Biden's Push for a $15 Minimum Wage Appears Dead

Mish

I believe Biden's push for a $15 minimum wage is dead. However, one of  two lower numbers has a very good chance.

It Only Takes One

Given the 50-50 split in the Senate, it only takes one Democrat defection to kill any piece of legislation if no Republicans play ball. 

Possible Defections

There are three Democrat Senators in the pool of potential defectors.

  1. Joe Manchin, Wet Virginia 
  2. Kyrsten Sinema, Arizona 
  3. Jon Tester, Montana

Minimum Wage Defection Found

The Wall Street Journal reports Manchin doesn't support Biden's $15 minimum wage proposal. 

Manchin proposes the current federal minimum wage of $7.25 should be raised by a smaller amount.

Manchin seeks $11 adjusted for inflation in future years. West Virginia's current minimum wage is $8.75.

Reconciliation Issue

Manchin is not the only problem Biden has with the minimum wage. 

Note that a hike in the minimum wage is not a budget item subject to reconciliation rules.

That means it would take 60 Senators to go along if any Republicans were persistent with a filibuster.

Killing the Filibuster

What about killing the filibuster rule?

That idea does not work because Manchin and possibly other Democrat Senators are against killing the filibuster process. 

Compromise?

Might there be a compromise?

That's possible. The $11 proposal of Manchin could fly or perhaps something a bit higher like the Arizona minimum wage of $12.15.

Possible Republican Defections in Smaller Hike

  • Arkansas Min Wage $11.00
  • Maine Min Wage: $12.15
  • West Virginia Min Wage: $8.75
  • Arizona Min Wage: $12.15

Manchin would go along with $11 or possibly slightly higher. Sue Collins in Maine might easily go along with $12.15. Arkansas is more of a wild card but perhaps Tom Cotton or John Boozman would go along with $11.00. 

There are no Arizona Republican Senators in play (both are Democrats) but $12.15 and seems like a possible target.

My guess is either $11.00 or $12.15 will fly especially if small businesses are exempt. 

The key is avoiding a filibuster. That may take exemptions for small businesses. 

In practice, however, a small business exemption might not mean much. It will be hard for small businesses to attract people at $7.25 if everyone else is paying $11.00 or $12.25.

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  3. Is Biden's Easy Money Stimulus Plan Dead or Alive?

Regarding point #3, Manchin is willing to go along with Biden's $1.9 trillion proposal.

Mish

Comments (25)
No. 1-17
Sechel
Sechel

I wrote about this earlier. I agree $15.00 is tough. I can easily see it negotiated down to $11.00 but how does the parliamentarian approve this as part of reconciliation? I don't see it personally. It's the weakest part of Biden's package.

My guess is the $15.00 rate is part of Biden's negotiated platform with progressives. Intuitively higher wages should increase unemployment and automation. One annectdote, NY raised the minimum wage last year. In response one supermarket in the area reduced hours. They later went out of business but just to be clear the business failure was not linked to higher wages

Frilton Miedman
Frilton Miedman

There's absolutely no question wages have to go up at the low end.

There's absolutely no question an increase in min wage will hurt small biz, kill jobs.

Many of those jobs are going anyway, to automation, globalization or the corporate "Walmart effect".

That said -

If we don't increase min wage, those workers are on food stamps, public housing, welfare and other forms of taxpayer assistance.

Here's an idea, tax incentives or credits to small businesses to offset the difference.

As a small biz myself, I'm lucky, my bias clarified -

My own business flourishes when more consumers are available, however other members will point out, say, a hardware store, will lose to Home Depot. (acknowledging Carl R's point here)

So, why not modify tax code according to number of employee's vs profit margin?

This is a rough, simplistic idea, throwing out in real time, wrinkles and all.

Doug78
Doug78

Dems control Congress and the White House and they can't get this through? It looks like they "fight for" yet never seem to get it done. We have seen this before. Deja vu.

Democritus
Democritus

You can forbid employers to hide below $15, but you cannot force them to hire at $15 or above... I mean if someone has less skills and cannot give an employer more than about $10 extra profit per hour, he/she will simply be unemployed forever. And unable to build up some skills. That's the side effect nobody is talking about.

jfpersona1
jfpersona1

As has been talked about already, $15/hr is far too high in many areas of the country. That will be a drain on all businesses in areas where it is not necessary - and hand-in-hand with that, it will result in a lack of opportunity for those it is supposed to help.

As in the setting of interest rates by the Fed, there is no way that one minimum wage could possibly be appropriate across the entire country - unless it is set at or below the minimum economically feasible level found across the country and those areas that 'need' a higher wage are adjusted by competition.

