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Longest drought for minimum wage increase

Is there movement afoot?

Posted July 16, 2019

The current federal minimum wage is $7.25 per hour, and has been at that level since July 2009, the longest period of time without a raise. The lack of federal movement has inspired states to step in and raise their minimum wages, many to $15 per hour. The federal Congress, however, has about ten bills that would affect the minimum wage.

The arguments for and against an increase are familiar. Proponents indicate that raising the minimum wage to $15 per hour would help over 1 million Americans out of poverty, and boost economic growth by putting money in the pockets of workers who will spend that money in the economy. Opponents argue that such a raise would result in hours or positions being cut and would force some employers to close shop; also, that the minimum wage was never designed to be a living wage, but rather for entry-level positions.

Some members of Congress would prefer a phase-in approach to increasing the minimum wage as opposed to hiking it all at once to $15. One bill, the Raise the Wage Act, is getting attention lately with a House vote scheduled for July 15. The bill would provide for gradually increasing the wage over six years. In an attempt to help the bill pass the House, one potential amendment would require the Government Accountability Office to study the effects, and submit a report to the committees of jurisdiction on the economic and employment impacts (nationally, regionally, and locally) of the four minimum wage increases in the bill, including wages for tipped and minor employees. The effects of the first two increases would set up a review to see how it stands.

A Congressional Budget Office report on the bill estimated that $15 minimum wage would result in 17 million workers seeing a boost in their wages, but it would cost up to 3.7 million jobs, with median job loss expected at 1.3 million. The report looked at the effects of increasing the federal minimum wage to $10, $12, or $15 per hour by 2025. Logically, the higher the wage increase, the greater the effects.

Under the bill, the phase in of the increase would be as follows:

  • $8.55 an hour, beginning on the effective date of the bill;
  • $9.85 an hour, beginning 1 year later,
  • $11.15 an hour, beginning 2 years later,
  • $12.45 an hour, beginning 3 years later,
  • $13.75 an hour, beginning 4 years later,
  • $15.00 an hour, beginning 5 years later,
  • Six years later, the minimum wage would be determined by the Secretary of Labor.

The bill would still face hurdles in the Senate, but the activity regarding the minimum wage is indicative of some progress. The issue is also a political one, so it could be used in the upcoming election. If nothing else, this issue could continue to ignite some fireworks.

This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS, of J. J. Keller & Associates, Inc.

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