Overview
Title
To provide for increases in the Federal minimum wage, and for other purposes.
ELI5 AI
The bill wants to make sure people who work get paid more money over time, starting at $9.50 an hour and going up to $17.00 an hour in five years. It also wants to change how much people who earn tips or have different age and ability levels get paid, so everyone can earn the same amount in the future.
Summary AI
S. 1332 aims to gradually raise the federal minimum wage in the United States, starting at $9.50 per hour and reaching $17.00 per hour over a span of five years. The bill outlines specific increases each year and includes provisions to annually adjust the wage based on the median hourly wage. It also proposes increased wages for tipped employees, young workers under 20, and individuals with disabilities, eventually eliminating different minimum wages for these groups. Additionally, the legislation provides for technical assistance to employers to ensure compliance with new wage standards.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
General Summary of the Bill
The proposed legislation, known as the "Raise the Wage Act of 2025," aims to increase the federal minimum wage incrementally over several years. The proposed increases start at $9.50 per hour and gradually rise to $17.00 per hour over six years. Additionally, the bill outlines changes to the wage system for tipped employees and individuals with disabilities, along with guidelines for the publication of wage changes.
Summary of Significant Issues
One of the primary concerns with this bill is the lack of specific metrics for determining annual percentage increases in the minimum wage based on the median hourly wage, which could result in inconsistent and unpredictable wage adjustments. Additionally, there is an absence of protective measures for small businesses, which might struggle with these rapid wage increases. The legislation does not consider exemptions or special considerations for different industries or regions that might face unique economic conditions.
Furthermore, the repeal of the separate minimum wage for tipped employees could create compliance challenges and confusion among employers and employees. For individuals with disabilities, the prohibition of new special certificates may limit employment options. Effective dates for different provisions of the bill are vaguely defined, potentially leading to confusion about when the changes should occur.
Impact on the Public
The bill sets out to benefit workers by raising their incomes and improving economic equity. For the general public, increased wages could enhance the quality of life for many workers who have struggled with low wages. However, the lack of clear guidelines on how wage increases will be determined annually raises the possibility of unpredictability in wage growth, potentially affecting consumer spending and economic stability.
Impact on Specific Stakeholders
Workers: For low-wage workers, an increase in the federal minimum wage offers the potential for better financial security and a higher standard of living. This particularly applies to tipped employees, who would eventually earn the same minimum wage as non-tipped workers.
Small Businesses: Small businesses might face stress due to rapid wage increases, leading to possible downsizing or closure if they cannot absorb the additional labor costs. The bill does not offer any provisions or assistance for these small entities, which might be disproportionately affected.
Industries with Tipped Workers: Industries relying heavily on tipped employees, such as the restaurant and service industries, might experience significant changes in wage structures. The elimination of a separate wage could burden employers financially, requiring adjustments either in pricing or staffing.
People with Disabilities: The bill's transition for workers with disabilities to a higher minimum wage seeks to promote economic self-sufficiency. Nevertheless, the prohibition on new special wage certificates could inadvertently reduce the employment opportunities available to individuals with disabilities, especially within organizations historically relying on such certificates.
Overall, while the Raise the Wage Act of 2025 aims to rectify income disparities, the passage and implementation of the bill without addressing its issues could have mixed outcomes for various stakeholders, potentially risking some negative consequences alongside the intended positive impacts.
Financial Assessment
The bill "S. 1332," titled the “Raise the Wage Act of 2025,” proposes a structured increase in the federal minimum wage from its current rate to $17.00 per hour over a series of five years. This increment is detailed as starting at $9.50 an hour and progressively increasing to $17.00 an hour, with specific annual benchmarks: $11.00, $12.50, $14.00, $15.50, and $17.00 per hour. Each step represents a financial commitment and adjustment by employers to align wages with federal requirements.
Financial References and Considerations
The bill mandates wage adjustments beyond the base minimum wage. Specifically, it ties future increases to the "median hourly wage" determined by the Bureau of Labor Statistics. This means that after reaching $17.00, subsequent annual increases should reflect changes in the economic baseline of wages, aiming to keep the minimum wage aligned with economic conditions. This approach introduces variability and responses to economic trends but raises concerns regarding potential unpredictability in wage adjustments. The issue here is that while it aligns wages with broader economic metrics, the variability for businesses as noted could create budgeting challenges, particularly for small businesses.
Impact on Specific Employee Groups
The proposed legislation also addresses wages for tipped employees, beginning with a rate of $6.00 per hour and increasing incrementally each year until equalizing with the non-tipped minimum wage at $17.00. These gradual increases in tipped wages aim to ensure equity but could disrupt existing pay structures, potentially leading to compliance challenges for employers in sectors relying heavily on tipped labor.
For young workers under 20, the bill sets an initial increased wage of $6.00 per hour, with similar incremental increases until matching the standard minimum wage. This phased approach is designed to balance the need to increase youth wages while easing the transition for employers. However, the incremental approach may still pose financial pressures on businesses hiring part-time or less experienced workers.
Provisions for Individuals with Disabilities
The bill introduces notable changes for workers with disabilities, guaranteeing progressively increasing wage rates starting at $5.00 per hour and reaching parity with the general minimum wage over several years. By prohibiting new special certificates, it aims to mainstream wages for workers with disabilities, although this could inadvertently reduce job opportunities if businesses struggle with wage adjustments or if there's insufficient support for transitioning employment practices.
Compliance and Communication Challenges
Lastly, the lack of specific guidance on communicating these changes, as pointed out in the issues, could hinder smooth implementation. Employers might face challenges understanding the timeline and scope of changes, affecting their financial planning and compliance strategy. Publishing structured communications well ahead of wage increases would be essential to mitigate miscommunication and ensure effective adaptation to the new wage rules.
In summary, S. 1332 involves significant financial allocations through structured wage increases across several layers of employment, addressing economic equity while also posing challenges regarding predictability, compliance, and adaptation for businesses, particularly smaller enterprises.
Issues
The bill lacks specific metrics for determining annual percentage increases in the median hourly wage, which could lead to variability and unpredictability in wage adjustments. This concern is noted in Section 2 but affects the general framework of the bill.
There are no protections or measures specified for small businesses, which could struggle with the rapid increase in wage rates as outlined in Section 2. This omission might lead to significant financial strain on such entities.
The bill does not address potential exemptions or special considerations for industries or regions with distinct economic conditions, which could be too broad and inflexible for diverse economic landscapes. This issue is rooted in Section 2.
The removal of the separate minimum wage for tipped employees, as mentioned in Section 3, might create issues for both employers and employees, leading to possible confusion or compliance challenges.
Prohibiting new special certificates for individuals with disabilities, as discussed in Section 6, might have unintended negative consequences on employment options for individuals with disabilities and businesses relying on these certificates.
The effective date provisions are vague across various sections (notably Sections 2 and 7), potentially causing confusion and inconsistent application of the new wage rules.
The section aimed at promoting self-sufficiency for individuals with disabilities (Section 6) might inadvertently limit employment opportunities by relying on competitive integrated employment organizations, which could advantage those with established influence.
There is no explicit guidance on how the changes will be communicated to affected parties, including employers and employees, which could lead to miscommunication and compliance issues as outlined in Sections 5 and 4.
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.