Democrats aim to pass President Joe Biden’s $1.9 trillion economic rescue plan in only a matter of weeks.
The House Budget Committee kicked off a markup session on Monday afternoon which is set to last at least five hours, according to Rep. John Yarmuth (Ky.), chair of the Budget Committee. The panel is expected to approve the legislation and send it to a floor vote.
Here’s the Democratic calendar for coronavirus relief, based on statements from Democratic officials:
February 25-27: The House is expected to vote on passage of the government rescue plan.
March 2-5: The Senate takes up the legislation, and possibly amends it before a vote.
March 8-12: The House votes on the rescue package again if the Senate makes legislative changes.
Democrats have a narrow margin of error. They are pledging to enact the package before March 14, the date that enhanced unemployment benefits for millions of Americans starts ending.
Rep. Don Beyer of Virginia, vice chair of the Joint Economic Committee, told Insider that Democrats will “do our damnedest to meet it.”
The House proposal would also provide $1,400 stimulus checks and $400 federal unemployment benefits through August It also includes funding for vaccine distribution and virus testing, aid for state and local governments, and a $15 minimum wage increase.
Still, some key hurdles remain in the Senate. Democrats are using a process called reconciliation that allows them to pass a budgetary bill with only 51 votes instead of 60.
The Senate parliamentarian governing the procedure may rule the wage increase is unrelated to the federal budget and strike down the provision, setting back the timeline. On the other hand, the wage increase’s sponsor, Budget Committee Chairman Sen. Bernie Sanders (I-Vt.), obtained a letter from the Congressional Budget Office saying it would have a sizable impact on the budget.
In recent weeks, Biden has downplayed the odds it would survive the process, though he still supports the measure.
Republicans are uniformly opposed to the Biden plan. They argue it is too costly and that a previous round of aid enacted in December still hasn’t been fully tapped.
A new CNBC analysis of cost-of-living data from Massachusetts Institute of Technology researchers looks at how a $15 minimum wage stacks up against a living wage.
For families with two children and two parents working at the minimum wage, current minimums in every state are below a living wage, and even the proposed increase to $15 an hour may still fall short for those families. As CNBC reports: “A $15 minimum wage would push a number of states closer to a living wage, but none would meet or exceed it.”
A $15 minimum wage would go a little bit further for single adults, according to the CNBC analysis. For them, minimum wages currently “fall short” of a living in every state. However, a $15 minimum wage would be a living wage for single adults in about half of the states.
Insider previously reported on the value that a $15 minimum wage would have in every state. Since the cost of living varies in each state, the value of the wage also fluctuates. Insider found that the new potential minimum would go the furthest in Mississippi, where it would be worth $17.77. Per the CNBC analysis, Mississippi is one state where a $15 minimum wage would provide a living wage for single adults.
Democrats are currently pushing for a $15 minimum wage as part of President Joe Biden’s $1.9 trillion stimulus relief package, aiming to pass the increase through reconciliation. However, Biden has reportedly indicated that he thinks the raise won’t be feasible – and two Democratic senators have also expressed their hesitations.
But both versions of passing the increase would see the minimum wage get to $15 only gradually, after several years. Under the Raise the Wage Act of 2021, the minimum wage would gradually increase to $15 until 2025. Then it would be indexed to median wage growth.
For some, that delay to $15 is jarring. President Joe Biden said throughout his campaign – and in a presidential debate – that he supported a $15 minimum wage, but at the time he didn’t provide a timeline for that rollout.
“President Biden campaigned on the promise of a $15-per-hour minimum wage, and to hear him backpedal on that promise and propose a gradual increase over time is disheartening,” Cynthia Murray, a Walmart worker for over 20 years and member leader with United for Respect, wrote in a statement to Insider. “We know that $15 an hour is the bare minimum of what workers need to survive.”
So why a gradual increase?
Ben Zipperer, an economist at the Economic Policy Institute (EPI), said that $15 in 2025 would be an “appropriate” level since it would put a dent in “poverty wages.”
“There is a kind of a large hole that we’ve dug ourselves in having low minimum wages relative to what workers need,” he told Insider. “And so then I think it does make sense to have some kind of gradual set of increases, because you do want to give time for some businesses to accommodate the higher wage schedule.”
