House Democrats are still poised to pass President Joe Biden’s proposed $1.9 trillion stimulus bill on Friday after the Senate parliamentarian ruled that a proposed increase to the minimum wage cannot be included in the stimulus bill. CNN and Politico first reported the news.
Despite the ruling, and after questions on whether the bill would have to go back into committees and go through the markup process all over again, Speaker Nancy Pelosi said the House is still set to vote on the stimulus bill on Friday. She said the the provision will remain in the bill.
“House Democrats believe that the minimum wage hike is necessary. Therefore, this provision will remain in the American Rescue Plan on the Floor tomorrow. Democrats in the House are determined to pursue every possible path in the Fight For 15,” Pelosi said.
Pelosi said earlier on Thursday that the House is prepared to pass the stimulus bill with or without a minimum wage provision, adding that the House could vote on a separate minimum wage measure.
What is likely to happen is after House Democrats approve the measure on Friday, the Senate would then be expected to remove the minimum wage provision, kicking the bill back to the House for a final vote.
Because Democrats are using the budget reconciliation process to pass the bill in an effort to circumvent a Senate filibuster, only certainly types of legislation can be used via budget reconciliation. Buried within the stimulus bill was a proposal to increase the federal minimum wage from $7.25 per hour to $15 an hour by 2025.
Without budget reconciliation, such a dramatic increase to the minimum wage is almost certain to fail in the Senate given that 60 votes would be needed to bring the proposal to a vote.
Senate Majority Leader Chuck Schumer expressed his disappointment about the decision in a statement.
“We are deeply disappointed in this decision,” Schumer said. “We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families. The American people deserve it, and we are committed to making it a reality.”
In order to use the budget reconciliation process, the bill has to be in agreement with the “Byrd Rule.”
The Byrd Rule in general requires that a proposal must produce a change in government spending or revenue, or change the federal deficit. While spending on a stimulus bill should pass the Byrd Rule, there were questions on whether the minimum wage increase would affect government spending or revenue.
In addition to Republican opposition, the minimum wage provision has faced criticism from various industries, including the restaurant industry, which has been decimated amid the pandemic. Rather than scrapping the stimulus bill altogether, leaders of the National Restaurant Association are calling for the minimum wage provision to be removed from the bill.
“Passage of this bill this year would lead to job losses and higher use of labor-reducing equipment and technology,” said Sean Kennedy, executive vice president for Public Affairs for the National Restaurant Association. “Nearly all restaurant operators say they will increase menu prices. But what is clear is that raising prices for consumers will not be enough for restaurants to absorb higher labor costs.”
If passed on its own, the federal minimum wage would increase to $9.50 on June 1, $11 in June 2022, $12.50 in June 2023, $14 in June 2024 and $15 in June 2025.
A recent Congressional Budget Office analysis projects that the poverty rate would decline by .9%, roughly the same percentage of workers would find themselves out of work.
The CBO projects the cumulative pay of affected people would increase, on net, by $333 billion through 2033. At the same time, those seeing higher income would cumulatively have a $509 billion increase in pay through 2033. Those with reduced employment would lose $175 billion in income.
Senate Minority Leader Mitch McConnell cited the CBO’s findings on the floor of the Senate earlier this month.
“But remember, this is about liberal dreams and not urgent needs,” McConnell said about Democrats wanting to include a minimum wage increase in the stimulus bill.
Schumer has been a proponent of increasing the minimum wage.
“The bottom line is simple. We are still in a historic crisis of health of the economy,” Schumer said. “The American people know we’re in a historic crisis and the Senate will soon take action on our plan to solve this crisis. A plan with overwhelming public support. Our Republican colleagues will have to decide whether they will work with us to improve the legislation or obstruct it to the bitter end.”
The stimulus bill includes $1,400 checks for most Americans making less than $75,000 a year. It also includes $1,400 for eligible dependents. The proposal increases the child tax credit to $3,000 per year ($3,600 for children under age 6). And it extends enhanced unemployment benefits through September.
The bill also replenishes funds for small business grants, and adds nearly $130 billion for schools to retain staff and implement social distancing protocols.