Overview
Title
To provide for increases in the Federal minimum wage, and for other purposes.
ELI5 AI
The "Raise the Wage Act of 2025" is like growing a plant where the minimum money people earn for working starts small at $9.50 and slowly grows up to $17.00 over the years, making sure everyone gets a fair chance to earn more money, including people who get tips and those who might need a bit of extra help.
Summary AI
H. R. 2743, known as the "Raise the Wage Act of 2025," proposes gradual increases to the Federal minimum wage over a period of several years, starting at $9.50 per hour and reaching $17.00 per hour. Additionally, the bill aims to raise the base minimum wage for tipped employees and phase out special minimum wage rates for workers under 20 and individuals with disabilities. The legislation specifies that these increases will be adjusted annually based on the median hourly wage, and the Department of Labor will be responsible for publishing notices of any changes.
Published
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AnalysisAI
The "Raise the Wage Act of 2025", as introduced in the House of Representatives, strives to increase the federal minimum wage incrementally, eventually reaching $17 per hour over six years. Additionally, the bill seeks to amend wage standards for tipped employees, newly hired young workers, and persons with disabilities, aligning them more closely with general wage standards.
Overview of the Bill
The act outlines a structured plan to elevate the federal minimum wage from $9.50 to $17.00 an hour. This increase will be rolled out over six years, with additional annual adjustments linked to the median hourly wage as determined by the Bureau of Labor Statistics. It also phases out the separate lower minimum wage for tipped employees and establishes a new wage schedule for workers under 20 and individuals with disabilities.
Significant Issues
One major concern centers on the bill's potential economic impact. There is apprehension that the prescribed wage increases could instigate inflationary pressures, inadvertently straining businesses financially, especially small enterprises that lack coverage or support under the proposed bill. Furthermore, while annual wage adjustments depend on the median hourly wage, the lack of a clearly defined metric raises the possibility of unpredictable outcomes.
Another significant issue involves communication and compliance. The bill employs complex language and frequent cross-references, potentially hindering understanding and execution, particularly among those unfamiliar with legal jargon. Moreover, the absence of a clear communication strategy for the changes may pose implementation challenges for employers and employees alike.
Lastly, while the act aims to empower individuals with disabilities by fostering economic self-sufficiency, the transition might inadvertently cause challenges for businesses currently utilizing special certificates to employ these workers at lower wages. Without clear management guidelines, this change could impact employment opportunities for these individuals.
Broad Public Impact
If effectively executed, the bill's gradual wage increases have the potential to uplift working standards, offering a more livable wage for a vast portion of workers. Such financial improvement could boost consumer purchasing power, potentially stimulating economic activity.
However, the act's implementation could result in cost pressures on businesses, primarily small to medium-sized enterprises. Such pressures might translate into reduced hiring, alterations in work hours, or even job cuts, affecting employment levels adversely.
Impact on Specific Stakeholders
Workers are poised to benefit from increased financial security and potentially improved quality of life, particularly tipped employees, young workers, and individuals with disabilities, who are slated to receive higher minimum wages.
Employers, especially small businesses, might face obstacles concerning increased operational costs stemming from the higher wages. These financial pressures might necessitate adjustments in workforce size or wage structures to maintain fiscal sustainability.
Individuals with disabilities, targeted for assistance via enhanced wages, may experience heightened employment opportunities and financial independence. However, the transition from special certificates may also introduce risk factors for these individuals, especially if businesses struggle to adapt without support.
Overall, while the bill promises positive strides towards equitable wage standards, the lack of clearly defined mechanisms for addressing economic variability and communication gaps remain pressing issues that could hinder its effective implementation and foster uncertainty among various stakeholders.
Financial Assessment
The "Raise the Wage Act of 2025," as detailed in H.R. 2743, proposes systematic increases in the Federal minimum wage over several years. The bill outlines specific financial milestones aiming to elevate the minimum wage from a starting point of $9.50 per hour to $17.00 per hour over a six-year period. Additionally, it addresses wage adjustments for tipped employees and individuals with disabilities.
Minimum Wage Increases
The fundamental financial aspect of the bill is the structured escalation of the Federal minimum wage. It introduces an increase that begins at $9.50 per hour, followed by an increment to $11.00 per hour after one year, $12.50 per hour after the second year, and continuing up to $17.00 per hour by the fifth year. After six years, further adjustments are to be determined annually based on the median hourly wage of all employees.
This legislative measure does not account for any mechanisms that could mitigate financial strain on businesses, especially small businesses—an issue highlighted in the provided analysis. As labor costs rise, businesses might face increased operational expenses, which could lead to inflationary pressures if wages rise faster than productivity.
Tipped Employees
In addition to setting a floor for non-tipped employees, the bill seeks to increment the base minimum wage for tipped employees over the same timeframe. The starting point is pegged at $6.00 per hour, increasing annually to eventually align with the general minimum wage. This aims to ensure that tipped employees receive equitable wage treatment. However, the sudden removal of the separate minimum wage for tipped employees could create compliance challenges if businesses and workers are not adequately prepared for these updates.
