A bill in Congress could raise the federal minimum wage to $25 an hour for workers at large employers such as Walmart and Target, but lawmakers must act before the current congressional session ends on January 3, 2027.
Federal minimum wage has stayed at $7.25 since 2009
The federal minimum wage remains at $7.25 an hour, where it has stood since 2009. Several states have introduced higher wage floors, but there has been no federal increase for more than 17 years.
The Living Wage for All Act, introduced in April by Democratic Representative Delia Ramirez of Illinois, seeks to change that.
Bill targets a $25 minimum wage by 2031
Under the proposal, large employers would gradually move toward a $25 hourly minimum wage by 2031. Other employers would have until 2038 to reach the proposed $25 rate.
The legislation would also link future federal wage increases to two-thirds of the national median hourly wage. This would create a formula for future increases rather than relying solely on individual votes in Congress.
Tipped workers could see their wage rules change
The bill also proposes phasing out lower federal minimum wage rates for tipped workers. Under the proposed system, tipped employees would gradually move toward the same minimum wage as workers who do not receive tips.
The change could affect businesses that currently rely on a lower direct wage for tipped staff alongside customer tips.
Supporters say workers need higher pay
Representative Ramirez has argued that the federal minimum wage no longer reflects the cost of living faced by many workers. When introducing the legislation, she said companies were reporting strong earnings while many workers were struggling financially.
The proposal has received backing from several labour unions. April Verrett, president of the Service Employees International Union, described the proposal as an important step towards higher wages.
Critics warn of potential job losses
The bill has also faced opposition from business and employment groups. Rebekah Paxton, research director at the Employment Policies Institute, argued that large mandated wage increases could have negative consequences for employment.
She said the proposed changes could result in five million fewer jobs nationwide. That figure is an estimate cited by opponents of the legislation rather than a confirmed forecast of future job losses.
Congress faces a January deadline
The Living Wage for All Act has been before Congress for several months. Lawmakers would need to pass it before the current congressional session ends on January 3, 2027.
If that does not happen, the legislation would have to be introduced again during the next congressional session. The bill has therefore not yet changed the federal minimum wage.
Walmart and Target are not facing a $25 wage requirement yet
The proposed legislation could eventually cover large employers such as Walmart and Target, but neither company is currently required by federal law to pay a $25 hourly minimum.
The proposal would need to pass Congress and become law before its wage provisions could take effect. For now, the federal minimum remains $7.25 an hour, while individual states and local authorities can set higher rates.
The coming months will determine whether Congress takes up the proposed federal increase before the January deadline.
