AUGUSTA – Maine’s minimum wage would be increased and automatically adjusted every year based on inflation under legislation that is being denounced by the business community but praised by organized labor.

“Maine’s working families desperately need an increase in their wages,” said Sen. Ethan Strimling, D-Portland, sponsor of the measure. “Minimum wage increases are a very important part of filling that need.”

Maine’s current minimum wage is $6.50 an hour and goes to $7 in October under existing law. Strimling’s bill proposes that it go to $7.70 an hour Jan. 1, 2008, and to $8.40 an hour Jan. 1, 2009. The measure also provides for an automatic increase every year after 2009 based on the consumer price index.

“It’s too much, too soon and it goes too far,” said Dana Connors, president of the Maine Chamber of Commerce. “This is an issue I thought we had dealt with and dealt with in a fair way.”

Connors said the proposal would put Maine above the federal minimum wage and that would hurt state businesses, particularly those along the border with New Hampshire, assuming New Hampshire does not increase its minimum wage.

“People are just outraged about this,” said Jim McGregor, executive vice president of the Maine Merchants Association. “This is going to hurt a lot of businesses.”

But Ed Gorham, president of the Maine AFL-CIO, said the business community always opposes a minimum wage increase, regardless of the amount or timing of the increase.

“A similar bill to this was passed in the state of Washington sometime back,” he said. “It is being praised by both businesses and labor and is given credit for helping that state have a booming economy.”

Gorham said employers in that state know that the higher minimum wage helps the economy by putting more money into the hands of consumers who will spend it. He said it also provides predictability to employers, something he said they have often testified they need and that Maine lacks.

“The autopilot is really more like auto self-destruct,” said David Clough, Maine director of the national Federation of Independent Businesses. “I am not even aware of union contracts that have escalators that go on forever. They have a fixed length of two or three years, but they don’t go on forever.”

He said because the bill has just been printed, his members are not aware of the measure, but he predicted when they are, they will be “very upset” at both of the increases in the measure, as well as the automatic escalator clause, which he said will mean further increases in later years.

“This will hurt businesses,” he said. “No question.”

Strimling said he is not surprised that many in the business community are opposed to any increase in the minimum wage, given their past track record of opposition.

“There is no evidence, never been any evidence that it will decrease the number of jobs or make us less competitive,” he said. “In fact, in other states that have raised the minimum wage, it has made them more competitive.”

Connors disagreed. He said the proposal would be “crippling” to Maine’s business community and would have a ripple effect when combined with the state’s tax burden, high health care costs and high energy costs.

“Maine can’t afford this,” he said. “It’s too much, too fast and goes way too far.”

Strimling said he expects there will be a battle in the Labor Committee and on the floor of the Legislature over his proposal. He acknowledged it could well be changed in committee or by floor amendment, but he intends to fight for the measure as is.

“I don’t know if we will have the horses to do it in this session, but we sure are going to give it a shot,” Gorham said.

The proposal also would remove exemptions to the state’s minimum wage and overtime laws, and also amend the enforcement provisions in the current law.