HR Management & Compliance

New Bill Generating Talk About Higher Federal Minimum Wage

Prospects may not be bright for Congress to raise the federal minimum wage to $15 an hour, but a recently introduced bill is generating discussion about the possibility of some kind of increase.

minimum wageOn February 7, the House Committee on Education and Labor conducted a hearing on the Raise the Wage Act (HR 582), a bill introduced in January that calls for raising the federal minimum wage to $15 by 2024. After reaching $15, the bill calls for future alterations to be tied to changes in median workers’ pay. The bill also would phase out the minimum wage for tipped workers.

Currently, the regular federal minimum stands at $7.25 an hour, where it has been since 2009. Previous attempts to raise the federal minimum have been nonstarters, and the current effort may face the same obstacles. But 29 states and several localities have taken it on themselves to increase the minimum wage allowed in their jurisdictions. For example, Maine’s minimum wage is $11 an hour and is scheduled to go to $12 in 2020.

‘Worst Fears . . . Have Yet to Come True in Maine’

Connor Beatty, an attorney with Brann & Isaacson in Lewiston, Maine, says employers initially reacted with skepticism to the ballot initiative that began a series of increases in the state’s minimum wage, but “results so far seem to have been largely positive for Maine businesses.”

Beatty cites media reports that have linked the wage increase to record low numbers of children living in poverty and an increase in overall employment hours and the number of employees across the state. “So far, it seems that the worst fears which were voiced during the implementation of Maine’s minimum wage law have yet to come true,” he says.

Beatty says any effort to increase the federal minimum to $15 is likely to be “an uphill battle,” but he expects that “a newly energized Democratic majority in the House would at least be able to bring the issue to a vote, forcing a national discussion of the issue.”

“Perhaps the most palatable proposal to increase the federal minimum wage would be one mirrored on Maine’s model: gradual increase over a number of years, eventually tied to objectively measured rises in the cost of living,” Beatty says. “This would allow the business community time to adapt and plan for the change without abruptly affecting their business model.”

‘Substantial Impact’ Feared for Small Employers

Jason S. Ritchie, an attorney at Ritchie Manning Kautz PLLP in Billings, Montana, also sees difficulties in getting the $15-an-hour minimum passed. Even though it may pass the Democratic-controlled House–putting pressure on the Republican-controlled Senate and the White House–he doesn’t expect that political pressure to be enough.

“If any minimum wage increase were to pass, I would anticipate that the increase would be substantially lower than $15 per hour,” Ritchie says. “I just don’t see that drastic of an increase passing.”

As to what such an increase would mean for employers and employees in sparsely populated states like Montana, Ritchie says it would have a substantial impact. “The most obvious impact would be the economic viability of small Montana businesses,” he says.

Montana’s current minimum wage is $8.50 an hour. That rate is reviewed every year and adjusted based on the Consumer Price Index. Ritchie says the structure “has worked fairly well.”

“It adjusts the minimum wage to reflect increases to the cost of living, while remaining fairly predictable and stable for employers,” Ritchie says.

Montana lawmakers were considering a new proposal to raise the state’s minimum wage. The new proposal, which was tabled earlier this month, would have provided for an immediate increase to $12 per hour and a jump to $15 per hour on July 1, 2020.

“Those increases were not well-received by the business community and, coupled with the legislation’s removal of an exemption for small businesses, threatened the economic viability of many Montana businesses,” Ritchie says.

Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.