Will Minimum Wage Move to $15/Hour?

A recently introduced legislative proposal aims to increase the federal minimum wage to $15 per hour. Presented by House Committee on Education and Labor chairperson Robert C. Scott (Va.) and led by Senators Bernie Sanders (I-VT) and Patty Murray (D-WA), Raise the Wage Act of 2021 would start with an increase from the current rate of $7.25 per hour to $9.50 on the effective date of new legislation. The rate would then increase by an additional $1.50 per year for three years thereafter, followed by a $1 increase in 2025 to $15 per hour. After reaching the $15 mark, the bill then calls for indexing future rates by median wage growth in order to ensure that the minimum keeps pace with economic inflation.

“The impacts of raising the minimum wage to $15 by 2025 are vast. According to research, more than 10 million workers in healthcare, education, construction and manufacturing would see a raise. This accounts for almost one-third of workers in these segments,” says Oliver Stepe, president of YKK AP America. “Considering the highly technical nature of the glass industry workforce combined with the already well-publicized shortage of labor, wages have organically risen in the industry in recent years and the actual prevalence of a gap to a $15 wage is not clear. Speaking from our experience as a manufacturing company, I would expect the gap to $15 in the industry to be nonexistent in many cases and fairly narrow in others.”

“Nonetheless, should regulation force an increase in wages, the economics in the building industry are no different than consumer goods and the cost of a rapid rise in wages will likely be passed on through the supply chain to end-users,” he adds. “A rapid rise in wages may also trigger an acceleration of the ongoing efforts toward the adoption of automated technologies to offset the cost and shortage of labor.”

Adapted from Minimum Wage and Maximum Hours Standards Under the Fair Labor Standards Act (FLSA), minimum wage requirements have seen a range of increases over the years—most notably in 2007, when amendments increased the rate to $5.85 per hour, and in 2008, when it rose to $6.55 per hour. The current rate of $7.25 per hour was enacted in July 2009 and has remained despite numerous attempts to advance increases. The nearly 12-year stretch represents the longest without increases since the requirement was first set in 1938.

In addition to the federal rate, the majority of states also have minimum wage laws that employers must comply with—including 30 states that require above the federal level. Five states mandate more than $12.50 per hour, while the District of Columbia currently requires $15 per hour.

According to an independent analysis conducted by the Economic Policy Institute, “The Raise the Wage Act follows the lead of the growing number of states and cities that have adopted significant minimum wage increases in recent years.” Currently, proposed increases would raise wages for nearly 32 million Americans—including approximately a third of all Black workers and 25% of all Latino workers, the Institute says in its analysis. Among those to benefit, more than half would be women. If enacted, the resulting annual pay increase would amount to around $3,300 per year for the average worker, the analysis says. The proposed bill would also ensure that teen workers are paid at least the full federal minimum, by doing away with a subminimum wage for youth workers, while also ending subminimum wage certificates for workers with disabilities.

“Even before the COVID-19 pandemic, the $7.25 federal minimum wage was economically and morally indefensible,” says chairperson Scott. “Now, the pandemic is highlighting the gross imbalance between the productivity of our nation’s workers and the wages they are paid.” Many of the essential workers helping to face down a public health crisis are among those not being paid enough to provide for their families, he suggests.

The House passed a similar version of the bill in 2019, known as the Raise the Wage Act, though it failed to advance through the Senate. The current bill would need to make its way through the House and Senate before reaching the desk of an eager President.