That sort of describes the current condition - but there are always those that take advantage of the super low level to argue they are providing jobs when they may just be indenturing their workers. That is the main benefit that I see in raising the federal minimum wage. If raised to a level that pulls people up economically in the 'lower lying' areas, it can be a positive force. The issue is that (at least to date) it never keeps up. Tying it to inflation would help, but as everyone here knows, the current measures of inflation are generally BS. It would be better than nothing, though.

Dodge Demon
Dodge Demon

What would $15 today be worth in 1974? I’m getting $3.12.

7.50 now would be worth 1.43 in 1974.

1974 was the year of Whip Inflation Now. Minimum wage in 1974 was 2.00.

Other factors which have wildly inflated since then but are not captured in official government stats are housing (including apartment rent), college and healthcare. Generally anything which can be financialized and local, state income, state property and federal taxes including social security and Medicare.

Wake me up when the masses storm The Fed.

ColoradoAccountant
ColoradoAccountant

I did work in a Jack-in-the-box one summer in Houston when I was in High School for the minimum wage. Everyone spoke English. Obviously, now only the counter help speaks English, and it is their second language. Immigration kept costs down since I was in high school, automation now will do the same.

numike
numike

when do I get my check?

PecuniaNonOlet
PecuniaNonOlet

Make it $11 and get rid of the payroll tax for everyone at this rate.

Irondoor
Irondoor

Here's the dirty little secret to the Dems push for $15. Many union contracts are written so that the union wage is a derivative of the local minimum wage. Unions always want to make relatively more than the lowly min wage worker. If it goes to $15, union pay automatically adjusts. Payment to unions for Dem election support. As union wages go up, union dues go up. As union dues go up, union bosses pay goes up. And around and around we go.

POKERCAT
POKERCAT

There is an easy solution, fair to everyone.
Replace the min wage with a maximum wage.
For all corporations of any type including all LLC's and Non-Profits.
No person or subcontractor can earn more than 12 times what the LOWEST paid worker of said entity earns. Eliminate all so called incentives, bonus, special privileges or ANY other compensation including commissions. All wages should be limited to the same time period all employees of said corporation will be paid by the hour, day, week, month or year.

You get the idea if the CEO wants to make $5,000,000 annually the lowest paid employee or subcontractor would earn $416,667 for that same year.

On the other hand, if the lowest paid worker receives $30K per year the highest paid employee would receive $360K.

Sole proprietorships, not incorporated (not hiding personal assets behind legal skirts) would be exempt.

Issue solved, thank you

Midwest Guy
Midwest Guy

I'm in the lower Midwest, Indianapolis area. We've seen a massive build-up of warehouse operations. They get filled by various mass production companies or retail distribution for the CVS, Walmart, Amazon, etc.. Sometimes small scale to mid-scale industrial comes on-line. Current pay in the Indy metro for Amazon is $17/hour.

Halfway between Cincinnati and Indy is a Honda plant. They were starting at $17+/hour through a temp agency. Pay is right around $20/hour if hired into Honda as a Honda employee. They located the plant in the boonies to avoid Indiana's UAWs past in other parts of the state. They have trouble keeping people because the surrounding area can't provide a decent, reliable workforce. Others get burned out making the drive from Indy or Cincinnati. In the last few months they've been doing more direct hiring to attract employees.

Day cares in this area pay mid teens.

All of these employees are going to demand a decent hike in pay if minimum wage goes up to $15/hour. Watch for more push to unionize and calls to go on strike from these employees. Once all the other jobs are paying similar wages, why work the harder job, the job with the worse hours, etc.? If we get $15/hour min., the economic results will be interesting.

KidHorn
KidHorn

I read that this was part of getting the $1.9t stimulus through. The dems get their money while the pubs get the minimum wage. It was a tradeoff.

KidHorn
KidHorn

Part of the pubs argument against raising the wage is it prevents many entry level jobs from being filled by young people. Something to get their career started. They have a point. Maybe they should consider having a minimum based on age. <18 get $11, 18-22 get $13 22+ get $15. I guess the counter argument will be people would be fired once they turn 18 or 22 and replaced with someone younger.

Sechel
Sechel

Latest reports are Biden ready to drop the increase in minimum wage

JoeJohnson
JoeJohnson

The whole point is the minimum wage is not supposed to be a living wage, and no matter how high minimum wage is no one should strive to work for it. Better ways to help lower income workers would be to create a refundable payroll tax credit and to cap the monthly health care premium based on net income or enact a penalty on businesses based on difference that lowest 10% of paid workers and 10% highest workers pay in monthly health care premiums.


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