On Thursday night, Congress approved the first increase in the federal minimum wage rate in a decade. By a vote of 348 to 73, the House approved the measure, and later that night, the Senate approved the measure by an 80 to 14 vote. President Bill Clinton signed the last increase, in 1997.
The measure will raise the minimum wage to $7.25 an hour from $5.15 in three stages over two years. Also, the bill includes $4.84 billion in tax breaks for small businesses, who say that the wage increase will be a burden to them.
Although more than half the states have higher minimum wages than the current federal rate, the Economic Policy Institute, a research think tank, estimates that 4 percent of the workforce, or 5.6 million employees, earns less than $7.25 an hour. Seven states still have a minimum wage higher than $7.25 an hour.
A number of business interests lobbied strongly against the increase. One group, National Restaurant Association, said the last increase led to a reduction of 146,000 jobs in the industry and prompted owners to postpone hiring an additional 106,000 workers.
Whether the hotel industry will follow a similar path--reducing its staff of housekeepers, bellhops, catering staff, landscapers, and other support staff that enhance the quality of the guest experience--remains to be seen. If staff reductions are not coming, then prices for the average hotel stay may have to rise for hotels to maintain their current level of solid profitability.