Bill Proposes Phased $17 Federal Minimum Wage, Eliminates Lower Tipped Wage Over 6 Years

This proposed legislation, the 'Raise the Wage Act of 2025,' outlines a multi-year plan to increase the federal minimum wage. If enacted, the standard minimum wage would rise incrementally from its current level, starting at $9.50 per hour shortly after the bill takes effect, and reaching $17.00 per hour five years later. Beyond that point, the minimum wage wouldn't be static; starting in the sixth year, it would be adjusted annually by the Secretary of Labor based on the growth in median hourly wages across the country, ensuring it keeps pace with overall wage trends.

The Pay Bump Breakdown

The bill sets a clear schedule for wage increases under Section 2: $9.50 initially, then stepping up yearly to $11.00, $12.50, $14.00, $15.50, and finally $17.00 by the fifth year. Think of it like a staircase for the wage floor. After hitting $17.00, the annual adjustment kicks in, calculated using Bureau of Labor Statistics data on median hourly wages. This means future increases would reflect broader economic wage growth, rounded to the nearest nickel. The Secretary of Labor is required to announce these annual updates publicly at least 90 days before they take effect.

Big Changes for Tipped Workers

For anyone working for tips, like servers or bartenders, this bill brings significant changes (Section 3). Currently, employers can pay a lower base wage if tips bring the total earnings up to the standard minimum. This bill gradually increases that base tipped wage over six years, starting at $6.00 and eventually reaching $17.00 in year six. Crucially, one day after the tipped base wage hits $17.00, the concept of a separate, lower minimum wage for tipped employees is eliminated entirely. They would then be entitled to the full standard minimum wage directly from their employer, plus any tips they receive. The bill reinforces that employers must inform employees that they retain all tips.

Adjusting Wages for Younger Workers and Individuals with Disabilities

The legislation also addresses specific wage categories. Currently, employers can pay workers under 20 a lower wage ($4.25/hour) for their first 90 days. Section 4 increases this initial wage to $6.00 and then raises it annually until it matches the standard minimum wage, after which this separate youth minimum wage provision is repealed. Similarly, Section 6 tackles the controversial Section 14(c) program, which allows certain employers to pay workers with disabilities less than the minimum wage under special certificates. This bill increases the minimum pay for these workers incrementally, starting at $5.00 per hour and rising annually until it reaches the standard $17.00 minimum wage. Importantly, no new special certificates would be issued after the bill's enactment, and existing certificates would become invalid after the final wage increase takes effect, effectively phasing out the subminimum wage for individuals with disabilities. The Department of Labor would provide technical assistance to help employers transition.

Getting the Word Out

To ensure everyone is aware of the changes, the Secretary of Labor is tasked under Section 5 with publishing notices of all wage increases in the Federal Register and on the Department of Labor website at least 60 days before they become effective. Unless specified otherwise, the changes outlined in the act would generally take effect on the first day of the third month after the bill is signed into law (Section 7).