As U.S. Debates Federal Minimum Wage Hike, U.K. Set to Raise Own Again

As the debate about increasing the federal minimum wage rages between both parties on Capitol Hill, across the Atlantic Ocean the U.K. is preparing for another imminent rise to its own.

The U.S. House of Representatives recently passed a $1.9 trillion COVID stimulus bill, called the American Rescue Plan, which includes a controversial provision to raise the federal minimum wage from $7.25 to $15.

Senators will likely strip this out, however, after the upper chamber's parliamentarian ruled that it can't be included under budget reconciliation rules. Reconciliation is the process by which Democrats hope to pass their relief package.

The U.K. government announced on Wednesday that a promised increase in the National Living Wage would go ahead as planned, despite the pandemic. The rise will increase the minimum wage to almost $12.50 per hour.

Rishi Sunak, the U.K. finance minister, made the announcement during the annual budget presentation in the House of Commons.

The National Living Wage will be raised from the present rate of £8.72 per hour ($12.18) to £8.91 per hour ($12.44). The change will come into effect in April.

The Conservative Party government has raised the living wage consistently every April since 2017. In 2016, it stood at £7.20 ($10.05).

Currently, the living wage is paid to people over the age of 25 and Sunak did not outline a change to this restriction when he confirmed the rise.

However, the U.K. government's website notes that from April 1 this year, people over the age of 23 will receive the National Living Wage.

Previously, all those under 25 were entitled to receive the National Minimum Wage, though the rate varies depending on a person's age.

For example, as of April, 2020 those aged between 21 and 24 were entitled to £8.20 ($11.45) per hour, while those aged 18 to 20 received £6.45 ($9.01).

Under the plans announced in November, these were due to rise in April to £8.36 ($11.68) and £6.56 ($9.16), respectively.

The national living wage will rise to £8.91 per hour from April #Budget2021

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— ITV News (@itvnews) March 3, 2021

"We've reaffirmed our commitment to end low pay, increasing the national living wage to £8.91 from April," said Sunak, a Conservative. "An annual pay rise of almost £350 [$488.77] for someone working full time on the National Living Wage."

Democrats have pushed for a significant increase in the U.S. federal minimum wage, which has not been increased since 2009. The last time Congress agreed to raise it was in 2007.

Congresswoman Alexandria Ocasio-Cortez (D-NY), a strong supporter of an increase, pointed to McDonald's workers in Denmark earning $22 per hour. She called $15 in the U.S. a "deep compromise."

Though the final version of the American Rescue Plan may not contain a minimum wage increase, some Republicans have indicated an openness to raising it through separate legislative action, though they are generally in favor of a lower rate than $15 per hour.

Senator Joe Manchin (D-WV), a Democrat who does not always vote along party lines, is a key figure in the debate.

The Senate is evenly divided, 50-50, between the Democratic caucus and Republicans. Tie-breaking votes go to Vice President Kamala Harris, giving Democrats the narrowest of majorities.

Manchin does not support raising the minimum wage to $15, and would prefer the federal level to be $11, leaving any further increases up to individual states.

Chancellor of the Exchequer Rishi Sunak
Chancellor of the Exchequer, Rishi Sunak stands outside 11 Downing Street ahead of the Chancellor of the Exchequer's delivery of the budget on March 3, 2021 in London, England. Sunak announced the National Living Wage would rise to almost $12.50. Chris J Ratcliffe/Getty Images