Yesterday, the Senate Parliamentarian, “the keeper of the rules in the Senate,” determined the rules of budget reconciliation of the $15 minimum wage proposal by 2025— Democrats choosing to use federal budget reconciliation in an effort to avoid a filibuster. As part of President Biden’s $1.9 trillion COVID-19 relief bill, the Senate Parliamentarian had to make a decision on whether the $15 minimum wage proposal was primarily budget-related, eventually ruling that it could not be included in the final bill as it has an impact on businesses and individuals, and not primarily the federal budget.
Naturally, reactions to this decision varied between parties. Republicans were pleased by this news and essentially “framed the decision as the Parliamentarian protecting the rules of the Senate.” Democrats generally expressed disappointment and specifically Chuck Schumer, the Senate majority leader, stated that he would pursue other legislation that would increase the national minimum wage. Biden was also disappointed and “will work with leaders in Congress to determine the best path forward because no one in this country should work full time and live in poverty” but noted that he respects the Senate Parliamentarian’s decision and the Senate process. Biden is now focusing on the other elements that are included in the COVID-19 relief bill such as $1,400 stimulus checks, money for schools, money for virus containment, and also pushing the vaccine distribution. As increasing the minimum wage was one of his major priorities, Bernie Sanders, the Budget Committee Chairman, claimed that he is going to work on an amendment to take tax deductions away from large profitable corporations that do not pay their workers at least $15 an hour. And, wants to somehow provide small businesses with incentives to raise their wages.
Aside from the major disappointment of many Democrats and progressives, this decision relieves pressure from Democratic party leaders who want to rally support for the overall bill, even if that means prioritizing its other elements — the $15 minimum wage standalone bill has fewer than 40 co-sponsors in the Senate, making it difficult to prioritize at the moment.
Raising the minimum wage has been a Democratic priority for years. The Covid economy has hurt low-wage workers much more than those that can work from home. In raising the minimum wage, small businesses could be forced to close as many are already struggling for sales. Not only that, but it also decreases the economic freedom of corporations, restricting their spending to compensate for the output of money that would need to be spent on labor. Some lawmakers and opponents feel that now is not the right time to raise operating costs for businesses. Republican Senator Elizabeth Ann Van Duyne of Texas notes that “a federal mandate to raise the minimum wage to $15 an hour will put us right back to where we were months ago — American jobs destroyed, small businesses forced to close their doors and life savings gone to waste.”
6 comments:
The debate over raising the minimum wage appears very complex. As I read your post and a bit else online about the pros and cons, it seems like this issue fits well with the economics concept of tradeoffs. With every supposed benefit there is, it appears that there is some drawback. Though it would fill household pockets, perhaps inspiring more consumption (though COVID-19 may make people save more money if this policy was done now), it would also force businesses to raise prices, and restrict labor and production. Though it would help people rise out of poverty, it would prevent many from getting or keeping their jobs. Though it could reduce government welfare spending, it might force the government to intervene to support faltering businesses. Though it could help many full-time adult workers, it could shut out many youth and unskilled workers from jobs. It appears incredibly unclear which--the benefits or drawbacks--outweighs the other. Like we learned how most advantageous trade occurs in the middle of the opportunity costs, factoring in comparative advantage, it appears that our approach toward minimum wage should be moderate and well-thought out. Perhaps a sudden double to 15$ is too much, but perhaps the government filibustering to keep it at 7.25 is too little as well. I also wonder why these numbers, which appear arbitrary, are chosen. Economics often disagree, so it might be hard to find a consensus on what number falls most profitably in the middle of the tradeoffs. However, they should try to work together to find something in the middle rather than fighting for 7.25 or 15 along partisan lines--that sounds like unprofitable, isolated production of policy.
I am in agreement with Danny. Surely it is time to increase the minimum wage, as a dollar now will barely buy you a candy bar in the grocery store. However double the minimum wage is surly too drastic. I understand that 15 is a clean cut number, a multiple of 5 and easy to do math with, but from an economic standpoint, doubling the current minimum wage probably has little reasoning associated with it. It also does not make sense to have one federal minimum wage as the cost of living varies drastically through out the United States. Perhaps a 15 dollar minimum wage is not the best approach to the issue. It would be a better idea to start with a 10$ minimum wage and a proportional increase in minimum wages that are already bigger than 10 dollars.
I think it’s important to know who the parliamentarian is, since she was the one who decided that the minimum wage should not be included in the federal budget. She’s an independent with support from key players in both parties (most of these key players being the moderates on both sides). She is the same woman that opened the Arctic National Wildlife Refuge in Alaska to oil drillings back in 2017. While a few parliamentarians have been fired in the past, the fact that the senate majority whip, a moderate democrat, is on the parliamentarians side, means that progressives won’t get what they want. However, it’s not progressives pushing for the $15 minimum wage - according the a pew research poll, over two-thirds of the country is in favor of it. There are some models that predict what would happen if the $15 minimum wage was implemented: one of them says 1.3 million households would be lifted out of poverty, but there would also be 1.3 million job losses. While I do agree that the minimum wage should be increased, I think the main priority is getting the bill through as quickly as possible so the $1400 checks can get to the people that need it most. If speed and helping the public as quickly as possible is the goal, then compromise is necessary.
I find Bernie's plan to increase the minimum wage without the need for a law to be passed. By amendment I would assume that Bernie means one for the proposed budget rule which the parliamentarian determined, instead of an actual amendment to the constitution.
Minimum wage raises have been a controversial thing for a very long time, but I do not believe that they are controversial for the right reasons. Most people who are opposed to raising the minimum wage argue that it would increase unemployment, which has been proven to be untrue by multiple reliable economic sources. It is important that we think about the economic impact of raising the minimum wage, but we should use economic data and trends in order to help us plan out minimum wage changes, rather than just going on baseless facts. As much as I believe in raising the minimum wage, and as much as I like the idea of continuing to release huge covid bills to help those in need, there are compromises that do need to be made and those compromises do include regrettable sacrifices. Since neither Republicans nor Democrats are open to negotiating with the other side in the current political climate, we need to make sure to both help those in need, and find a way to pass legislation. Currently, since the senate is divided between Democrats and Republicans, negotiation is necessary. Thank you so much for sharing!
This is yet another example that demonstrates the clear and massive divides between the political parties in the United States. The values of both parties differ extremely, and that is never more clear than in conversations regarding economics. Obviously, it is always controversial when discussing fluctuation of minimum wage, and primarily opinion split straight down the middle of party lines. In my personal opinion, it is far past time for minimum wage to be raised. The value of money has changed dramatically since the current outdated laws surrounding minimum wage were made. Workers grind everyday in their gruelling jobs, only to be paid a measly amount for their contributions to society. Change needs to happen. The United States is already in a severe amount of debt, but this needs to be a more discussed and analyzed issue. I am very grateful for Joe Biden readily discussing it and making moves toward change.
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