Question: In February 2007, the U.S. Senate voted overwhelmingly to increase the federal minimum wage for the first time in nearly a decade. To attract Republican support, Senate leaders agreed to extend tax credits and expand

deductions for businesses that would be hit hardest by the minimum wage increase. These tax breaks were offset by a proposal to raise taxes by a similar amount on corporations, their chief executives and other highly

paid workers. For example, included in this proposal were new restrictions that forbid executives from deferring more than $1 million in pay every year and placing the money in tax-deferred accounts.

Discuss the impact of increasing the minimum wage on the markets for low-skilled and high-skilled labor.