Raise the Wage Act of 2025
- Sponsor
- Rep. Scott, Robert C. "Bobby" [D-VA-3]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Apr 8, 2025
Bottom line
The Raise the Wage Act of 2025 significantly increases the federal minimum wage and eliminates subminimum wages for specific worker groups, aiming to boost incomes for millions of low-wage workers.
What it actually does
This bill incrementally raises the federal minimum wage from its current level to $17.00 per hour over a six-year period. It also phases out the subminimum wages for tipped employees, youth workers, and workers with disabilities, bringing them to parity with the general minimum wage. After the phase-in, the minimum wage will be indexed to the median hourly wage of all employees, ensuring it keeps pace with economic growth.
Proponents argue
Supporters argue that raising the minimum wage is essential to lift millions of workers out of poverty, reduce income inequality, and stimulate the economy by increasing consumer purchasing power. They contend that current minimum wage levels are insufficient to cover basic living expenses and that indexing the wage will provide long-term stability and fairness for workers.
Opponents contend
Opponents contend that such a significant increase in the minimum wage will lead to job losses, particularly for entry-level and less-skilled workers, as businesses face higher labor costs. They also argue it could force small businesses to close, reduce hours for existing employees, and contribute to inflation, ultimately harming the very workers it intends to help.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions and implications within a reasonable timeframe.
Section 2(a)
Federal Minimum Wage Increase Schedule
This provision establishes a new schedule for increasing the federal minimum wage. It starts at $9.50 per hour on the effective date of the act and increases incrementally each year, reaching $17.00 per hour five years after the effective date. This structured increase provides a clear pathway for businesses and workers to adapt to the new wage floor.
Supporters argue
Proponents argue that these scheduled increases are necessary to ensure a living wage for all workers, allowing them to meet basic needs and reducing reliance on public assistance programs. They believe the incremental approach allows businesses time to adjust.
Critics contend
Opponents argue that these increases are too rapid and substantial, potentially leading to job cuts, reduced hiring, and increased automation as businesses seek to offset higher labor costs. They fear it could disproportionately impact small businesses.
Tradeoffs
The provision balances the goal of increasing worker income and reducing poverty against concerns about potential job losses and increased operating costs for businesses, particularly small enterprises.
Section 2(b)
Minimum Wage Indexing to Median Hourly Wage
Beginning six years after the act's effective date, this provision mandates that the federal minimum wage will be annually adjusted based on the increase in the median hourly wage of all employees, as determined by the Bureau of Labor Statistics. The wage will be rounded up to the nearest $0.05. This mechanism aims to ensure that the minimum wage maintains its purchasing power and keeps pace with overall wage growth in the economy.
Section 3(a) and 3(b)
Tipped Employee Wage Increase and Tip Retention
This section gradually increases the cash wage paid to tipped employees, starting at $6.00 per hour on the effective date and rising incrementally over six years until it equals the full federal minimum wage. Concurrently, it explicitly affirms an employee's right to retain all tips received and introduces penalties for employers who violate this right. This aims to eliminate the 'tip credit' system and ensure tipped workers receive the full minimum wage plus their tips.
Section 4
Youth Minimum Wage Increase and Repeal
This section raises the subminimum wage for newly hired employees under 20 years old, starting at $6.00 per hour on the effective date. It then increases this youth wage annually until it matches the general federal minimum wage. Once parity is achieved, the separate youth minimum wage provision is repealed, ensuring that all workers, regardless of age, receive the same minimum wage.
Section 6(a)
Disability Subminimum Wage Increase and Repeal
This section incrementally increases the subminimum wage for workers with disabilities, starting at $5.00 per hour on the effective date and rising over five years until it equals the full federal minimum wage. Concurrently, it prohibits the issuance of new special certificates that allow employers to pay subminimum wages to individuals with disabilities after the act's enactment date. Once the wage parity is achieved, the authority to issue such certificates is sunsetted, effectively ending the practice of paying subminimum wages to workers with disabilities.
Amends Section 16 of the Fair Labor Standards Act of 1938 to include 'or used' after 'kept' in provisions related to employer records, specifically concerning tips. This change clarifies that employers are prohibited not only from keeping tips but also from using them for purposes other than distribution to employees.
Section 3(d)
Why it matters:This is standard legislative practice for technical conforming amendments to existing law. It strengthens enforcement without being a primary policy driver.
Case for: Proponents would argue this technical amendment closes a potential loophole, ensuring that employers cannot indirectly benefit from tips by 'using' them even if they don't 'keep' them, thus better protecting tipped employees' earnings.
Case against: Opponents might argue that this adds another layer of complexity and potential liability for employers, particularly those in the service industry already grappling with significant wage changes. However, no specific opposition is typically raised against such technical enforcement clarifications.
Estimated impact: Strengthens enforcement of tip retention for millions of tipped workers, potentially preventing wage theft.
Establishes the general effective date for the Act and its amendments as the first day of the third month that begins after the date of enactment.
Section 7
Why it matters:This is standard legislative practice to provide a clear and consistent effective date for the entire bill, allowing time for agencies and affected parties to prepare.
Case for: Proponents would highlight that this delayed effective date provides a reasonable transition period for businesses to adjust their budgets, payroll systems, and operational models before the new wage requirements take effect.
Case against: Critics might argue that even with a delayed effective date, the magnitude of the wage increases will still pose significant challenges for businesses, especially small ones, and that more time or different phase-in mechanisms are needed.
Estimated impact: Determines the precise start of all wage increases and policy changes, affecting millions of workers and businesses.