Dive Brief:
- A bill introduced Tuesday could, if signed into law, raise the federal minimum wage to $15 per hour by 2025.
- The Raise the Wage Act of 2021, proposed by U.S. House of Representative Democrats, would begin with a boost to $9.50 on the prospective law’s effective date. The rate would increase each year until reaching $15 five years after the law takes effect.
- The bill also would eventually eliminate the tipped minimum wage — a provision that allows an employer to count employees’ tips toward its minimum wage responsibility — and subminimum wages for workers with disabilities and young workers.
Dive Insight:
The bill appears to make good on several of President Joe Biden’s campaign promises. Biden in the months leading up to the election repeatedly called for a $15 minimum wage and the elimination of the subminimum wages.
The bill’s likelihood of success, of course, remains to be seen. The House passed a similar bill in 2019, but it didn’t find success in the Senate; now, however, Democrats control both houses of Congress. In a press conference announcing the bill, Sen. Bernie Sanders, I-VT, expressed hope that Senate Republicans would support the measure but said if not, he will fight to implement the changes through the reconciliation process with a simple majority in the Senate.
While many employers already are subject to state and local minimum wage rates higher than the federal rate, others have opted to move to a $15 minimum voluntarily. Target, for example, raised its starting wage to $15 per hour last year.
The long-term effects of such increases is hotly debated. The Congressional Budget office in 2019 predicted that an increase to $15 an hour by Jan. 1, 2025, could raise the wages of 27 million U.S. workers while also putting an estimated 1.3 million out of work. A 2018 report examining minimum wages higher than $10, however, found no significant drop in employment.
