U.S. House of Representatives has approved a bill to raise the federal minimum wage, which has the potential to more than double the $7.25 per hour rate that has been in place for a decade.
The legislation, which passed almost entirely along party lines, in a 231-199 vote on Thursday, called for a gradual increase to $15 by 2025, as well as a phasing out of the lower minimum wage paid to tipped workers. This marks the first time since 2007 that the Democratic-held chamber has moved to increase the minimum wage.
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Today, the District of Columbia and 29 states, including New York, boast higher pay floors than at the federal level, with seven states already enforcing a $15 minimum wage.
However, the bill will likely face heavy resistance in the Republican-led Senate over concerns that the higher pay will burden small businesses and potentially slow employment growth. A new report from the nonpartisan Congressional Budget Office predicted that a $15 an hour minimum wage would pull 1.3 million Americans out of poverty but would also cost the United States 1.3 million jobs by 2024.
In the retail sector, though, some companies have individually set out to back the federal minimum wage hike with raises of their own.
Last January, Walmart said it was raising its starting wage to $11, reaping the benefits of the tax reform law that slashed corporate rates. Target also stepped up its minimum hourly pay to $13 in April, with plans to raise that number to $15 by 2020.
That same month, Amazon made headlines when CEO and founder Jeff Bezos issued a challenge to rivals to match its employee benefits and minimum wage of $15, which was increased in November and impacted more than 250,000 full-time, part-time and temporary employees.
But some remain convinced that minimum wage hikes will translate to payroll cuts and more automation. Such was the case when Walmart announced plans to lay off nearly 10,000 workers on the same day it announced an increase in wages. As retailers shrink their physical footprints and amp up e-commerce, they rely less and less on cashiers and sales associates, who are typically among the industry’s lowest-paid positions.
According to outplacement firm Challenger, Gray and Christmas, the retail industry has trimmed more jobs than any other sector for three years running. However, VP Andrew Challenger rejected rumors of a mass tech takeover, adding that the jobs impacted by automation are “the ones with the lowest wages in the infrastructure of any company anyway, and so by eliminating some of those jobs, it raises the average wage for jobs that can’t be automated away.”
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