Doubling pay floor to $15 would raise pay for up to 27M | News Coverage from USA

Doubling pay floor to $15 would raise pay for up to 27M

Legislation to more than double the federal minimum wage to $15 an hour by 2025 would raise pay for up to 27 million workers and lift 1.3 million others out of poverty but leave another 1.3 million Americans jobless, a Congressional Budget Office report concludes.

Starting January 1, the Raise the Wage Act would increase the U.S. minimum wage from $7.25 an hour to $15 in five annual steps through January 1, 2025. The base wage has been at $7.25 since 2009, the longest period in U.S. history without a bump.

The hourly pay floor for tipped workers would immediately jump from $2.13 to $3.60 and then rise by $1.50 each year until reaching the $15 benchmark by 2029, CBO projects.

The proposal would boost the wages of 17 million workers who otherwise would earn less than $15 an hour, the study says. Another 10 million employees earning slightly more than $15 could see their paychecks increase as well, though CBO says the impact is uncertain because it’s not clear how fast wages will rise for those workers anyway over the next five years.

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Overall, however, a $15 base wage would reduce total inflation-adjusted family income in 2025 by $9 billion, or 0.1%, the study says. And 1.3 million Americans would lose their jobs as employers pare back hiring or lay off workers to offset the higher labor costs.

Heidi Shierholz, chief economist of the left-leaning Economic Policy Institute, says the CBO overstated the number job losses. Its findings were partly based on its review of other studies on minimum wage hikes, and Shierholz says the agency should have given more weight to more reliable studies.

She also says that low-wage workers cycle in and out of the labor force so often that many who lose jobs because of a minimum wage increase could wind up earning more and working fewer hours in another position.

But Michael Saltsman, managing director of the Employment Policies Institute, which is backed by the restaurant industry, notes that up to 3.7 million workers could lose their jobs. The 1.3 million payroll losses is CBO’s median estimate.

“Lifting 1.3 million workers out of poverty at the expense of up to 3.7 million jobs is a terrible trade-off,” Saltsman says.

Many Democrats in Congress and about half the Democratic presidential candidates support the bill but it faces stiff opposition from the Republican-controlled Senate and President Trump.

Bobby Scott, D-VA, chairman of the House Committee on Education and Labor, says the legislation “would benefit up to 95% of America’s low-wage workers.”

“What the report makes clear is that the benefits far outweigh any costs,” he said on a conference call with reporters.

The CBO also assessed hourly minimum-wage increases to $10 and $12, finding more modest effects. For example, a hike to $12 would increase wages for up to 11 million workers and leave 300,000 jobless.

Terrence Wise, 39, who earns $12 an hour as a McDonald’s worker in Kansas City, told reporters he works two jobs and his wife is a home health care worker. Yet the couple and their three daughters have been homeless and need food stamps and Medicare to scrape by.

He said he just wants “enough to pay my rent, feed my kids and keep the lights on.”

Twenty-nine states and the District of Columbia already have pay floors higher than the federal minimum, according to the Labor Department. Twenty-two states and the district increased their minimum wages this year, according to the National Employment Law Project. And states such as New York and California and about 20 cities are lifting their minimums to $15 over the next few years.

Also, companies such as Amazon, Target and Walmart are gradually raising their base wages to $15 an hour.

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