Should there be a single minimum wage for all 50 states, or should it differ depending on local prices and costs of living?
The federal minimum wage has remained unchanged for 10 years, stuck at $7.25/hour since 2009. Because of inflation, that means the minimum wage has lost -14.8% of its value since it was last increased.
By law, no state can set a minimum wage lower than the federal one: $7.25/hour. However, 29 states plus Washington, D.C. have gone in the opposite direction and set minimum wages higher than that.
Congressional Democrats and every Democratic presidential candidate propose increasing the federal minimum wage. But how do they respond to concerns that prices vary wildly in different parts of the country, so increasing the minimum wage uniformly would hurt certain states and cities more?
What the bill does
The Paying Hourly Americans Stronger Earnings (PHASE) in $15 Wage Actwould establish five different regional minimum wages, rather than one national level.
Here’s how it works. The country can be divided up into 390 “metropolitan statistical areas.” (Here’s the full list from the Office of Management and Budget.) Each area would be categorized into one of five tiers, depending on wages, prices, and costs of living. The different tiers would then be subject to more or less stringent timetables for increasing their minimum wage.
What would that look like in practice? Extrapolating from estimates by the bill’s sponsors, the country’s highest cost metropolitan area San Jose, California would reach $15/hour by 2024. The country’s lowest cost metropolitan area of Beckley, West Virginia wouldn’t reach that level until about 2033.
It was introduced in the House on April 4 as bill number H.R. 2080, by Rep. Terri Sewell (D-AL7).
What supporters say
Supporters argue the bill simultaneously provides the economic boost most Democrats advocate while also being mindful of the concern, traditionally more conservative, about disparities in prices across regions.
“Small businesses are the lifeblood of communities in Alabama’s 7th district and across the country and are often the primary source of economic opportunity for workers in distressed neighborhoods,” Rep. Sewell said in a press release, “but they are disproportionately impacted by uniform changes to the minimum wage.”
“The PHASE in $15 Wage Act establishes a regional minimum wage structure that provides all minimum wage workers with a much-needed raise while protecting jobs,” Rep. Sewell continued, “giving every community the flexibility to grow their economy and taking into account that the cost of living in Selma, Alabama is very different than New York City.”
What opponents say
Republicans are already almost uniformly opposed to a federal minimum wage increase, calling it a bad economic decision that will raise prices and make it harder for entry level workers to get hired — but even some on the left oppose this bill, too.
The bill would “lock in low wages for millions of workers in parts of the country where large national employers pay as little as they can get away with,” wrote Heidi Shierholz of the Economic Policy Institute, a left-leaning think tank. “Setting regional differences with wages this depressed as federal policy isn’t a way to raise wages in lower cost-of-living areas — it simply ensures wages for workers struggling in those areas will remain shamefully low.”
“Of the 17 metro areas that would see their minimum wages increased to $15 an hour under the PHASE-in $15 Act,” Shierholz continued, “all but two are in states or cities that have already passed their own $15 minimum wages.”
Odds of passage
The bill has attracted 12 House cosponsors, all Democrats. More than half those cosponsors are from states abiding by the current federal minimum wage, which generally tend to be lower cost states: Alabama, Georgia, Oklahoma, Pennsylvania, Texas, and Virginia.
The other cosponsors are from states with higher minimum wages, which generally tend to be higher cost states: California, Michigan, Minnesota, New York, and Oregon.
The Republican-controlled Senate would likely not go for such a bill, but even House Democrats are primarily focusing on the Raise the Wage Act [H.R. 582] instead. That bill would increase the federal minimum wage in six steps, finishing at $15/hour nationally in 2024.
That bill was approved in the House Education and Labor Committee on March 6. With a far larger 205 cosponsors, its passage in the House seems much more likely than Rep. Sewell’s regional alternative — although anything is possible.