Minimum Wage Increase, Tax Credits in Spending Bill Signed by President

President Bush May 25, 2007 signed into law an emergency war supplemental spending bill (H.R. 2206) that raises the federal minimum wage in three steps to $7.25 an hour by 2009, while affording approximately $4.8 billion in tax relief to businesses affected by the wage increase.

Under the measure, the current minimum wage of $5.15 an hour will rise to $5.85 an hour on July 24, 2007, to $6.55 an hour on July 24, 2008, and to $7.25 an hour on July 24, 2009.  The bill also extends the Fair Labor Standards Act in phases to the U.S. territories of American Samoa and the Commonwealth of the Northern Mariana Islands.

This is the first increase in the federal minimum wage in 10 years.  The measure was originally proposed in the House of Representatives in January but became entangled in Senate debate over the need to provide offsetting relief for businesses and eventually in controversy over the Iraq war.  President Bush vetoed an earlier version of the Iraq supplemental appropriations bill also containing the minimum wage increase but including as well provisions requiring the withdrawal of most U.S. troops from Iraq.  As Sen. Edward Kennedy (D-Mass.) noted following Senate passage of the bill May 24:  “We’ve overcome many obstacles … to get this minimum wage increase across the finish line.”

Copyright © 2007 by The Bureau of National Affairs, Inc.