As Democrats push ahead with the budget reconciliation process to pass President Joe Biden‘s $1.9 trillion economic relief legislation, the package’s proposed increase in the federal minimum wage could face opposition from Senator Joe Manchin and be hampered by the rules of the reconciliation process itself.
Under Biden’s plan, the federal minimum wage would be gradually increased to $15 per hour by 2024. Lawmakers last increased the wage in 2009, raising it to its current level of $7.25 per hour.
Notably, this is the longest period—nearly 12 years—that the U.S. has gone without raising the minimum wage since one was first implemented in 1938. Many states and municipalities have raised the wage at the local level, with some parts of the country already having a $15 per hour minimum.
But Republicans have come out largely against raising the minimum wage, arguing it will harm small businesses. Manchin, who is considered to be the most conservative Senate Democrat, has expressed his opposition to raising it to $15 as well. Reached for comment, a spokesperson for Manchin referred Newsweek to his remarks during a Wednesday morning interview with MSNBC.
“The minimum wage hike, I do not believe, will fit in there at all. We need a good discussion on this,” Manchin said. “You’ve got to find common ground there, where we can start—so little rural states and rural areas don’t get basically decimated by it and the businesses don’t collapse.”
Still, the West Virginia Democrat suggested that the amount should be raised, describing $7 as “poverty wages.”
The budget reconciliation process in the Senate allows for legislation to pass with only slim majority support, as opposed to the typical 60-vote threshold required under the legislative filibuster rule. Democrats have narrow control of the Senate, but the legislative body is evenly split 50-50. Vice President Kamala Harris, who serves as president of the Senate, can cast a tie-breaking vote—meaning that all senators within the chamber’s Democratic Caucus must unanimously back the relief bill if it’s to pass without any GOP support.
Manchin, moderate Senate Republicans and the White House are still voicing their hope for a bipartisan agreement, but that possibility appears increasingly difficult. A group of 10 moderate Republican senators, led by Susan Collins of Maine, put forward a substantially smaller $600 billion proposal this week. While Biden met with the GOP lawmakers to discuss their proposal and his package, they appeared to remain far apart following that meeting.
Although Republicans and some moderate Democrats are concerned about raising the minimum wage to $15, economists have largely dismissed fears of its negative impact on the economy.
“The consensus among economists is that a $15 minimum wage would have minimal effects on employment. The evidence shows that restaurants will absorb the higher costs by raising their prices a few pennies on the dollar and that their sales will increase,” Michael Reich, a professor of economics at the University of California, Berkeley, told Newsweek.
Reich pointed out that the value of the current federal minimum wage is now 24 percent lower than it was when it was raised in 2009, after correction for inflation. In a paper published Monday, Reich projected that the increased minimum wage would actually bring in about $65 billion per year for the federal budget after fully implementation in 2025.
“Most minimum wage workers are either essential workers or workers most affected by the pandemic. As the economy reopens this spring, the increase in the minimum wage will help their own finances and speed the recovery,” the economist said.
Ben Zipperer, an economist at the Economic Policy Institute, told Newsweek that raising the minimum wage is “well overdue.”
“Minimum wage workers today are paid substantially less than what their counterparts earned even 50 years ago, after adjusting for inflation,” Zipperer said. “I’m not too concerned about the scare stories regarding the minimum wage: shutting down businesses, hurting the people that the policy is trying to help, etc.”
The economist said that the lowest-paid workers would benefit the most from the change. Although he acknowledged that some jobs may be lost, he pointed out that many millions more would see substantial wage increases.
“Whatever your thoughts are about the employment impacts of the minimum wage, they are overwhelmed by the earnings increase for low-wage workers,” Zipperer said. “Even the Congressional Budget Office, which in 2019 estimated 1.3 million jobs lost due to $15 in 2025, predicted that the policy would increase wages of 27 million workers, increasing their total income and reducing the number of families in poverty.”
While Manchin has raised his concerns about the minimum wage, he’s suggested his main priority is ensuring an adequate debate and giving Republicans the opportunity to put forward amendments. Senator Bernie Sanders, who now chairs the Senate Budget Committee and will be critical to pushing the Biden package through the reconciliation process, told ABC News on Sunday he was confident Democrats would be united and able to pass the bill without GOP support if necessary.
“At the end of the day, we’re going to support the president of the United States, and we’re going to come forward, and we’re going to do what the American people overwhelmingly want us to do,” Sanders said. Newsweek reached out to Sanders’ press representatives for comment on Manchin’s concerns but did not immediately receive a response.
Even if Democrats all end up rallying behind the minimum wage increase, some analysts think it may not be possible to pass it through the budget reconciliation process.
“There’s an outside chance you could do it through reconciliation, but I think what I take away from this is, in fact, you need a supermajority and Republican support to get this done,” Sarah Binder, a political scientist at George Washington University and the Brookings Institution, told NBC News.
The budget reconciliation process can be used only for certain legislation, such as tax, spending and debt limit bills. Democrats would need to find an argument that the minimum wage increase directly affects one of these items. They could say that the wage increase directly affects the budget, as it would be expected to increase federal government revenue through the additional income taxes collected.
Sanders expressed confidence that the wage hike can pass through the reconciliation process. “We must raise the minimum wage to $15 an hour through budget reconciliation by a simple majority vote in the Senate,” he told reporters during a Tuesday call.