- minimum wage won’t make it into Biden’s
.9-trillion COVID-19 relief bill — lawmakers have other ideas
- What a minimum wage would mean
- Raising the minimum wage to or instead
- A regional approach to raising the minimum wage to
- Raising the minimum for ‘big business’ only
- A Minimum Wage Can’t Be Included In Biden’s
.9 Trillion Stimulus Plan, Senate Official Rules
- Key Background
- What To Watch For
- What We Don’t Know
- Further Reading
$15 minimum wage won’t make it into Biden’s $1.9-trillion COVID-19 relief bill — lawmakers have other ideas
Democratic lawmakers pushing to increase the federal minimum wage to $15 an hour were elated when President Joe Biden included it in his $1.9 trillion stimulus proposal. They hoped the urgency to pass a third COVID-19 relief package would fast-track a decades-long standstill on raising the minimum wage.
But that may have been wishful thinking: Senate parliamentarian Elizabeth MacDonough last week ruled against passing minimum-wage legislation through the budget-reconciliation process.
On Saturday, the House approved the stimulus plan, and sent it to the Senate.
Many Democratic and Republican lawmakers weren’t surprised by MacDonough’s ruling.
“The sooner we pass the bill and it is signed, the sooner we can make the progress that this legislation is all about — saving the lives and the livelihood of the American people,” House Majority Leader Nancy Pelosi (D., Calif.), said at a news conference Friday.
But there are plenty of other paths lawmakers can pursue to raise the federal minimum wage, which has been $7.25 an hour for over a decade, said Jim Kessler, a former aide to Senate Majority Leader Chuck Schumer (D., N.Y.).
“This is not the only shot at passing the minimum wage,” said Kessler, the executive vice president for policy at Third Way, a centrist think tank. “Democrats are unanimous that they want to raise the minimum wage. The question is, what level and how fast?”
What a $15 minimum wage would mean
If the federal minimum wage increases to $15 by 2025, some 17 million workers would be “directly affected” and see their wages go up, according to a report published earlier this month by the Congressional Budget Office, a nonpartisan federal agency. Some 900,000 Americans would no longer be living below poverty levels if a $15-an-hour minimum wage were enacted, the CBO estimated.
The downside, though, is that 1.4 million workers could become unemployed as a result, according to the CBO’s average estimate. The agency says jobs are lost because higher wages lead to higher costs for businesses, which they in turn pass on to customers in the form of higher prices. That leads to consumers buying less of their goods and services, the CBO said.
“ “If the federal minimum wage increases to $15 by 2025, some 17 million workers would be ‘directly affected’ and see their wages go up.” ”
— Congressional Budget Office report
Biden contested the CBO report during a Feb. 16 CNN town hall. “There is equally as much, if not more, evidence to dictate that it would grow the economy and, long-run and medium-run, benefit small businesses as well as large businesses, and it would not have such a dilatory effect,” he said. “But that’s a debatable issue.”
Two key moderate Democratic senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, oppose raising the federal minimum wage to $15 an hour. “Putting $15 out there right now just makes it very difficult in rural America, we have small businesses,” Manchin told the Wall Street Journal this week.
On top of that, at least 10 other Democratic senators haven’t publicly expressed their opinion on raising the minimum to $15 an hour.
“ ‘Putting $15 out there right now just makes it very difficult in rural America, we have small businesses.’ ”
— Sen. Joe Manchin, D-W.V.
“We’re not going to get a $15 minimum wage that kicks in by 2025,” said Harry Holzer, a public policy professor at Georgetown University. If proponents of raising the minimum wage want to see any change, he added, they’ll have to compromise.
Here are some possible options:
Raising the minimum wage to $11 or $12 instead
Lawmakers from predominantly rural states where the cost of living is significantly lower than in states New York and California worry that their constituents won’t be able to afford paying employees $15 an hour.
And ultimately, it’s not in Schumer’s best interest to “corner” Manchin and Sinema into voting for a $15 minimum wage by tying it into an overarching stimulus package, because they’ll vote against it, Holzer said.
But there is a “good chance” the majority leader could get those two senators and “a small number of Republicans” to agree to raise the minimum wage within the $10- to $12-an-hour range, Holzer said.
That would boost wages for more than 5 million Americans by 2025, according to previous CBO estimates, while leaving at least 300,000 Americans unemployed as a result.
“My hunch is that it would be easiest to pass minimum-wage legislation that targets $11 to $12 an hour,” said Sarah Binder, a political scientist at George Washington University.
White House press secretary Jen Psaki declined to comment Wednesday on whether Biden would support an hourly minimum wage below $15.
Separately, five Republican senators — Mitt Romney, Tom Cotton, Shelley Moore Capito, Susan Collins and Rob Portman — proposed legislation that would raise the federal minimum wage to $10 an hour by 2025.
Their proposal, un prior Democratic proposals to increase the minimum wage, mandates employers to E-Verify that their employees are U.S. citizens.
A regional approach to raising the minimum wage to $15
Instead of mandating all states to adhere to the same yearly schedule for minimum wage hikes, Kessler suggests that lawmakers consider a regional approach.
This would allow “different regions of the country to get to $15 minimum wage at different times,” he said.
Another option Kessler previously proposed is to replace the single federal minimum wage “with five regional minimum wages regional cost variations.”
Raising the minimum for ‘big business’ only
Sen. Josh Hawley (R., Mo) said he is in favor of raising the minimum to $15 an hour for “big business, not small business.”
