It’s no secret that increasing the minimum wage through President Joe Biden’s proposed $1.9 trillion stimulus bill will be a tall task.
Passing a minimum wage increase in the stimulus bill has two huge obstacles. One is that several moderate Democratic senators, namely Joe Manchin of West Virginia, remain lukewarm to the proposal. Secondly, there are questions on whether a minimum wage increase can be approved through the budget reconciliation process in the Senate.
The Democrats propose hiking the federal minimum wage from $7.25 an hour to $15 an hour by 2025. Also, it would continually adjust the minimum wage to reflect the cost of living.
Generally bills in the US Senate either need 60 votes to avoid a legislative filibuster, or a simple majority if the budget reconciliation process is used. But in order to use the budget reconciliation process, the bill has to be in agreement with the “Byrd Rule.”
The Byrd Rule in general requires that a proposal must produce a change in government spending or revenue, or change the federal deficit. While spending on a stimulus bill should pass the Byrd Rule, there are questions on whether the minimum wage increase would affect government spending or revenue.
Sen. Bernie Sanders is asking the Senate parliamentarian to adjudicate whether the minimum wage proposal can go through the budget reconciliation process. If it can’t, the bill would require 60 votes for passage. In an evenly divided Senate, it would seem unlikely a $15 minimum wage proposal would garner 10 Republican votes.
White House press secretary Jen Psaki said Friday that despite expressing some doubts, Biden remains committed to get the minimum wage increase passed.
“He would not have put it in the bill if he did not want the minimum wage to be increased,” Psaki said. “That's what he wants to see the outcome as, but he also knows, through many, many decades of working through legislation, that the bill that comes out the other end may not look exactly the same as the bill coming in. And there's several steps.”
Psaki responded to reports that Biden told a group of governors that he doesn’t expect a minimum wage increase through reconciliation.
“He said what he had said publicly about a week and a half earlier during a CBS interview, which is that, you know, he is looking at -- he was in the Senate for 36 years, he knows it has to go through a process -- through the parliamentarian in the Senate,” Psaki said. “He put the minimum wage -- an increase in the minimum wage in his bill because he hopes that it is -- because he feels that it is long overdue for that to be raised for American workers. “
If passed, the federal minimum wage would increase to $9.50 on June 1, $11 in June 2022, $12.50 in June 2023, $14 in June 2024 and $15 in June 2025.
Earlier this month, the nonpartisan Congressional Budget Office examined what would happen if the Raise the Wage Act gets enacted in March.
In its findings, while the CBO projects that the poverty rate would decline by .9%, roughly the same percentage of workers would find themselves out of work.
Here are the highlights:
- The number of unemployed Americans would increase by a projected 1.4 million workers, or .9%.
- Conversely, the act would reduce the number of Americans in poverty by .9%.
- The cumulative budget deficit through 2033 would increase by $54 billion. Increases in annual deficits would be smaller before 2025.
- Higher prices for goods and services, stemming from the higher wages of workers paid at or near the minimum wage, would increase federal spending.
- Changes in employment and income distribution would increase spending for some programs (such as unemployment compensation), reduce spending for others (such as nutrition programs), and boost federal revenues.
Senate Minority Leader Mitch McConnell cited the CBO’s findings on the floor of the Senate.
“But remember, this is about liberal dreams and not urgent needs,” McConnell said about Democrats wanting to include a minimum wage increase in the stimulus bill.
To read the full report, click here.