In a move some small businesses say will force them to raise prices or lay off employees, Massachusetts lawmakers on Thursday voted to boost the state's minimum wage from $6.75 to $8 an hour over a two-year period.

The bill, a compromise passed by the state Senate and expected to pass the House next week, would make the Bay State's minimum wage the highest in the nation in 2008, once the full increase takes effect.

Under the measure, the first increase of $0.75 will come on Jan. 1, 2007, with an additional increase of $0.50 planned for the following year.

"Our members need a pay increase and they need it now," said Carl Nilsson, campaign director for Neighbor to Neighbor Massachusetts, an advocacy group that represents more than 10,000 low-income and working-class employees in the state.

"The minimum wage increase would give a raise to over 300,000 people," Nilsson added. "This is money that is going to go back into the local economy."

Based on a 40-hour workweek, the increase will boost workers' earnings from about $14,000 a year to $16,500.

However, small-business advocates said the increase will place a significant burden on employers. "We are very disappointed," said Erin Trabucco, general counsel for the Retailers Association of America. "It's hard for small businesses to deal with the wage increase. They'll be left with no other option than to raise costs to their consumers."

According to Trabucco, the wage increase and potential price hikes that ensue will be especially hard for small businesses in Massachusetts that are close to the border with New Hampshire, where the minimum wage remains at the federal level of $5.15 an hour. "It will be hard to remain in business, due to the competition," she said, noting that she expects the bill will indeed pass the House.

Eighteen states and the District of Columbia now have minimum wages higher than the federal minimum wage, which has remained the same since 1997.

Although Massachusetts Gov. Mitt Romney, a possible candidate for the Republican presidential nomination, historically has supported indexing the minimum wage for future inflation, the new legislation does not include that provision under the compromise. Romney has not yet received the bill and will wait to review before commenting on it, according to Eric Fhernstrom, Romney's director of communications.

State Sen. Marc R. Pacheco (D-Taunton), who was the chief sponsor of the Senate's original version of the bill, which included a raise to $8.25 over three years and indexing the minimum wage to inflation, said he agreed to the compromise in order to "get it done" during this legislative session.

"If the governor is concerned with the issue of indexing, he should have no problem signing this bill," Pacheco said, noting that if the current minimum wage were tied to inflation, it would be close to $8 an hour by 2008 anyway.

Nilsson said he believes the current bill will hit Romney's desk on July 11 -- 20 days before the end of the legislative session. "We're under a tight time limit," he said. "I hope that the legislature is committed to making this happen during this session."