House votes to raise minimum wage to $15 an hour

The U.S. House of Representatives has passed a bill that would gradually raise the federal minimum wage to $15 an hour, but the legislation is unlikely to pass the Republican-controlled Senate.

The federal minimum wage has been stuck at $7.25 an hour since 2009 — that’s the longest stretch of time without an increase since the minimum wage was established in the 1930s.

“That's not America. We need to make sure that people who work full-time are not in poverty,” said Rep. Bobby Scott (D-VA).

Scott introduced the Rase the Wage Act, which would incrementally raise the minimum wage to $15 an hour by 2025. After that, the federal minimum wage would be pegged to median wages.

The Raise the Wage Act would also eventually require employers to offer tipped workers the full minimum wage, and phase out the lower minimum wage for workers who receive tips.

Currently, 29 states and D.C. have minimum wages above the federal minimum wage of $7.25 per hour.

“The people have already spoken on this,” said Scott.

Critics argue a $15 federal minimum wage would lead to job losses and would primarily hurt lower-wage workers the most.

“Good intentions are no excuse for imposing bad policy,” said Rachel Greszler with the Heritage Foundation, a conservative think tank. “The Raise the Wage Act is a misguided attempt to increase incomes. In reality, it will eliminate jobs and decrease incomes for workers with the fewest skills and least experience.”

Higher wages, job losses

A recent Congressional Budget Office report said raising the minimum wage to $15 an hour would boost the wages of 17 million people, but could also cause a median 1.3 million employees to lose their jobs.

“Even if there's a little adverse effect on unemployment, the increase in the minimum wage will overwhelm that problem,” said Scott.

Several companies like AmazonTarget and Costco have raised their minimum wage or have called on Congress to raise federal federal minimum wage. Earlier this year, McDonald’s stopped lobbying against a federal minimum wage increase.

“Many people point out that McDonald's (MCD) may have to pay their workers a little more, but more people can buy hamburgers, and so they'll be all right. Many corporations have come out in favor, or at least they're not opposing the minimum wage because the minimum wage has been shown to stimulate the economy so much that the corporations will do well,” Scott said.

$15 is ‘not workable’

The U.S. Chamber of Commerce has said the Raise the Wage Act would lead to millions of job losses and primarily hurt small businesses.

“The Chamber continues to believe that there is a path forward on a legislative package that includes a meaningful, but reasonable increase in the minimum wage. We stand ready to work with Congress on such legislation. However, $15 per hour is not a workable federal minimum wage,” Suzanne Clark, president of the chamber, wrote in a letter to Congress.

Opponents also insist raising the federal wage ignores cost-of-living differences around the country, and would hurt states with lower living costs.

“There's some that just don't want to pay people fair wages,” said Scott.

In order to address some of those concerns, moderate Democratic lawmakers introduced an amendment to the bill that would require the Government Accountability Office to to study the impact on job creation after the first two wage increases.

The Senate is unlikely to take up the Raise the Wage Act as it stands now. Scott told Yahoo Finance he thinks some Republican senators may pressure party leaders to at least negotiate.

“The people have already decided what they want, and if the Republicans in the Senate want to block the minimum wage and tell the people that they should continue working at a wage where they can't even rent a two-bedroom apartment if they worked full-time, let them say that,” he said.

“Maybe not $15, but we can talk,” Scott said. “But you first have to agree that you want an increase.”

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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