House Passes $15 Minimum-Wage Bill

Republican-controlled Senate expected to reject the measure

House Passes $15 Minimum-Wage Bill

The U.S. House of Representatives approved a bill that would gradually raise the minimum wage to $15 an hour by 2025. However, the bill is not likely to be considered in the Republican-controlled Senate.

The House voted 231-199 in favor of H.R. 582, with most Democrats voting for the wage increase and most Republicans voting against it. The current minimum wage of $7.25 an hour was set in 2009, and Democrats argued during the July 18 vote that an increase was "long overdue." Rep. Rosa DeLauro, D-Conn., said that workers earning the minimum wage can't pay for basic expenses, such as housing, medical care and education. "Congress needs to make this right," she said.

Rep. Barbara Lee, D-Calif., called the current rate "a poverty wage." She argued that "no one in the richest nation in the world should be struggling like this."

Republican congressmembers, however, argued that a $15-an-hour minimum wage would hurt a thriving economy. "The harm inflicted by this bill far outweighs the benefits," said Rep. Virginia Foxx, R-N.C. She said the wage hike would "dampen progress."

Rep. Ron Wright, R-Texas, called the bill "radical legislation." He said the effects of doubling the minimum wage would be felt in urban and rural areas alike, forcing employers to cut jobs and possibly go out of business.

Gradual Increases

The proposal would increase the federal minimum wage in phases. Initially, the bill's sponsors wanted the $15-an-hour wage to take effect in five years, but a resolution that was approved on July 17 changed the phase-in period to six years to garner support from moderate Democrats. The minimum wage would initially be raised to $8.55 an hour on the effective date and increased again each year until it reaches $15 an hour. 

The bill would also phase out the subminimum wages that certain employers may pay to workers with significant disabilities and tipped employees.

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

The increase would affect some regions of the country more than others. Although the federal minimum wage hasn't changed in a decade, many states and cities require employers to pay higher rates. Some states, such as California and Massachusetts, are already phasing in a $15 minimum wage, and some large businesses have recently announced that they will pay at least $15 an hour for all U.S. locations.

Minimum Wage Map 2019.jpg

Impact Debated

The Congressional Budget Office (CBO) recently said that the wage hike would lead to raises for 27 million workers but also cause over 1 million job losses. The bill's supporters have focused on the raises while opponents have highlighted the losses.

House Democrats who support a $15-an-hour federal minimum wage say it will lift the economy. "When we put money in the pockets of workers, they will spend that money in their local economies," said Rep. Bobby Scott, D-Va. "Gradually increasing the minimum wage to $15 by 2025 will stimulate economic growth, particularly in struggling communities."

Republican lawmakers, however, say that a federal wage hike would hurt job growth. "More than half of the private-sector workforce goes to work each day at a small business, and these are the workplaces that would struggle the most under this mandate," Foxx said. "Many job creators would be forced to reduce workers' hours, let employees go or close their doors for good."

Some employers support a higher wage rate and others don't. Many large businesses pay more than the federal minimum, noted Alfred Robinson Jr., an attorney with Ogletree Deakins and former acting Wage and Hour Division administrator in Washington, D.C. The minimum wage is the floor, and it's good that some businesses can pay more and make higher wage offerings part of their recruiting strategy, he said.

But an increase to $15 an hour would probably hurt first-time job seekers, because it would create a greater financial hurdle for employers, he noted.

"Small, local and independent businesses with small workforces don't have the financial recourses that larger employers do," he added.

Some employers may offset the cost of a minimum-wage increase by cutting other benefits, said Caroline Brown, an attorney with Fisher Phillips in Atlanta. "There are many jobs where the hourly rate is only one component of the employee's compensation and benefits package."

Moreover, she said, businesses may raise the prices of goods and services to keep profits stable, particularly in the restaurant and hospitality industries. 

"In jurisdictions that have increased the minimum wage or limited the tip credit, we have seen employers increase menu prices" or add service charges to bills, Brown observed.

Robinson noted that more employers may turn to technology to perform low-skilled jobs.

The minimum-wage rate is "definitely an issue that has people's attention, and an increase isn't beyond reason," Robinson said. But what is a fair minimum-wage rate? While $15 an hour may be "overreaching," lawmakers may have some room to compromise on a new rate, as well as other aspects of the Fair Labor Standards Act that need to be updated, he said.



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