The Raise the Wage Act would lift millions of Americans out of poverty and supercharge the American economy by raising the federal minimum wage to $15 an hour – without leaving a single worker behind.
It’s been 10 years since the federal government raised the minimum wage to $7.25 an hour. In that time, an already inadequate minimum wage has been undercut by inflation, leaving millions of American workers living on the brink of disaster. 40% of Americans struggle to afford basic necessities and are living paycheck to paycheck. At the same time, CEO pay has skyrocketed and income inequality continues to increase. Relying on “the market” has failed the American worker, and the Federal government needs to step in.
It’s time to give America a raise. HR 603, the Raise the Wage Act, would gradually double the federal minimum wage to $15 an hour by 2025 and moving forward, index it to wage growth. The bill would raise millions out of poverty, begin to reduce years of runaway income inequality, stimulate small businesses across the country, and correct shameful historical inequities that have left tipped workers out of labor protections.
The Raise the Wage Act – at a glance
Bill number(s): H.R. 603 / S. 53
Sponsors: Rep. Bobby Scott / Sen. Bernie Sanders
Status: Passed in the House, introduced in the Senate
What it does:
Gradually raises the federal minimum wage to $15 an hour by 2026.
Upon passage, the bill would immediately raise the minimum wage to $9.50 an hour and then gradually raise it over the next six years until it reaches $15 an hour in 2026. Gradually raising the federal minimum wage to $15 by 2025 would lift pay for nearly 40 million workers— 26.6 percent of the U.S. workforce. The majority of those workers are over the age of 18, full-time workers, and women. Raising the wage to $15 an hour will directly lift 1.3 million Americans out of poverty.
Earning $15 an hour isn’t pie in the sky or a radical idea. It’s the bare minimum a worker needs to survive anywhere in the country, urban or rural. For example, in rural Missouri, the average worker will need $17.17 an hour to cover typical rent, food, transportation, and other basic living costs by 2025. In this context, The Raise the Wage Act is a baseline correction that can’t wait any longer.
Indexes the minimum wage yearly to keep pace with the growth in median worker’s wages.
In the decade since Congress raised the federal minimum wage, inflation and increasing cost of living have undercut minimum wage workers. As a result, minimum wage workers have effectively suffered a 17 percent pay cut. In fact, if the minimum wage had been indexed to inflation or wage growth at its peak in 1968, it would currently be around $11 an hour.
After reaching $15 an hour in 2026, the Raise the Wage Act would index the minimum wage to median wages so that each year, the minimum wage would automatically be adjusted based on growth in the median wage. This ensures that workers’ purchasing power will be protected going forward and that we don’t have to have this same fight every decade.
Ensures all workers – including tipped workers – are paid the federal minimum wage.
Tipped workers are paid a lower minimum wage – called the subminimum wage – than other minimum wage workers. Since 1991, the subminimum wage has remained just $2.13 an hour, nowhere near enough to survive on.
The subminimum wage is a product of racist policies from the Reconstruction era that were shamefully codified into law. Workers in sub-minimum tipped wage jobs are disproportionately women and people of color, and are more likely to live in poverty than the general population. Because their wages are unreliable and inconsistent and they rely on tips from customers to survive, these workers are far less likely to report instances of bias and sexual harassment, and are more vulnerable to wage theft than non-tipped employees.
Employers are supposed to pay the difference if tips do not bring workers to the full regular minimum wage, but many workplaces unfortunately ignore this requirement (for example, a Department of Labor study in 2010-2012 found that 84% of restaurants surveyed had committed some form of wage theft.
The Raise the Wage Act would eliminate any exemptions for tipped workers and raise the minimum wage for all workers to $15 an hour by 2025 and then index it to median wage growth. Eliminating the sub-minimum wage for tipped workers will eliminate a damaging remnant of American slavery and provide a secure, livable existence for millions of vulnerable tipped workers.
Supercharges the economy with a huge small-business stimulus
The American economy is 70% consumer demand, meaning that the vast majority of our country’s economy activity comes from people actually buying things: food, clothing, electronics, cars, and Big Macs. To thrive, our economy needs one simple thing: customers with money to spend.
Unlike tax giveaways to the rich, raising the minimum wage will boost local economies because low-wage workers will use the raise to buy goods and services they need. The Raise the Wage Act would give 40 million workers a raise, pushing nearly $120 billion into the pockets of lower-wage workers between now and 2025. Given that stimulus, it’s no surprise that two out of three small business owners (67%) support increasing the federal minimum wage and adjusting it yearly to keep up with the cost of living (Source: Business for a Fair Minimum Wage).