Across the country, there are millions of people who are struggling to cope with financial problems. In many cases, the federal minimum wage is not enough to cover all costs. Hopefully, both President Joe Biden’s American Rescue Plan as well as recently reintroduced the Raise the Wage Act would gradually increase the federal minimum wage to $15 from $7.25.
Let’s have a look at the Raise the Wage Act. Interestingly, it offers the following timeline: The minimum wage would increase to $9.50 an hour in 2021 and reach $15 an hour by 2025. Moreover, after that, it would be indexed to median wages.
It is worth noting that the jump would give nearly 32 million American workers a raise. This is based on the information provided by the Economic Policy Institute.
Interestingly, workers in some states with the lowest local wages, or that use the minimum wage could see some of the largest jumps in pay. Importantly, that includes workers in 17 states that use the federal minimum wage or have set their minimum wage at the same amount. Moreover, that includes a small number of people in Wyoming and Georgia who make the state minimum wage of $5.15. Importantly, this is only for employers that are not subject to the Fair Labor Standards Act. Thanks to this act, most workers in these states get the minimum wage of $7.25 per hour.
However, employees in states with local minimum wages above the federal level would see a smaller increase this year. Moreover, others may not see an increase at all, or would not see one for a couple of years. Interestingly, that includes those in states that already have minimum wages that are much higher than the federal level.
Federal minimum wage and its importance
Tipped workers would be among the biggest winners of current legislation to pass a $14 federal minimum wage. Moreover, disabled workers, who are often legally paid less than the minimum wage, would also benefit from this decision.
People should keep in mind that, raising the federal minimum wage would also be an important step towards erasing pay inequality. Importantly, this decision would give 31% of Black and 26% of Latino workers a raise. Moreover, a $15 the minimum wage could also help close the gender pay gap as well as extend pay to those on the frontlines of the coronavirus pandemic.
However, it is unclear if Democrats will be able to pass the legislation without any Republican support. There are other challenges as well. Nevertheless, the new administration should work with lawmakers to find the best solution.