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Federal minimum wage to be debated in House

3/14/2019

Federal minimum wage to be debated in House

The idea that the federal minimum wage needs to be increased for the first time in more than a decade has gained a lot of traction of late. As such, lawmakers in the U.S. House of Representatives recently announced a bill that would make the federal minimum wage $15 per hour.

The Raise the Wage Act - which would bring the federal minimum to $15 by 2024 - recently approved the House Committee on Education and Labor by a comfortable margin and will now move to the broader chamber for a vote in the near future, according to National Public Radio. In addition to raising the minimum wage, the bill would also eliminate the tipped minimum wage over that period as well, if passed. While the bill has a strong chance of actually passing the House, it is likely to face a far more difficult fight in the Senate, though it has many corporate advocates as well, including Amazon and Target.

"After nearly 10 years with no increase in the federal minimum wage, minimum-wage workers have suffered a 17 percent pay cut due to inflation," said Chairman Bobby Scott, a Virginia Democrat, in announcing the bill, which he introduced. "The result is that there is no place in America where a full-time worker who is paid the current federal minimum wage can afford a modest two-bedroom apartment."

A closer look
The bill has widespread support in the House, with 190 Representatives all signing on as co-sponsors, and polling suggests the majority of voters across the country - even those who would normally be divided along party lines - also want to see a significant increase in the federal minimum wage, according to Vox. On the more academic side of things, however, is the fact that a higher minimum wage has two likely effects.

First and foremost, millions of people nationwide will see their wages rise and, for many, that comes with being lifted out of poverty, even if 40 hours per week at $15 an hour is still inadequate to cover all living expenses in some parts of the country, the report said. The other is that, when wages go up, some jobs are shed from the economy as businesses adjust to the new labor costs. There is disagreement, however, on just how impactful that shift would be on overall employment nationwide, but some studies have shown it might be less than 1 percent.

In the meantime
While all this is unfolding, the U.S. Department of Labor recently proposed a worker-friendly rule change that would allow employees to collect more in overtime pay, according to the Seattle Times. Currently, people making $455 per week or less have to be paid overtime when they go beyond 40 hours worked in a given seven-day period, but the DOL proposed to raise that limit to $679, about 2.3 times the federal minimum wage, unlocking overtime benefits for potentially millions of Americans.

Businesses would be wise to get out in front of these changes and offer their workers higher pay and better benefits as a means of both attracting and retaining talent going forward.

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