The hurdles of the $15/hour Minimum Wage
This past Friday, February 19, 2021, a House committee released a 591-page coronavirus relief package and all of President Biden’s wishes did not make it in although most did. So what information made it in and what are the next steps? Also, what will become of the question of the federal minimum wage being raised to $15/hour and what hurdles does it face?
Well as an initial discussion, the parts that made it into the proposed package that should not be surprising from President Biden’s clear wish list are:
Stimulus Checks
Unemployment Assistance
Nutrition Assistance
Housing Aid
Tax Credits for Families and Workers
Education and Child Care
Loans for Small Business - EIDL (Emergency Injury Disaster Loan Program) would get additional funding
Aid to the States - Funding to state and local governments
Vaccines and Testing - Funding for testing and contact tracing and development of and administration of vaccines
The most surprising part of the proposed bill that I saw was that it backed off making the FFCRA (Families First Coronavirus Response Act) a mandatory requirement for Employers. This was a pretty clear wish on the President’s list and had been discussed as a necessary part by his administration’s efforts in continuing to provide paid sick leave and emergency family medical leave to workers through at least September 2021 due to COVID-19. As you may recall, this allowed for paid leave for various COVID-19 Pandemic-related reasons and those paid benefits expired December 31, 2021. What the proposed bill does state is that employers who choose to participate in providing this relief could still benefit from the tax credits through October 1, 2021.
The second partially surprising part of the proposed bill was seeing the $15 an hour minimum wage increase included in the bill. As you may recall, in a report released by the Congressional Budget Office at the beginning of February 2021, they did an analysis of the Raise the Wage Act of 2021 which was the senate proposed legislation to raise the federal minimum wage, in annual increments, to $15 per hour by June 2025. Using their economic forecast model, the CBO’s estimations were that this legislation would increase the budget deficit, cause higher prices for goods and services, and would increase spending for some programs (such as employment compensation), reduce spending for others (such as nutritional programs) and boost federal reserves (on net). They also estimated employment would be reduced by 1.4 million workers and the number of people in poverty would be reduced by 0.9 million.
At the time it appeared President Biden appeared to consider that this may need to be addressed in later totally separate legislation as CBS and CBNC reported him stating as such around February 6, 2021, here. I think the main issue at hand is that the economy has been hurt by the pandemic and businesses have been struggling, so there are hurdles to overcome if some of Congress has constituents that are not on board with passing this federal minimum wage increase now. In particular, because many businesses and some whole industries are looking at a recovery of several years from everything that has occurred throughout the whole time frame of the pandemic.
There are challenges in the Senate due to the Senate’s Byrd Rule which limits measures that are passed through budget reconciliation and are limited to items that do not “increase net outlays or decrease revenue during a fiscal year.” Some argue that the CBO report is evidence that the increase of the minimum wage would do so. Even though there are some challenges in the Senate, some senators remain hopeful that it will be included in and will not be stopped by the Byrd Rule as reported by the New York Post.
All of this is on a ticking timeline as the unemployment benefits are set to expire in March, so we will likely see this develop quickly over the coming weeks.