It has been great watching the new Congress over the past couple of days. And I am glad that the House is likely to pass an increase in the minimum wage (from $5.15 to $7.25) and the Senate seems likely to follow (though the Senate bill is likely to include some tax breaks for small businesses in order to counteract the effect of up to a 40% increase in labor costs). And it is worth noting that the Democratic Congress is getting this done as one of its first orders of business after the Republican Congress for at least the past four years has pawed around the issue and either failed to take action or come up with excuses for why they couldn't.
In fact, as long as this is what the tax breaks are for, I don't have a problem with them. However, there needs to be one other provision in the bill then. That is because of the fact that the 40% increase in labor costs is only to adjust for the rise in inflation accumulated and compounded over the decade since the last time minimum wages were increased. So in effect these same businesses, if they are still paying people minimum wage, have been the beneficiaries of ten years of what amounts to decreasing labor costs. I can understand that having to 'eat' it all in a year or two might be difficult, and that some of these businesses may just be starting into business now. However, in order to prevent the situation from repeating itself (which it has-- and on the whole to the detriment of the workers as minimum wages have since the 1950's not increased as fast as inflation) there should be a periodic adjustment in minimum wages. There have been proposals to index the minimum wage to the same cost of living indicator that is used for the salaries of members of Congress and for Social Security payments, and I agree with that proposal.