On Tuesday, July 24, Congress approved the raise on the federal minimum wage from $5.15 to $5.85 an hour. Congress also plans on increasing wages again in 2008 to $6.55 an hour, then to $7.25 in July 2009.
Sen. John F. Kerry, who chairs the Committee on Small Business and Entrepreneurship, does not believe that the increase will negatively affect most small businesses. In fact, he believes that the increase will help small business. "It's no secret that good wages result in increased productivity, ultimately improving a firm's bottom line and economic development in their community," Kerry said.
The U.S. Chamber of Commerce, however disagrees. They Chamber predicts that almost 60 percent of small business owners will not be able to offset the cost of the increase. "Mandating that small companies pay minimum wage workers at a rate higher than what these companies can afford, is bad business," the Chamber said in a news release.
Marc Freedman, the Chamber's director of labor policy, said, “Even this modest increase will hurt free enterprise, and the increases which will go into effect in 2008 and 2009 are likely to have an even greater negative impact."
The Chamber is concerned that small businesses might have to raise their prices to cover the increase in the minimum wage and create fewer jobs for low wage earners.
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