Senate parliamentarian rules against $15-per-hour minimum wage in COVID relief bill

Demonstrators participate in a protest outside of McDonald's corporate headquarters on Jan. 15, 2021, in Chicago. The protest was part of a nationwide effort calling for minimum wage to be raised to $15 per hour. (Scott Olson/Getty Images)

 (CNN) — The Senate parliamentarian has ruled against including the increase in the minimum wage in the Covid relief bill.

While Democrats had pushed for the increase to be included — and leadership expressed its disappointment in the ruling Thursday evening — its removal may actually make it easier to pass the bill, senior Democratic sources believe, because it’ll avoid a messy fight over whether to strip it out of the bill and whether to compromise.

“President Biden is disappointed in this outcome, as he proposed having the $15 minimum wage as part of the American Rescue Plan,” White House press secretary Jen Psaki said in a statement. “He respects the parliamentarian’s decision and the Senate’s process.”

For now, far from being a defeat, the ruling is viewed as clearing the way for the bill’s passage in the Senate, a Biden administration official told CNN.

House Speaker Nancy Pelosi said Thursday evening the provision will remain in the House bill on which the chamber is voting Friday. However, the parliamentarian ruled that the increase to $15 per hour did not meet a strict set of guidelines needed to move forward in the Senate’s reconciliation process. That means that the House will pass its bill, the Senate will have to strip the minimum wage provision out, and then eventually the House will have to pass that bill again at the end of the process.

But the ruling likely makes it easier for Senate Majority Leader Chuck Schumer to get his members in line behind the bill since the rise in the minimum wage had been a key sticking point for moderates like Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia.

There are no viable options to use the procedures in the Senate to keep the wage hike in the bill.

White House officials, cognizant of the potential math problem with Senate Democrats if the minimum wage increase were in the final package, had been counting on the provision being stripped, the administration official told CNN.

While there had been discussions about what would occur if it weren’t, President Joe Biden’s top advisers were fairly certain it would come out — something Biden himself alluded to several times publicly.

The parliamentarian’s ruling takes a significant potential hurdle out of play, officials acknowledged. While Biden will make a push to pass a standalone increase, officials know it has no path in the Senate due to Republican — and Democratic — opposition.

“We are deeply disappointed in this decision,” Schumer said in a statement following the ruling. “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.”

The parliamentarian’s decision marks the end of a multi-weeks effort by Senate Budget Chairman Bernie Sanders, an independent from Vermont, to include the provision in the relief bill.

“I strongly disagree with tonight’s decision by the Senate Parliamentarian,” Sanders said in a statement Thursday evening. “The (Congressional Budget Office) made it absolutely clear that raising the minimum wage to $15 an hour had a substantial budgetary impact and should be allowed under reconciliation. It is hard for me to understand how drilling for oil in the Arctic National Wildlife Refuge was considered to be consistent with the Byrd Rule, while increasing the minimum wage is not,” Sanders added, referring to the rule — named after the late Sen. Robert C. Byrd — that prohibits including “extraneous” measures as part of the budget process that Democrats are employing to send the Covid-19 relief package to Biden’s desk by early March.

“Let’s be clear: raising the minimum wage is COVID-19 relief,” Washington Rep. Pramila Jayapal, the chair of the Congressional Progressive Caucus, said in a statement responding to the ruling. “We simply cannot go back to the Black, Brown, AAPI, Indigenous, poor and working class voters who delivered us the White House and the Senate majority and tell them that an unelected parliamentarian advised us — based on arcane rules — that we could not raise the minimum wage as we promised,” she added, calling on the Senate to reform the filibuster “to allow populist and necessary policies like the $15 minimum wage to pass with a majority of the Senate.”

Progressive Democratic Rep. Alexandria Ocasio-Cortez of New York told CNN earlier this week that she would still support the Covid relief package if the parliamentarian were the one to remove the minimum wage provision, but not if politicians had been the ones to take it out. For Ocasio-Cortez, members of her own party removing or lowering the minimum wage would have made the bill fall apart. Rep. Ilhan Omar, a progressive Democrat from Minnesota, echoed those sentiments.

Senate parliamentarian Elizabeth MacDonough, a little known but powerful Senate official, had been thrust into the spotlight this week, with Democrats eager to see whether the minimum wage increase would survive in the President’s relief package. MacDonough is the first woman to serve in the role of Senate parliamentarian — a nonpartisan role — since that position was created in the 1930s.

Where the stimulus bill stands in Congress, and what comes next

By Zachary B. Wolf, CNN

(CNN) — House Democrats have included a minimum wage hike in their latest COVID relief bill, although a ruling from the Senate parliamentarian means it can’t be included in the final package.

Improving worker pay is unrelated to pandemic relief in that raising the minimum wage has long been a Democratic priority. It is completely related in that the COVID economy has hurt low wage workers — those in food service, child care and home health care, for instance, who can’t work from home — more than it’s hurt people who are able to work from home.

The argument about income inequality, which is growing in the US, is central to the widespread effort to raise the minimum wage.

“A $15 minimum wage is not a radical idea,” said Vermont Sen. Bernie Sanders on Twitter recently. “What’s radical is the fact that millions of Americans are forced to work for starvation wages, while 650 billionaires became over $1 trillion richer during a global pandemic. Yes. We must raise the minimum wage to a living wage.”

Here’s what you need to know to understand the debate.

What is the current minimum wage?

The federally mandated wage floor is $7.25 per hour.

But the minimum wage is actually different around the country. Some states have a much higher minimum wage than others, and some cities are even higher than the rest of their states. The highest minimum wage is $15 in Washington, DC.

