Employment Law Daily Tiered minimum wage bill, the PHASE-in $15 Wage Act, would set the floor regionally
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Tuesday, April 9, 2019

Tiered minimum wage bill, the PHASE-in $15 Wage Act, would set the floor regionally

By Pamela Wolf, J.D.

The PHASE-in $15 Wage Act would establish five tiers based on regional costs of living and purchasing power, provide a two-year phase-in, and make adjustments every three years based on current economic data.

Led by Representative Terri Sewell (D-Ala.), a dozen lawmakers have introduced the Paying Hourly Americans Stronger Earnings (PHASE)-in $15 Wage Act, H.R. 2080, legislation that would calculate a new federal minimum wage floor based on regional costs of living and purchasing power.

The bill would permit the entire country to meet and exceed a $15 minimum wage, but at different times, depending on how quickly an area can absorb the wage increase, according to its sponsors. The legislation would raise the minimum wage in high-cost areas, like New York City, to $15 by 2024, and in low-cost areas, like Tuscaloosa, Alabama, by around 2033.

Under the legislation, federal minimum wages would be updated every three years using the most current economic data, while still letting state and local governments maintain the ability to supersede the federal minimum wage based on local economic conditions.

So far H.R. 2080 is getting a chilly reception from some folks on the same side of the political aisle. The bill “would do little more than 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,” according to Heidi Shierholz of the left-leaning Economic Policy Institute.

PHASE-in $15 Wage Act. Specifically, H.R. 2018 would group Metropolitan Statistical Areas (MSAs, as designated by the U.S. Census) into one of five tiers based on the most recent Regional Price Parities (RPP) data, the bill’s sponsors explained. RPP is a measure of comparative purchasing power across MSAs, determined by the Bureau of Economic Analysis.

The bill would provide a two-year phase-in and a readjustment every three years based on increases in the average hourly wage of private sector, non-supervisory workers.

The minimum wages would apply to both tipped and non-tipped workers, as well as workers under the age of 20, according to a summary of the bill, which provides estimated wages across the phase-in and re-adjustment periods for certain metropolitan centers of the country that represent each of the five tiers.

Federal wage levels would not apply in areas where the state or local minimum wage is higher than the prescribed federal minimum wage under the bill. Communities not included in a Metropolitan Statistical Area would fall under the tier corresponding with their State Nonmetropolitan Portion RPP, as designated by the Bureau of Economic Analysis.

Not much help for low-wage workers. “Twenty-one percent of low-wage workers live in an area that would see a minimum wage of $11.50 in 2024 under this proposal—equivalent to around $10.00 in today’s dollars,” Shierholz wrote. “And another 22 percent of low-wage workers live in an area where the minimum wage would increase to only $12.10 in 2024—or around $10.50 in today’s dollars. That means a total of 43 percent of low-wage workers live in areas that, under this proposal, would have a minimum wage of $10.50 or less in today’s dollars.

As Schierholz sees it, nowhere in the United States can a person—even a single one with no children—afford a secure standard of living on $10.00 or $10.50 an hour.

More centrist vision. Nonetheless, the PHASE-in $15 Wage Act is endorsed by Third Way, which describes itself as “a national think tank that champions modern center-left ideas.” And it appears that the bill’s sponsors have center-left ideals in mind.

“To be clear, all Democrats are committed to keeping our promise to raise the minimum wage for the American people. Many minimum wage workers—including those in Alabama—haven’t seen a pay increase since the federal government raised the wage to $7.25 nearly ten years ago,” Sewell said in a statement. “It is time for Congress to raise the minimum wage in a way that supports workers and protects jobs. 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, 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, 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.”

Effective date. The amendments and repeals made by PHASE-in $15 Wage Act would be effective on the first day of the third month that begins after its date of enactment.

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