Researcher Yannet Lathrop of the National Employment Law Project previously told Insider that a gradual increase makes sense, as in some states a $15 minimum wage is more than double the current rate. She said that, if their minimums were closer to $15, it would make sense to do the increase in one or two steps.
Broadly, Zipperer said, minimum wage increases used to be more frequent and roughly track the productivity of the economy. But that slowly came to a halt by the 1980s, when there were very few minimum wage increases – leading to a fall in value of the minimum wage. It hasn’t caught up since.
“Had we continued since the 1960s to increase minimum wages in accordance with the productivity of the economy, the minimum wage today would be over $20 an hour,” Zipperer said. “So the money is there. The economy can support much higher wages. It’s just that we’ve effectively redistributed that money away from low-wage workers towards the highest-paid people in the economy.”
And while a minimum wage increase is one step towards addressing that, Zipperer said it’ll take a “larger set” of policies such as higher taxes on higher income and stronger collective bargaining rights to correct this dynamic.
When it comes to workers like Murray expressing disappointment over how long it’ll take to actually receive that raise, Zipperer said he “can’t disagree with that.” Groups like Fight for 15 have been advocating for higher minimum wages for years.
“It is a really a negative mark on this country that we have kept minimum wages so low for so long,” he said. “We have a very large hole to climb out of if we’re going to actually pay people decent wages. And that is the product of decades of infrequent and inadequate minimum wage increases.”
Sen. Bernie Sanders of Vermont on Saturday expressed confidence that the proposed minimum wage hike to $15 per hour will remain in the $1.9 trillion COVID-19 relief package that congressional Democrats are aiming to pass through the budget reconciliation process.
President Joe Biden supports the minimum wage hike but has expressed doubt that it would be permissible under reconciliation rules. But, Sanders, the independent chairman of the Senate Budget Committee who caucuses with the Democrats, thinks the measure will pass muster with the Senate parliamentarian.
“Raising the minimum wage to $15 an hour is not ‘incidental’ to the federal budget and is permissible under the rules of reconciliation,” Sanders said in a statement to CNN. “The CBO [Congressional Budget Office] has found that the $15 minimum wage has a much greater impact on the federal budget than opening up the Arctic National Wildlife Refuge to oil drilling and repealing the individual mandate penalties – two provisions that the parliamentarian advised did not violate the Byrd Rule when Republicans controlled the Senate.”
He added: “I’m confident that the parliamentarian will advise next week that we can raise the minimum wage through the reconciliation process.”
Biden said it’s “not illegitimate” for small businesses to worry about the impact of increasing the minimum wage in one “fell swoop,” but that he still supports the raise. He said he believes it would have both medium- and long-term benefits for both small and big businesses.
He also said “there are studies that show that by increasing the minimum wage to $15 an hour, it could have an impact on a number of businesses but it would be de minimis” – and he stressed the importance of implementing the raise gradually.
An incremental increase
The minimum wage would be increased under the aptly named Raise the Wage Act of 2021, which is currently being considered as part of Biden’s $1.9 trillion stimulus package. It would increase the federal minimum from its current rate of $7.25 to $15 by 2025; tipped and subminimum wages would also incrementally increase to the standard federal minimum.
“If the wage in those places was closer to $15, I think it would make a lot more sense to do it in one or two steps, but a gradual approach is probably better so that businesses have a chance to adjust to the higher wages,” she said.
Biden also said that if that $7.25 minimum wage had been indexed to inflation, the minimum wage today would be around $20 an hour.
When asked about a recent Congressional Budget Office (CBO) report that projects a $15 minimum wage would cost 1.4 million jobs, Biden said several other economic studies have suggested less of a negative impact on employment.
But for Drew Board, who works in online grocery pickup at a Walmart in North Carolina, an increase in the minimum wage would have more than a minimal impact. At his current wage of $13.50 an hour – the highest-paying job he’s been able to find – he’s sometimes found himself having to ask for help to buy essentials like food.
“Last year, my dog was due for her annual shots, and that was like a hundred and some dollars,” Board told Insider. “So do I use my money to put that into savings, or pay off a couple of my student loans, or do I spend it on my dog?”
He’s been involved with United for Respect, a labor activist group, for the past year. He said that he’s been advocating for basic rights for all retail workers: “If everyone is created equal, everyone should have that equal chance to live.”
