Raise the Wage Act Proposes Phased $17 Federal Minimum Wage, Eliminates Lower Pay Tiers

The Raise the Wage Act of 2025 proposes a significant overhaul of the federal minimum wage, amending the Fair Labor Standards Act of 1938 (FLSA). The core change involves gradually increasing the standard federal minimum wage from its current level to $17.00 per hour over a five-year period, starting three months after the bill's enactment date. Following this initial phase, the minimum wage would be adjusted annually based on the percentage increase in the median hourly wage of all employees, as calculated by the Bureau of Labor Statistics.

The Climb: Year-by-Year Increases

This bill sets out a clear schedule for wage bumps. Starting on the effective date, the minimum wage jumps to $9.50 an hour. It then climbs annually: $11.00 in year two, $12.50 in year three, $14.00 in year four, $15.50 in year five, and finally reaching $17.00 in year six (Section 2). For someone working full-time at the minimum wage, this structured increase provides a predictable path for wage growth over the next half-decade. After hitting $17.00, future increases aren't fixed dollar amounts but will rise with the national median wage, aiming to keep pace with overall earnings trends. The Secretary of Labor is required to publish notice of these increases 60 days in advance (Section 5).

Leveling the Field: Phasing Out Subminimum Wages

A major component of this act is the elimination of lower minimum wages for specific groups. For tipped employees, the current system allowing a lower base wage ($2.13/hour federally, if tips make up the difference) is phased out (Section 3). Their required cash wage increases annually, starting at $6.00, hitting $17.00 in year seven, and matching the standard minimum wage from year eight onwards. Employers must ensure employees retain all tips. Similarly, the provision allowing employers to pay workers under 20 a lower training wage for their first 90 days is adjusted (Section 4). Their minimum starts at $6.00 and increases annually until it matches the standard rate, at which point the separate category is repealed. Finally, the act addresses wages for individuals with disabilities employed under special certificates (Section 14(c) of the FLSA). It raises their minimum wage incrementally from $5.00 to eventually match the standard minimum wage (Section 6). Crucially, it prohibits issuing new Section 14(c) certificates and phases out the program entirely once the wage parity is reached, while providing technical assistance to employers during the transition.

Putting It Into Practice

Beyond the wage rates, the bill includes operational details. The changes generally take effect three months after enactment, unless specified otherwise (Section 7). The requirement for the Department of Labor to provide advance notice helps businesses prepare for upcoming wage adjustments. The phase-out of Section 14(c) certificates represents a significant policy shift, moving away from subminimum wages for workers with disabilities towards integrated employment at the standard minimum wage. This multi-year, multi-faceted approach means individuals and businesses will need to track several different wage schedules depending on the employee category, particularly during the transition years before wage parity is achieved across the board.