An Uncertain Future for the Minimum Wage Increase

About the Author: Jackson Colling is a first-year law student at American University- Washington College of Law. Jackson graduated from Rollins College and hopes to work in government, potentially in national security or international law, after graduating law school. 

 

The federal hourly minimum wage was introduced in 1938 when Congress passed the Fair Labor Standards Act.[1] Since then, the minimum wage has been raised twenty-two times, the last being in 2009 when it was raised to $7.25 an hour.[2] Now, with Democrats in control of the White House, House of Representatives, and Senate, raising the minimum wage to $15 an hour by 2025 through the Raise the Wage Act is a top priority.[3] A majority of Americans support the proposed increase.[4] However, passing the legislation will not be easy.[5]

In late February, the Senate Parliamentarian struck down a bid by Democrats to include the Raise the Wage Act in the next coronavirus relief package.[6] Republicans lauded the decision while progressives fumed.[7]

Democrats view raising the minimum wage to $15 as essential to lift struggling Americans out of poverty and to provide them with a living wage.[8] Americans currently earning a minimum wage salary must work multiple jobs and longer hours to afford the bare minimum necessary to take care of themselves and their families.[9] In many cases, minimum wage workers face constant homelessness and hunger and must rely on government assistance.[10] In 95% of America’s counties, full-time minimum wage workers do not even make enough to afford a one-bedroom rental.[11] Although many states require minimum wages above the federal rate, none reach the $15 threshold proposed by Democrats.[12]

On the other side of the aisle, Republicans argue that raising the minimum wage to $15 an hour will result in mass job loss, increase the price of goods for consumers, and disproportionately harm small businesses.[13] Additionally, the cost of living varies drastically across the country. Raising the minimum wage to $15 an hour across the board could disproportionately harm businesses in poorer, more rural areas compared to more expensive places like New York City and San Francisco.[14] The ultimate fear is that small businesses will not be able to pay their employees a $15 hourly minimum wage, resulting in small businesses across the country closing for good.[15

Some of these concerns were confronted in a report by the Congressional Budget Office published this February on the effects of the proposed Raise the Wage Act.[16] The study concluded that raising the minimum wage to $15 an hour would result in a reduction of 1.4 million jobs and increase prices on consumer goods while also lifting 900,000 people out of poverty.[17] Additionally, 17 million low-wage workers would see their wage increase while another 10 million workers already earning just above $15 an hour would potentially see increases.[18

With the Raise the Wage Act currently in limbo, Democratic leaders have a choice to make, either dig in their heels or compromise. After seven Democratic senators voted against overriding Senate rules to include the $15 wage hike in the coronavirus relief bill on March 5, digging in and refusing to budge doesn’t seem like a successful strategy.[19] Although the $15 wage hike faces opposition from moderate Democrats and Republicans, that does not mean that the prospect of raising the minimum wage is dead.

Democratic Senator Joe Manchin has floated the idea of an increase to $11 an hour adjusted for inflation.[20] He argues this would allow workers to live above the federal poverty line while not hurting rural America.[21] Republican Senators Mitt Romney and Tom Cotton proposed their own minimum wage increase which would reach $10 within four years.[22] With every senate Republican against a $15 wage hike and a handful of Senate Democrats either skeptical or against it, it appears that compromise is the best way forward.

While the outcome on this issue is unclear, one thing is for certain, it isn’t going away any time soon. As Senator Sanders stated on March 5, “if anybody thinks that we’re giving up on this issue, they are sorely mistaken…If we have to vote on it time and time again, we will – and we’re going to succeed.”[23]

 

[1] Jonathan Grossman, Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage, U.S. Dep’t of Lab. (1978), https://www.dol.gov/general/aboutdol/history/flsa1938.

[2] Id. at 1.

[3] See Building a Stronger, Fairer Economy, Democratic National Committee, https://democrats.org/where-we-stand/party-platform/building-a-stronger-fairer-economy/ (last visited Mar. 7, 2021) [Hereinafter DNC Platform].

[4] Reuters Staff, Majority of Americans Support $15 Minimum Wage, Reuters/Ipsos Poll Shows, Reuters (Feb. 25 2021), https://www.reuters.com/article/us-usa-minimum-wage/majority-of-americans-support-15-minimum-wage-reuters-ipsos-poll-shows-idUSKBN2AP2B9.

