Legislation seeking to raise the federal minimum wage to $15 an hour passed the House of Representatives on Thursday, and now heads to the Senate for consideration.
The Raise the Wage Act, co-sponsored by Rep. Katie Hill, D-Agua Dulce, passed with a vote of 231 to 199, according to Congress.gov. Six Democrats opposed the bill and three Republicans supported it.
California lawmakers previously agreed to raise the state’s minimum wage to $15 an hour beginning in 2023, which would be slightly faster than the timeline proposed by House Resolution 582.
Following the passage of H.R. 582 in the House, Hill said in a video posted to Facebook that minimum wage increases are good for the country’s communities, women and the economy.
“I’ve seen the effects of a low minimum wage on young people and women, specifically,” Hill said, mentioning her past experience as a server who lived off of tips. “I know if we ever want to deal with issues like the housing crisis, the student loan debt crisis and all of the other barriers between my generation and the American Dream, then we have to address the critically low minimum wage across this country.”
If H.R. 582 were to become law, the federal minimum wage would be set at $8.40 three months after the bill’s enactment, and every year after, minimum wage will rise an additional $1.10 until it hits $15 an hour in 6 years, according to the act’s text. Minimum wage will then rise at a rate equal to the annual percentage increase of the median hourly wage of all employees as determined by the Bureau of Labor Statistics
Once fully phased in, the new wage would translate to an annual pay increase of about $2,760 for the average affected year-round worker, according to a fact sheet from the House Committee on Education and Labor. “Even the Congressional Budget Office’s cautious estimates of a similar proposal predict gradually raising the minimum wage will lift 1.3 million Americans out of poverty, including 600,000 children.”
“But 1.3 million other workers could become jobless,” according to CBO.gov.
Statistics like these are why Joe Messina, communications director for the 38th Republican Central Committee, said he believes states should be able to dictate their wage minimums.
“$15 an hour isn’t getting you much in New York, but in Mississippi, it’s a lot,” Messina said, “so applying a broad-brush solution like this doesn’t work.”
Citing the CBO’s analysis and some states who’ve already raised their minimum wage, Messina said a federal minimum wage increase would cost the country millions of jobs.
When considering how much staff is needed, small-business owners take into account the costs of operations and how much revenue they’re making, Messina said, so when the owners are forced to fork over more money for wages, then it’s likely workers will be let go.
“It’s also likely that the increasing wages will get passed onto groceries and other living costs, so workers will need another raise in response,” Messina said. “It’s a vicious cycle.”
Another unintended effect of raising the minimum wage is companies will sometimes begin to move towards automation or place much higher expectations on those who are performing the work, according to Holly Schroeder, president and CEO of the SCV Economic Development Corp.
This is only one reason why Schroeder said, “One of the things that needs to be looked at is how an increase in the minimum wage relates to other public support programs.
“For example, we saw with the increase in California that certain people with disabilities had to reduce their number of hours because if they kept working at the same rate, they would’ve exceeded the allowable income level, and that would have discontinued their disability support,”
Schroeder said. “So, while people who are working get a higher wage, the unintended consequence is that employers hire fewer people, so you end up with more people needing unemployment or public subsidies.”
“I don’t think anybody has thought this out,” Messina added, explaining how the law would make it so workers take home about $2,000 a month. “Does that mean you can afford rent for an apartment, food and gas? If so, will it still be a living wage in 2024?”