Minimum Wage Fairness Act (S. 1737; 113th Congress)
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The Minimum Wage Fairness Act () is a bill that would amend the
Fair Labor Standards Act of 1938 The Fair Labor Standards Act of 1938 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of minors in "oppres ...
(FLSA) to increase the federal minimum wage for employees to $10.10 per hour over the course of a two-year period. The bill was strongly supported by President
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
and many of the Democratic Senators, but strongly opposed by Republicans in the Senate and House. The bill was introduced into the
United States Senate The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States. The composition and pow ...
during the
113th United States Congress The 113th United States Congress was a meeting of the legislative branch of the United States federal government, from January 3, 2013, to January 3, 2015, during the fifth and sixth years of Presidency of Barack Obama, Barack Obama's presiden ...
.


Background

In the United States workers generally must be paid no less than the statutory
minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
. As of July 2009, the federal government mandates a nationwide minimum wage level of $7.25 per hour, while some states and municipalities have set minimum wage levels higher than the federal level, with the highest state minimum wage being $9.47 per hour in
Washington Washington commonly refers to: * Washington (state), United States * Washington, D.C., the capital of the United States ** A metonym for the federal government of the United States ** Washington metropolitan area, the metropolitan area centered o ...
as of January 1, 2015. Among those paid by the hour in 2013, 1.5 million were reported as earning exactly the prevailing federal minimum wage. About 1.8 million were reported as earning wages below the minimum. Together, these 3.3 million workers with wages at or below the minimum represent, respectively: 1.0% of the population, 1.6% of the labor force, 2.5% of all workers, and 4.3% of hourly workers. Many states already have a state minimum wage higher than the existing federal minimum wage. The major economic schools of thought -
Classical economics Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...
,
Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
, and the
Austrian School The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...
- disagree about the importance and the effects of the minimum wage. According to a paper written in 2000 by Fuller and Geide-Stevenson, 73.5% (27.9% of which agreed with provisos) of American economists agreed that a minimum wage increases
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
among unskilled and young workers, while 26.5% disagreed with this statement.Fuller, Dan and Doris Geide-Stevenson (2003): ''Consensus Among Economists: Revisited'', in: Journal of Economic Review, Vol. 34, No. 4, Seite 369-38
(PDF)
/ref> Some economic research has shown that restaurant prices rise in response to minimum wage increases. Overall, there is no consensus between economists about the effects of minimum wages on youth employment, although empirical evidence suggests that this group is most vulnerable to high minimum wages.Ghellab, Youcef (1998): ''Minimum Wages and Youth Unemployment'',
ILO The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and ol ...
Employment and Training Papers 2
(PDF)
/ref> However, new evidence for workers that were bound by the minimum wage suggests a distinct negative impact on employment and income growth.


Provisions of the bill

''This summary is based largely on the summary provided by the
Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a c ...
, a
public domain The public domain (PD) consists of all the creative work A creative work is a manifestation of creative effort including fine artwork (sculpture, paintings, drawing, sketching, performance art), dance, writing (literature), filmmaking, ...
source.'' The Minimum Wage Fairness Act would amend the
Fair Labor Standards Act of 1938 The Fair Labor Standards Act of 1938 (FLSA) is a United States labor law that creates the right to a minimum wage, and "time-and-a-half" overtime pay when people work over forty hours a week. It also prohibits employment of minors in "oppres ...
(FLSA) to increase the federal minimum wage for employees to: (1) $8.20 an hour beginning on the first day of the sixth month after the enactment of this Act, (2) $9.15 an hour beginning one year after the date of such initial increase, (3) $10.10 an hour beginning two years after such date, and (4) the amount determined by the
United States Secretary of Labor The United States Secretary of Labor is a member of the Cabinet of the United States, and as the head of the United States Department of Labor, controls the department, and enforces and suggests laws involving unions, the workplace, and all ot ...
(based on increases in the
Consumer Price Index A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time. Overview A CPI is a statistica ...
) beginning three years after such date and annually thereafter. The bill would increase the
federal minimum wage A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
for tipped employees to $3.00 an hour for one year beginning on the first day of the sixth month after the enactment of this Act. The bill would provide a formula for subsequent annual adjustments of the minimum wage for tipped employees until it equals 70% of the wage in effect under FLSA for other employees. The bill would direct the Secretary of Labor, 60 days before any increase in the minimum wage, to publish it in the
Federal Register The ''Federal Register'' (FR or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every weekday, except on feder ...
and on the
United States Department of Labor The United States Department of Labor (DOL) is one of the executive departments of the U.S. federal government. It is responsible for the administration of federal laws governing occupational safety and health, wage and hour standards, unemploym ...
's website. The bill would amend the
Internal Revenue Code The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 ...
to extend through taxable years beginning before 2017: (1) the increase to $500,000 of the expensing allowance for business assets, including computer software; and (2) the treatment of qualified real property (i.e., leasehold improvement property, restaurant property, and retail improvement property) as depreciable business property.


