The House is poised to pass President Joe Biden’s $1.9 trillion Covid-19 stimulus, but a ruling by late Thursday by a Senate official dealt a major blow to prospects that the final legislation will include a hike in the U.S. minimum wage to $15 per hour.
Friday’s vote in the House will bring most Americans one step closer to receiving $1,400 relief payments and move action to the Senate, where disagreements among Democrats over the minimum wage had been the biggest obstacle to turning the pandemic relief plan into law.
However, Senate parliamentarian Elizabeth MacDonough found that the wage provision did not qualify for action under budget reconciliation, a fast-track procedure that would let Democrats pass the stimulus with only 50 votes in the evenly divided Senate.
Democrats don’t yet have a unified approach for dealing with the minimum wage decision. While Biden called on Congress to “quickly” pass the relief bill, progressives are urging Democrats to overrule the parliamentarian or wage a battle over tax penalties to force higher wages. That raises the potential for disputes that delay Senate passage of the broader stimulus package.
The $15 minimum wage had been a rallying point for progressive Democrats, and Senate Budget Chair Bernie Sanders immediately proposed a work-around to raise pay for low-level workers.
“I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages,” Sanders said in a statement. “That amendment must be included in this reconciliation bill.”
Senate Finance Chair Ron Wyden also endorsed the idea of a tax penalty for large corporation “that refuse to pay a living wage.”
There may be prospects for bipartisan talks on a standalone measure. On Friday, Republican Senator Josh Hawley of Missouri proposed requiring companies with at least $1 billion in revenue to pay employees $15 an hour.
White House economic adviser Brian Deese said Friday on MSNBC that the administration will “talk this morning and in coming days” with congressional leaders to “figure out the best way” to proceed with a minimum-wage hike while at the same time making progress on the aid bill.
Using tax incentives may address a main complaint from opponents of raising the minimum wage to $15 an hour: That it would be onerous for small businesses. It also may be a way to appeal to two Senate Democrats, West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema, who’ve expressed opposition to elevating the wage floor that high nationally and whose votes are needed to pass the legislation in the face of unified Republican opposition.
Manchin has backed an $11 an hour minimum, phased in over two years, and then indexed to inflation. He said on Thursday before the Senate parliamentarian ruled that a compromise might be found. “There are a lot of things we can do,” he said.
Faced with the influence that moderates like Manchin wield in the 50-50 Senate, progressives have said they’re prepared to use their own leverage in the House, where Speaker Nancy Pelosi can only afford to lose five votes and still pass bills if all Republicans stick together in opposition.