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USA discuss raising minimum wage: what does the project involve?


Seattle, one of the cities in the United States that has raised its minimum wage – GETTY IMAGES NORTH AMERICA / AFP / Arquivos

The legislative battle in favor of doubling the minimum wage began this week in the United States, with the launch of a project that would raise $ 7.25 an hour to 15.

The proposed increase is much greater than those approved in the recent past, but its advocates argue that it is justified because it has been more than a decade since the salary was raised and the current minimum is too small for the cost of living in the country.

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– When did the United States set a minimum wage? –

First enacted by Congress in 1938 as part of the Fair Labor Standards Act, the minimum wage was adjusted several times, most recently in 2007, when Congress voted to gradually raise it from $ 5.15 to $ 7.25 an hour .

Since then, several state and local governments have increased the minimum wage to 15 per hour or other levels, both higher and lower.

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Of the 50 states, 21 currently serve the federal level of 7.25, while the rest have a higher minimum.

Twenty-five states currently prohibit cities and counties under their jurisdiction from setting a local wage higher than the state, according to Resourceful Compliance, which monitors labor legislation.

– How would the proposed increase work? –

According to the bill presented by Democrats in the House of Representatives and the Senate, the minimum wage would rise to 9.50 an hour three months after the law was enacted, and then reach 15 in four intervals over a five-year period.

The proposal also raises the base salary for waiters and other tip-dependent employees and instructs the US Secretary of Labor to calculate the average hourly wage for all employees annually.

In years when the average increases, the federal minimum wage would increase by the same percentage.

– Would that hurt the economy? –

Economists have long debated whether the decision to increase workers’ purchasing power would offset the wage burden added to companies. There is no consensus on this.

“There has been a debate for years,” says Gregory Daco, chief economist at Oxford Economics in the United States, explaining that some studies have shown that this can cause job losses, while others do not. The same study can be interpreted differently.

Critics of the higher-wage initiative point to a 2019 report from the Congressional Budget Office that said raising the level to $ 15 an hour would result in 1.3 million workers losing their jobs.

But supporters of the measure stress that the same report notes that the proposal would lift 1.3 million people out of poverty and raise wages for up to 27 million workers, which, they argue, would make up for lost jobs.

– What happened when the minimum was increased to $ 15? –

There is no consensus on the effects, as demonstrated in Seattle, which in 2014 became the first major city in the United States to adopt a minimum wage of $ 15.

A 2018 study by the University of Washington says that this policy reduced total payroll in low-income jobs, with wages that increased by 3% per cent, but the working hours decreased by between 6 and 7%.

However, a 2017 study by the University of California at Berkeley found that the policy increased wages in the food industry without job losses.

Howard Wright, CEO of the Seattle Hospitality Group and co-author of the 2014 initiative, rejects most criticisms of Seattle’s policy.

“Our economy was at its peak until the covid arrived,” Wright said.

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