Congressional Budget Office report

''This summary is based largely on the summary provided by the
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...
, as introduced in the Senate on November 19, 2013. This is a
public domain The public domain (PD) consists of all the creative work A creative work is a manifestation of creative effort including fine artwork (sculpture, paintings, drawing, sketching, performance art), dance, writing (literature), filmmaking, ...
source.'' S. 1737 would amend the Fair Labor Standards Act (FLSA) to increase the federal minimum wage in three steps from $7.25 per hour to $10.10 per hour, and to adjust the wage annually thereafter to account for
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. In addition, the bill would increase the federal minimum cash wage for workers who receive tips by gradually raising that wage until it equals 70 percent of the federal minimum wage for other workers. Finally, S. 1737 would amend the Internal Revenue Code to extend through 2016 an increased limitation on the amount of investment that firms can immediately deduct from their taxable income—a limitation that mostly affects small- to medium-sized businesses.


Procedural history

The Minimum Wage Fairness Act was introduced into the
United States Senate The United States Senate is the upper chamber of the United States Congress, with the House of Representatives being the lower chamber. Together they compose the national bicameral legislature of the United States. The composition and pow ...
on November 19, 2013 by Sen. Tom Harkin (D, IA). On April 8, 2014, Senate Majority Leader
Harry Reid Harry Mason Reid Jr. (; December 2, 1939 – December 28, 2021) was an American lawyer and politician who served as a United States senator from Nevada from 1987 to 2017. He led the Senate Democratic Caucus from 2005 to 2017 and was the Sena ...
announced that the Senate would not vote on the bill until three weeks later after a two-week April recess.


