Biden might get an $11 minimum wage—but not $15
Raising the federal minimum wage has been a Democratic priority for years, and Democrats now control the White House and Congress for the first time in a decade. So now might seem like the time.
But there are still barriers to the Democrats’ preferred option, a $15 minimum wage that would phase in over four or five years. Sen. Bernie Sanders (I., Vt.), who’s taking over as chair of the Senate Budget Committee, has pushed for a $15 wage for at least six years, and President Biden now endorses that. The minimum wage has been stuck at $7.25 since 2009, and it has generally declined relative to inflation for the last 50 years.
Biden wants a $15 minimum wage included in the $1.9 trillion relief bill Congress is drafting, which seems likely to pass by March. There are plenty of Congressional Democrats who support it. But a few Democrats don’t, and that’s probably enough to prevent the $15 minimum wage from passing.
Democrats control the Senate with the narrowest possible majority: a 50-50 split, with Vice President Kamala Harris casting the tie-breaking vote in favor of Dems. Republicans typically oppose a minimum-wage hike en masse, which means it would take every single Senate Democrat to vote for $15.
One Democrat says he won’t— Sen. Joe Manchin of West Virginia. But Manchin says he’d support raising the federal minimum wage to $11, which would still be 52% higher than the current level. West Virginia is one of the lowest-wage states, which means a sharp hike in the federal minimum would hurt employers more than it would hurt businesses in higher-wage states. That’s one of the problems with a federal minimum wage: it doesn’t account for the wide variation in living costs among states.
West Virginia is one of 28 states with a higher minimum wage than the federal standard – $8.75. So an $11 wage might not be that hard for employers to absorb, especially if it were phased in over time. It’s also possible Congress could pass a minimum wage hike this year but delay its implementation until GDP or overall employment have recovered to pre-pandemic levels, so as not to slow hiring as millions of unemployed Americans are trying to get back to work.
Manchin isn’t the lone spoiler on the $15 minimum wage. Five other Democratic senators declined to sponsor a $15 minimum wage bill Bernie Sanders and other Democrats introduced in January. Those five haven’t spelled out their stance the way Manchin has, however, perhaps because they’re reluctant to alienate voters who want a higher wage. Manchin, may have less to fear, as a Democrat representing a relatively conservative state.
Hiking the minimum to $11 might sit well with voters. A Yahoo Finance–Harris Poll survey found that 83% of Americans think $7.25 an hour is too low. But they’re split on how high to raise it. Twenty-nine percent say it should be between $10 and $12; 35% say it should be between $13 and $15; and 13% say it should be higher than $15. Seventeen percent say it should stay where it is, or go lower. The variations probably reflect sharp differences in wages and living costs among the wealthy coasts, big cities, rural areas and towns on the decline.
Even if Democrats agree to scale back their wage proposal from $15 to a lower rate all Democrats can agree on, it still might be hard to pass. For the Senate to pass legislation with a simple majority, it has to happen under the arcane “reconciliation” procedure. And Senate rules say that procedure only applies to bills that affect the federal budget in some way. A new minimum-wage law wouldn’t directly affect spending or revenue, since it’s not a tax and it’s not an expenditure. So the rules could force the Senate to strip a wage hike from the relief bill. It wouldn’t be able to pass as a standalone measure for the same reason.
It’s possible Democrats could attach some contrived tax or spending measure to a wage hike, to satisfy the technical requirements of the reconciliation process. They could also break the Senate rules, which aren’t in the constitution or in any law. But Manchin himself has said he’d be unwilling to vote for a bill that broke the rules, even if he supported the legislation itself. Democrats don’t have nearly as much control as they wish.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidentital tips, and click here to get Rick’s stories by email.
Corporate donors are letting extremist Republicans off the hook
Get the latest financial and business news from Yahoo Finance
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.