Federal Register - July 22, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 138 / Thursday, July 22, 2021 / Proposed Rules
workers, 17 million of whom would have their rate increased to the new minimum wage and ten million of whom may receive spillover effects.
Increasing the wage less, such as twelve dollars an hour or ten dollars an hour over the same time frame has commensurately smaller impacts on earnings.
a. Calculating Transfer Payments To estimate transfers, the Department used the population of affected workers estimated in section IV.B.4 and the CPS
data.
Hourly transfers are estimated as the difference between the average current hourly wage of workers with wages in the affected wage rate range and $15.67 68
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67 The Department notes that the minimum wage will be $15 in 2022, and thus could be deflated to
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Hourly transfers are then multiplied by average weekly hours in the industry and 52 weeks. Using wage data by industry results in Year 1 transfer payments $1.5 billion in 2020 dollars Table 9. 2019 transfers were inflated to 2020 dollars using the GDP deflator.69
be the comparable amount in 2019. The appropriate measure to use to deflate this wage is ambiguous;
the Department used $15, which may overestimate the number of affected workers.
68 For covered tipped workers, the $15 minimum wage will be phased-in through 2024. However, the Department uses the full $15 in Year 1. Calculating transfers based on a rate of $15 in 2022 will overestimate the transfers for tipped workers in Year 1. However, the Department believes there are few tipped workers covered by Federal contracts, so the overestimate is likely small relative to total transfers.
69 Bureau of Economic Analysis. 2021. Table 1.1.9. Implicit Price Deflators for Gross Domestic Product. https www.bea.gov/data/prices-inflation/
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There are several reasons Year 1
transfers may be overor underestimated, but the Department believes the net effect is an overestimation. First, as noted in section IV.B.3., the Department assumed all workers would be affected in Year 1, whereas in reality some will not receive transfers until later years. Second, some workers will not be impacted until partway through 2022. For example, many contracts may not be impacted until the beginning of the fiscal year on October 1, 2022. Therefore, annualizing Year 1 transfers for a full 52 weeks should result in an overestimate.
Conversely, transfers may be underestimated because the Department did not account for higher overtime pay premiums due to an increase in the regular rate of pay.
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