Newly Hired Young Employees and Individuals with Disabilities
Also addressed are newly hired employees under 20 and certain individuals with disabilities. The bill aims to phase out distinct lower wages historically applicable to these groups. The wage for newly hired young employees would start at $6.00 per hour, with annual increments until equivalent to the general minimum wage. For individuals with disabilities, it commences at $5.00 per hour, escalating to meet the regular minimum wage over five years.
Inflation Adjustment and Economic Considerations
The bill mandates future increases linked to median hourly wage growth, keeping wages in tune with economic conditions. However, the methodology for determining the median wage increase is not explicitly specified, leading to potential unpredictability in wage adjustments. This could impact both businesses, which might struggle to forecast operating costs, and employees, whose earnings might not consistently align with living cost changes.
Communication and Implementation
Clarity in communication of these changes is crucial. The bill requires the Department of Labor to announce these changes, but without detailed provisions on how this information will be disseminated effectively. Potential implementation difficulties might arise if employers and employees are not adequately informed.
Considerations for Economic Downturns
Lastly, the automatic nature of the wage increases proposed by the bill does not account for periods of economic downturn. This lack of flexibility could place undue strain on businesses during times of low economic growth, necessitating consideration of contingencies to support both business viability and employee welfare during challenging economic conditions.
Overall, the proposed financial changes aim to boost wages and align them with cost living adjustments but raise concerns about feasibility, communication, and economic effects, particularly in lean economic phases.
Issues
The bill's provision for minimum wage increases might lead to unintended consequences such as inflationary pressures without a clear mechanism to mitigate potential financial strain on businesses, especially small businesses, which are not protected under this bill. (Section 2)
There is no clear specification of the metric to be used for determining the annual percentage increase in the median hourly wage by the Bureau of Labor Statistics, which could lead to variable outcomes annually, impacting businesses and workers unpredictably. (Section 2)
The removal of the separate minimum wage for tipped employees without addressing the implications for employers and employees might lead to confusion or uncertainty about compliance and enforcement. (Section 3)
The complexity of the language and numerous cross-references in the bill make understanding and compliance difficult for those not familiar with legal terminology, possibly affecting proper implementation and communication. (Sections 3, 4, 5, 6)
There is no clarity on how the changes in the wage laws will be communicated to affected employees and employers, which could lead to implementation challenges and misunderstandings. (Sections 4, 5)
The bill lacks provisions for handling economic downturns, which may lead to financial strain on businesses during periods of low economic growth due to the automatic increases in minimum wage. (Section 2)
The prohibition on new special certificates for employing individuals with disabilities while promoting economic self-sufficiency might cause unintended consequences for businesses relying on such certificates and affect employment for individuals with disabilities if not managed carefully. (Section 6)
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of this act establishes its name, which is the "Raise the Wage Act of 2025".
2. Minimum wage increases Read Opens in new tab
Summary AI
The section outlines a plan to gradually increase the minimum wage from $9.50 to $17.00 over six years, starting with an initial raise on the effective date of the Raise the Wage Act of 2025. After six years, the wage will be adjusted annually based on the increase in the median hourly wage, as determined by the Bureau of Labor Statistics, and rounded to the nearest multiple of $0.05.
Money References
- In general.—Section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to read as follows: “(1) except as otherwise provided in this section, not less than— “(A) $9.50 an hour, beginning on the effective date under section 7 of the Raise the Wage Act of 2025; “(B) $11.00 an hour, beginning 1 year after such effective date; “(C) $12.50 an hour, beginning 2 years after such effective date; “(D) $14.00 an hour, beginning 3 years after such effective date; “(E) $15.50 an hour, beginning 4 years after such effective date; “(F) $17.00 an hour, beginning 5 years after such effective date; and “(G) beginning on the date that is 6 years after such effective date, and annually thereafter, the amount determined by the Secretary under subsection (h);”. (b) Determination based on increase in the median hourly wage of all employees.—Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) is amended by adding at the end the following: “(h)(1) Not later than each date that is 90 days before a new minimum wage determined under subsection (a)(1)(G) is to take effect, the Secretary shall determine the minimum wage to be in effect under this subsection for each period described in subsection (a)(1)(G).
- The wage determined under this subsection for a year shall be— “(A) not less than the amount in effect under subsection (a)(1) on the date of such determination; “(B) increased from such amount by the annual percentage increase, if any, in the median hourly wage of all employees as determined by the Bureau of Labor Statistics; and “(C) rounded up to the nearest multiple of $0.05, if the amount after applying subparagraphs (A) and (B) is not a multiple of $0.05.
3. Tipped employees Read Opens in new tab
Summary AI
The proposed amendments to the Fair Labor Standards Act focus on increasing the base minimum wage for tipped employees over a period of six years, granting employees the right to retain their tips, and ensuring employers inform employees of these rights. Additionally, it plans to abolish the separate lower minimum wage for tipped employees six years after the effective date and introduces penalties for employers who misuse tips.
