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Once the Covid-19 relief bill heads to the Senate, the $15 minimum wage will face two big tests: one procedural, and one political.
On the procedural front, Democrats need to convince the Senate parliamentarian — an in-house expert who advises on the rules of the upper chamber — that the $15 minimum wage has a significant enough effect on the budget that it can be part of the reconciliation process. Because of a practice known as the Byrd Rule, any policy that’s not seen as sufficiently budget-related can be flagged for removal by the parliamentarian. (Democrats don’t have to abide by this decision, but there have been few breaks with such guidance in the past.)
“We think we have a strong argument on the minimum wage being a real whole-of-government policy that touches a range of budget areas,” a Democratic aide tells Vox.
Beyond the procedural question it poses, the $15 minimum wage push could soon be the first big test of party unity as well.
With just 50 votes to work with to pass this bill, Democrats need every single member onboard in order to reach the simple majority threshold required for the budget measure. Already, however, statements by Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have thrown the likelihood of such consensus into doubt when it comes to the wage increase.
“I’m supportive of basically having something that’s responsible and reasonable,” Manchin told The Hill, while noting that he does not back a $15 minimum wage.
For now, Democrats are just trying to overcome the process challenge and deal with their internal conflicts later.
As the House votes on its version of the relief bill this week — both parties have a chance to present their final arguments to the Senate parliamentarian in a practice called the “Byrd bath.” Upon hearing their respective cases, the parliamentarian — Elizabeth MacDonough — will determine what can be included in the legislation and what needs to be removed. As soon as mid-week, MacDonough could reach a decision about the minimum wage.
Then, the political pressure ramps up: If MacDonough greenlights the measure, Democrats will need to navigate the dissent within their caucus to get it passed. If she doesn’t, they’ll have to decide if they’re willing to ignore her ruling and move ahead with it anyway. Senate Majority Leader Chuck Schumer thus far has kept the focus squarely on immediate next steps.
“We’re trying to work as well as we can with the parliamentarian to get minimum wage to happen, that’s all I’m going to say,” Schumer noted at a recent press conference. After her decision comes through, however, Democrats will have to wrestle with their own divides on the matter.
The first step is getting the bill past the parliamentarian
Democrats are in the process of making their case to the parliamentarian — and they’ve emphasized that their first priority is getting the legislation past this hurdle: MacDonough’s decision, expected this week, could play a critical role in determining what the $1.9 trillion Covid-19 relief bill contains.
Democrats have prepared several arguments — and they think there are strong grounds for inclusion of the minimum wage, according to two aides.
For one, the recent report from the Congressional Budget Office highlights exactly how the Raise the Wage Act, which would increase the federal minimum wage from $7.25 to $15 over the course of five years, would have a direct effect on the budget. That CBO report found the measure would increase the budget deficit by $54 billion within 10 years, and that it would alter government spending on social safety net programs like food aid, since fewer people would be using them if they had higher wages. As noted in the bill, additional increases to the minimum wage would be pegged to gains in the median wage after the fifth year, in order to keep pace with inflation.
To gain parliamentarian approval, Democrats will have to show that the proposal’s impact on taxing and spending is not “merely incidental” to the implementation of the policy. And aides see this report — which found that wage changes would also affect tax revenues — as important proof of that.
“The CBO has demonstrated that increasing the minimum wage would have a direct and substantial impact on the federal budget,” Sen. Bernie Sanders (I-VT) said in a recent statement. “What that means is that we can clearly raise the minimum wage to $15 an hour under the rules of reconciliation.”
Democrats also intend to draw a comparison between the changes to the minimum wage and the zeroing-out of the individual mandate in the Affordable Care Act. In 2017, when Republicans used reconciliation to pass major corporate tax cuts, they also eliminated the individual mandate — or penalty for not having health insurance — by reducing it to $0. The logic behind the increase to the minimum wage is similar, an aide explained.
“Republicans were able to dial this [individual mandate] penalty down to zero,” the aide said. “We are not creating a federal minimum wage, we are dialing the wage up.”
They’ll also point to past uses of reconciliation that had less budgetary effects than the proposed minimum wage increase, such as the establishment of a program for drilling in the Arctic in 2017. “Increasing the minimum wage would affect more budget functions than ... the [Arctic National Wildlife Refuge] provisions would,” the CBO concluded in a letter.
Republicans, meanwhile, are expected to emphasize the constraints of the Senate’s reconciliation process — and highlight how increases to the minimum wage would only have a tertiary effect on the budget, a concern some Democrats have voiced, too.