Sen. Bernie Sanders (I., Vt) and Sen. Ron Wyden (D., Ore.) said they are also exploring legislation that would tax large corporations that don’t pay their employees at least $15 an hour.
“As chair of the Finance Committee, I’ve been working on a ‘plan B’ to make big corporations pay for mistreating their workers,” Wyden said in a statement. “My plan would impose a 5 percent penalty on a big corporations’ total payroll if any workers earn less than a certain amount.”
Some corporations including Amazon AMZN, +0.19%, Target TGT, +4.28% and Best Buy BBY, +3.14% have already raised their based wages to $15 an hour. And on Thursday Costco COST, +1.64% CEO Craig Jelinek announced that the warehouse retailer will raise the minimum wage for its U.S. workers to $16 per hour at a Senate Budget Committee hearing led by Sanders.
“This isn’t altruism,” Jelinek said. “At Costco we know that paying employees good wages and providing affordable benefits makes sense for our business and constitutes a significant competitive advantage for us.”
But even as more retail giants their base wages, it’s unly that Democratic lawmakers will abandon their longstanding promise to raise the federal minimum wage for all workers to $15 an hour, said Binder, who is also a congressional expert at the Brookings Institution, a left-leaning think tank.
“It could create fodder for Republicans and give them a reason not to play ball on finding a resolution on wage hikes,” she added.
A $15 Minimum Wage Can’t Be Included In Biden’s $1.9 Trillion Stimulus Plan, Senate Official Rules
Updated Feb 25, 2021, 07:48pm EST
A key advisor to the U.S. Senate on the chamber’s rules and procedures said Thursday that a $15 national minimum wage—a major priority for President Biden and progressive Democrats—cannot be included in the $1.9 trillion stimulus bill Democrats are pushing through Congress under budget reconciliation rules.
U.S. President Joe Biden speaks at an event to sign an Executive Order on the economy with Vice … [+] President Kamala Harris February 24, 2021 in the State Dining Room of the White House in Washington, DC.
The special budget process will allow Democrats, who now control the Senate by the slimmest of margins, to pass Biden’s aggressive stimulus proposal without any Republican votes, but reconciliation rules also require that every provision in the legislation have a direct impact on the federal budget.
Elizabeth MacDonough, the Senate’s parliamentarian, said Thursdaythat the wage hike does not meet the criteria to be included in the bill under the special reconciliation process, according to multiple news reports.
The push for a $15 minimum wage emerged as a divisive issue this month as lawmakers began crafting the sweeping rescue package.
Republicans objected to the provision on the basis that it would be too expensive for businesses and could actually cost jobs.
Conservative Democratic Sen. Joe Manchin of West Virginia has said he objects to the wage hike (he has suggested that an $11 per hour national minimum wage would make more sense for his state), as has Sen. Krysten Sinema (D-Ariz.).
“We must pass a minimum wage bill,” House Speaker Nancy Pelosi (D-Calif.) said during a press briefing Thursday morning. She added that Congress last passed a wage hike 14 years ago, when Democrats raised the federal minimum to $7.25 per hour.
Biden’s $1.9 trillion American Rescue Plan includes another round of $1,400 stimulus checks for individuals—another sticking point for some lawmakers.
The proposal also includes expanded federal unemployment insurance of $400 per week through the end of August, a major expansion of the child tax credit, $130 billion for schools, $160 billion for coronavirus testing, tracing, and vaccines, roughly $7 billion for small businesses and $350 billion for state and local governments.
On Tuesday, Republican Sens. Tom Cotton of Arkansas and Mitt Romney of Utah introduced a counterproposal to raise the minimum wage to $10 by 2025 and then index the wage to inflation every two years.
That plan would grant businesses with fewer than 20 employees an extra two years to comply with the federal minimum, and it would require that employers verify the legal state of their workers. Sens. Shelley Moore Capito (R-W.Va.), Susan Collins (R-Maine) and Rob Portman (R-Ohio) signed onto that plan on Thursday, one day after Sen. Josh Hawley (R-Mo.) introduced another alternative.
Hawley’s plan would send quarterly refundable tax credits to workers earning less than $16.50 per hour. The tax credits would only go to those workers with valid Social Security numbers.
What To Watch For
The House of Representatives will vote on its version of the $1.9 trillion American Rescue Plan Friday.The Senate will also assemble its own version of the legislation, and the two bills must be reconciled before they are sent to Biden’s desk.
What We Don’t Know
The Washington Post reported Thursday afternoon that House Democrats still planned to include the $15 minimum wage provision in the bill if the parliamentarian voted against them, butHouse Majority Leader Steny Hoyer (D-Md.
) told CNN Thursday evening that Democrats hadn’t yet made that decision.
It’s not yet clear whether Democrats will pursue a narrower compromise that might attract enough bipartisan support to pass as a standalone bill outside of the reconciliation process.
Republican Senators Unveil $10 Minimum Wage Plan To Counter Democrats' $15 An Hour Proposal (Forbes)
Democrats Await Key Ruling On $15 Minimum Wage In Biden’s $1.9 Trillion Stimulus Package (Forbes)
It’s A Big Week For Biden’s $1.9 Trillion Stimulus Plan—Here’s What To Watch For (Forbes)
Sanders 'Confident' $15 Minimum Wage Will Pass Senate Without Republican Support (Forbes)