Senate Democrats are seeking another way to raise hourly wages for Americans after suffering a blow Thursday when a key Senate official ruled a minimum wage hike to $15 an hour could not stay in President Joe Biden’s COVID-19 stimulus plan making its way through Congress.
Senate Majority Leader Chuck Schumer, D-N.Y., was considering amending the massive $1.9-trillion legislation with a provision to penalize large corporations who did not pay their workers at least $15 per hour, according to a senior Democratic aide speaking on condition of anonymity, though the details of the provision were not yet available.
Sen. Ron Wyden, D-Ore., who chairs the Senate Finance Committee, said Friday he would work to amend the stimulus plan to tax 5% of corporations’ total payroll if workers earned less than a certain amount. His proposal would also provide income tax credits to small businesses equal to up to 25% of wages, up to $10,000 per year per employer, if they paid their workers higher wages.
Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats, said Thursday evening following the ruling he would work with Senate colleagues to amend the bill to strip tax breaks from large corporations who do not pay workers at least $15 an hour and to provide incentives to small businesses to raise wages.
Senate Parliamentarian Elizabeth MacDonough ruled Thursday the provision raising the wage from $7.25 to $15 by 2025 would have to be removed and considered as a standalone bill or as part of other legislation. The senators’ proposed changes would also be subject to rulings by the parliamentarian.
The ruling is key because the COVID relief package is being considered under “reconciliation” rules that bypass the filibuster and allow a simple majority to pass the bill. Progressives who have been pushing for the $15 wage hike say attaching the provision to Biden’s American Rescue Plan legislation was their best shot because a standalone measure would require at least 10 Republicans to overcome a filibuster.
Progressive House Democrats, many of whom said the $15 minimum wage was a key part of the relief proposal, expressed their displeasure with the parliamentarian’s decision and signaled they would continue to push for the minimum wage.
Rep. Alexandria Ocasio-Cortez, D-N.Y., told reporters on Capitol Hill “a tax break is just not a replacement” for a minimum wage increase, referring to the proposals in the Senate, but said, “I think that Sen. Sanders is doing the right thing by trying to include something last minute.”
Rep. Pramila Jayapal, D-Wash., who chairs the Congressional Progressive Caucus, said the parliamentarian’s ruling was just an “advisory opinion.”
“We had Black, brown, indigenous, working poor people who came out and voted for us. And now we have to show that it’s going to make a difference that we’re not going to get caught up in the tyranny of the minority that exists in the Senate,” she said.
Democrats were not alone in proposing wage hikes after the parliamentarian’s ruling. Sen. Josh Hawley, R-Mo., said Friday he would propose legislation to require corporations with annual revenues of $1 billion or more to pay employees at least $15 an hour.
Other senators have proposed smaller wage increases.
Sen. Joe Manchin, D-W.V., who opposed the $15 wage, has proposed an increase to $11.
GOP Sens. Mitt Romney and Tom Cotton are proposing a $10 wage but only if businesses are required to use the internet-based E-Verify system designed to prevent employers from hiring undocumented workers.
Both senators say their proposal provides a dual benefit for American workers: raising the pay floor for the first time in more than a decade while also ensuring that documented employees would be the beneficiaries.
Congress hasn’t raised the federal minimum wage – currently, $7.25 an hour – since 2007, even though a recent Pew Research poll shows Americans overwhelmingly favor an increase. Then-President Barack Obama called on Congress to boost the minimum wage in 2014, but the effort went nowhere. The House voted in 2019 to raise the minimum wage to $15 an hour, only to see the Senate kill the proposal.
Currently, 31 states have a minimum wage law that allows at least some workers to be paid less than $10, according to the U.S. Department of Labor. No state has a minimum wage at $15 or above.
A Congressional Budget Office analysis released earlier this month estimated that raising the minimum wage to $15 an hour would boost the pay for as many as 27 million Americans and lift nearly 1 million out of poverty but also would result in the loss of as many as 1.4 million jobs.
Higher wages increase the cost to employers of producing goods and services, and those costs are generally passed on to consumers who usually react by purchasing fewer goods and services, according to the CBO. As a consequence, employers faced with having to scale back their output usually cut back their workforce.
Backers of the Romney-Cotton bill, called the Higher Wages for American Workers Act, say a $10 wage phased in through 2025 (and then indexed to inflation after that) would cost no more than 100,000 jobs and would raise wages for approximately 3.5 million Americans.
And by mandating E-Verify within 18 months of the law’s signing, they say the proposal “would preserve American jobs for legal workers and remove incentives for increased illegal immigration.”