Top Story USA

1 February 2007

Senate Passes Minimum Wage Bill

The Democratic-held Senate in US has passed the Fair Minimum Wage Act of 2007, increasing the minimum wage by $2.10 per hour to $7.25 from its current level of $5.15 by voting overwhelmingly in favour.

The hike in the minimum wage, the first one in a decade, was approved 93-4 after a nine-day debate over how to balance the wage hike with the needs of businesses that employ low-wage workers.

The senators also approved the tax cuts for small businesses to minimize impact of the wage increase.

The House of Representatives also approved a similar measure on 10 January, though without tax cuts. Appearing to be on a collision course over the issue of minimum wage, both the chambers must agree on a final bill.

Last month the House of Representatives voted to raise the federal minimum wage from $5.15 an hour to $7.25 per hour in three $.70 increments over a two year span and sent the bill on to the Senate for their endorsement.

The Senate's version included $8.3bn in small business tax cuts.

While both bills would increase the minimum wage to $6.50 an hour in 2008 and then $7.50 in 2009, some distinctive differences are obvious.

The Senate and House, also dominated by the Democrats - now have to come to negotiation on a final bill before it is sent to President Bush to be signed into law.

Mr Bush was for all praise for the Senate's vote, saying it passed "significant legislation that will benefit America's workers and small businesses".

Thus the Democrats’ promise to increase the minimum wage during their successful campaign last year was fulfilled.

The minimum wage has been frozen in the US at $5.15 per hour since 1997.