• Senate Dems explore options for $15 minimum wage,
Might penalize corporations paying less
WASHINGTON — Senate Majority Leader Chuck Schumer, D-N.Y., is exploring the idea of tax penalties for corporations that pay less than $15 an hour, according to two congressional aides who spoke on the condition of anonymity to share private deliberations.
The plan, which would be added to President Joe Biden’s COVID-19 relief stimulus package, represents a backup proposal to Democrats’ efforts to increase the federal minimum wage to $15 an hour, a provision the Senate’s parliamentarian ruled out on Thursday evening.
The parliamentarian said the minimum wage hike was not permissible under the rules of budget reconciliation, the procedure Democrats are using to pass Mr. Biden’s $1.9 trillion stimulus plan. But budget experts believe the tax penalties on corporations would likely be approved under the rules of that process.
After the parliamentarian’s ruling, Senate Finance Chair Ron Wyden, D-Ore., and Senate Budget Chair Bernie Sanders, I-Vt., called for adding the tax changes into the stimulus package after it is passed by the House. It is unclear how many Senate Democrats would support the backdoor approach.
White House National Economic Council Director Brian Deese, in a Friday interview on CNBC, said the administration will consult with congressional leaders on the best path forward about the minimum wage.
With their narrow majority, Democrats could choose to overrule the Senate parliamentarian to pass the straight $15 an hour minimum wage hike. But White House Chief of Staff Ron Klain has ruled out that approach, as have centrist Senate Democrats.
Key questions about how the backup plan would work remain unsettled. In a statement, Mr. Wyden said his plan would impose a 5% penalty on the payrolls of “big corporations” if any workers earned below a “certain amount.” The statement did not define big corporations or the level of the wages that would trigger the penalty. Mr. Wyden also called for tax credits equal to up to 25% of wages to small businesses that pay their workers higher wages. The penalties and credits would aim to encourage firms to adopt a higher wage floor.
House Speaker Nancy Pelosi, D-Calif., said Thursday night that the $15 an hour minimum wage would be included in the stimulus package, which passed through the House on Friday evening.
“While conversations are continuing, I believe this ‘plan B’ provides us a path to move forward and get this done through the reconciliation process,” Mr. Wyden said. “Workers have not gotten a federal pay raise in more than a decade. We can’t continue to have millions of workers — workers who are disproportionately people of color, women and essential workers like fast-food workers and home health aides — earning starvation wages.”
Only 20% of minimum wage workers in Oregon are employed by firms with more than 500 employees, according to Arindrajit Dube, professor of economics at the University of Massachusetts, Amherst. Mr. Dube analyzed how the potential plan would affect Oregon because he currently has a data sharing agreement with the state.
“You can pay a sufficiently punitive tax to make sure everyone pays a $15 an hour minimum wage,” Mr. Dube said. “But most low-wage workers don’t work for megacorporations. This is not a substitute for a broad-based minimum wage increase.”