Raise the Wage Act of 2025
- Bill Number
- S. 1332
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Labor and Employment
- Status
- Introduced
- Latest Action
- 2025-04-08: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- Last Updated
- 2026-03-06T12:03:19Z
AI-Generated Summary
Purpose
The Raise the Wage Act of 2025 aims to increase the federal minimum wage for most workers, phase out lower wage rates for tipped employees, young workers, and individuals with disabilities, and ensure wages keep pace with economic growth by tying future increases to the median hourly wage. This legislation seeks to improve earnings for low-wage workers while providing transition measures for affected groups.
Key Provisions
- General Minimum Wage Increases: Amends the Fair Labor Standards Act (FLSA) to raise the federal minimum wage in stages starting from the effective date (first day of the third month after enactment):
- $9.50/hour immediately.
- $11.00/hour after 1 year.
- $12.50/hour after 2 years.
- $14.00/hour after 3 years.
- $15.50/hour after 4 years.
- $17.00/hour after 5 years.
- After 6 years, annual adjustments based on the increase in the median hourly wage of all U.S. employees, as calculated by the Bureau of Labor Statistics (BLS), rounded up to the nearest $0.05.
- Tipped Employees: Gradually increases the required cash wage paid by employers (excluding tips) to match the full minimum wage by year 6 ($17.00/hour). Employees must retain all tips received, and employers must inform workers of this right. The separate lower wage for tipped workers is fully repealed after year 6, requiring payment of the standard minimum wage.
- Newly Hired Employees Under 20 Years Old: Replaces the current $4.25/hour training wage with phased increases starting at $6.00/hour, rising by up to $1.75 annually until it matches the full minimum wage. This youth subminimum wage is repealed once it reaches the standard rate.
- Workers with Disabilities: Phases out special certificates allowing wages below the minimum (currently as low as permitted under certificates). Sets a rising floor starting at $5.00/hour, reaching the full minimum by year 5. No new certificates can be issued after enactment, but existing ones continue with transition assistance (e.g., technical help for employers and referrals for workers). The entire special wage provision sunsets after year 5.
- Publication Requirements: The Department of Labor (DOL) must publish notices in the Federal Register and on its website at least 60 days before each wage increase, announcing the new rates.
- Penalties: Strengthens FLSA enforcement by adding penalties for employers who "use" (in addition to "keep") employees' tips improperly.
Significant Changes to Existing Law
- Raises the federal minimum wage from its current $7.25/hour (unchanged since 2009) through a structured, multi-year increase, introducing automatic annual indexing to the median wage (a new feature not previously in the FLSA).
- Eliminates long-standing subminimum wages over time: for tipped workers (previously $2.13/hour cash wage plus tips), youth trainees (previously $4.25/hour for the first 90 days), and workers with disabilities (previously variable below minimum under special certificates).
- Mandates that tipped workers keep 100% of tips (previously, employers could require tip pooling in some cases) and prohibits new subminimum wage certificates for disabilities, shifting toward full minimum wage compliance.
- Adds DOL responsibilities for wage data compilation via BLS and public notifications, enhancing transparency.
Potential Impacts
- On Citizens: Low-wage workers (estimated 1.3 million directly affected initially, plus millions indirectly) would see higher earnings, potentially reducing poverty and increasing consumer spending. Tipped, young, and disabled workers gain protections and fuller wages, but some employers might cut hours or jobs to offset costs.
- On Government Agencies: DOL and BLS face new duties to calculate, publish, and enforce indexed wages, including transition support for disability programs, which could increase administrative workload and budget needs.
- On Employers and Businesses: Small businesses and industries reliant on low-wage labor (e.g., restaurants, retail) may experience higher labor costs, possibly leading to price increases or staffing changes. Larger firms might adapt more easily.
- On International Relations: Minimal direct impact, though higher U.S. wages could influence trade competitiveness or labor standards in international agreements.
Main Stakeholders Affected
- Low-Wage Workers: Primary beneficiaries, including the approximately 20% of U.S. workers earning near minimum wage.
- Tipped Employees: Servers, bartenders, and similar roles in hospitality, who gain tip retention rights and eventual full cash wages.
- Young Workers (Under 20): Entry-level employees in training positions, such as in retail or fast food.
- Individuals with Disabilities: Those in sheltered workshops or special programs, who receive wage boosts and transition to competitive employment.
- Employers: Especially small businesses and labor-intensive sectors like food service, agriculture, and care facilities.
- Government Entities: DOL for enforcement and BLS for data; state governments may see reduced reliance on federal subminimum programs.
- Advocacy Groups: Labor unions (supporters) and business associations (potential opponents).
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens FLSA enforcement with expanded penalties for tip misuse, potentially increasing litigation over compliance. The sunset of subminimum wages for disabilities could face challenges from providers arguing it limits employment opportunities, though the bill includes transition aid to mitigate this.
- Constitutional: Aligns with Congress's authority under the Commerce Clause to regulate wages in interstate commerce; no major constitutional hurdles anticipated, as similar minimum wage laws have been upheld (e.g., in West Coast Hotel Co. v. Parrish, 1937).
- Political: Introduced by a bipartisan but largely Democratic group of senators, it reflects ongoing debates on income inequality versus business burdens. Passage could energize progressive policies but risks opposition in a divided Congress, potentially affecting midterm elections or economic policy agendas. The phased approach may ease implementation but invites amendments on timing or exemptions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (34)
Sen. Alsobrooks, Angela D. [D-MD], Sen. Baldwin, Tammy [D-WI], Sen. Blumenthal, Richard [D-CT], Sen. Blunt Rochester, Lisa [D-DE], Sen. Booker, Cory A. [D-NJ], Sen. Cantwell, Maria [D-WA], Sen. Duckworth, Tammy [D-IL], Sen. Durbin, Richard J. [D-IL], Sen. Fetterman, John [D-PA], Sen. Gallego, Ruben [D-AZ], Sen. Gillibrand, Kirsten E. [D-NY], Sen. Hirono, Mazie K. [D-HI], Sen. Kaine, Tim [D-VA], Sen. Kelly, Mark [D-AZ], Sen. Kim, Andy [D-NJ], Sen. Klobuchar, Amy [D-MN], Sen. Markey, Edward J. [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Murphy, Christopher [D-CT], Sen. Murray, Patty [D-WA], Sen. Padilla, Alex [D-CA], Sen. Peters, Gary C. [D-MI], Sen. Reed, Jack [D-RI], Sen. Schatz, Brian [D-HI], Sen. Schiff, Adam B. [D-CA], Sen. Smith, Tina [D-MN], Sen. Van Hollen, Chris [D-MD], Sen. Warnock, Raphael G. [D-GA], Sen. Warren, Elizabeth [D-MA], Sen. Welch, Peter [D-VT], Sen. Whitehouse, Sheldon [D-RI], Sen. Wyden, Ron [D-OR], Sen. Slotkin, Elissa [D-MI], Sen. Coons, Christopher A. [D-DE]
Recent Actions
- 2025-04-08: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
- 2025-04-08: Introduced in Senate
Bill Versions
- Raise the Wage Act of 2025 — issued 2025-04-08 — PDF (12 pages)