House passes bill to raise federal minimum wage to $15 an hour

FILE PHOTO: The U.S. Capitol building is seen through flowers in Washington, U.S., April 23, 2019. REUTERS/Shannon Stapleton

By Nandita Bose

WASHINGTON (Reuters) – The U.S. House of Representatives on Thursday passed legislation to raise the federal minimum wage to $15 an hour by October 2025, a big win for workers and labor groups, even as it remained unlikely the bill would pass a Republican-controlled Senate.

The move comes at a time when the $15 minimum wage fight, first started by fast-food workers in New York in 2012, has been gaining momentum around the country with several states and large private-sector employers that hire entry-level workers.

Cities and states including Seattle, San Francisco, New York state, California, Arkansas and Missouri have raised their minimum wage. Over the past year, employers like Amazon.com Inc and Costco Wholesale Corp have raised their base wages to $15 an hour while others like Target Corp have committed to going up to that level by the end of 2020.

Even some opposed to the move like fast-food chain operator McDonald’s Corp said recently it would no longer fight proposals to raise the federal minimum wage.

The country’s largest private-sector employer Walmart Inc, which pays $11 in base wages to its employees, recently said it supports raising the federal minimum wage, calling it “too low.”

The Democratic-majority House approved the legislation titled Raise the Wage Act, in a mostly partisan vote of 231-199. Only three Republicans voted for it, while six Democrats opposed it.

The bill increases entry-level wages for millions of American workers from the current $7.25 an hour – about $15,000 a year for someone working 40 hours a week, or about $10,000 less than the federal poverty level for a family of four. It has remained unchanged since 2009.

Many Republicans and business groups have argued that raising the minimum wage to $15 an hour would hurt jobs, forcing businesses to hire fewer people and replacing jobs with automation. Several Republican lawmakers cited a report from the non-partisan Congressional Budget Office last week, which estimated the move will boost wages for 17 million workers but at the same time, 1.3 million workers would lose their jobs.

U.S. Senate Majority leader Mitch McConnell said he would not take up the House’s minimum wage bill.

“We don’t need to lose jobs, we don’t have enough jobs now,” he told Fox Business Network in an interview on Thursday. “This would depress the economy at a time of economic boom. We’re not going to be doing that in the Senate.”

McConnell’s opposition to the bill makes its passage more symbolic in nature. However, it delivers a long-sought victory to liberals and allows Democratic presidential hopefuls to attract more working-class Americans with a promise to tackle growing economic inequality in the country, a key campaign issue for many candidates.

“This is a historic day,” said House Speaker Nancy Pelosi, adding this is about 33 million people in the country getting a raise. “No one can live in dignity with a $7.25 an hour wage. Can you?,” she said.

Others like U.S. House Majority Leader Steny Hoyer said a pay raise for American workers is long overdue. “We’ve now had the longest period without a minimum wage increase,” he said.

Several moderate Democrats, especially those who represent districts carried by President Donald Trump and were concerned about job losses, were assured by an amendment that would require a study of the effects of the bill a few years in, leaving room to make adjustments if more jobs are lost than expected.

Unions and labor groups, who brought the $15 minimum wage bill onto the national stage, see the passage of the bill as a key step towards building support among voters in Republican-dominated states and districts.

For retail workers like Cyndi Murray, a 19-year Walmart worker who is also a leader with labor group United For Respect, this is a big step forward in making companies, who pay below $15 an hour, pay higher wages.

“Walmart, the largest private employer in the country, pays so low that many employees depend on food stamps to survive,” she said. “They won’t change unless they’re forced to. That’s why the Raise the Wage Act has our full support.”

Walmart has said it pays an average of $17.50 an hour to its hourly employees, including benefits.

(Reporting by Nandita Bose; additional reporting by Richard Cowan and Susan Heavey in Washington; editing by Bernadette Baum and Diane Craft)

Amazon raises minimum wage to $15, urges rivals to follow

Workers sort arriving products at an Amazon Fulfilment Center in Tracy, California August 3, 2015. REUTERS/Robert Galbraith

By Arjun Panchadar

(Reuters) – Amazon.com Inc said on Tuesday it would raise its minimum wage to $15 per hour for U.S. employees from next month, seeking to head off criticism of working conditions at the world’s second most valuable company.

The online retailer said it would now lobby in Washington for an increase in the federal minimum wage and urged its competitors to follow its lead as the union-led “Fight for Fifteen” movement pushes for higher remuneration.

The new minimum wage will benefit more than 250,000 Amazon employees in the United States, as well as over 100,000 seasonal employees who will be hired at sites across the country this holiday, the company said.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” founder and Chief Executive Jeff Bezos said in a statement.

“We’re excited about this change and encourage our competitors and other large employers to join us.”

Amazon, which became the second company after Apple to cross $1 trillion in market value last month, paid its U.S. employees on average $34,123 last year. Bezos is listed by Forbes as the world’s richest man with a net worth of nearly $150 billion.

Amazon’s current minimum hourly wage starts at around $11 and analysts said the raise would cost it $1 billion or less annually and be offset by a recent $20 increase in the cost of Prime memberships.

Retailer Target Corp raised its minimum hourly wage last year to $11 and promised to raise it to $15 an hour by the end of 2020, while the world’s largest retailer Walmart raised its minimum wage to $11 an hour earlier this year.

Higher wages could further pressure margins at retailers that are already getting squeezed by higher transportation and raw materials costs, but the $15 still compares unfavorably with average U.S. blue collar wages.

Bureau of Labor Statistics show ordinary workers in the U.S. private non-farm sector on average earn $22.73 an hour. The mean hourly wage for non-management workers in transportation and warehousing is $21.94.

Amazon shares, trading lower before the company announced the wage hike, were down less than 0.3 percent at $1,997.75 in trading before the bell.

WORKER STRESS

Workers have been protesting against fast food chains like McDonald’s Corp and demanding wage increases since 2012 but conditions at Amazon’s warehouses, distribution centers and for its couriers have been drawing media attention and criticism for some time.

Democratic Senator Bernie Sanders has been vocal about low wages paid at U.S. corporations and has proposed legislation, nicknamed the “Bezos Bill”, aimed at making large corporations pay workers more.

“The pay increase puts Amazon ahead of the curve when it comes to providing its employee a living wage,” D.A. Davidson analyst Thomas Forte said, adding that the move will help it to attract employees as it opens more brick-and-mortar retail stores.

The company, which bought Whole Foods Market in a $13.7 billion deal last year, opened a general store in New York City in September after launching a few small grocery shops known as Amazon Go in Seattle and Chicago.

Amazon said it would increase its minimum wage for all full-time, part-time, temporary and seasonal employees.

Amazon also raised its minimum wage in Britain to 10.50 pounds ($13.59) an hour for all employees in the London area and 9.50 pounds an hour for staff in all other parts of the country, effective from Nov. 1.

“We will be working to gain Congressional support for an increase in the federal minimum wage. The current rate of $7.25 was set nearly a decade ago,” said Jay Carney, senior vice president of Amazon global corporate affairs.

(Reporting by Arjun Panchadar and Akanksha Rana in Bengaluru; Editing by Shailesh Kuber and Saumyadeb Chakrabarty)