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Yesterday the U.S. House of Representatives passed H.R. 582, the Raise the Wage Act, to increase the minimum wage to $15 per hour by a margin of 231-199. The bill passed on fairly partisan lines with only six Democrats opposing the bill. The House moved forward with the bill despite predictions from the Congressional Budget Office (CBO) that increasing the minimum wage to $15 per hour would put 1.3 to 3.7 million people out of work and reduce total real (inflation-adjusted) family income in 2025 by $9 billion.
Why then did Democrats move forward with the $15 per hour figure? One of the key arguments for this legislation was that the federal minimum wage had not kept up with inflation. However, as the Chamber explained in a Key Vote letter to the House before the vote:
“…if the current federal minimum wage were adjusted for inflation over five years, as the Raise the Wage Act envisions, it would be $9.76 per hour, based on CBO’s estimates of the Consumer Price Index.”
In fact, as part of its analysis, CBO also considered alternate options including an increase to $10 per hour, which it predicted would result in negligible, if any, job losses over the next 6 years. This leads one to infer that the $15 per hour figure is not one grounded in sound economic analysis, but rather was set to satisfy political interests instead of those of small businesses and the American workers employed by them.
As the Chamber noted in our letter, there is a responsible path forward for raising the federal minimum wage. In another letter sent out in advance of H.R. 582 being considered, we laid out a reasonable framework for what a meaningful, but economically sound, increase to the minimum wage level alongside other reforms could look like.
With this bill being effectively dead on arrival in the Senate, it’s time for problem solvers on both sides of the aisle to develop a package that brings advantages to all parties, and the Chamber remains ready to discuss such a package. With a minimum wage increase this year now likely to be zero, it’s time to start talking.