WASHINGTON (CN) – Tackling the federal minimum wage for the first time in a decade, the House of Representatives passed a bill Thursday that will raise the wage to $15 an hour by 2025.
The bill that cleared the Democrat-controlled House this morning 231-199 would bump the federal minimum wage in six yearly steps. After that point, the bill would tie future changes to the minimum wage to the median hourly wage.
Minimum wage has been a rallying cry for Democrats, who call the increase to $15 an hour long overdue. The minimum wage was last increased in 2009.
“America’s workers deserve a raise,” Speaker of the House Nancy Pelosi, D-Calif., told reporters Thursday ahead of the vote.
As the bill crossed the number of yes votes necessary to pass, a chant rang out from advocates wearing bright red shirts in the House gallery. “We work, we sweat, put 15 on our check,” they said.
The bill passed Thursday will also gradually phase out the lower minimum wage for workers who get tips and do away with a lower minimum wage for teenage employees and workers with disabilities.
According to a July 2019 report from the Congressional Budget Office, 29 states and Washington, D.C., have higher minimum wages than required by the federal government, and 30% of workers live in states where the minimum wage is $15 or higher.
Republicans argue that widespread layoffs and higher prices could result from jumping to a $15 minimum wage. The Congressional Budget Office report found that, while the $15 minimum wage would increase the income of some 27 million people in 2025, it would also likely come at the cost of 1.3 million people losing their jobs. The report said about half of lost jobs would affect teenage workers.
But these estimates are far from certain, the CBO warned, putting the odds at 66.6% that the effects of the wage hike would fall somewhere in the range of zero and 3.7 million lost jobs.
The CBO also estimated the increased wage would raise prices and cut U.S. economic productivity.
“Without the cash reserves or profit margins to absorb the increase in labor cost, small businesses will have a choice of several bad options,” Representative Virginia Foxx, R-N.C., said on the House floor Thursday. “Among their choices are laying off workers, raising prices on their customers, replacing workers with robots or going out of business.”
Foxx, the top Republican on the House Education and Labor Committee, called the wage hike “crippling” to businesses amid historically low unemployment.
But the report also found the wage increase would be a boon for low-income people, who would see a 5.3% increase in their income on average in 2025. In addition, the increase could lift as many as 1.3 million people out of poverty by the time it goes fully into effect.
Like other priorities House Democrats have passed during their short time in the majority, the wage hike is unlikely to go anywhere in the Republican-controlled Senate. The White House has also threatened to veto the legislation.