A recent exchange between Republican senators and a leading proponent of raising the minimum wage highlighted a sometimes overlooked facet of the Democrats’ effort to boost the floor to $15 an hour—the increase would happen gradually, not all at once.
Here is a closer look at the proposal, which Democrats hope to include in a broader $1.9 trillion Covid-19 aid bill, and its chances of passage through a process called budget reconciliation.
What happened early Friday morning?
In a vote intended to show Democrats’ divides on the issue, Republicans proposed a budget amendment that would prevent Congress from raising the federal minimum wage to $15 an hour during the pandemic. Sen. Bernie Sanders (I., Vt.), an outspoken proponent of raising the wage, countered that the proposal would raise the wage over several years, not all at once, so he had no problem with the Republican amendment. As a result, it passed by unanimous voice vote.
“I will do everything that I can to make sure a $15-an-hour minimum wage is included in this reconciliation bill, but there appears to be some misunderstanding,” said Mr. Sanders, who caucuses with the Democrats. “It was never my intention to raise the minimum wage immediately and during the pandemic.”
What is being proposed, and when would the wage hit $15?
President Biden has called for a $15-an-hour federal minimum wage, up from $7.25 currently, a move that would require action by Congress. But the wage wouldn’t jump the full amount immediately.
The first increase to $9.50 an hour would occur the day a law becomes effective. Congress can set the law to become effective at a later date than when the president signs it. Annual increases would follow until reaching $15 an hour, four years after the effective date, then the rate would be reviewed annually and adjusted based on changes to median hourly earnings of all employees.
Democrats also proposed gradual elimination of subminimum wages for workers who are in part paid through tips. That minimum wage for adult workers is currently $2.13 an hour. The bill also eliminates separate subminimum wages for youth and disabled workers.
Currently, the federal minimum wage is in force in 21 states that either don’t have a state minimum wage or set a level at or below $7.25 an hour. More states would be covered by the federal rate should it be raised to $15 an hour in the coming years.
What are critics saying?
Republicans and some Democrats have raised concerns that $15 an hour is too high in rural areas and regions of the country with a lower cost of living. They say a wage floor at that level could result in businesses forgoing hiring or cutting workers’ hours.
Depending on when a law is passed, and the effective date, Democrats’ minimum wage proposal calls for reaching $15 an hour a year sooner than called for in last year’s Democratic Party platform, which set a goal of a $15 minimum wage in 2026.
What are businesses saying?
Several large employers have raised their starting wages in recent years, and some have suggested a federal increase could help level the playing field among businesses.
The U.S. Chamber of Commerce, a business lobbying group, has said $7.25 an hour is too low, but $15 is too high. Walmart Inc., the nation’s largest private employer, starts workers at $11 an hour. Amazon.com Inc., Target Corp. and Costco Wholesale Corp. have raised their starting wages to $15 an hour. Starbucks Corp. in December said all of its U.S. workers would earn $15 or above in the next two to three years.
How would the wage increase affect the broader economy?
Mr. Biden says his proposal will lift many low-wage workers out of poverty, but some businesses and economists warn it could cost jobs as the U.S. recovers from pandemic layoffs.
Some economists have looked at the patchwork of state and local increases and found little job loss relative to nearby areas with lower minimums. But others say job losses tied to a $15 minimum wage could be more severe, especially in states with a relatively low cost of living.
Is the Democrats’ plan likely to pass?
It is too early to say. Mr. Biden and congressional Democrats have included the $15-an-hour proposal in their broader Covid-19 aid package, a priority that they are trying to move through the Senate on just 51 votes, using a process called budget reconciliation.
But some lawmakers have expressed doubts about whether the wage plan qualifies for the reconciliation process, which is limited to tax and spending issues. So it is possible that the wage increase gets stripped from the broader legislation. Also, some Democrats have joined Republicans in calling the $15-an-hour rate too high, and have suggested a more modest increase—so it isn’t clear the current wage proposal could garner a Senate majority in any case.
—Andrew Duehren contributed to this article.
Write to Eric Morath at [email protected]
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