Minimum wage: Riding the legislation wave as the country moves toward a federal increase

A roundup of three proposed bills

Posted March 5, 2021 

With no increase to the federal minimum wage in more than a decade — the longest period in U.S. history — potential changes are on the horizon. 

Minimum wage has been sitting at $7.25 per hour since 2009. Since the Fair Labor Standards Act (FLSA) was established in 1938, this is the longest period of time in which the federal minimum wage hasn’t budged.

Below is a roundup of three key pieces of federal legislation in chronological order.

Note, if these pending bills don't go anywhere, there is one last chance at a higher minimum wage increase passing this year, and that's in a tax reform proposal that Democrats are expected to introduce this fall (as a 2022 budget reconciliation measure).

January 26, 2021 – Raise the Wage Act

On January 26, 2021, House and Senate Democrats introduced the Raise the Wage Act — legislation designed to increase the federal minimum wage to $15 per hour by 2025.

Key topics of the Raise the Wage Act include:

  • Minimum wage. Gradually raise the federal minimum wage from $7.25 to $15 by 2025;
  • Future increases. Future increases in the federal minimum wage would be tied to median wage growth to ensure the value of minimum wage does not once again erode over time;
  • Tipped workers. Guarantee tipped workers are paid at least the full federal minimum wage by phasing out the subminimum wage;
  • Child labor. Guarantee teen workers are paid at least the full federal minimum wage by phasing out the rarely used subminimum wage for youth workers; and
  • People with disabilities. End subminimum wage certificates for workers with disabilities. Supporters of the bill say this would provide opportunities for workers with disabilities to be competitively employed and participate more fully in their communities.

Proposed timeline for increases under the Raise the Wage Act:

Year

Minimum Wage

Tipped Wage

Current

$7.25

$2.13

2021

$9.50

$4.95

2022

$11

$6.95

2023

$12.50

$8.95

2024

$14

$10.95

2025

$15

$12.95

2026

Index to Median Wages

$14.95

2027

Index to Median Wages

Equal to Standard Minimum Wage

February 23, 2021 – Higher Wages for American Workers Act

On February 23, 2021, U.S. Senators Mitt Romney (R-UT) and Tom Cotton (R-AR) announced plans to introduce the Higher Wages for American Workers Act, legislation which would gradually raise the federal minimum wage to $10 and mandate E-Verify to ensure the wage increase only goes to legal workers. The bill will also index future minimum wage increases to inflation and includes protections for small businesses.

Minimum Wage Increase:

  • Gradually raises the federal minimum wage to $10 over four years, and then indexes it to inflation every two years.
  • Creates a slower phase-in for small businesses with fewer than 20 employees.
  • Prevents any increase during the COVID-19 emergency.

Mandatory E-Verify:

  • Mandates E-Verify for all employers, phasing in implementation over 18 months to allow small businesses additional time to comply.
  • Raises civil and criminal penalties on employers that hire unauthorized aliens and/or violate I-9 paperwork requirements.
  • Prevents fraud by requiring workers 18 and older to provide a photo ID to their employer for verification, which will be cross-referenced if a photo is available through the E-Verify system.

Proposed timeline for increases under Higher Wages for American Workers Act:


Year

Federal Minimum Wage

Small Businesses

Youth Minimum Wage

Current

$7.25

$7.25

$4.25

Post-pandemic Year 1

$8

$7.75

$4.75

Year 2

$8.75

$8.25

$5.25

Year 3

$9.50

$8.75

$5.75

Year 4

$10

$9.25

$6

Year 5

$10

$9.75

$6

Year 6

Index to inflation

Equal to federal

Index to inflation

February 27, 2021 – COVID-19 relief bill

Late February, a COVID-19 relief bill passed by the House of Representative, but it is in on shaky ground in the U.S. Senate.

There’s a strong possibility that the minimum wage portion will get pulled out of this bill. However, even if it gets pulled, that won't be the last we hear about minimum wage this year.

This bill includes a minimum wage increase that would take effect on July 1, 2021.

At the moment, the COVID-19 relief bill is under consideration by the Senate. The Senate parliamentarian has said a minimum wage increase can’t be in the Senate version because of Senate rules. The Vice President could overrule this decision. Some Senators have said they will try to keep the increase in the bill through a tax that would be paid by companies that do not increase the minimum wage. Both of these are unlikely.

Democrats are looking to have a bill signed by March 14, 2021. It is looking doubtful that a minimum wage increase, however, will be in the COVID-19 relief bill.

This article was written by Michelle Higgins of J. J. Keller & Associates, Inc.

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