money Republicans release bill to 'gradually raise the federal minimum wage to $10'
Sen. Mitt Romney (R-UT) and Sen. Tom Cotton (R-AR) unveiled a proposal on increasing the federal minimum wage to $10 by 2025. The proposal comes as President Joe Biden and Democrats push to include a provision increasing the minimum wage to $15 by 2025 in the next stimulus package.
“For millions of Americans, the rising cost of living has made it harder to make ends meet, but the federal minimum wage has not been increased in more than 10 years,” Romney said in a statement on Tuesday. “Our legislation would raise the floor for workers without costing jobs and increase the federal minimum wage to $10, automatically raising it every two years to match the rate of inflation."
Under the Republican proposal, the federal minimum wage will increase to $8.00 in 2022, $8.75 in 2023, and $9.50 in 2024, until it reaches the $10 threshold. Businesses with fewer than 20 employees would have a longer phase-in period.
“American workers today compete against millions of illegal immigrants for too few jobs with wages that are too low— that’s unfair,” Cotton said in a statement. “Ending the black market for illegal labor will open up jobs for Americans. Raising the minimum wage will allow Americans filling those jobs to better support their families. Our bill does both.”
The legislation would mandate stricter immigration control and would implement an E-Verify system to "ensure the wage increase only goes to legal workers," while raising civil and criminal penalties on companies hiring unauthorized aliens.
The current state of federal minimum wage
But most Americans favor raising the federal minimum wage, which was last increased in 2009.
Many cities and states have enacted their own hikes, including in Republican-leaning ones like Florida. While the federal minimum wage stands at $7.25 presently, 20 states (and D.C.) currently have a minimum wage at or above $10. By 2022, three more states will have increased their hourly wages beyond $10.
Leading Democrats are pushing for a gradual increase of the federal minimum wage to $15 by 2025.
UC Berkeley's Center for Labor Research and Education recently found that $15 an hour would provide a “direct boost” in pay to 23 million Americans, a boon to many amid the pandemic.
“There’s good evidence to say: ‘Yeah, this is a bold policy, but it’s not as risky as some people think,'” Michael Reich, a minimum wage expert at the University of California, Berkeley, told Yahoo Finance in a previous interview.
Goldman Sachs analysts also previously estimated that a rise to $15 an hour would impact around 30% of U.S. workers, most of whom have household incomes below $50,000.
Critics of a $15 minimum wage, including most Republicans and some Democrats, generally argue that a large hike lacks nuance and is bad for businesses that are also dealing with the ongoing coronavirus pandemic.
“Everybody’s trying to paint this whole thing with one broad brush stroke,” John Horne, owner of the Anna Maria Oyster Bar in Bradenton, Fla., told Yahoo Finance previously. “$15 [minimum wage] is fine in Miami... but it’s not good in a small town, you know?”
John Motta, chairman of the Coalition of Franchisee Associations, said during a press conference on February 17 that states that hiked their minimum wages “did it in a way where businesses can absorb that increase."
But he added that “doing it as quickly as the Biden administration is stating will definitely hurt businesses, will hurt jobs, and probably cause some businesses to close because they jus cannot compete and pay those wages.”
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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova
Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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