Federal $15 Minimum Wage? Bill Proposed in Congress

Could a federal $15 minimum wage be coming?

Democrats in the U.S. House of Representatives this week proposed legislation that would gradually bring the federal minimum wage rate to $15 an hour.

The federal minimum wage, $7.25, has not increased since 2009. It’s the longest such stretch in the history of the nation.

Proposed Federal Minimum Wage Increases

Should the Raise the Wage Act of 2021 pass, gradual increases to the federal minimum wage would occur annually. The first bump would take the standard minimum wage to $9.50 on the effective date. On that date each year after, minimum wage would increase steadily:

• $11
• $12.50
• $14
• $15

After the years of scheduled increases, further rates would be indexed via median wage growth. The calculation will take place 90 days before the annual adjustment becomes effective and is rounded to the nearest $0.05. It cannot fall below.

Meanwhile, the initial increase for tipped employees would take the rate from $2.13 to $4.95. Future increases are less clear, however.

Each year after the initial increase, at the same time as standard wage increases, the tipped employee cash wage will increase by $2 or the amount necessary to make the tipped employee wage equal to the standard minimum wage for that year, whichever is less. Once they are equal, the tipped employee minimum wage will annually increase at the same rate as the standard minimum wage. This is reinforced by the next section of the law – section (c) “Scheduled Repeal of Separate Minimum Wage for Tipped Employees.”

Minimum Wage Management. Simplified.

Federal Minimum Wage and the Fight for $15

President Joe Biden has previously voiced his support for a $15 federal minimum wage.

Since he has taken office, Biden also included a $15 minimum wage proposal as part of his $1.9 trillion COVID-19 relief bill. He has also asked the U.S. Department of Labor to investigate the efficacy of having a $15 minimum wage for federal workers.

UPDATE (Feb. 5, 2021): The Senate passed the relief bill without the minimum wage increase.

The action at the federal level builds on growing momentum in recent years to increase the minimum wage rate, much of it spurred by the Fight for $15. In 2012, fast-food employees in New York City refused to work in an effort to increase their pay.

In 2019, the U.S. House passed a bill to eventually bring the minimum wage to $15, but it did not gain any traction in the Republican-controlled Senate. However, with Democrats now in control of both chambers (via the vice president in the Senate) and the presidency, a $15 minimum wage may have legs.

“In the richest country in the history of the world, if you work 40 hours a week, you should not be living in poverty,” Sen. Bernie Sanders told reporters. “Minimum wage must be a living wage, enabling people to live with dignity.”

Could a Federal $15 Minimum Wage Pass?

Still, with GOP lawmakers generally opposed to the idea of a $15 minimum wage, it would be an uphill climb for it to become law. Overcoming a Senate filibuster would take 60 votes, though a minimum wage hike could be included in a taxing and spending measure that would only require a simple majority.

Pushback has also come from business groups over the past decade. And with the pandemic continuing to negatively impact businesses with minimum wage employees, an increase could be a hard sell for proponents.

Also, an often-cited 2019 report from the Congressional Budget Office showed the potential as many as 1.3 million in lost jobs with a $15 minimum wage in 2025.

Conclusion

Of course, with inaction at the federal level, smaller jurisdictions have been setting their own minimum wage rates over the past several years.

Dozens are poised to eventually reach $15 an hour, and in many California cities, several have already surpassed that figure. Meanwhile, major employers have taken steps to pay employees rates above what is required by law.

What does all this add up to? The surge of minimum wage increases could spur federal lawmakers to act on a new rate. But where it lands on the priority list, the appetite of conservatives for an increase and other factors will ultimately determine its fate.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.