President Joe Biden is among those raising similar questions. “I put [the minimum wage] in, but I don’t think it’s going to survive,” he told CBS News in early February, citing the limitations of the Senate rules. He reiterated this position in a recent conversation with governors and mayors when he warned them that the measure would likely be tabled.
Experts note that the lack of precedent for the use of reconciliation on minimum wage changes makes this question a truly untested one. “Would the minimum wage increase fall prey to the incidental test? No one yet knows,” says George Washington University political science professor Sarah Binder.
The $15 minimum wage is also a political test for Democrats
Democrats face a political test regardless of what the parliamentarian ends up deciding.
If the parliamentarian determines that the minimum wage can’t be included in the bill, then Democrats have the option of ignoring this decision — and forging ahead regardless. It’s a path that’s backed by some progressives, which is likely to face resistance from moderates in the party.
“The parliamentarian doesn’t rule. She gives advice. If Democrats want to ignore advice that the minimum increase violates the Byrd Rule, then they would go ahead and include it in the bill,” says Binder. After the minimum wage provision is included, any senator is then able to challenge it when the bill hits the floor, and Vice President Kamala Harris, or whoever is presiding, is able to overrule that challenge. If 60 lawmakers don’t vote to push back on this decision, Harris’s ruling would stand.
Sinema and Manchin have already said they would not go for this approach, however, suggesting that Democrats will probably avoid it. “There is no instance in which I would overrule a parliamentarian’s decision,” Sinema told Politico. “I want to restore the 60-vote threshold for all elements of the Senate’s work.” Manchin, too, told CNN that he’s intent on preserving the sanctity of the Byrd Rule.
Because of their pushback — and because this would be a more partisan move in an already partisan process — it’s seen as a less likely route.
“I don’t see much room for that just because of the politics that Joe Biden represents,” says Josh Huder, a senior fellow at the Government Affairs Institute. White House press secretary Jen Psaki has signaled as much at a recent briefing as well. Were the parliamentarian to rule the minimum wage a violation of the Byrd Rule, the measure would probably be tabled for now.
The pressure on moderates is even higher, however, if the parliamentarian decides that the minimum wage qualifies for the reconciliation bill.
In that scenario, Manchin, Sinema, and any others who’ve stated their opposition to the $15 minimum wage will face significant public scrutiny over their positions. And at that point, they’ll be holding up something concrete, without the ability to cite process arguments as the rationale for doing so.
Senate Democrats would have to grapple with whether they can get all 50 lawmakers in line on increasing the minimum wage to $15, or if they’d negotiate it down to Manchin’s $11 proposal, or another option.
“I do support a $15 minimum wage,” Biden noted in a recent town hall, while acknowledging the challenges it could pose for some businesses. “It’s totally legitimate for small-business owners to be concerned about how that changes.”
Democrats are having to go it alone because Republicans aren’t open to it
A key reason Democrats are operating on such narrow vote margins is because Republicans are widely expected to oppose the proposed minimum wage increase.
“We are getting Republicans on the record,” one of the Democratic aides told Vox. “I think it will be difficult for them to say thank you to our frontline heroes who’ve been risking their lives and say, we think $7.25 [an hour] is an appropriate salary.”
As Vox’s Dylan Matthews explains, there’s been a longstanding debate over whether increases to the minimum wage lead to outsized losses in employment. With regard to the recent bill, the CBO report states that it’s expected to lift 900,000 people out of poverty and bolster the pay of 27 million people. (Another estimate from Democrats notes that the measure would increase the pay of as many as 32 million people.) At the same time, the CBO estimates it could potentially cost 1.4 million jobs, a figure that’s garnered pushback from some economists who argue that’s an overestimate.
Republicans have raised concerns that such wage increases would put extensive pressure on small businesses that are already struggling during the pandemic, and that they should be tailored to the living costs in different states. Sens. Mitt Romney and Tom Cotton have announced plans to introduce their own bill that would increase the minimum wage, though they intend to tie such changes to immigration enforcement. Romney and Cotton haven’t yet revealed how much they would raise the minimum wage by.
In order to pass a $15 minimum wage, or even a compromise measure, Democrats will have to first clear the procedural hurdle of the parliamentarian, and then deal with the fracturing among themselves. As Sanders has emphasized, navigating both challenges is pivotal for this future of the minimum wage increase: Because of Republican opposition, this could be the party’s one shot to advance this proposal in the near term.
“Let’s be clear. We are never going to get 10 Republicans to increase the minimum wage through ‘regular order’,” Sanders said. “The only way to increase the minimum wage to $15 an hour now is to pass it with 51 votes through budget reconciliation.”
