Citing a lack of protections for small businesses, Senate Republicans on Wednesday blocked a measure to raise the federal minimum wage without including tax cuts for employers.
The Democrat-led bill, which passed the House by 315-116 two weeks ago, was rejected after falling six votes short in a motion to end debate. Under Senate rules, 60 votes were required to proceed. Lawmakers voted mostly along party lines, with only five Republicans and two independents supporting the motion.
The so-called "clean bill" sought to raise the minimum wage from $5.15 to $7.25 over two years, the first increase in a decade, without added tax breaks or other exemptions for business owners.
Sen. Edward Kennedy (D-Mass.) has said adding tax relief to the bill "creates procedural hurdles that will delay -- perhaps significantly -- the implementation of the increase."
Still, President Bush has said he will only support an increase that includes tax cuts.
With the House version of the bill rejected, debate and negotiations in the Senate will now focus on a series of amendments -- including tax relief measures -- to a second minimum-wage bill that remains on the floor, according to a spokeswoman for Sen. John Kerry (D-Mass.), chairman of the Senate Committee on Small Business and Entrepreneurship.
The Senate bill already includes a bipartisan amendment to ease federal regulations on small businesses, which passed unanimously earlier in the week. A second amendment, which was approved Wednesday, would boost funding for Women's Business Centers nationwide.
Opponents of a minimum wage hike say higher mandated increases will result in payroll cuts and job losses, particularly at smaller business that lack the resources to adapt.
Roughly half of all private-sector workers are employed by small businesses, according to the Small Business Administration.
Yet Kennedy said most will not feel the impact of a minimum-wage hike.
"Many small businesses are already paying higher wages in order to recruit and retain quality workers," he said.
A survey of more than 1,000 small-business owners in December by Discovery Financial Services found 70 percent said raising the federal minimum wage would not affect labor costs -- suggesting very few employed minimum-wage level workers.
On Monday, a broad coalition of hundreds of business owners, executives, and investors nationwide rallied to urge the Senate to raise the minimum wage. "Higher wages benefit business by increasing purchasing power, reducing costly employee turnover, raising productivity, and improving product quality, customer satisfaction and company reputation," the group said in a petition presented to Congress.
A vote on the second Senate bill is not expected until next week.