Democrats Scramble to Save $15 Minimum Wage

By Yuval Rosenberg

House Set to Pass Covid Relief Bill as Dems Scramble to Save
$15 Minimum Wage

The House is set to pass a $1.9 trillion Covid relief package
late Friday, sending the legislation to the Senate for further
consideration and almost certain revision. The bill includes a
controversial provision that raises the minimum wage to $15 an hour
over a period of years, but the Senate parliamentarian ruled
Thursday that the wage hike cannot be included in the upper
chamber's version of the legislation.

Democrats are trying to advance the bill through budget
reconciliation, which would allow the Senate to avoid a Republican
filibuster and pass the legislation with a simple majority of 51,
with Vice President Kamala Harris providing the deciding vote. But
as it stands Friday, the minimum wage provision will likely have to
be removed from the Senate version of the bill, following Senate
parliamentarian Elizabeth MacDonough’s ruling that the minimum wage
cannot be altered through the bill under the rules governing the
reconciliation process.

House Democrats are moving ahead with the bill despite its
uncertain status in the Senate in an attempt to finish the
legislation before March 14, when temporary unemployment assistance
passed in December is set to expire.

House Speaker Nancy Pelosi (D-CA) on Thursday night pushed her
case for the bill in its current state. “The ruling from the Senate
parliamentarian is disappointing, because raising the minimum wage
would give 27 million Americans a well-deserved raise and pull
nearly one million Americans out of poverty in the middle of a
once-in-a-century devastating pandemic and economic crisis,” Pelosi
said in a statement. “House Democrats believe that the minimum wage
hike is necessary. Therefore, this provision will remain in the
American Rescue Plan on the Floor tomorrow. Democrats in the House
are determined to pursue every possible path in the Fight For
15.”

Republicans are more or less united in their opposition to the
bill, saying it is too large and unfocused. In addition to the
minimum wage increase, the bill would provide $1,400 relief
payments for millions of Americans; extend enhanced unemployment
benefits of $400 per week through August; provide $350 billion in
aid for state and local governments; expand child and earned income
tax credits; fund vaccine distribution; and much more (see this
Committee for a Responsible Federal Budget
analysis for a complete rundown).

An alternative minimum wage plan: Although the White
House says it still backs the goal of a $15 minimum wage, the
administration reportedly has no plans to intervene in the Senate
parliamentarian’s decision, effectively scuttling the option of
having the vice president object to the ruling, a move that could
potentially result in the provision staying in the bill.

As an alternative, Senate Majority Leader Chuck Schumer (D-NY)
is considering adding a provision that would impose tax penalties
on large corporations that don’t pay their workers at least $15 an
hour, an approach that would stand a better chance of winning
approval from the parliamentarian, though such a ruling would not
be guaranteed.

Senate Finance Chairman Ron Wyden (D-OR) outlined the tax
penalty idea Friday. It would hit employers with an escalating tax,
starting at 5%, if employee wages are too low. Wyden said the
proposal would include “safeguards to prevent companies from trying
to outsource labor to avoid paying living wages,” but he did not
specify how many companies would fall under the rule. Wyden also
said he wanted to provide tax credits to smaller companies that
paid their employees higher wages, but he did not specify the pay
level.

Republican Sen. Josh Hawley of Missouri floated a similar plan
Friday, proposing that companies with revenues of $1 billion or
more be required to pay their workers at least $15 an hour. Sen.
Bernie Sanders (I-VT) also offered a version of the proposal.

Worries about complications: Some Democrats were wary
about making last-minute changes on a complicated issue. House Ways
and Means Committee Chair Richard Neal (D-MA) said Friday that he
was concerned about anything that would slow the bill down. “Time
is ticking, and we have to do everything in our power to keep
unemployment benefits from lapsing and delivering the other urgent
relief in this package,” Neal
told Bloomberg.

Some experts also expressed concerns. “This is a really big,
complicated, brand new proposal. It is *possible* that it works,”
Jason Furman, who led the Council of Economic Advisers in the Obama
administration, said in a tweet,
referring to Wyden’s plan. “It is also *possible* that another tax
version works. But I would be extremely nervous about trying out a
brand new idea like this with virtually no vetting.”

Progressives push for fundamental changes: The struggle
over the minimum wage provision pushed some Democrats to call for
changing the rules in the Senate, including abolishing the
filibuster in order to clear the way for legislation to pass with a
simple majority vote.

Progressive Rep. Pramila Jayapal (D-MI) called on Democrats not
to give up on the wage increase just because of Senate rules. “We
made a promise to raise the minimum wage,” she said. “We now have
to deliver on that promise to 27 million Americans who are not
going to be much convinced when we go back in two years and say,
‘Sorry the unelected parliamentarian told us we couldn’t raise the
minimum wage.’”

What’s next: The Covid relief bill
will almost certainly be revised significantly in the Senate, which
means the House will need to vote on it again. No clear resolution
of the minimum wage issue has emerged yet, and it could take some
time for a new consensus to emerge on the final shape of President
Biden’s first major legislative effort.

Quote of the Day: CDC Director Warns of ‘Concerning Shift’ in
Pandemic

“Over the last few weeks, cases and hospital admissions in
the United States have been coming down since early January, and
deaths have been declining in the past week, but the latest data
suggest that these declines may be stalling, potentially leveling
off at still a very high number. We at CDC consider this a very
concerning shift in the trajectory. … It’s important to remember
where we are in the pandemic. Things are tenuous. Now is not the
time to relax restrictions. … We cannot get comfortable or give in
to a false sense of security that the worst of the pandemic is
behind us, not now, not when mass vaccination is so very
close.”

– Dr. Rochelle Walensky, director of the Centers for
Disease Control and Prevention, at a Friday press
briefing by the White House Covid-19 response
team.

Chart of the Day: The Stimulus Check
Effect

In another sign of economic recovery, personal income jumped 10%
in January, lifted by $600 government coronavirus relief payments
and enhanced unemployment benefits, the Commerce Department

said Friday. The monthly increase was the largest
since April and followed a 0.6% increase in December and decreases
in the previous two months (see the New York Times chart
below).

The “stimulus checks” helped fuel a surge in retail sales as
personal consumption expenditures rose by 2.4% for the month, just
below analyst estimates of 2.5%. The personal savings rate — or
savings as a percentage of disposable income — also jumped to 20.5%
as Americans socked away some $3.9 trillion, the government said.
Inflation, meanwhile, remained tame, at 1.5% year over year.

Why it matters: “The January data was the latest sign of
the economy’s march forward, a trend also seen in recent reports on

retail sales and orders
of durable goods,” the Times
reports. “Some economists are now predicting not
just a period of growth after the pandemic, but
perhaps even a post-Covid boom.” That boom,
economists expect, will be unleashed once the health crisis has
largely passed as consumers start spending the money they’ve saved
up over the many months of the pandemic.

But the data also suggest that the recovery remains dependent on
government support, Diane Swonk, chief economist for the accounting
firm Grant Thornton told the Times: “Technically, you could say
we’re recovering,” she said. “But the patterns in both income and
spending point out the fragility of the recovery without aid to
bridge these waters that are poisonous.”

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