Senate seen as easing federal wage hike by adding tax breaks, following House vote for 40% increase

Nation's Restaurant News, Jan 22, 2007

WASHINGTON -- The Democrat-controlled U.S. Senate is expected to court employers' support for an increased federal minimum wage by adding key business-friendly provisions to a bill that otherwise would mirror the measure passed by the House this month.

The House bill, which would raise the current $5.15 hourly rate to $7.25 over 26 months, did not contain any offsetting measures for employers.

The Senate version is expected to include an extension of the Work Opportunity Tax Credit, and industry advocates and executives also were anticipating that the Senate would add a provision allowing businesses to depreciate new structures over 15 years rather than the current 39.5- year depreciation schedule.

President Bush has said he favors a wage bill that includes offsets to help businesses cope with higher payroll costs.

The House bill, passed by a 315-116 vote, would raise the minimum wage in three increments of 70 cents each--first to $5.85 per hour 60 days after the measure was signed into law, then to $6.55 one year later and to $7.25 one year after that.

Because 70 percent of the nation's restaurants are small businesses, "an increase in the minimum wage without sufficient targeted offsets will ultimately impede job creation and hurt those that it is intended to assist," said Steven C. Anderson, president and chief executive of the National Restaurant Association.

Scott Vinson, vice president of government relations for the National Council of Chain Restaurants, predicted that Democrats in the Senate would be "more open to introducing a balanced bill" that "probably will contain some sort of offsets."

The Economic Policy Institute has estimated that about 4 percent of the American workforce, or some 5.6 million people, would benefit directly from a federal wage increase.

According to the most recent U.S. Department of Labor estimate, 479,000 hourly workers were paid $5.15 an hour in 2005.

Twenty-four states have set their minimum wage higher than the federal minimum, which has not been increased in a decade. In November, voters in Arizona, Colorado, Missouri, Montana, Nevada and Ohio approved ballot initiatives to increase their state's hourly rate and adjust it automatically each year based on cost-of-living inflation.