Minimum Wage

In May, Congress enacted a minimum wage increase to $7.25 an hour phased in over two years, as part of the Iraq supplemental spending bill. The spending bill also includes a $4.84 billion tax relief package for small businesses designed to offset the impact of the wage increase.

The largest share of the tax breaks comes from an extension of the Work Opportunity Tax Credit. The credit is granted to employers for hiring individuals who face barriers to employment, now defined to include veterans, high-risk youths, and vocational rehabilitation referrals. The credit will be extended through 2011.

Further, the bill increases Section 179 small business expensing limits to $125,000 a year from $100,000 for capital investments and extends the expensing limit through 2010. The phaseout threshold is increased to $500,000.

The U.S. Chamber continues to believe that increases in the minimum wage fall disproportionately on small businesses who are the least able to absorb such a dramatic increase in their labor costs. Accordingly, the U.S. Chamber continues to oppose increases in the minimum wage and believes that any increase must be coupled with provisions that recognize the impact this will have on small businesses.