If the “Fair Minimum Wage Act of 2007” makes it through the Senate this week, and it almost definitely will, it will be the first increase in the federal minimum wage in a decade. And after ten years of watching the purchasing power of that wage fall, it is time to raise the bare minimum.
On Jan. 10, more than 80 Republicans joined Democrats in the House to pass a clean bill that would gradually increase the minimum wage from $5.15 to $7.25 over two years. But when the bill was sent to the Senate, it got messy—Republicans wouldn’t vote on the bill unless it included tax breaks to small businesses to offset the supposed losses of a minimum wage hike. The breaks would cost $8.3 billion over ten years. Congress has already passed staggering tax cuts for businesses since 2001. Republicans blocked the House’s version of the bill from going to a vote because Democrats couldn’t muster the 60 votes needed in the Senate to end debate on a bill. On Tuesday, the Senate finally voted to end the grueling debate, and will thus vote on a tainted bill.
Congress should make sure that raising the minimum wage happens no matter what—it’s too important to the poorest Americans. In its final form, however, the House and Senate should ensure that the bill doesn’t include tax breaks to businesses. Doing so is bad policy not only because of the massive federal budget deficit, but also because a minimum wage hike is actually good for businesses.
The current minimum wage is simply not enough to sustain poor families. According to the Economic Policy Institute, “in 2005, a single parent working full time with two children would have a combined earnings and tax credit of $14,177, only 90 percent of the 2005 poverty threshold of $15,735 for a family of three.” The lowest paid workers lack bargaining power, so the government has an obligation to bargain for them.
What is more, many businesses support raising the minimum wage, having signed a public petition coordinated by the “Let Justice Roll” campaign. Why? Paying workers well is good for business. For both investors and employers, higher wages yield higher returns because of increased labor productivity.
“[Underpaying workers,] I’d lose more than I saved because of declining quality, service, reputation and customer base,” said Kirsten Poole, co-owner of Kirsten’s Cafe and Dish Caterers in Silver Spring Md. in a Let Justice Roll press release.
How long can Senate Republicans really continue to play the small business card? According to Georgetown Professor of Public Policy Harry Holzer, “the vast majority of small businesses won’t be hurt one way or another.” The House understood this and passed legislation without tax breaks. In its final stages, Democrats and Republicans in both Houses should pass a clean bill. It’s just good business.
