The Senate on Wednesday defeated a proposal to raise the minimum wage, rejecting arguments by Democrats that the current floor, $5.15 an hour for the past eight years, was perpetuating poverty.

The proposal by Sen. Edward Kennedy (search) to raise the lowest wage by $1.10 over an 18-month period was defeated on a near-partyline vote of 51-47 vote.

The Senate was also voting Wednesday on a Republican alternative that combined the same $1.10 increase with various breaks and exemptions for small businesses. It was expected to lose.

Kennedy, D-Mass., said Hurricane Katrina (search) demonstrated the depth of poverty in the country and he pointed out that a single parent with two children working a minimum wage earns $10,700 a year, $4,500 below the poverty line.

He said it was "absolutely unconscionable" that in the same period that Congress has denied a minimum wage increase, lawmakers have voted themselves seven pay raises worth $28,000.

But Republican opponents, echoing the arguments of business groups, said higher minimum wages can work against the poor if they force small businesses to cut payrolls or go out of business.

"Mandated hikes in the minimum wage do not cure poverty and they clearly do not create jobs," said Sen. Mike Enzi (search), R-Wyo., who offered the Republican alternative.

White House spokesman Scott McClellan (search), asked Wednesday about Kennedy's measure, said President Bush "believes that we should look at having a reasonable increase in the minimum wage. ... But we need to make sure that, as we do that, that it is not a step that hurts small business or prices people out of the job market."

Enzi's proposal would provide tax and regulatory relief for small business, permit tips to be credited in complying with minimum wage hikes and expand the small business exemption from the Fair Labor Standards Act.

It also would have put into law a "flex-time" system, opposed by organized labor as an assault on overtime pay, under which workers could work more in one week and take time off the next.

Both proposals, amendments to a fiscal 2006 spending bill, needed 60 votes to pass.

Kennedy, who has campaigned relentlessly for a minimum wage increase, picked up one vote from the 46 votes for a similar measure in March. On Tuesday he modified his proposal, which originally called for a $2.15 increase over 26 months, in hopes of attracting more Republicans.

The first minimum wage of 25 cents an hour was enacted under President Roosevelt in 1938. Congress has since voted eight times to increase it, including under Republican presidents Eisenhower, Ford and George H.W. Bush. Congress approved the last increase in 1996, with the second stage, boosting the rate to $5.15, taking effect in 1997.

Sixteen states and the District of Columbia have minimum wages higher than the national level, including Washington State at $7.35, according to the Labor Department. Twenty-six states are the same as the federal level; two — Ohio and Kansas — are below; and six do not have state laws.

Also on Wednesday, Sens. Jack Reed, D-R.I., and Susan Collins, R-Maine, proposed adding $3.1 billion to the administration's $2 billion request this year for emergency heating assistance for low income families.

"We're about see a second tidal surge from Katrina and Rita," with rising energy costs, Reed said.

A vote could take place Thursday, with GOP leaders saying an emergency spending bill to be taken up soon was a better venue for the heating assistance debate.