[5] See Richard McGahey, Republicans in Washington Block Biden’s Vital Minimum Wage Increase, Forbes (Feb. 27, 2021), https://www.forbes.com/sites/richardmcgahey/2021/02/27/republicans-in-washington-block-bidens-vital-minimum-wage-increase/?sh=444ffa30f72c.

[6] Morning Edition, Senate Can’t Vote on $15 Minimum Wage, Parliamentarian Rules, NPR, at 00:14 (Feb. 25, 2021), https://www.npr.org/2021/02/25/970637190/senate-cant-vote-on-15-minimum-wage-parliamentarian-rules.

[7] Id. at 01:20.

[8] See DNC Platform, supra.

[9] See Megan Leonhardt, What it’s Like Trying to Live on Minimum Wage–it’s a ‘Constant Struggle’, CNBC Make It (Jul. 18, 2019, 9:43 AM), https://www.cnbc.com/2019/07/18/what-its-like-to-live-on-minimum-wage-in-the-us.html; See Alex Norcia, This is What Living on Minimum Wage Looks Like, Vice (Oct. 25, 2018, 12:45pm), https://www.vice.com/en/article/kzjpya/this-is-what-living-on-minimum-wage-looks-like-v25n3.

[10] Leonhardt, supra.

[11] Andrew Aurand et al., Out of Reach: The High Cost of Housing, 4 (Nat’l. Low Income Housing Coal., 2020).

[12] State Minimum Wage Laws, Dep’t. of Lab., https://www.dol.gov/agencies/whd/minimum-wage/state (last updated Jan. 1, 2021).

[13] Alan Rappeport & Jeanna Smialek, Republicans Grapple With Raising the Minimum Wage, N.Y. Times (Feb. 26, 2021), https://www.nytimes.com/2021/02/26/us/politics/republicans-minimum-wage.html.

[14] Adam A. Millsap, A Statewide $15 Minimum Wage is a Bad Idea, Forbes (Mar. 10, 2017), https://www.forbes.com/sites/adammillsap/2017/03/10/a-statewide-15-minimum-wage-is-a-bad-idea/?sh=32feef775d4a.

[15] See Rachel Greszler, A $15 Federal Minimum Wage: An Anchor on Struggling Businesses, The Heritage Foundation (Jan. 23, 2021), https://www.heritage.org/jobs-and-labor/commentary/15-federal-minimum-wage-anchor-struggling-businesses.

[16] Eric Morath & Andrew Duehren, $15 Minimum Wage Would Cut Employment, Reduce Poverty, CBO Study Finds, The Wall Street Journal, (Feb. 8, 2021, 4:24 PM), https://www.wsj.com/articles/15-minimum-wage-would-cost-1-4-million-workers-jobs-lift-900-000-from-poverty-cbo-study-finds-11612800875.

[17] Congressional Budget Office, The Budgetary Effects of the Raise the Wage Act of 2021, 1 (2021), https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage.pdf.

[18] Id. at 2.

[19] Ursula Perano, 8 Senate Democrats Vote Against Adding $15 minimum Wage to COVID Relief, Axios (Mar. 5, 2021), https://www.axios.com/senate-minimum-wage-democrats-568568ca-ba2f-4bfa-bcdd-cfecaf93dae2.html.

[20] See John Bowden, Manchin: Every Member of the Senate Thinks Minimum Wage Should Increase, The Hill (Mar. 7, 2021, 9:52 AM), https://thehill.com/homenews/sunday-talk-shows/541995-manchin-every-member-of-the-senate-thinks-minimum-wage-should.

[21] Caitlin Emma & Aaron Lorenzo, Democrats Plot Their Plan B to Save Minimum Wage Hike, Politico (Feb. 22, 2021, 1:00 PM), https://www.politico.com/news/2021/02/22/democrats-minimum-wage-increase-plan-470860.

[22] Niv Elis, Romney, Cotton Propose $10 Minimum Wage Plan, The Hill (Feb. 23, 2021, 11:07 AM), https://thehill.com/policy/finance/540051-romney-cotton-propose-10-minimum-wage-plan.

[23] Emily Cochrane & Catie Edmondson, Minimum Wage Increase Fails as 7 Democrats Vote Against the Measure, N.Y. Times (Mar. 5, 2021), https://www.nytimes.com/2021/03/05/us/minimum-wage-senate.html.

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