Democrat-led House OKs $15/Hour Minimum Wage; How US Workers Will Benefit

The House of Representatives on Thursday passed a bill that will gradually increase the federal minimum wage to $15 per hours by 2025. The current federal minimum wage stands at $7.25 and has remained stuck at this level for a decade.

The Raise the Wage Act (RWA) championed by Democrats was approved by 231 members of the House (including three Republicans) and opposed by 199 others (including six Democrats). Republicans opposed the bill for being anti-business and pro-worker.

The minimum wage hikes will gradually be increased according to the following schedule: $8.40 in 2019, $9.50 in 2020, $10.60 in 2021, $11.70 in 2022, $12.80 in 2023, $13.90 in 2024 and $15 in 2025.

After raising the federal pay floor to $15 per hour by 2025, RWA will index future minimum wage hikes to median wage gains. Analysts said the indexing will link future changes to the minimum wage to changes in middle-class pay. This provision will go a long way toward boosting paychecks for underpaid workers when employers refuse to do so on their own.

The bill will eventually abolish the lower minimum wage for tipped workers such as restaurant servers and valets, which has been stuck at a measly $2.13 an hour since 1996. It will also eliminate subminimum wages for workers with disabilities. It will do away with a seldom used pay floor for teen workers, which pays them less than the minimum wage.

RWA is expected to boost pay for 27 million U.S. workers, and will lift 1.3 million households out of poverty, according to an analysis issued earlier this month by the nonpartisan Congressional Budget Office (CBO).

The bill’s passage in the Democrat-controlled House is a major step toward alleviating poverty among low-income families.

The current $7.25 minimum wage was set in 2009 during the Great Recession. Over the past 10 years, however, the country’s lowest-paid workers have lost about $3,000 a year taking into account the rising cost of living, according to the Economic Policy Institute (EPI). EPI is a non-profit U.S. think tank that does economic research and analyzes the economic impact of policies and proposals.

Poll after poll showed overwhelming public support for raising the federal minimum wage, even among Republican voters. A majority of voters want at least $15 an hour.

Mainstream economists agree raising the minimum wage boosts the average income of low-wage workers and will lift many out of poverty. They also concur raising the minimum wage will likely cause some job losses.

A new white paper from Berkeley, which analyzed pay data for millions of households in more than 750 counties, provides more evidence the impact of a higher minimum wage on jobs is insignificant. Authored by Anna Godoey and Michael Reich, the Berkeley study found that raising the federal minimum wage to $15 an hour by 2024 will likely boost incomes for the poorest households in rural counties.

It found no evidence such a large wage hike will lead to significant job losses or fewer work opportunities.

Despite this, Republicans in the Senate (which they control) will take no action on the bill while president Donald Trump has vowed to veto it. Republicans and Trump contend the bill is anti-business and will lead to job losses.