On a largely party-line vote of 54-42, backers fell short of the 60 needed to advance the legislation, which would boost the minimum wage to $10.10 per hour from its current $7.25.
The bill would raise the federal minimum wage to $10.10 per hour during the next three years, and then index it in the future to inflation. Adjusted for inflation, the current minimum wage is a third of what it was in 1950.
The non-partisan Congressional Budget Office estimates that the bill would lift 900,000 Americans out of poverty, but cost another 500,000 Americans their jobs.
Polls show most Americans support an increase in the minimum wage, and Obama and his Democrats plan to use the issue to rally their liberal base in advance of the November congressional elections.