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Federal Minimum Wage Bill Passes

The federal minimum wage will soon increase for the first time in ten (10) years, ending the longest period without an increase in the 70 years since the Fair Labor Standards Act (FLSA) was enacted. The minimum wage bill was included in a $120 billion Iraq war spending bill, which was passed by the House and Senate on May 24, 2007. Although the White House said the bill did not contain sufficient tax breaks to offset the effects of the minimum wage increase on small businesses, President Bush nonetheless is expected to sign the bill into law soon.

Known as the "Fair Minimum Wage Act of 2007", the new law will amend the FLSA to raise the federal minimum wage to $5.85/hour 60 days after its enactment, to $6.55/hour one year later, and then to $7.25/hour in 2009. That will amount to a 41 percent increase in the minimum wage, which has been static at $5.15/hour since 1997.

The Economic Policy Institute, a research group in Washington, estimates that 5.6 million workers - or 4 percent of the work force - currently earn less than $7.25. Currently, a person working 40 hours per week at the current minimum wage of $5.15 makes about $10,700 a year. An increase to $7.25 would boost that to just over $15,000 a year. More than two dozen states and the District of Columbia already have minimum wages higher than the federal level.

According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs and restaurant owners put off plans to hire an additional 106,000 employees. "A minimum wage increase will cost our industry jobs, and the vital discussion of how to minimize this job loss is getting lost in the debate," said Peter Kilgore, the group's acting interim president and chief executive officer.

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