The Raise the Wage Act of 2023, aiming to incrementally raise the federal minimum wage to $17 an hour by July 2029, has stirred an argumentative debate. The Congressional Budget Office (CBO) study highlights its potential to positively impact over 18 million workers but also forecasts potential job displacement for around 700,000 Americans.
What Are The Impacts?
Positive wage impact
The CBO’s findings emphasize the potential for substantial wage hikes for workers currently earning at or slightly above minimum wage levels. This move could significantly improve the economic situation for many individuals, lifting around 400,000 workers out of poverty. In addition, an analysis by the Economic Policy Institute in Washington, D.C., found that raising the federal minimum wage to $17 an hour by 2028 would positively impact nearly 28 million workers across the country. The average affected worker who works year-round would receive an extra $3,100 per year. President Joe Biden and Senator Bernie Sanders both advocate for a shift from a “starvation wage” to a “living wage,” supporting a gradual increase after over a decade of stagnation at $7.25 an hour.
Concerns about job loss
However, the flip side of this wage increase is the projected reduction in employment opportunities, particularly affecting younger and less educated individuals. The CBO suggests that by 2029, a substantial portion of those rendered jobless by the bill might exit the labor force, raising concerns about long-term economic participation. The average estimate is about 700,000 workers would lose their jobs.
Economic Ramifications
The proposed wage hike could set off a chain reaction in the economy. Increased labor costs could lead to higher consumer prices, potentially decreasing overall buying power and reducing employment across various wage brackets. Employers must also pivot towards automation to mitigate increased labor expenses.
Alternative Approaches
Senator Bill Cassidy and Senate Republicans advocate a more gradual approach, proposing the Higher Wages for American Workers Act. They aim to reach an $11 federal minimum wage by 2028, prioritizing the protection of small businesses and preserving job opportunities. In contrast, advocates for the $17 minimum wage underscore its potential to positively impact around 28 million workers nationwide. They emphasize the need to fortify existing state-level standards and solidify wage gains, especially crucial in post COVID-19 pandemic economic recovery.
State Variances
While 30 states and Washington, D.C. already exceed the federal minimum wage, the impact of a $17 federal minimum could vary. Workers in these states may have already experienced wage hikes above this proposed threshold. In addition, the debate isn’t solely about the numbers; it’s about balancing economic progress and job security. Crafting legislation that uplifts workers without compromising employment opportunities requires navigating complexities.
Tackle Labor Laws With GMS
When all is said and done, navigating the complexities and unknowns of the minimum wage debate necessitates a careful balance between uplifting workers and safeguarding employment opportunities. As a small business owner, it’s essential to follow all laws and regulations and, in this case, those associated with minimum wage increases. However, you did not start your business to be an expert in wages and labor laws.
Consider partnering with a professional employer organization (PEO). PEOs like GMS provide expertise in navigating evolving labor laws, providing vital insights into adapting compensation structures and HR strategies. By leveraging the resources and guidance of GMS, business owners can proactively analyze their workforce dynamics, streamline operations, and implement measures to mitigate the potential impacts of minimum wage adjustments. This partnership allows you to focus on areas that allow you to grow and not hold you back from doing what you do best. Contact our experts today to learn how we can lend a helping hand.