The Senate voted overwhelmingly Thursday to boost the federal minimum wage by $2.10 to $7.25 an hour over two years, according to media reports. The bill also calls for billions of dollars in small-business tax cuts and higher taxes for wealthy executives to help offset the cost of the wage increase.
The increase in the minimum wage, the first in a decade, was approved by a 94-3 vote, capping a nine-day debate over how to balance the wage hike with the needs of businesses that employ low-wage workers, The Associated Press reports.
The wage hike is a top priority of Democrats and would be one of the first major legislative successes of the new Democratic-controlled Congress.
Republicans stressed the importance of the $8.3 billion in business tax breaks in the bill, though it was a significantly smaller tax package than Republicans had sought during previous attempts to raise the minimum wage, according to media reports.
The bill must now be reconciled with the House version passed Jan. 10 that contained no tax provisions. House Democrats have insisted they want a minimum wage bill with no strings attached, though some have conceded the difficulty of passing the legislation in the Senate without tax breaks, the AP reports.
The House and Senate must agree on a final bill before it can be sent to President George W. Bush to sign into law.
“We look forward to working with the House of Representatives to send a final bill to the president that will be a victory for both those who earn the minimum wage and those who pay it,” said Senate Minority Leader Mitch McConnell R-Ky.
Both House and Senate measures would give several million of America’s poorest workers—dishwashers, short-order cooks, laborers, maids—a pay hike by boosting the minimum wage from $5.15 to $7.25 over two years, Reuters reports. Under the current minimum wage, a person working 40 hours per week makes $10,712 per year, about $5,000 below the poverty line for a family of three.
“Passing this wage hike represents a small but necessary step to help lift America’s working poor out of the ditches of poverty and onto the road toward economic prosperity,” Sen. Edward Kennedy, D-Mass., reportedly said.
House Speaker Nancy Pelosi, D-Calif., reportedly said she supports some of the tax provisions in the House package, but she also has said she would prefer they be put in a separate, House-initiated tax bill.
A spokesman for Senate Majority Leader Harry Reid, D-Nev., reportedly said the tax breaks are necessary to overcome a potential GOP filibuster.
Besides increasing the minimum wage, the bill would extend for five years a tax credit for businesses that hire the disadvantaged and provide expensing and depreciation advantages to small firms, the AP reports. The tax breaks would be paid for by closing loopholes on offshore tax shelters, by capping deferred compensation payments to corporate executives, and by removing the deductibility of punitive damage payments and fines.
Senators also adopted an amendment that would bar companies that hire illegal immigrants form obtaining federal contracts, the AP reports. That measure was designed to encourage companies to participate in an employee identification program that can weed out undocumented workers.