Will a new law to gradually increase the federal minimum wage to $15 per hour make it into the final $1.9 trillion COVID-19 stimulus plan, or will President Joe Biden have to try again later? How does the increase work, and what are the differences for employees who make most of their money from tips and for employees with disabilities?
Biden’s plan calls for an increase to the federal minimum wage between now and 2025, and to end the “tipped minimum wage” (for people whose income is based largely on tips, like restaurant servers) and subminimum wage for people with disabilities. Workers who receive at least $30 in tips a month qualify for the “tipped wage,” which is split between a $2.13 minimum cash wage and a $5.13 maximum tip credit with both combining to $7.25.
According to the Fair Labor Standards Act, certain groups qualify for a wage below the minimum, which is currently $4.25. This includes student workers, those under the age of 20 and workers with a physical or intellectual disability.
The federal minimum wage for $7.25 an hour was decided in 2009. States and cities, however, can dictate their own hourly minimum, based on local economics, for example. Washington has the highest among the states at $13.69, and Seattle is the major city with the top minimum wage of $16.69 for most workers, beginning Jan. 1, 2021.
How much would the minimum wage increase every year?