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A New Bill Would Raise the Federal Minimum Wage To $25–Here's What To Know

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The legislation would mean workers for smaller employers would need to wait until 2038 for the same rise in minimum wages.

Rhenizara S / Getty Images

Key Takeaways

• A new bill proposes raising the federal minimum wage to $25 an hour by 2031 for large companies and eliminating sub-minimum wages for tipped workers, young workers and workers with disabilities.
• Critics argue that higher wages could increase prices and cut employment, while proponents say it could reduce poverty and help workers keep pace with inflation.

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A new bill introduced Tuesday by four Democratic members of Congress would raise the federal minimum wage to $25, up from $7.25.

The bill would require large employers to phase in $25 wages by 2031—workers for smaller employers would have until 2038. The bill would also abolish sub-minimum wages, the lower rates that apply to tipped workers, young workers and workers with disabilities.1

Rep. Delia Ramirez, D-Ill.; Rep. Chuy García, D-Ill.; Rep. Lateefah Simon, D-Calif.; and newly elected Rep. Analilia Mejia, D-N.J, introduced the bill, known as the Living Wage for All Act.2

What This Means For You

This bill would more than triple the federal minimum wage. Many states and cities already have higher local minimum wages that pay more than $7.25 an hour, but the highest local minimum wages top out at less than $22 an hour.3

Although many cities and states have raised their minimum wages above the federal minimum, there hasn't been an increase at the federal level since 2009.4

"This is unacceptable. No one working full time should be struggling to survive. We need an economy that reflects the realities of 2026, not one stuck over a decade ago," said Rep. Mejia in a press release.5

Related Education

What Are the Pros and Cons of Raising the Minimum Wage?

Which State Has the Highest Minimum Wage and Which States Will Raise Pay in the New Year

The bill would set "a standard that keeps the minimum wage aligned with typical wages across the economy."5 The mechanism in the Raise the Wage Act thus looks like other recent federal minimum-wage proposals, which aim to keep pace with median wages for workers rather than just inflation.

Thirty states have minimum wages above the federal minimum wage, and more workers live in states with a minimum wage of $15 or higher than in states at the $7.25 federal minimum.67

In January, 19 states increased their minimum wages.6

Seattle has one of the country's highest local minimum wages, at $21.30.3

Proponents of increasing the federal minimum wage argue it can reduce poverty and help workers cope with the rising cost of living, without negatively impacting employment.

Critics of higher minimum wages assert that raising wages could reduce employment and increase prices, as employers may pass on higher wage costs to consumers in the form of elevated prices.

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