$15 Minimum Wage did not make the Rescue Act cut
When I last wrote about the American Rescue Plan Act of 2021 here, the legislation's final wording was still to be determined and it still contained the proposed $15 minimum wage increase. This past Thursday on March 11, 2021, President Biden signed the final version of the legislation that Congress passed. Even though the minimum wage debate really stole much of the show surrounding the American Rescue Act as far as news coverage, the $15 minimum wage increase did not make the cut due to challenges in the Senate. The final nail in the coffin was when the Senate parliamentarian, Elizabeth MacDonough, ruled the minimum wage increase is not eligible for the reconciliation process. Due to this ruling, passing the minimum wage increase with a simple 51-vote majority was prevented from becoming a reality.
So what did pass and what now for the minimum wage?
What did pass?
The American Rescue Plan Act of 2021 can be read in full here but I have summarized some of the key parts below:
Employer Credits for Paid Sick and Family Leave - Extends the employer-provided paid sick and family leave (FFCRA) credit through to September 30, 2021. Adds employer restrictions on receiving credits if paid leave policies favor highly compensated employees, full-time workers, or employees based on tenure. There were also changes to self-employed provisions and the use of time to cover COVID-19 vaccinations or wait times for test results or diagnoses.
Unemployment - Extension of Federal Pandemic Unemployment Assistance - Benefits remain at $300/week through September 6, 2021 and increase the total number of weeks from 50 weeks to 79 weeks for individuals that don’t qualify for regular benefits. Note there were no changes to eligibility to benefits for individuals that don’t qualify for state unemployment benefits (ex. gig workers).
Unemployment - Extension of Pandemic Emergency Unemployment Compensation - This extends the CARES benefits to individuals that exhausted benefits to September 6, 2021 - from twenty-four weeks extended to possibly fifty-three weeks.
Unemployment - Extension of Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations - Increase federal payments for the cost of providing unemployment benefits from 50 percent to 75 percent after March 31, 2021 thought September 6, 2021.
COBRA Continuation Coverage - If a COBRA recipient loses their job, this provides a subsidy for 100% of premiums. Employers can claim a refundable tax credit against their Medicare payroll tax liability for the cost of the premiums.
Modification to the Paycheck Protection Program - Funding increase to a little less than $814B with the eligibility for 501(c)(3) and 501(c)(6)’s to be maintained and expanding eligibility to fraternal benefit societies, labor organizations and social/recreational clubs.
Stimulus Checks -3rd Round of checks
Veteran Rapid Retraining Assistance Program - funds $386 million to reskill unemployed veterans for high-demand jobs or in high-tech programs through rapid retraining program
Dependent Care Flexible Spending Accounts - Raises the 2021 Contribution limit for Dependent Care Flexible Spending Accounts (FSAs) to $10,500 for single taxpayers and to $5,250 for married individuals separately.
Employer Retention Credit - The CARES Act employee retention credit is extended through December 31, 2021 with an extension to startups (after Feb. 15, 2020) with a $50,000 credit cap per calendar quarter for startups.
What now for the minimum wage?
You may be wondering what this means for the Fight for 15 and the future of minimum wage. I think it is clear that this was considered a devastating blow to those that had felt this would become law with this stimulus package. The hurdles of raising the minimum wage continue and while they have lost this battle, they did successfully start the conversation in the public and press about whether the minimum wage should be raised and what that should look like.
I think after the report from the Congressional Budget Office, there was a concern that the current state of the economy was not conducive for such a change on businesses at this immediate time due to the economic recovery being attempted after the COVID-19 pandemic. It is hard to argue that businesses have not suffered and been challenged over the last year considering the government shutdowns, layoffs, furloughs, safety protocols, reduced productivity, and an overall devastating effect on certain industries. This creates a difficult argument about the timing of the minimum wage being raised while businesses are in distress and the potential changes that employers may take in reaction such as letting employees go, consolidation of positions, or automation of processes.
Although employers should understand that while the economy recovers, it is clear that the supporters of the minimum wage increase will continue to seek this as a major priority including President Biden who has continued to voice his support. As you can see from their website, the Fight for 15 movement continues to encourage their supporters to contact their Senators and to continue to fight for $15 an hour, and they are likely not going to stand for less. Most recently, the Fight for 15 is going after McDonald’s for not truly being “America’s Best First Job” as they advertise and calling on sites such as Monster.com and Indeed.com to stop hosting McDonald’s job openings.
In fact, some companies chose to make the switch or start the transition to a higher minimum wage without the legislation likely in part because it seems an inevitable part of the horizon in some form. In particular, Costco announced they would be increasing their starting wage from $15 an hour to $16 an hour. (as reported in USA Today)
Perhaps also seeing that some change is inevitable, U.S. Senators Mitt Romney (R-UT) and Tom Cotton (R-AR) announced plans to introduce the Higher Wages for American Workers Act which would gradually raise the federal minimum wage to $10 with automatically raising it every two years to match the rate of inflation.
If Employers have not started to seriously consider how or if a minimum wage increase will impact their company, then they should start working through these issues both from the business and employment perspective. Because while it did not make it in this round of legislation, the fight is far from over on both sides of this contentious proposed legislation.