By  on January 11, 2007

WASHINGTON — The House passed a minimum wage increase Wednesday that many retailers maintain would adversely impact specialty stores and small chains and diminish opportunities for low-skilled workers.

The House bill, approved 315 to 116, would raise the federal wage to $7.25 from $5.15 over two years. How­ever, the industry's stance was softened as senators intensified efforts to link a minimum wage increase to tax breaks for small businesses, a move supported by retailers. President Bush has said he would support an increase if it is linked to tax breaks.

The vote on the wage hike came a day after the House passed a security bill that calls for 100 percent screening of containers in foreign ports, which some retail and wholesale importers worry will lead to delivery delays.

Many experts have said the economy will absorb the increase without suffering a major shock.

Part of their reasoning is that 28 states, along with the District of Columbia, already have higher minimum wage rates than the federal standard. The state of Washington has the highest, $7.93, followed by Oregon, $7.80, and California, $7.50.

"There will be some losers at the low end of the scale because some people who would have gotten jobs at the prevailing wage level will not get those jobs with a higher minimum wage," said Nigel Gault, chief U.S. economist at Global Insight. "People who currently have jobs will have more purchasing power."

Senate Majority Leader Harry Reid (D., Nev.) has said the Senate will consider tax cuts for small businesses and possibly pair them with a minimum wage increase.

"The course they are on in the Senate might be acceptable because it is narrowly targeted" in terms of tax breaks for small businesses, said Tom Snyder, national political director of UNITE HERE. "We would prefer a clean up-or-down vote on the minimum wage, but we are not going to second-guess Sen. Reid. If he comes to the conclusion that he needs tax breaks to get it through, so be it."

Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, said Wednesday he plans to introduce a "responsible tax package next week…to ensure the continued growth and success of small businesses" that will likely include a minimum wage increase.The National Retail Federation plans to step up its lobbying in the Senate on tax incentives for smaller retailers.

"As Congress moves to increase the federal minimum wage, it also needs to look at provisions that could help provide some relief for businesses," said Steve Pfister, senior vice president of government relations for the National Retail Federation.

H. Lee Scott, president and chief executive officer of Wal-Mart Stores Inc., staked out the discount giant's support of a minimum wage increase in a speech in October 2005, saying it was "out of date with the times. We can see firsthand at Wal-Mart how many of our customers are struggling to get by."

Scott said Wal-Mart saw an increase in spending when paychecks were issued on the 1st and 15th of each month and a decrease at the end of the month.

House Majority Leader Steny Hoyer (D., Md.), seized on Wal-Mart's support of a minimum wage increase during the floor debate Wednesday.

"They know their consumers cannot buy even discounted necessities of life on the minimum wage," he said. "You and I know for the richest nation on the face of the earth, that's wrong."

The bill would also raise the minimum wage in the Common­wealth of the Northern Marianas, a U.S. territory that came under scrutiny in the Nineties for labor abuses in garment factories. More recently, the territory was linked to lobbyist Jack Abramoff, who was convicted in a bribery scandal. Abramoff was hired by the government of the Northern Marianas and allegedly worked with then-House Majority Leader Tom Delay (R., Tex.), to block legislation in Congress that would have raised the minimum wage and strengthened labor and immigration laws there. The current wage rate there is $3.05.

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