The Fair Minimum Wage Act of 2007
January 9, 2007
TO THE MEMBERS OF THE UNITED STATES HOUSE OF REPRESENTATIVES:
On behalf of the U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, I urge you to vote against H.R. 2, The Fair Minimum Wage Act of 2007, which would increase the federal minimum wage by $2.10 per hour. This legislation is expected to be considered by the House on Wednesday, January 10, 2007.
A study by the Employment Policies Institute (Job Loss in a Booming Economy, 2nd Edition) suggests that, as a result of the 1996 wage increase of only $0.50 an hour, 645,000 entry-level jobs were destroyed despite the robust economy at that time. The proposed increase of $2.10 an hour—more than four times that of the 1996 increase—will cause small business employers to eliminate entry-level jobs, reduce hours and benefits for current employees, and possibly dismiss current employees. For small businesses, the extra cost associated with a minimum wage increase is often impossible to recoup by raising prices. Customers are likely to shift their business to other competitors who are more able to absorb this increased wage burden.
Moreover, statistics show that increases in the minimum wage does little to help the intended beneficiaries—low-income families. According to the Employment Policy Foundation, less than one percent (0.9%) of current minimum wage earners are part of families with a total family income of $20,000 or less.
Increasing the minimum wage by more than 40 percent will be damaging to businesses, particularly small ones, and will impair the creation of entry-level jobs for low-skilled employees. Doing so without providing assistance to these businesses is irresponsible and unfair. The U.S. Chamber urges you to vote against H.R. 2.
R. Bruce Josten