Debate and discussion

The delay of the Senate vote on the bill was attributed to Reid's inability to get all members of the Democratic party in the Senate to agree to vote in favor of the bill. Senator
Mark Pryor Mark Lunsford Pryor (born January 10, 1963) is an American attorney, politician and lobbyist who served as a United States Senator from Arkansas from 2003 to 2015. He is a member of the Democratic Party. Prior to becoming senator, he was Attorne ...
(D-AR) opposed the bill. Pryor was up for election in 2014 and was considered "the Senate's most vulnerable incumbent." Senator
Tom Carper Thomas Richard Carper (born January 23, 1947) is an American politician and former military officer serving as the Seniority in the United States Senate, senior United States Senate, United States senator from Delaware, having held the seat si ...
(D-DE) preferred legislation that would have a greater chance of becoming law, such as an increase to only $9 an hour. Senator
Mark Warner Mark Robert Warner (born December 15, 1954) is an American businessman and politician serving as the senior United States senator from Virginia, a seat he has held since 2009. A member of the Democratic Party, Warner served as the 69th governo ...
(D-VA) expressed a willingness to negotiate with Republicans about some of the provisions of the bill, such as the timeline for the phase-in. Warner said that any increase needs to be done "in a responsible way." Senator
Mary Landrieu Mary Loretta Landrieu ( ; born November 23, 1955) is an American entrepreneur and politician who served as a United States senator from Louisiana from 1997 to 2015. A member of the Democratic Party, Landrieu served as the Louisiana State Treasure ...
(D-LA) wanted additional debate on the timeline and the raise for tipped workers. Landrieu said that "I do not believe that $10.10 an hour is too high to aspire to, but how quickly we get there and what increments, the tipped wage, how that should be handled, who should get paid the tipped wage, and who shouldn't. There are a lot of questions about that, and some of those discussions are going on." President
Barack Obama Barack Hussein Obama II ( ; born August 4, 1961) is an American politician who served as the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, Obama was the first African-American president of the U ...
strongly supported increasing the minimum wage, giving speeches about it urging Congress to take action. Obama argued that "if you pay people well, there's more money in everybody's pockets, and everybody does better." The nonpartisan
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...
said in a report that an "estimate half a million jobs would be lost if lawmakers passed the president's proposal" to increase the minimum wage to $10.10 an hour. Spokesman
Brendan Buck Brendan may refer to: People * Saint Brendan the Navigator (c. 484 – c. 577) was an Irish monastic saint. * Saint Brendan of Birr (died 573), Abbot of Birr in Co. Offaly, contemporaneous with the above * Brendan (given name), a masculine given na ...
for Speaker of the House
John Boehner John Andrew Boehner ( ; born , 1949) is an American retired politician who served as the 53rd speaker of the United States House of Representatives from 2011 to 2015. A member of the Republican Party, he served 13 terms as the U.S. represe ...
said in reaction that "the president's plan would increase costs for consumers and eliminate jobs for those who need them the most" so the House would "continue focusing on our plan to protect workers' hours and create jobs, not the president's plan to destroy them." The
National Retail Federation The National Retail Federation (NRF) is the world's largest retail trade association. Its members include department stores, specialty, discount, catalog, Internet, and independent retailers, chain restaurants, grocery stores, and multi-level ma ...
(NRF) opposed the bill, saying that "raising the standard of living for low-skill, low-wage workers is a valid goal," but that "there is clear evidence that mandate wage hikes undermine the job prospects for less skilled and part-time workers." The trade group also argued that this was the "least opportune moment" to increase the minimum wage because employers were still dealing the fallout of changes they needed to make because of the
Affordable Care Act The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act and colloquially known as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Presid ...
("Obamacare"). Senate Republican
Susan Collins Susan Margaret Collins (born December 7, 1952) is an American politician serving as the senior United States senator from Maine. A member of the Republican Party, she has held her seat since 1997 and is Maine's longest-serving member of Co ...
(R-ME) tried to negotiate a compromise that centrist Republicans could agree to, but was unable to do so. Several Republicans, such as Senators
Dean Heller Dean Arthur Heller (born May 10, 1960) is an American businessman and politician who served as a United States senator for Nevada from 2011 to 2019. A member of the Republican Party, he served as the 15th secretary of state of Nevada from 1995 ...
(R-NV) and
Rob Portman Robert Jones Portman (born December 19, 1955) is an American attorney and politician serving as the Seniority in the United States Senate, junior United States Senate, United States senator from Ohio since 2011. A member of the Republican Party ...
(R-OH), noted that their states already have minimum wages higher than the federally-mandated level and thought that the minimum wage should be left up to the states. Heller said "I think there is a difference between North and South, East and West on what those minimum wages ought to be." Senator
Mark Kirk Mark Steven Kirk (born September 15, 1959) is a retired American politician and attorney who served as a United States senator from Illinois from 2010 to 2017, and as the United States representative for Illinois's 10th congressional district fr ...
(R-IL) said he would not vote for the bill or a compromise. Collins' tried to argue that the Congressional Budget Office report predicting 500,000 jobs lost if the minimum wage was increased to $10.10 also said that an increase to $9.00 would only lead to 100,000 jobs lost, but the argument did not seem to persuade her fellow centrists. Collins said "I'm confident that the votes are not there to pass a minimum wage increase up to $10.10, therefore, it seems to me to make sense for senators on both sides of the aisle to get together and see if we can come up with a package that would help low-income families without causing the kind of job loss that the Congressional Budget Office has warned against."


See also

*
List of bills in the 113th United States Congress The bills of the 113th United States Congress list includes proposed federal laws that were introduced in the 113th United States Congress. This Congress lasted from January 3, 2013, to January 3, 2015. The United States Congress is the bicamer ...
*
Minimum wage in the United States In the United States, the minimum wage is set by U.S. labor law and a range of state and local laws. The first federal minimum wage was instituted in the National Industrial Recovery Act of 1933, signed into law by President Franklin D. Roos ...


References


External links


Library of Congress - Thomas S. 1737beta.congress.gov S. 1737GovTrack.us S. 1737OpenCongress.org S. 1737
{{DEFAULTSORT:Minimum Wage Fairness Act Proposed legislation of the 113th United States Congress Minimum wage