The Raise the Wage Act of 2023, by increasing the federal minimum wage above $7.25 an hour for the first time in more than a decade, would boost spending for major federal healthcare programs by about $27 billion from 2024 to 2033 if enacted in April, according to a new report from the nonpartisan Congressional Budget Office.
The report was prepared in response to a request by Sen. Bill Cassidy, MD (R-LA), the ranking member of the Senate Committee on Health, Education, Labor and Pensions.
The act was introduced in Congress last summer. Under it, the minimum wage would be increased, in annual increments, to $17 per hour by July 2029. The first increase would bring the federal minimum wage to $9.50 on July 1.
Most low-wage workers would be covered by the bill, although it would not apply to self-employed individuals, “casual” babysitters or some seasonal workers. Some of the effects would be felt by workers employed in nursing homes and home health, according to the CBO, because Medicaid and Medicare programs pay for much of the care in those settings.
The bill’s enactment would reduce federal spending in some areas, however, according to the CBO. For instance, according to the report, Medicaid spending would be reduced due to changes in the distribution of income and increased spending for subsidies for health insurance obtained through the marketplaces established by the Affordable Care Act, “because more people would qualify for such benefits.”
Social Security also could be affected by the legislation, according to the report, because of increases in average benefits.
“Those benefits would increase in part because initial benefits are indexed to economywide average wages, which would be boosted by a higher minimum wage,” the CBO said. “In CBO’s assessment, those benefits would also increase because raising the minimum wage would increase prices, which would in turn boost annual cost-of-living increases for Social Security recipients.”
The legislation was spearheaded by Sen. Bernie Sanders (I-VT), chair of the Senate HELP Committee.
Sanders called the current federal minimum wage a “starvation wage,” noting that for a 40-hour work week, the minimum wage works out to approximately $15,000 per year, an amount that is below the federal poverty line for a two-person household.
“At a time of massive income and wealth inequality and record-breaking corporate profits, we can no longer tolerate millions of workers being unable to feed their families because they are working for totally inadequate wages,” Sanders said last July.
“The Raise the Wage Act will increase the pay and standard of living for nearly 28 million workers across this country,” Rep. Robert C. “Bobby” Scott (D-VA) said.
The bill is a reboot of 2021 legislation of the same name, which failed to gain traction. It was estimated at that time that the bill would affect 2 million direct care workers
According to CBO, if the bill becomes law, the cumulative budget deficit over the 2024-to-2033 period would increase by $46 billion.
States with their own minimum wage rate can exceed the federal minimum level. Twenty-two states raised their minimum wage on Jan. 1. States that introduced minimum wage increases include Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont and Washington.