Money References
- the cash wage paid such employee, which for purposes of such determination shall be not less than— “(I) for the 1-year period beginning on the effective date under section 7 of the Raise the Wage Act of 2025, $6.00 an hour; “(II) $8.00 an hour, beginning 1 year after such effective date; “(III) $10.00 an hour, beginning 2 years after such effective date; “(IV) $12.00 an hour, beginning 3 years after such effective date; “(V) $13.50 an hour, beginning 4 years after such effective date; “(VI) $15.00 an hour, beginning 5 years after such effective date; “(VII) $17.00 an hour, beginning 6 years after such effective date; and “(VIII) for each succeeding 1-year period after the increase made pursuant to subclause (VII), the minimum wage in effect under section 6(a)(1); and”. (b) Tips retained by employees.—Section 3(m)(2)(A) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(2)(A)) is amended— (1) in the second sentence of the matter following clause (ii), by striking “of this subsection, and all tips received by such employee have been retained by the employee” and inserting “of this subsection.
4. Newly hired employees who are less than 20 years old Read Opens in new tab
Summary AI
This section of the bill updates the minimum wage for newly hired employees under 20 years old, beginning with $6.00 an hour and increasing each year until it matches the general minimum wage. It also states that once this increment is completed, the separate minimum wage for these workers will be repealed.
Money References
- (a) Base minimum wage for newly hired employees who are less than 20 years old.—Section 6(g)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(g)(1)) is amended by striking “a wage which is not less than $4.25 an hour.” and inserting the following:“a wage at a rate that is not less than— “(A) for the 1-year period beginning on the effective date under section 7 of the Raise the Wage Act of 2025, $6.00 an hour; “(B) for each succeeding 1-year period until the hourly wage under this paragraph equals the wage in effect under section 6(a)(1) for such period, an hourly wage equal to the amount determined under this paragraph for the preceding year, increased by the lesser of— “(i) $1.75; or “(ii) the amount necessary for the wage in effect under this paragraph to equal the wage in effect under section 6(a)(1) for such period; and “(C) for each succeeding 1-year period after the increase made pursuant to subparagraph (B)(ii), the minimum wage in effect under section 6(a)(1).”. (b) Scheduled repeal of separate minimum wage for newly hired employees who are less than 20 years old.— (1) IN GENERAL.—Section 6(g) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(g)), as amended by subsection (a), shall be repealed.
5. Publication of notice Read Opens in new tab
Summary AI
The section requires that any increase in the minimum wage or certain other wage rates must be announced by the Secretary of Labor at least 60 days before it takes effect. This announcement must be published in the Federal Register and on the Department of Labor's website.
6. Promoting economic self-sufficiency for individuals with disabilities Read Opens in new tab
Summary AI
The section aims to improve financial independence for people with disabilities by gradually increasing their minimum wage over five years, starting at $5.00 per hour and reaching $15.50 per hour. It also prohibits new special certificates that allow employers to pay less than minimum wage and offers guidance to employers and employees during the transition, with the authority to issue special certificates expiring once the highest wage rate is reached.
Money References
- (a) Wages.— (1) TRANSITION TO FAIR WAGES FOR INDIVIDUALS WITH DISABILITIES.—Subparagraph (A) of section 14(c)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 214(c)(1)) is amended to read as follows: “(A) at a rate that equals or exceeds, for each year, the greater of— “(i)(I) $5.00 an hour, beginning on the effective date under section 7 of the Raise the Wage Act of 2025; “(II) $7.50 an hour, beginning 1 year after such effective date; “(III) $10.00 an hour, beginning 2 years after such effective date; “(IV) $12.50 an hour, beginning 3 years after such effective date; “(V) $15.50 an hour, beginning 4 years after such effective date; and “(VI) the wage rate in effect under section 6(a)(1), beginning 5 years after such effective date; or “(ii) if applicable, the wage rate in effect on the day before the date of enactment of the Raise the Wage Act of 2025 for the employment, under a special certificate issued under this paragraph, of the individual for whom the wage rate is being determined under this subparagraph,”. (2) PROHIBITION ON NEW SPECIAL CERTIFICATES; TRANSITION ASSISTANCE.— (A) IN GENERAL.—Section 14(c) of the Fair Labor Standards Act of 1938 (29 U.S.C. 214(c)) is amended by adding at the end the following: “(6) PROHIBITION ON NEW SPECIAL CERTIFICATES.—Notwithstanding paragraph (1), the Secretary shall not issue a special certificate under this subsection to an employer that was not issued a special certificate under this subsection before the date of enactment of the Raise the Wage Act of 2025.
7. General effective date Read Opens in new tab
Summary AI
This section states that, unless stated otherwise, the law and its changes will begin to apply on the first day of the third month after the law is officially enacted.