• Allon Advocacy

Will Minimum Wage Sink COVID Relief?

Congressional Democrats are pushing to include a minimum wage hike in the next COVID relief bill. But do they have the votes?

Next week could bring the first major test of the durability of Democrats’ advantage in Washington. A House of Representatives vote on President Joe Biden’s $1.9 trillion coronavirus spending package will indicate whether the party’s one-seat advantage in the Senate (because Vice President Kamala Harris provides the tie-breaking vote) and its four-seat majority in the House is enough to get major legislation passed.

In this instance – with the winds of the budget reconciliation process and rules (see our explanation here) – the Democrats’ slim advantage should be enough. The bill ultimately will make it to President Biden’s desk. But, due to the cost of the package and some controversial provisions within it, there will be bumps along the way.

The biggest flashpoint is likely to be the inclusion, at the insistence of progressives and President Biden, of an increase to the minimum wage to $15 an hour by 2025. That provision was included in the portion of the COVID-19 relief bill that was written by the U.S. House Committee on Education and Labor, and approved on a party-line vote by the panel last week.

This morning Politico explained that the committee’s language is “expected to be a main sticking point for the broader legislation’s passage.” And the language is not opposed only by Republicans. Two Senate Democrats have voiced opposition to including the provision in the next COVID bill.

While Sen. Joe Manchin (D-W. Va.) has said he will vote for the $1.9 trillion bill, according to The Hill, he also warned the bill should be targeted. Specifically, Sen. Manchin said, “Let me be clear – and these are words I shared with President Biden – our focus must be targeted on the COVID-19 crisis and Americans who have been most impacted by this pandemic. … I will only support proposals that will get us through and end the pain of this pandemic.”

That statement leaves open the possibility that Sen. Manchin will vote against legislation that includes the wage hike. With no margin of error, Democrats can’t afford to lose Manchin’s vote and still pass the bill in the Senate.

But he’s not the only vote Democratic leaders are worried about.

Sen. Kyrsten Sinema (D-Ariz.) also has gone on record saying she opposes the wage hike. Last month, Sen. Sinema said, “The minimum wage provision is not appropriate for the reconciliation process … It is not a budget item. And it shouldn't be in there.”

In the House, meanwhile, at least a dozen moderate Democrats have said over the last few years that they prefer to allow regional differences in the minimum wage based on the cost of living. These 12 House members also could oppose the wage hike as currently written even though, as Roll Call noted, 11 of the 12 voted in 2019 for a blanket increase to $15.

Why is the wage hike controversial?

Critics have argued it would impose significant new costs on small businesses after a year in which many barely survived. They point to a recent analysis from the Congressional Budget Office (CBO) that estimated raising the minimum wage to $15 an hour by 2025 would lift 900,000 individuals out of poverty, but also would lead to 1.4 million job losses. Additionally, according to a CNBC and SurveyMonkey Small Business Survey, one-third of small businesses have said they anticipate laying off workers if Congress raises the federal minimum wage to $15 an hour. Overall, 54 percent of small businesses oppose increasing the minimum wage.

The provision clearly is a poison pill for Republicans as well. This morning Politico also noted, “GOP members of the House Education and Labor Committee offered so many amendments targeting that provision … at last week’s markup that lawmakers didn’t wrap up until after 4 a.m.” Also last week? Sen. Joni Ernst (R-Iowa) successfully pushed through an amendment to the budget resolution in the upper chamber of Congress that, as The New York Times explained, “prohibit[s] any minimum wage increase during the pandemic.” The amendment passed without a roll call vote and does not have the force of law behind it.

The Times explained, “Democrats did not contest Ms. Ernst’s proposal” – which is why it passed without a roll call vote – “but their reticence to record a vote on the matter was a signal that the wage increase might ultimately lack the support to pass in an evenly split Senate.”

Compounding the bipartisan opposition to the wage hike is the fact that it is unclear whether the budget reconciliation rules (again, discussed here in last week’s update) even allow for a minimum wage increase to be considered as part of the bill. The argument is that the Byrd Rule, adopted in 1985 and enacted into law in 1990, “prohibits senators from including provisions in reconciliation bills that are unrelated to deficit reduction goals.”

The CBO might have given progressive Democrats some support on this front. As Business Insider reported yesterday, the CBO wrote a letter saying the provision “would have a sizeable impact on the budget” – and therefore deficit – meaning “it may be able to clear the hurdle of the Byrd Rule and be passed through reconciliation.”

Just a few hours later, however, Sen. Manchin went on CNN and pledged to “protect the Byrd Rule come ‘hell or high water.’” (The same day, according to The Washington Post, President Biden, a creature of the Senate, suggested he would negotiate and could be persuaded to lower his minimum wage proposal to $12 or $13 per hour. The president also reportedly said that it’s “totally legitimate” for small business owners to be concerned.)

What if the CBO is wrong and the Senate parliamentarian rules the provision out of order?

Well, it might not matter. According to Roll Call, Senate Majority Leader Chuck Schumer (D-N.Y.) could overrule the ruling “and go ahead anyway” – presuming the entire Senate Democratic caucus goes along with him.

The bill’s price tag also has given some Democrats (not to mention Republicans) heartburn. Clinton administration Treasury Secretary Larry Summers is among those who have criticized the total cost of the legislation. Summers told National Public Radio, “We should put money into the economy. The question is how much. If your bathtub isn’t full, you should turn the faucet on, but that doesn't mean you should turn it on as hard as you can and as long as you can. And so the question isn’t whether we need big stimulus. The question is, do we need the biggest stimulus in American history?”

Summers is right that the amount spent on COVID-19 relief already has surpassed historical stimulus levels. As Axios noted after the December coronavirus legislation was enacted, COVID spending already has outpaced the cost of the New Deal, the Marshall Plan, and the 2009 Obama administration stimulus bill. And that’s before another round of legislation that looks likely to be signed into law next month.

So, what would Americans get for $1.9 trillion? The package includes:

  • A provision to increase the maximum Child Tax Credit for a year from $2,000 to $3,600 for children under age six and to $3,000 for those from ages six through 17;

  • Extended paid sick leave for private-sector workers;

  • Direct payments of up to $1,400 to most Americans;

  • $400 per week in supplementary unemployment benefits;

  • $350 billion for state and local governments, territories and tribal governments;

  • $25 billion in assistance to renters and their landlords;

  • $10 billion for assistance to homeowners;

  • $20 billion for vaccinations; and

  • $170 billion to help reopen schools.

The bill also expands family and paid leave for federal workers, and would make “significant changes to the Affordable Care Act, COBRA, Medicaid, and a variety of federal public health programs” – provisions that some opponents argue are not directly related to the pandemic.

Will all of these efforts ultimately be too much for Democrats? We won’t have to wait long to find out. As noted above, the House is expected to vote on the package next week. The Senate skirmish could come the week after as Democratic leaders attempt to enact the new bill into law before the March 14 expiration of the current enhanced unemployment benefits.

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