Can You Spare an Extra $7.75? Will the Federal $15 Minimum Wage Become a Reality?
Stites & Harbison Client Alert, February 15, 2021
I have more than one client who contacts me once every couple of weeks to ask, “where are we with the proposed federal $15 minimum wage?” And I think I can safely say that while in 2019, a majority of Americans surveyed1 were supportive of such an increase to the current $7.25 an hour, the political logistics of achieving this feat continue to be a challenge. Typically, the only thing I can tell clients is that there is a lot of discussion, but as of today it hasn’t yet happened, and it may not happen, but if it does you will be the first you know.
So as of today, set forth below is where the issue stands:
- On February 2, 2021, the Senate voted 50-49 to move President Joe Biden’s $1.9 trillion COVID-19 relief bill, the “American Rescue Plan” through the budget reconciliation process, developed under the “Congressional Budget Act of 1974.”2
- Reconciliation under the Budget Act requires only a simple majority to pass budgetary legislation. The process is permitted once per fiscal year, and it can only be used to change — or "reconcile" — laws related to taxes and spending.
- Reconciliation is not a new process. Since it was first used in 1980, the House and Senate have used it 25 times, with 21 reconciliation bills enacted into law for things such as tax cuts to individuals, or the passing of portions of the Affordable Care Act.
- On Wednesday, February 10, 2021, the Democratic-controlled House Education and Labor Committee approved a Covid-19 relief bill which includes a wage hike from $7.25 per hour to $15, slowly over four years.
- However, there is a process called the Byrd Rule wherein, if a senator objects, this would allow a provision to be removed from a reconciliation bill if it is deemed to be “extraneous.” This is to ensure no unrelated provisions can be snuck into the bill. Examples of such provisions might include rewriting rules on immigration and gun control.
- The Senate parliamentarian is tasked with deciding what is and isn't "extraneous." According to the Senate website,3 the “parliamentarian is the Senate's advisor on the interpretation of its rules and precedents.” Both the Senate and the House has its own parliamentarian to provide expert advice and assistance on questions relating to the meaning and application of that chamber's legislative rules, precedents, and practices.
Certainly there will be a Senator who will challenge the inclusion of the $15 minimum wage increase if it makes it that far, claiming such an increase is a regulatory matter, and not related to taxes or spending. Supporters will argue that the increase in the minimum wage will result in increased taxes for the government, and is therefore appropriately in the bill.
We will keep you posted on this process as it unfolds. If the increase survives any challenge and remains in the bill and is passed, a true $15 increase will not be immediate. Rather, the increase will occur over the course of four to five years. For specific questions or additional assistance, please feel free to contact anyone in the Firm’s Employment Law Services Group.
1Two-thirds of Americans favor a $15 federal minimum wage | Pew Research Center
2The Budget Reconciliation Process: The Senate’s “Byrd Rule” (fas.org)
3U.S. Senate: Office of the Parliamentarian