$15 minimum wage increase can’t go in COVID relief legislation, Senate official rules

WASHINGTON – Backers of a push to raise the federal hourly minimum wage to $15 suffered a key loss Thursday after a Senate official ruled the controversial measure cannot be considered as part of President Joe Biden’s $1.9 trillion COVID relief package making its way through Congress.

Under the decision from Senate Parliamentarian Elizabeth MacDonough, the provision raising the the wage from $7.25 to $15 by 2025 will have to be removed and considered as a standalone bill or as part of other legislation.

“We are deeply disappointed in this decision,” Majority Chuck Schumer, D-N.Y., said in a statement Thursday night. “We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families. The American people deserve it, and we are committed to making it a reality.”

The ruling is key because the COVID relief package is being considered under 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 this was their best shot because at least 10 Republicans would be required to overcome a filibuster.

Service industry workers listen to remarks and hold up signs during a rally in support of the Raise the Wage Act, which includes a $15 minimum wage for tipped workers and is included in President Joe Biden's American Rescue Plan, at the National Mall on Jan. 26, 2021, in Washington, D.C.

Sen. Bernie Sanders, the Vermont independent who is leading the charge for a $15 wage, said on Wednesday the proposal wouldn’t stand a chance of passing if it wasn’t attached to the relief package.

“As of now, there’s not one Republican who will support a $15 an hour minimum,” he told MSNBC’s All In With Chris Hayes” Wednesday night. “The only way that we are going to raise the minimum wage is through reconciliation or ending the filibuster.”

The ruling is a win for Republicans who argued that doubling the minimum wage would cost jobs and hamper the country’s recovery from the economic fallout posed by the nearly yearlong pandemic.

Sen. Lindsey Graham, R-S.C., the top Republican on the Budget Committee, said he was “very pleased” by the decision.

“This decision reinforces reconciliation cannot be used as a vehicle to pass major legislative change – by either party – on a simple majority vote,” he said.

Democrats, who expect to pass the relief package in the House Friday, are using a process called “reconciliation” to approve the COVID relief package in the Senate as early as next week.

The designation allows certain budget-related bills to bypass filibuster rules that would require 60 votes and be approved by a simple majority. But reconciliation also triggers Senate rules that require provisions of the bill be tied directly to the budget.

That’s where the parliamentarian comes in. McDonough, who has served under both Democratic and Republican majority leaders, was asked to determine whether provisions like a minimum wage increase would qualify. She ruled it did not.

Democrats argued it did qualify, pointing to a Congressional Budget Office analysis of the effects a minimum wage increase would have on the federal budget.

CBO found that the cumulative budget deficit over the next decade would increase by $54 billion, that higher prices for goods and services due to increased labor costs would boost federal spending, and that changes in employment and income distribution would affect government spending on programs such as unemployment compensation and nutrition programs.

The ruling comes as other proposals to raise the minimum wage have emerged.

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.

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.

The CBO 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.

Higher wages can also have an impact on the people that are supposed to benefit, said Rachel Greszler, a research fellow in economics, budget, and entitlements at the Heritage Foundation, a conservative think tank.

Extra pay would force some families into higher income brackets, disqualifying them from subsidies that help offset college tuition or child care costs, and it would force businesses to cut back, she told a House Small Business subcommittee Wednesday.

“For anyone who doubts that doubling the minimum wage will cause substantial disruption and harm, consider if your mortgage payment or rent were to double,” she said. “That would likely require a lot of changes, and sometimes those changes end up hurting the people they’re aiming to help.”

But Rebecca Hamilton, co-CEO of New Hampshire-based W.S. Badger Company, which makes skincare products, told the committee that paying her employees no less than $15 an hour has helped her small firm.

“This approach has enabled us to spend virtually zero dollars on recruitment while retaining an engaged and committed workforce for the past 25 years,” she told lawmakers. “By retaining experience staff, we’ve seen increased productivity, less waste and fewer errors which is important in a manufacturing facility … The success of our business is directly tied to the dedication of our staff.”

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