There’s also a big exception to the minimum wage for workers who make tips, such as waiters. The federal minimum for those workers is just $2.13 an hour.

When was the last time the minimum wage changed?

While states and cities have recently raised their own minimum wages — in some places, after voters approved ballot measures — it has been more than a decade since the federal minimum wage was last raised in 2009.

That 12 year gap is the longest American workers have ever gone without a bump.

The minimum wage was first enacted in 1938 at 25 cents an hour.

How far does that $7.25 go?

Not as far as it went in 2009! Because of inflation, you would need $8.81 per hour in 2021 dollars to equal $7.25 in 2009. In that regard, the federal minimum wage has dropped.

When was the minimum wage highest?

In terms of inflation and purchasing power, the $1.60 minimum wage in 1968 would be worth about $12.27 in 2021 dollars.

How high do Democrats want to raise the minimum wage?

Sanders wants to raise the minimum wage incrementally — by $1 or $1.50 each year — until it reaches $15 per hour in 2025.

But this next part is important. Rather than rely on Congress to agree on raising the minimum wage again in 10 years or so, a bill introduced by Sanders would require it to be raised each year by the Department of Labor based on Bureau of Labor Statistics data.

How many people make the federal minimum wage?

Because so many states have their own, higher minimum wage, relatively few American workers make the federal minimum wage.

According to BLS surveys, about 392,000 workers earned the minimum wage of $7.25 in 2019 and 1.2 million workers were paid a wage below the federal minimum. They represent 1.9% of the 82.3 million American workers paid by the hour.

But almost all workers make less than $15, which is the minimum in only a few places.

How much of the country has imposed a minimum wage higher than the federal floor?

More than half of states — 29 — have a minimum wage higher than $7.25 and 45 cities have a minimum wage higher than their state, according to the Economic Policy Institute. A large portion of the states with a minimum wage higher than $7.25 raise it automatically with inflation.

The wage went up in 20 states Jan. 1. California has the highest statewide minimum wage at $14 per hour for companies that employ 26 or more people — but San Francisco and other cities in the state have higher wages, as do New York, Seattle and others.

What do we know about people making minimum wage?

Again, according to BLS, they are mostly young and they are less likely to have more than a high school education, if that. They are more likely to be working part-time than full-time. A larger portion are women than men, and they are less likely to married.

The top industry for people making minimum wage is the service industry, particularly food service.

The states with the largest proportion of minimum wage workers are in the South — Louisiana, Mississippi and South Carolina, according to BLS. In the vast majority of states, less than 5% of workers paid by the hour make minimum wage.

Can you live on the minimum wage?

An individual working 40 hours a week and making the federal minimum wage would make $15,080.

The federal poverty level in 2021 is $12,880. So a single person working full time and making minimum wage is technically above the poverty level. However, if the person has a dependent and is making minimum wage, they fall below the federal poverty level of $17,420.

The poverty level seems impossibly low

There is criticism of the poverty level as a measure, since it does not take into account the cost of living in different places. MIT professor Amy Glasmeier has developed a “living wage” calculator, that varies by state, county and city.

It also takes into consideration different family scenarios — such as one adult with one or more children, and two adults with one or both working — and is invariably higher than even the proposed $15 minimum wage.

What would be the effect of raising the minimum wage on businesses?

Many business owners and some economists argue that raising the federal minimum wage hurts businesses and costs people jobs, particularly in parts of the country with lower cost of living.

“Large cities with high costs of living — many of which already have or are on the path to a $15 minimum wage — may not experience huge consequences. But non-urban areas and places with lower costs of living could be devastated,” writes Rachel Greszler, a research fellow at the Heritage Foundation.

What would be the effect of raising the minimum wage on low-wage earners?

The non-partisan Congressional Budget Office predicted the incremental wage hike to $15 would raise worker pay by $333 billion for 17 million workers whose pay is at or below the minimum and could also affect 10 million workers whose pay is slightly above. Nearly 1 million people would be pulled above the poverty level and the government would spend less money on food assistance programs.

For an extremely in-depth look at the benefits of raising the minimum wage, here’s a report by the Economic Policy Institute, which lobbies for a wage increase.

For the argument that raising the wage costs American jobs, here’s a report by the National Bureau of Economic Research.

What does corporate America say about raising the minimum wage?

A number of massive companies — Amazon and Target — under public pressure from activists, have committed to their own $15 minimum wage. Walmart has raised wages well above the $7.25 floor, but does not automatically pay all of its employees $15 per hour, although it argues that with benefits, its employees are compensated above that level.

Which lawmakers are key to this debate?

Democrats want to use something called “budget reconciliation” to pass their Covid relief bill because it allows them to maneuver around the filibuster and pass the measure with a simple majority instead of a 60-vote supermajority.

The Senate parliamentarian determined that the minimum wage hike violates the rules and can’t stay in the final package — which some Democrats said might make it easier to get it passed.

Which Democrats oppose raising the minimum wage?

Democratic Sen. Kyrsten Sinema of Arizona has said she opposed the wage hike because in her view it is not related to the pandemic.

“What’s important is whether or not it’s directly related to short-term Covid relief. And if it’s not, then I am not going to support it in this legislation,” Sinema told Politico. “The minimum wage provision is not appropriate for the reconciliation process. It is not a budget item. And it shouldn’t be in there.”

Interestingly, Arizona has already elevated its minimum wage to among the highest statewide minimum wages in the country, at more than $12. Like Democrats’ national proposal, it is attached to cost of living and rises with inflation.

Sen. Joe Manchin of West Virginia, another moderate Democrat, also opposes using reconciliation to pass the measure. He sees an $11 wage as more appropriate for West Virginia, where the state minimum wage has been set at $8.75 since 2016.