An increase to the minimum wage would have minimal impact (if any) on employment
Ben Zipperer, an economist at the Economic Policy Institute (EPI), told Insider that there’s a “theoretical horror story” of businesses hiring less – and thereby hurting the lowest-paid workers – when the minimum wage is increased. He said that those effects are smaller or even nonexistent in the real world.
“What happens is that yes, it is true that when you raise the minimum wage employers hire fewer low wage workers, that is correct,” Zipperer said. “On the other hand, the factor that’s really offsetting that is that, even though employers are hiring fewer workers, fewer workers are leaving their jobs.”
Those workers can stick around, become more experienced, and even potentially more productive. And low wage businesses will have to spend less time and money finding and training new workers – making the employment effects “much smaller.”
“Boosting the federal minimum wage would lift millions out of poverty and serve as a huge additional pandemic stimulus boost for the entire economy,” Chuck Collins, the Director of the Program on Inequality and the Common Good at the Institute for Policy Studies, said in a statement to Insider. “We have seen how many frontline essential workers are poorly paid and most vulnerable. Boosting their pay is both morally right and economically smart.”
“In the late 1960s, there were a series of sizable minimum wage increases,” Zipperer said. “Recent research has found that those minimum wage increases were responsible for about 20% of the fall in Black to white earnings gaps during that time period, so the minimum wage has played a very sizable role in reducing racial earnings inequality.”
Biden has already made headway in raising the minimum wage
As Insider’s Grace Dean reported, Biden is planning on signing an executive order that aims to boost all federal workers’ wages to $15 an hour. He also plans on signing an additional executive order within his first 100 days that would make sure federal contractors pay $15 an hour (and provide paid emergency leave).
Still, the proposed wage increase may prove to be a sticking point for some conservatives. During Yellen’s confirmation hearing, Republican Sen. Tim Scott of South Carolina questioned the $15 minimum wage proposal and its potential to negatively impact jobs.
“How do we grapple with parts of this package that really are philosophical in nature and denies the practical reality that comes from it?” he said.
Machuca asks that politicians opposed to the measure put themselves in the shoes of workers like her.
She added she wants them to know “that we’re all human beings, that we have our depths, that we have our bills to pay. It is not fair that we work so much and that we have to suffer this much.”
GOP Sen. Rand Paul of Kentucky on Friday came out swinging against President Joe Biden, saying that the Democratic president’s push for a $15 minimum wage would hurt Black youth.
During an interview with Fox host Sean Hannity, Paul alleged that a minimum wage increase would put 4 million people out of work.
“The people who lose their jobs first when you hike up the minimum wage are Black teenagers,” Paul said. “So, you know, ‘Why does Joe Biden hate Black teenagers?’ should be the question. Why does Joe Biden want to destroy all of these jobs?”
He added: “Even the government says that nearly 4 million people will lose their jobs.”
According to a Congressional Budget Office report, there’s a two-thirds chance that raising the minimum wage to $15 by 2025 would cause zero job losses on the low end of estimates to 3.7 million job losses on the high end of estimates, with a median CBO estimate of 1.3 million job losses.
However, the CBO also estimates that a $15 minimum wage would increase pay for 17 million workers.
“It’s kind of a strange beginning to an administration,” Paul said. “You’re going to put your best foot forward and the first thing you say is, ‘This is how I’m going to kill jobs’ … ‘I’m going to kill thousands of jobs of the Keystone pipeline with ending it.'”
While in office, former President Donald Trump championed the US-Canada project, saying it would create 28,000 US jobs, a number that was disputed by The Washington Post in 2017. That same year, ABC News also noted that the majority of the jobs involving the pipeline would be temporary.
On January 1, the minimum wage in Florida increased from $8.56 to $8.65. It will increase to $10 effective September 30.
Florida is incrementally raising its minimum wage to $15 by 2026, making it the most conservative state to do so, as Insider previously reported.
In Illinois, the minimum wage increased from $10 to $11.
Illinois also has two areas with different minimum wages, according to the Economic Policy Institute: Chicago and its surrounding Cook County. In Chicago, the minimum wage will increase from $14 to $15 on July 1. In Cook County, the minimum wage of $13 will see an annual increase on July 1 tied to the consumer price index.
In Maine, the minimum wage increased from $12 to $12.15.