An amendment to add an increase to the federal minimum wage to the $1.9 trillion COVID-19 relief bill failed to pass in the Senate Friday. With eight Democrats joining the 50 Republicans in opposing the pay bump, it appears unlikely that $15 an hour will be passing anytime soon.
Sen. Bernie Sanders, an Independent from Vermont, forced a vote on an amendment for a $15 an hour federal minimum wage Friday. It failed to pass by a vote of 42-58. This means it will not make it into the Senate's final COVID relief bill, which is set to include a third stimulus check, more bonus unemployment checks and a larger Child Tax Credit.
The federal minimum wage increase hit a wall last week when the Senate parliamentarian ruled it didn't comply with budget rules. There were calls to ignore the ruling or even fire the parliamentarian, but neither of those actions was taken.
Here's everything you need to know about the now failed minimum wage increase.
What's happening with the $15 federal minimum wage increase?
Increasing the federal minimum wage to $15 an hour has been on Biden's agenda since Day 1. House and Senate Democrats introduced the Raise the Wage Act of 2021 on Jan. 26, which would begin annual increases until 2025.
But although the $1.9 trillion stimulus plan passed the House with the wage provision, it failed to get through the Senate. A vote on Friday to increase the minimum wage didn't pass by a vote of 42-58, with eight Democrats joining the Republicans. It's unlikely there will be any additional action in the Senate over this issue and considering the urgency of Congress to pass the bill, the House might not make any changes when it votes on the bill from the Senate.
What other options are available for increasing the minimum wage?
Other lawmakers have developed their own plans to increase the minimum wage in the past month.
Republicans Sen. Mitt Romney, from Utah, and Sen. Tom Cotton, from Arkansas, proposed their own minimum wage bill on Feb. 23. The Higher Wages for American Workers Act would gradually increase hourly pay from $7.25 to $10 over the course of five years. Then after every two years, pay would increase to match the rate of inflation. The legislation would also raise civil and criminal penalties for employers who hired unauthorized workers and require employees' eligibility to work to be confirmed with E-Verify.
Sen. Josh Hawley, a Republican from Missouri, also plans to introduce legislation to increase wages, but it has a few more provisions. With his Blue-Collar Bonus Tax Credit, workers would receive quarterly payments from the IRS if they make less than $16.50 an hour. In the example provided, a person making $12 an hour would receive a $2.25 per hour credit that would equal to $4,680 a year and would be paid out in four payments of $1,170.
There's also the Raise the Wage Act of 2021 that was introduced by House and Senate Democrats at the end of January. This bill would increase the federal minimum wage to $15 by 2027.
How much would the minimum wage increase annually if the plan passed?
Biden's plan called for an increase to the federal minimum wage between now and 2025, and to end the "tipped minimum wage" (for people whose income is based largely on tips, like restaurant servers) and subminimum wage for people with disabilities. Workers who receive at least $30 in tips a month qualify for the "tipped wage," which is split between a $2.13 minimum cash wage and a $5.13 maximum tip credit with both combining to $7.25.
According to the Fair Labor Standards Act, certain groups qualify for a wage below the minimum, which is currently $4.25. This includes student workers, those under the age of 20 and workers with a physical or intellectual disability.
While legislation is required to raise the national minimum wage, Biden can increase the wage for federal workers via executive order. On Jan. 22, he signed an order to have the Office of Personnel Management provide recommendations for a $15 an hour wage for federal workers, as a starting point.
The Raise the Wage Act of 2021 in the House and Senate lays out how the gradual increase will look from now until 2027. Here's a breakdown of how the bill would affect the minimum wage, the tipped wage, the youth wage for workers under the age of 20 and the 14(c) subminimum wage for workers with disabilities.
Minimum wage raise proposal by year (Raise the Wage Act)
||Minimum wage||Tipped wage||Youth wage||14(c) wage|
What is the current minimum wage? Is it the same in every state?
The federal minimum wage of $7.25 an hour was decided in 2009. States and cities, however, can dictate their own hourly minimum, based on local economics, for example. Washington has the highest among the states at $13.69, and Seattle is the major city with the top minimum wage of $16.69 for most workers, beginning Jan. 1, 2021.
Why increase the minimum wage over five years instead of all at once?
Raising the federal minimum wage all at once could create the risk of bankrupting small businesses by requiring them to immediately double each employee's pay. A gradual increase also gives employers and the economy an opportunity to catch up to changes in ways more prone to keeping pace with inflation.
Biden and other backers of the $15 national minimum wage will likely need to address it in a bill or package that's separate from Biden's $1.9 billion American Rescue Plan. The Senate voted 99-1 on an amendment to not raise the wage during the pandemic, which had the support of Sen. Bernie Sanders, the Senate Budget Committee chairman.
"I will support this amendment because nobody is talking about doubling the federal minimum wage during the pandemic," Sen. Sanders said on Feb. 5. "We're talking about gradually phasing it in over a five-year period."
Although the pay increase wasn't included in the package, the vote to prevent wages from going up during the pandemic was nonbinding, which means it could be added at a later date.
Biden reiterated this gradual phase-in idea during his town hall Feb. 16.
For more information about bills in Washington aimed at bringing households more money, here's how a proposal to expand the Child Tax Credit could send families a check every month for a year, and the latest stimulus check timeline, payment limits and qualifications.