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May 7, 2015Client Alert

Minimum Wage Returns as a Political Football

On April 30, 2015, U.S. Senator Patty Murray (D-WA) and U.S. Congressman Robert C. “Bobby” Scott (D-VA) introduced the Raise the Wage Act, which would increase the minimum wage to $12.00 by 2020 by raising it $0.75 in 2016 to $8.00 an hour and raising it an additional $1.00 per year for the next four years. Although the bill currently has little chance of passing the Republican-controlled Congress, Democrats plan to make this a major campaign issue during the 2016 congressional and presidential elections.

The Senate bill would also index the minimum wage to the median wage after 2020 and gradually phase out the tipped minimum wage for workers that receive tips, bringing it up to equal the minimum wage. Currently, an employer of a tipped employee is only required to pay $2.13 an hour in direct wages if that amount plus the tips received equals at least the federal minimum wage. If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

“Raising the minimum wage to $12.00 by 2020 will give hardworking, underpaid workers a pay raise that has been long overdue,” said Rep. Bobby Scott (D-VA). “Bigger paychecks for working families not only help them make ends meet, it also increases consumer demand and grows our economy. No one working full-time should live in poverty, and we can’t build a strong economy on the backs of impoverished workers. America deserves a raise.”

“It's been almost eight years since Congress last raised the national minimum wage,” said US. Secretary of Labor Thomas E. Perez. “The president first called for a national minimum wage increase in his 2013 State of the Union address, and we renew that call today — in the name of fundamental fairness, broad-based economic growth and shared prosperity.”

The Raise the Wage Act follows the release of a National Employment Law Project (NELP) poll and nationwide protests on April 15 for $15.00 wages by workers and organizers. The protests are a continuation of a campaign that began in 2012 and is spearheaded by Service Employees International Union (SEIU). In January 2015, left-leaning NELP released a poll, which shows that 75% of Americans—including 53% of Republicans—support an increase in the federal minimum wage to $12.50 by 2020, and that 71% of Americans believe the minimum wage for tipped workers should be increased so that all workers are subject to the same wage floor. The poll also shows that 63% of Americans support an even greater increase in the minimum wage to $15.00 by 2020.

SEIU continues to spend millions on the minimum wage campaign. According to an April 15, 2015, Reuters report, SEIU’s Labor Organization Annual Report filed with the U.S. Department of Labor revealed $24 million spent in 2014 on eight worker organizations aimed at increasing wages for restaurant and retail workers. SEIU President Mary Kay Henry said, “We are quite confident there will be a breakthrough in having the union recognized as part of this growing movement.”

SEIU’s activities extend far beyond traditional union-organizing tactics. On April 29, 2015, over 100 people from across the country joined a protest outside the GEO Group’s annual shareholder meeting at the Boca Resort and Club. SEIU Florida and other community organizers helped organize and promote the protest. According to SEIU Florida, GEO is the second largest private prison corporation in the world and its billion-dollar business “hinges on a daily payment rate for every prisoner or immigrant it houses.”

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