Senate Republicans on Wednesday blocked the Democrats from fulfilling a campaign promise to increase the federal minimum wage, demanding that the pay hike include tax relief for small business.

On a vote of 54-43, Democrats fell six short of the 60 needed to end debate and go to passage of a House-approved bill, to raise the minimum wage for the first time in a decade — boosting it over two years to $7.25 per hour from $5.15.

Democratic leaders responded by adding $8 billion in tax breaks, and the Senate is expected to pass the bill next week. The measure adopted by the House included no tax breaks. The two chambers must agree on a final bill before it can become law.

“There is no doubt in my mind that we will get together quite quickly,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat.

But Brendan Daly, an aide to House Speaker Nancy Pelosi, a California Democrat, said: “We should not delay a minimum wage increase another day in order to negotiate a tax package.”

President George W. Bush has said he wants tax relief in the bill to help small business pay for a minimum wage hike.

“We’re trying to make sure we don’t put mom-and-pop businesses and their employees out of work,” said Sen. Mike Enzi, a Wyoming Republican.

With the gap between rich and poor widening, Democrats promised a minimum wage increase as a part of the campaign that saw them win control of the Congress from Bush’s Republicans in last November’s elections.

“Millions of Americans who earn the minimum wage have been waiting a decade for a much-deserved raise,” said Rep. Rahm Emanuel, an Illinois Democrat. “Incredibly, Senate Republicans would have them wait even longer.”

Democratic Sen. Edward Kennedy of Massachusetts had initially opposed adding tax breaks to the bill, noting that in the past decade corporations and the wealthiest Americans have received billions of dollars in tax relief.

But Kennedy said to win passage, he will back the proposed tax breaks. He said they were far less than those demanded by Republicans when they repeatedly stopped an increase in the minimum wage in recent years.

Republicans have cited studies that say an increase would drive people out of work and hurt the economy.

But Democrats counter that a modest increase would cause no significant job loss. They have also noted a survey that found most small businesses believe it would not hurt them. Most already pay above it.

At $5.15 per hour, a person working 40 hours per week makes $10,712 per year, about $5,000 below the poverty line for a family of three.

According to federal statistics, in 2005, the latest year figures are available, 479,000 people received the minimum wage. But several million others were paid just a dollar or two more. All would benefit from the proposed increase.

(Additional reporting by Donna Smith)

Copyright © 2007 Reuters Limited


  1. I think any Senator or Rep that votes against a minimum wage increase should have to try living on it for a year. I’m sure it wouldn’t take a year for them to decide that a raise in minimum wages was way over due. In the first place, any bill that goes before the Senate or House should stand alone, nothing attached. If they want to vote on a tax break, then send that bill before the house with no attachments. This adding to every bill that comes before Congress is ridiculous and the laws should be changed so that Congress votes on each INDIVIDUAL bill on its own merit.

  2. I forgot to mention that I have a real problem with the tax laws that confiscate a portion of our EARNED income but take a smaller percentage of UNEARNED income — like that 200% capital gain you made on the sale of your HALLIBURTON stock this year. But thats another topic; we were supposed to be talking about the minimum wage. Sorry.

  3. Any individual making under $25K a year should not have to pay federal income taxes. Any married couple making under $40K a year should not have to pay federal income taxes. Of course that might mean a small increase for the rest of us but so what? Is it every man for himself or are we all in this together? Any small business owner would fall under the same parameters. Its a bit hard for me to feel sorry for a small business owner who made $250K last year but will only make $200K this year because of an increase in the minimum wage. Tax breaks for truly small business owners could also be placed into the mix to help offset the minimum wage increase. Simple. But if we can’t make it really complex the legislature isn’t interested. If we can’t figure out a way to funnel billions to the Halliburton’s and the GE’s then they aren’t interested.

  4. How the hell are they going to make sure the tax breaks go to to those small busineses who would hurt by the wage increase? I bet most of the breaks will benefit businesses with no minimum wage workers.

    It would make more sense just to give that $8bill directly to the low wage earners.

  5. It seems strange to me that the Republicans have some kind of an attachment before they could pass a half way decent pay raise for the working class, but when they raise their salaries there are no strings attached. I think it is about time the American people decide if they deserve a raise. Bring it before the American people and see what happens.

  6. How can not raising the wage people need to live better and eat better and maybe be able to have some health insurance be bad. Conservatives make my sad. People have a right to have a good paying job under the Constitution of the United States. I feel sorry for Republicans. They have no heart or feelings.

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