PROGRESSIVES WALK ON THE $15 PLANK

The art of simplicity is a puzzle of complexity. ~ Douglas Horton  

As many of us now remember the federal government’s minimum wage is $7.25 per hour, which works out to be about $15,000 per year. It has not been changed since 2009, despite Congressional Democrats’ past efforts. All told, the federal government has raised the minimum wage 22 times since 1938, when Franklin D. Roosevelt signed the Fair Labor Standards Act that first created a minimum wage at $0.25/hr for workers. In today’s dollars, the original minimum wage is $4.64/hr. Democrats have raised the minimum wage 20 times when they held Congressional majorities.

Twenty-nine states now have minimum wages higher than the federal wage. Five states in the South have no minimum wage, which means their covered workers earn the federal minimum wage. This year, the state with the highest minimum wage is California’s at $14.00/hr, for firms with 26 or more employees. Next year, the Golden State’s minimum wage will be $15.00/hr for these firms, the magic number for Progressives.

According to the Bureau of Labor Statistics, workers in the US who earn the federal minimum wage or less represent 1.5% of all hourly-paid workers or 0.68% of the entire labor force in 2020. Despite their slender (and decreasing) share of the labor force, these minimum-wage workers will meaningfully benefit from a higher minimum wage.

Ever since 2012 this benefit has been the focal point of the “Fight for $15” labor movement which began when fast-food workers assembled outside a New York City McDonalds to demand better pay. They’ve succeeded in the Big Apple, but not beyond. Since 2019, the New York City minimum wage has been $15/hr.

This key benefit, backed by a key Dem constituency, labor unions, is why the Dems decided to raise the federal minimum wage to $9.50/hr immediately (and to $15/hr over four years) as part of President Biden’s $1.9 trillion Covid relief legislation.

The House passed this legislation on February 27, with a slim seven-vote majority; two House Dems voted against the bill. Because the Senate Dems at best have only 51 votes (counting VP Kamala Harris), they need to use the Senate’s very peculiar reconciliation process to pass this legislation. This process only applies to legislation that directly involves budgetary taxing and spending matters.

After being prompted last week by the Repubs, the non-partisan Senate parliamentarian, Elizabeth MacDonough, determined if the Dems’ bill could proceed under the reconciliation process’ rules. As parliamentarian, Ms. MacDonough advises the Senate Majority Leader, Chuck Schumer, as the referee when the Senate Dems and Repubs play their legislative games.

She determined that the minimum wage increase portion of the Dems’ bill did not abide by the Byrd Rule and thus cannot be part of the reconciliation process. The Senate’s reconciliation process and Byrd Rule are so opaque and seemingly quixotic that mere (non-political) mortals cannot hope to understand exactly how they work.

The Byrd Rule restricts legislative provisions, apparently like the minimum wage hike, because they do not directly produce a change in expenditures or tax revenues. After the parliamentarian’s decision, the Dems could still try to pass a wage hike, but that would require 60 Senate votes, which they don’t have because of a lack of any Republican support. Realistically, Sen. Chuck Schumer undoubtedly knew that adding the minimum wage increase would be a stretch for passing this bill via reconciliation. But he wisely never said so publicly before Ms. MacDonough’s decision.

The Progs, especially in the House, are beside themselves about the parliamentarian’s decision. They have called for her firing and for the Senate to overrule her decision. The Progs sturdily walked the $15/hr plank in the House bill and want misplaced retribution paid for its demise in the Senate. That will not happen.

The Progs’ verbal fury is purely for public consumption not action, for two reasons. First, under Nancy Pelosi’s leadership, the Dems already enjoy their needed, simple-majority control to pass bills in the House. House bills are not subject to the Senate’s filibuster process, which requires super-majority (60 votes) for passage of “regular order” bills. Second, Majority Leader Pelosi has already stated the House will agree to the Senate’s bill without the minimum wage increase, if needed, during the bill’s conference committee. She realizes, as the Progs apparently don’t, that the other, substantial parts that remain in the Covid relief legislation will provide important benefits for everyone, including hourly workers.

But Dem Senators haven’t given up the $15/hr fight yet. Senators Ron Wyden and Bernie Sanders have proposed a contorted, substitute measure that would create a 5% tax/penalty on payrolls of large corporations, if any of the companies’ workers are paid less than a $15/hr wage. This penalty would increase over time, if the firm continued to under-pay its workers. Sen. Wyden said this alternative plan would provide “safeguards” to prevent the firms from contracting out these workers, the Uber anathema despised by Dems. He also mentioned that as part of the plan, very small businesses who have middle-class owners would receive an income tax credit to cover 25%of their employees’ wages, up to $10,000 per year per employer, in an effort to incentivize higher pay at those businesses. But, if Sen. Schumer were to push for inclusion of the Wyden/Sanders tax in the Covid relief bill, it would take more time to pass the entire legislation, probably beyond mid-March when the current supplemental unemployment benefits will expire.

Also, to implement this convoluted, almost Goldbergian proposal would require the already-underfunded and over-committed IRS to gather and process a profusion of additional data from thousands of businesses and their owners. This would certainly be more complex and less efficient than mandating a phased-in $15/hr minimum wage for all hourly employees in the nation.

A Rube Goldberg machine, similar to the Wyden-Sanders tax.

This tax would apply solely to the largest corporations. Many low-wage workers work at small businesses. The two largest industries that employ minimum-wage workers are the education and health services and wholesale and retail trade industries. These industries include many lesser-sized businesses and public entities that would not be subject to this possible tax. Finally, if this proposal were to become part of the current Covid relief legislation, such a new tax would likely lose the votes of Sen. Joe Manchin (D-WV) and Sen. Krysten Sinema (D-AZ) in addition to each and every Repub, meaning the Covid relief bill would not pass the Senate under reconciliation.

The Progs should stop being so thin-skinned about their favorite piece of the Dems’ Covid relief bill, be creative by temporarily folding up their $15 plank, and appreciate that 7/8’s of the bill will soon become law of the land. The Dems should take a deep breath or two and wait to incorporate their $15/hr minimum-wage leap as an adder to a “must-pass” appropriations bill, say for the Defense Department. Such bills already would have nominally strong Repub support that the Dems could leverage to have their wage increase more likely become actual law. By being a bit more patient and less truculent, the Dems’ goal of walking the $15 plank can be successful.