Jan. 10 (Bloomberg) -- The House of Representatives is set to pass the first U.S. minimum wage increase in 10 years today and send it to the Senate where lawmakers may add tax breaks for small businesses.

House Democratic leaders want to boost the minimum wage to $7.25 an hour, from $5.15 now, over about two years. They oppose joining the bill with tax cuts as urged by President George W. Bush, Republicans and Democratic senators such as Max Baucus of Montana, chairman of the tax-writing Senate Finance Committee.

``The Congress will pass an increase,'' Baucus said in an interview last week. The question is ``the degree to which we can find ways to help small businesses, because a lot of small businesses are hurt sometimes by minimum wage increases.''

A minimum wage boost is part of the legislation House Speaker Nancy Pelosi of California is trying to push through in the first 100 hours of Democratic control of the House. Congress and Bush face increased pressure to approve an increase following the passage of minimum-wage increases in six states in November.

Democrats such as House Majority Leader Steny Hoyer of Maryland and Senator Edward Kennedy of Massachusetts, head of the Senate Labor Committee, are pushing Congress to send Bush a clean bill.

``This legislation will benefit literally millions of Americans,'' Hoyer said today as debate on the measure began.

He said a raise for the country's lowest-earning workers is overdue and won't hurt employers.

28 States

There are ``28 states that have a minimum wage that's above the federal minimum wage,'' Representative George Miller of California, head of the House Education and Labor Committee, said in an interview. ``A lot of the evidence is suggesting that communities are doing better with the higher wages, and businesses are doing better with the higher wages because people have more discretionary income.''

In October, a group of economists that included five Nobel Prize winners said a boost in the federal minimum wage wouldn't stunt job growth as some opponents claim. The value of the current wage, when adjusted for inflation, is the lowest since 1951, the economists said.

Wal-Mart Stores Inc., the world's largest retailer and frequent target of labor unions critical of the company's labor practices, also has said it supports a wage increase, saying it would be good for the company's customers.

Veto

Miller said he's not concerned that Bush would veto minimum wage legislation that doesn't include tax breaks. Bush said Dec. 20 that he supports the $2.10-an-hour minimum-wage increase as long as it is done ``in a way that does not punish the millions of small businesses that are creating most of the new jobs in our country.''

``I don't think the president is going to veto this bill,'' Miller said. ``Eighty percent of the people in the country not only support it, they see it as a matter of economic fairness.''

Still, Senate Majority Leader Harry Reid of Nevada has said he's willing to consider adding tax breaks to a Senate version of the minimum wage bill. Senate Minority Leader Mitch McConnell, a Republican from Kentucky, says he's working with Reid on a measure that would include tax relief.

``The package, we think, has bipartisan support,'' McConnell said last week.

The House and Senate would have to reconcile any differences in the legislation each chamber passes.

Charles Gabriel, a senior political analyst at Prudential Equity Group, said he expects the House will have to ``fall in line'' with the Senate to get a measure passed. That's in part because Senate Democrats would be hard pressed to get the 60 votes needed to bring the legislation to a vote without the tax provisions. Democrats have only 51 votes in the 100-member chamber.

Whatever happens, the tax relief package is ``very likely going to be less generous than what would have been the case if the Republicans had held onto Congress,'' Gabriel said.

To contact the reporter on this story: Kim Chipman in Washington at kchipman@bloomberg.net

Last Updated: January 10, 2007 11:32 EST