Senate Democrats look for alternative ways to boost minimum wage after suffering setback

Senate Democrats are scrambling to find a new way to force a minimum wage increase as part of President Joe Biden’s $1.9 trillion Covid relief package after suffering a major setback Thursday night when the Senate parliamentarian ruled against including a $15 minimum wage in the legislation.

As an alternative, Senate Majority Leader Chuck Schumer is now eying imposing penalties for corporations offering less than a $15 minimum wage as part of the relief package, which stands as the new administration’s first big legislative priority and the first chance Democrats have to show they can deliver on their promises now that they control both chambers of Congress and the White House.

“Schumer is looking at adding to Senate COVID bill a new provision to penalize large corporations that don’t pay their workers at least a $15 minimum wage,” a senior Democratic aide told CNN on Friday.

Senate Democrats are discussing their process for adding their alternative $15 minimum wage hike into the bill, according to two aides familiar with the talks, and are weighing offering it as an amendment during floor debate next week, something that would require 51 votes to approve.

The other option is to try to insert it into the underlying bill that they plan to bring to the floor, but that seems less likely at the moment.

Either way it still needs to pass muster with the Senate parliamentarian about whether it falls within the rules of the budget reconciliation process that they are employing to pass the bill with 51 votes.

One reason the Senate parliamentarian ruled the minimum wage increase was in violation of the rules was that it was a mandate on business, according to Senate sources. Democrats are now attempting to get around that concern by seeking to incentivize rather than mandate a wage hike.

The move from the majority leader comes after Senate Budget Committee Chairman Bernie Sanders, a Vermont independent who causes with Democrats, floated the idea Thursday night.

“In the coming days, I will be working with my colleagues in the Senate to move forward with an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages,” Sanders said in a statement Thursday reacting to the parliamentarian’s decision. “That amendment must be included in this reconciliation bill.”

The parliamentarian — a little known but powerful Senate official — 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, which Democrats are using to pass the relief package and evade a Republican filibuster.

But Senate Democrats made clear Friday morning that they plan to pursue other ways to force an increase.

Senate Finance Committee Chairman Ron Wyden said that he is working on a “plan B” as a possible alternative to incentivize companies to pay a higher minimum wage.

“I’ve been working on a ‘plan B’ that would make big companies pay for mistreating their workers. My plan would impose a 5 percent penalty on a big corporations’ total payroll if any workers earn less than a certain amount,” Wyden said in a statement, adding, “While conversations are continuing, I believe this ‘plan B’ provides us a path to move forward and get this done through the reconciliation process.”

House GOP leader Kevin McCarthy criticized the idea of raising taxes on companies that do not pay $15 an hour in minimum wage, saying, “I think it’s stupid.”

“I think it’s a tax increase and I wouldn’t expect anything else from the progressive Democrats,” McCarthy said, adding, “This is what happens when the Democrats win the majority.”

The key question now for Democratic leaders will be whether they can find a way to thread the needle on the issue that can satisfy both the progressive and moderate wings of their party as they seek to navigate slim majorities in both the House and Senate.

Biden has been pushing for the wage hike and progressives have made clear it’s a major priority, but including a $15 dollar increase as part of the Covid package has faced resistance from moderate Senate Democrats, like Kyrsten Sinema of Arizona.

For that reason, while Democrats had pushed for the increase to be included — and Democratic leaders expressed its disappointment in the ruling by the parliamentarian Thursday evening — its removal could actually make it easier to pass the bill, senior Democratic sources believe, because it would avoid a messy fight over whether to strip it out of the bill and whether to compromise.

This story has been updated with additional developments Friday.