House Passes $15 Minimum Wage; Unlikely to Proceed in Senate

On July 18, 2019, voting largely along party lines, the U.S. House of Representatives passed legislation that would increase the federal minimum wage from the current $7.25 an hour to $15.00 an hour by 2025. 

H.R. 582, the “Raise the Wage Act” has been a top priority for House Democrats.  The legislation passed on a vote of 231-199—all but six Democrats voted for the measure; all but three Republicans opposed it.  In addition to raising the minimum wage to $15 over six years, the bill provides for automatic adjustment of the minimum wage in the years thereafter.  H.R. 582 also increases the minimum wages for tipped workers and youth, with further increases scheduled until both meet the full federal minimum wage (at which point they would be effectively eliminated).

It is near certain that the legislation will not be taken up by the Republican-controlled Senate.  Less clear is whether some compromise package may be negotiated in the future, perhaps pairing a smaller increase in the minimum wage with small business or tax relief, or other amendments to federal wage and hour laws.  In the absence of an increase in the federal minimum wage, activity has been focused in the states and cities.  As of this writing, 29 states (and Washington, D.C.) currently have minimum wages that are higher than the federal minimum.  In addition, dozens of counties and cities have increased the minimum wage within their jurisdictions.

Earlier this month, the Congressional Budget Office estimated that enactment of H.R. 582 would likely raise wages for 17 million workers and lift 1.3 million families out of poverty – but at the potential cost of 3.7 million jobs lost.  Moreover, the debate over increasing the minimum wage comes at a time of increased automation of jobs though robotics and artificial intelligence.  From digital ordering kiosks in restaurants to automated packing and delivery in warehouses, it seems every day brings a new report of job displacement by way of automation, which lowers unit labor costs.  Conversely, when unit labor costs increase without a corresponding increase in productivity, companies look for labor saving strategies, suggesting that the displacement and modification of jobs will only intensify (as discussed in this Littler analysis).  Policy makers are starting to seriously think about lifelong learning as a necessity for our evolving workplace, suggesting that for some, a lifelong learning account may prove much more beneficial than a minimum wage increase, particularly if the wage is not competitive in local geographic locations.  Littler will keep you apprised of future developments.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.