Bill Overview
Title: RAISE Act of 2022
Description: This bill allows employers a tax credit for 10% of the excess of the aggregate amount of wages paid to specified employees (i.e., continuously-employed employees whose earned wages do not exceed $75,000 in a calendar year) in a taxable year, over the aggregate amount of wages paid to such employees during the immediately preceding calendar year. The amount of such credit may not exceed $500,000 for any employer in any taxable year.
Sponsors: Rep. Ruiz, Raul [D-CA-36]
Target Audience
Population: Individuals earning wages not exceeding $75,000 annually globally
Estimated Size: 86000000
- The RAISE Act of 2022 focuses on specified employees with earnings not exceeding $75,000 annually. Thus, it targets lower to middle-income employees, who are a significant segment of the workforce.
- According to the Bureau of Labor Statistics, a substantial proportion of the American workforce earns below $75,000 annually, especially in sectors like retail, education, and healthcare support.
- The bill incentivizes employers to increase wages by offering a tax credit, which could potentially impact a large number of wage earners by encouraging wage increases.
- The global estimate assumes a proportional distribution of similar wage demographics as in the US in other economically similar countries, but the impact is more direct in the US where the tax law is implemented.
Reasoning
- The RAISE Act of 2022 specifically targets workers earning under $75,000 annually by incentivizing employers to increase their wages through a tax credit. This is aimed at a considerable portion of the civilian labor force in the U.S., providing a boost to both employees who might see salary increases and employers who are rewarded for such actions with tax credits.
- Given the policy's budget and target demographic, it's expected to have varying levels of impact across different sectors—particularly those with a high number of lower to middle-income employees, such as retail, healthcare, and education.
- The policy is limited by a budget constraint, implying not all employers can maximize the benefit, which could result in uneven distribution of wage increases. Also, while the maximum credit per employer is set at $500,000, this may limit the scope for larger employers with larger workforces.
- We've selected individuals representing the diversity of the workforce earning below $75,000 across different locations and industries to simulate potential impacts and self-reported wellbeing changes within this demographic range.
Simulated Interviews
Retail Sales Associate (Dallas, Texas)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I think any policy that helps increase wages is great, especially for single parents like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Administrative Assistant (New York City, New York)
Age: 42 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 10/20
Statement of Opinion:
- It's a helpful start, but in a city like NYC, we need more than a 10% wage increase.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 5 |
Construction Worker (Miami, Florida)
Age: 34 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- I welcome anything that can help boost my paycheck. It’ll be good for us as we start our family.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Barista (Boise, Idaho)
Age: 22 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- I think it’s a great idea, but I'm unsure how much change I'll see soon with my current job.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Home Healthcare Aide (Cleveland, Ohio)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- Every little bit helps, but healthcare work needs more recognition in terms of pay.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Freelance Graphic Designer (San Francisco, California)
Age: 31 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 9/20
Statement of Opinion:
- I like the idea, but as a freelancer, I fear I might not see much change directly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Elementary School Teacher (Phoenix, Arizona)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 13/20
Statement of Opinion:
- Education needs all the help it can get, but will schools actually use these incentives to pay us more?
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Factory Worker (Detroit, Michigan)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 14/20
Statement of Opinion:
- I think this could be great, especially for keeping stable work available.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Restaurant Server (Chicago, Illinois)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 8.0 years
Commonness: 15/20
Statement of Opinion:
- My tips aren't guaranteed, so any wage increase program is a positive possibility for me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
IT Support Specialist (Houston, Texas)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 12/20
Statement of Opinion:
- I appreciate the government supporting wage increases, but I'm not sure how much it will benefit in a competitive tech market.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $3000000000 (Low: $2000000000, High: $3500000000)
Year 2: $3100000000 (Low: $2050000000, High: $3600000000)
Year 3: $3200000000 (Low: $2100000000, High: $3700000000)
Year 5: $3400000000 (Low: $2300000000, High: $3900000000)
Year 10: $3700000000 (Low: $2500000000, High: $4200000000)
Year 100: $4500000000 (Low: $3000000000, High: $5000000000)
Key Considerations
- Potential for significant wage increases among lower to middle-income earners.
- Impact on tax revenue in the short term due to credits given for wage increases.
- Long-term economic benefits potential through increased consumer spending and disposable income.
- Caps on the amount of credit per employer could limit overall costs but also influence employer participation.