California has one of the highest minimum wage rates in the United States.  At $7.50 per hour, it ranks behind only Washington, at $7.93 per hour, and Oregon, at $7.80 per hour.  The proposed federal minimum wage rate hike to $7.25 per hour over the next two years will not affect California, as California’s minimum wage already exceeds the federal rate.

Last summer, the House of Representatives passed a bill to increase the federal minimum wage rate while helping small businesses and cutting taxes.  This balanced measure had the support of both Republicans and Democrats but fell just short of the votes needed to win approval in the Senate and become law.  Now, House Democrats are promoting an unfair minimum wage increase that will hurt small businesses and our economy.  H.R. 2, the so-called “Fair” Minimum Wage Act of 2007 seeks to raise the Federal minimum wage rate by an enormous 41%, without any help for small businesses.

According to the Congressional Budget Office, an unbalanced minimum wage increase that excludes considerations for small businesses will end up costing those businesses $5-$7 billion.  This would spell disaster for the very minimum wage workers that the Democrats are supposedly trying to help, resulting in 20% of these workers – 1.6 million – losing their jobs.  In addition to the heavy toll that this proposal will take on the private sector, state and local governments will also be penalized.  It is estimated that state and local governments will be responsible for $300-$400 million in unfunded mandates.

I have introduced two bills to help relieve the burden of a minimum wage increase on small businesses: H.R. 32, the Health Care Incentive Act, and H.R. 33, the Minimum Wage Fairness Act of 2007.  The Health Care Incentive Act provides employers credit toward their minimum wage obligation if they provide health care coverage to their employees.  H.R. 32 would benefit small businesses by easing the minimum wage burden and helps minimum wage earners by reducing their health care costs.  The Minimum Wage Fairness Act similarly alleviates the minimum wage onus by crediting employers a portion of their minimum wage obligation for their tipped employees who earn over $30 per hour in tips.  This proposal, if added to a minimum wage rate increase, would ensure that small businesses are not forced to fire employees or pass the cost of a minimum wage rate hike on to consumers. 

Nancy Pelosi and the House Democrats have ensured that H.R. 2 will be considered under a closed rule, meaning no Member of Congress will be allowed to offer amendments – the bill cannot be changed, no new ideas may be considered, and no measure assisting small business may be included.  Small businesses create two-thirds of our nation’s new jobs and are the backbone of the American economy.  Congress ought to be fighting for this vital part of our economy, not making it more difficult for small businesses to succeed. Raising the minimum wage in this fashion means a missed opportunity to help small businesses.

 



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