The U.S. House of Representatives approved a bill last week to more than double the federal minimum wage, taking it from $7.25 to $15 an hour by 2025 and then adjusting the rate annually moving forward.
Despite opposition and practical concerns raised by the U.S. Chamber of Commerce, the National Restaurant Association and other business groups, the House voted 231–199 in favor of H.R. 582. Most Democrats voted for the increase and most Republicans voted against it. The current minimum wage of $7.25 an hour was set in 2009, and Democrats argued during the vote that an increase was “long overdue.”
Under the House-passed legislation, the federal minimum wage rate would increase from $7.25 to $8.55 an hour in 2020 (three months after enactment). From there, the minimum wage would increase to $9.85 to $11.15 to $12.45 to $13.75 to $15.00 an hour annually in 2025. The bill would also increase the minimum wage for tipped employees, teenagers and employees with disabilities until they all equal the regular minimum wage rate.
It is important to note that, similar to 28 other states, Michigan’s minimum wage currently is well above the federal minimum wage, or “federal floor.” Michigan’s current minimum wage rate is $9.65 an hour and will gradually increase to $12.05 an hour by 2030. As such, the U.S. House-passed proposal would not impact most Michigan employers and employees until 2022, when the federal minimum wage rate would surpass or trump the Michigan minimum wage rate.
A Congressional Budget Office (CBO) report has indicated that dramatic increase of the federal minimum wage from $7.25 per hour to $15 per hour would have disruptive impacts on employers, particularly small businesses, as well as negative effects on the job opportunities for first-time and lower-skilled workers. The report stated that, when fully implemented, a $15 per hour minimum wage could result in as many as 3.7 million workers losing jobs and total real family income dropping by $9 billion.
The bill now moves to the U.S. Senate where it is likely to face increased opposition. The Michigan Chamber will be closely monitoring this issue and will communicate any major developments. Please contact Wendy Block with any questions at email@example.com.