H.R.3438 - Fair Wage Act of 2025 (119th Congress)
Summary
H.R.3438, the Fair Wage Act of 2025, proposes amendments to the Fair Labor Standards Act of 1938. The bill introduces a cost-of-living based minimum wage that varies by metropolitan statistical area or nonmetropolitan portion, using regional price parities to adjust the wage. It also modifies the minimum wage for tipped employees and newly hired employees who are 18 years old or younger.
Expected Effects
The likely effect of this bill would be a restructuring of minimum wage standards across the United States. Wages would become more closely tied to the cost of living in specific regions. This could lead to higher wages in some areas and potentially affect employment levels and business operations.
Potential Benefits
- Increased wages for low-income workers, potentially improving their living standards.
- Regional adjustment of wages to reflect the actual cost of living, addressing disparities.
- Reduced reliance on tips for tipped employees, providing more stable income.
- Potential stimulus to local economies as low-wage workers have more disposable income.
- Could lead to reduced poverty rates in high-cost areas.
Potential Disadvantages
- Potential for job losses as businesses adjust to higher labor costs.
- Increased operating costs for businesses, particularly small businesses, potentially leading to higher prices for consumers.
- Complexity in administering and enforcing the geographically variable minimum wage.
- Possible inflationary pressures in areas with higher minimum wages.
- The formula for determining minimum wage may not accurately reflect the true cost of living in all areas.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the spirit of promoting the general welfare, as stated in the Preamble of the US Constitution. Congress has the power to regulate commerce, including labor standards, under Article I, Section 8, Clause 3 (the Commerce Clause). The bill does not appear to infringe on any specific constitutional rights or freedoms.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).