By: Jacob Pramuk for CNBC, Photo by Marco Oriolesi on Unsplash
KEY POINTS
- The House passes a bill to gradually raise the federal minimum wage to $15 per hour.
- House Democrats see it as a major part of their economic platform as they contend a strong economy and roaring stock market have not boosted the working class.
- Senate Majority Leader Mitch McConnell is unlikely to take the bill up, while President Donald Trump has threatened to veto it.
The House passed a bill Thursday to hike the federal minimum wage to $15 per hour in a win for liberal activists who have long pushed to give low-wage workers a raise.
The Democratic-held chamber passed the plan in a 231-199 vote. Six Democrats opposed it, while three Republicans supported it.
The measure would gradually hike the U.S. pay floor to $15 by 2025, then index further hikes to median wage growth. It would also phase out lower minimum wage paid to tipped workers.
House Democrats view the legislation as a core piece of their agenda to boost pay and economic growth. As President Donald Trump runs for reelection in 2020, the party argues strong economic growth and a roaring stock market have not done enough to lift the workers who most need relief.
“I commend my colleagues for taking this important step towards creating an economy that works for everyone,” said Rep. Bobby Scott, a Virginia Democrat who introduced the legislation, in a statement. “Now, Senate Republicans must decide to either stand with American workers or turn their backs on hardworking people across the country.”
Congress last raised the federal minimum wage to $7.25 per hour about a decade ago. Now, 29 states and Washington, D.C., have higher pay floors than the U.S., while seven states have approved $15 per hour minimum wages. Those increases have boosted pay for the working class despite the federal inaction.
The bill has little chance of becoming law before next November’s election. Senate Majority Leader Mitch McConnell has no plans to bring the legislation up in his chamber. On Thursday, he told Fox Business Network that it would “depress the economy at a time of economic boom,” adding, “we’re not going to be doing that in the Senate.”
The White House also warned this week that Trump would veto the measure if it came to his desk. The Trump administration argued its policies are “driving economic growth and increasing workers’ take-home pay far more effectively and efficiently” than the Democratic plan. The White House contended it would “eliminate jobs and reduce total wages for American workers.”
In an analysis earlier this month, the nonpartisan Congressional Budget Office estimated the bill would give 17 million U.S. workers a raise — and could lift wages for millions more. It would also boost the annual income of 1.3 million people above the poverty level.
At the same time, the measure would cause about 1.3 million Americans to lose jobs, according to the CBO. It would also “reduce business income and raise prices” as companies pass on higher labor costs, the CBO said.
Here are the main pieces of the Raise the Wage Act:
- It would increase the federal pay floor to $15 per hour by 2025, then index future increase to median wage gains.
- The minimum wage hikes would take effect on 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.
- It would eventually abolish the lower minimum wage for tipped workers.
- The bill would eliminate a seldom used pay floor for teen workers that pays them less than the minimum wage.
- It would also toss out subminimum wages for workers with disabilities.
- An amendment adopted Thursday, proposed by Rep. Tom O’Halleran, requires a Government Accountability Office report on the effects of minimum wage increases. House and Senate committees could use the report to recommend changes to curb any negative effects of the bill.
Activists such as Fight for $15, a movement started by striking fast-food workers, helped to spur $15 per hour minimum wage laws around the country. In a tweet, the group said: “Organizing workers. Strikes work. We’re not even close to done!”
Some major business groups opposed the legislation. The level of support the bill got in the House was “disappointing,” Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, told CNBC. He said “it appears that politics beat basic economics today.”
Last week, Bradley wrote a letter to House members saying the organization — the largest business group in the world — would work with Congress on “a minimum wage increase that would benefit employees and employers.” He told CNBC that a federal pay floor above $10 per hour is “imminently doable.”
Sean Kennedy, executive vice president of public affairs at the National Restaurant Association, which represents more than 500,000 restaurant businesses, in a statement called House plan “the wrong wage at the wrong time, implemented in the wrong way.”
In a statement, National Federation of Independent Business President and CEO Juanita Duggan also called the bill a “devastating blow to small business.”
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