Minimum Wage

The House of Representatives recently voted to increase the minimum wage, but the measure is being held hostage in the Senate by demands for tax relief for small businesses supposedly burdened by the wage increase. That may sound fair to some, but a closer review shows the tax provisions are clearly more inspired by politics than credible equity considerations or sound economic reasoning.

Yes, a minimum wage hike will have effects. An increase to $7.25 an hour could directly benefit nearly 6 million workers, lifting the incomes of many families currently under the poverty line or not far above it. But critics also claim the boost, estimated to cost employers about $13 billion annually, would result in higher prices and fewer jobs. That's far from certain, and raises an important question: Who would be harmed, and, if they are, should they receive compensation?

Certainly, some companies will be forced to raise wages. But there is no precise way for government to predict which ones will be affected or by how much. Nonetheless, the Senate bill provides