Minimum wage increase could work under Biden’s stimulus, CBO report suggests

Minimum wage increase could work under Biden’s stimulus, CBO report suggests

Sen. Bernie Sanders’ bill to hike the federal minimum wage to $15 an hour would increase the deficit by $54 billion over a decade, Congress’s independent budget scorekeeper estimated Monday.

That prediction of a deficit pile-up could work in Sanders’ (I-Vt.) favor as he fights to include the minimum wage increase in the package that Democrats are crafting to enact President Joe Biden’s $1.9 trillion economic-relief plan.

Under the fast-tracked budget process that Democrats could use to clear the aid package with just 51 votes in the Senate, the bill must have a direct and substantial impact on federal spending, revenue or the debt. So the Congressional Budget Office score is a boon for Democrats fighting for the minimum wage hike to be included, even as Biden casts doubt on whether it would pass muster under Senate rules for the so-called reconciliation process.

“What that means is that we can clearly raise the minimum wage to $15 an hour under the rules of reconciliation,” Sanders said in a statement about CBO’s predictions.

“Let’s be clear. We are never going to get 10 Republicans to increase the minimum wage through ‘regular order,’” said Sanders, chair of the Senate Budget Committee. “The only way to increase the minimum wage to $15 an hour now is to pass it with 51 votes through budget reconciliation.”

The wage proposal, S. 53 (117), would gradually hike the federal hourly minimum from $7.25 to $15 by 2025 and index future increases to median wage growth. It would also eliminate the sub-minimum tipped wage, or the amount tipped workers must be paid by their employers.

Biden expressed uncertainty Friday over whether the minimum wage provisions would work under reconciliation or be struck down at the hand of the Senate parliamentarian. “I don’t think it’s going to survive,” Biden told CBS.

The Senate parliamentarian decides which provisions will make the cut, but congressional leaders can tinker with the language to try to make it work.

After Biden said a wage increase was “not going to occur because of the rules of the United States Senate,” White House press secretary Jen Psaki said on Monday that the president is “firmly committed to raising the minimum wage to $15.”

“In terms of what the options are,” Psaki said, “we’ll see what the parliamentarian decides, and then we’ll see what additional options are.”

The president would “defer” to the parliamentarian and Congress, Psaki said about whether Biden would consider deploying Vice President Kamala Harris to overrule the parliamentarian.

Even if a minimum wage increase can withstand parliamentary challenges, support for the proposal may fall short of the 50 votes needed in the Senate to be included in a final package. Sen. Joe Manchin (D-W.Va.) has already said he does not support increasing the wage to $15 an hour. Last week, the Senate passed by a voice vote an amendment from Sen. Joni Ernst (R-Iowa) that would prohibit a $15 hike during the pandemic.

Among CBO’s predictions of how a minimum wage increase would affect workers, the budget office estimated nearly a million people would be lifted out of poverty. At the same time, it would result in the loss of 1.4 million jobs, pushing hundreds of thousands of workers out of the labor force by the time the federal minimum reaches $15 in 2025, disproportionately affecting “young, less educated people,” CBO forecast.

Republicans seized on the predictions of job loss and increased inflation. Rep. Virginia Foxx (R-N.C.), the ranking Republican on the House Education and Labor Committee, said CBO’s report on “the radical Democrat legislation” paints “a dire picture for workers and small businesses.”

A minimum wage increase could affect as many as 27 million workers who were earning less than or slightly above $15 in 2025, the budget office predicted. The report estimated that cumulative pay for workers affected by the increase would go up by $333 billion in the 10 years after the bill is enacted.

While Sanders highlighted the positive aspects of the budget office’s deficit projection, he also complained about the hefty cost that CBO estimated for his plan. “I find it hard to understand how the CBO concluded that raising the minimum wage would increase the deficit by $54 billion,” he said, noting that the budget office previously estimated it would expand the deficit by far less.

CBO’s predictions are contrary to Sanders’ argument that his bill would provide overall savings for taxpayers and ultimately reduce the deficit by lifting workers out of public assistance programs.

According to the budget office, the bill would actually increase Medicaid and Medicare spending because of the number of people “who lost employment as a result of the minimum-wage increase and thus became eligible for the program” and because “payment rates for health care providers would be higher.”

House Education and Labor Committee Chair Bobby Scott (D- Va.), who is the sponsor of the House version of the bill, H.R. 603 (117)), said the report “shows that increasing the minimum wage will act as a direct and targeted stimulus for struggling workers and their families.”

Scott also argued that the CBO prediction “strengthens the case for gradually raising the minimum wage through the COVID-19 rescue package.”

Advocacy groups pressuring Congress to raise the federal minimum wage also hailed the CBO report as a victory.

“There are over 54 billion reasons for the Senate parliamentarian to stand with 32 million workers,” People for Bernie, a grassroots movement that supported Sanders’ presidential bid, said in a statement.

Frances Holmes, a member of the union-backed “Fight for $15” campaign, said the CBO report “confirms what we already knew — the Senate can raise the minimum wage to $15 as part of the COVID relief package.”

“We don’t need excuses from our nation’s leaders,” Holmes said. “We need relief.”

Marianne LeVine, Caitlin Emma and Laura Barron-Lopez contributed to this report.

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