House Votes to Increase Minimum Wage to $15
Measure not expected to see movement in the Senate
The U.S. House of Representatives recently approved legislation to increase the federal minimum wage – currently at $7.25 an hour – in increments to a $15 hourly rate by 2025.
The measure would also phase out lower minimum wage paid to tipped workers.
While the bill passed the House by a wide margin, Senate Majority Leader Mitch McConnell told Fox Business News he has no plans to bring the legislation up in his chamber.
According to a Congressional Budget Office (CBO) analysis of the impact of a $15 federal minimum wage, the bill would boost the wages of 17 million workers who would otherwise earn less than that amount. The analysis noted the increase would reduce by 1.3 million the number of people with income below the poverty threshold.
The CBO estimated the increase in minimum wage could mean a rise in wages for workers making slightly more than $15 an hour, but another 1.3 million people would likely lose their jobs when the increase takes effect. The higher wage could also:
- Reduce business income and raise prices as higher labor costs were absorbed by business owners and then passed on to consumers
- Reduce the nation’s output slightly through the reduction in employment and a corresponding decline in the nation’s stock of capital (such as buildings, machines and technologies)
The CBO analysis also estimated the impact on the economy if the minimum wage was set at $12, and hour and $10 an hour.
The $12 option would the increase in the federal minimum wage would boost the wages of 5 million workers earning below that amount, and move 400,000 people out of poverty. The boost would likely also increase wages for 6 million workers earning just over $12 an hour, according to the analysis.
Another 300,000 workers would lose their jobs, the CBO reported, and the higher wage would reduce business income, raise prices and lower total output in the economy.
Under the $10-an-hour scenario, 1.5 million employees getting paid less than the new minimum wage would see wage increases and the boost would have a “small effect on the number of people in poverty,” according to the CBO. Another 2 million workers who would otherwise earn slightly more than $10 per hour might see an increase in pay.
The $10 option would have virtually no effect on unemployment in an average week, with a maximum of 100,000 people becoming jobless, the report noted.
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