Senate Parliamentarian Elizabeth MacDonough has told senators that the federal minimum wage increase President Joe Biden and Democrats have been seeking would violate the chamber's rules for inclusion in a filibuster-proof pandemic relief reconciliation bill.
Two sources familiar with the discussions confirmed the ruling, which emerged after arguments from aides to both parties in closed-door meetings with MacDonough this week.
The decision dealt a blow to Democratic hopes of tacking the long-sought rise in the minimum wage onto the $1.9 trillion coronavirus relief package that's taking shape. While the provision would affect the federal budget significantly, MacDonough deemed the impact "merely incidental" to the underlying policy intent of the wage boost, therefore violating the Senate's "Byrd rule.”
The provision, which Biden proposed even before he took office, would gradually increase the federal hourly minimum wage from $7.25 to $15 by 2025.
White House spokeswoman Jen Psaki said Biden "respects the parliamentarian's decision and the Senate's process" and would "work with leaders in Congress to determine the best path forward" on a minimum wage boost.
The language is currently included in the version the House plans to take up on Friday, but the parliamentary ruling means it will need to be stripped in the Senate or Democrats would have to disregard MacDonough's advice. White House Chief of Staff Ron Klain told MSNBC on Wednesday night that Democrats were not planning to take that step, however.
Senate Majority Leader Charles E. Schumer, D-N.Y., declined to say earlier this week what Democrats would do if the parliamentarian ruled against them. He vowed to keep fighting for a wage boost Thursday night but stopped short of saying how.
“We are deeply disappointed in this decision,” Schumer said in a statement. “We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families. The American people deserve it, and we are committed to making it a reality.”
Budget Chairman Bernie Sanders, I-Vt., said Thursday night that his next step would be to push an amendment to the reconciliation package to support minimum wage increases through the tax code.
"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," he said in a statement.
South Carolina Sen. Lindsey Graham, the Budget Committee’s ranking Republican, said he was “very pleased” with the ruling. He said in a statement the decision means “reconciliation cannot be used as a vehicle to pass major legislative change - by either party - on a simple majority vote. This decision will, over time, reinforce the traditions of the Senate.”
Even if Democrats had won the procedural battle, they faced internal divisions over a minimum wage boost that Republicans said would cost jobs. Sen. Joe Manchin III, D-W.Va., said he wanted to cap a wage boost to $11 an hour, while Sen. Kyrsten Sinema, D-Ariz., has said she didn’t want to see a wage boost passed as part of a reconciliation bill.
And with the Senate split 50-50 between the parties, the defection of even a single Democrat was likely to jeopardize a minimum wage increase. Passing the measure in standalone legislation would be even more daunting, since it would require 60 votes.
Sanders had told reporters in recent days he thought Democrats stood on strong procedural ground for including a minimum wage boost after the Congressional Budget Office had estimated the measure would cost about $67 billion over a decade — a sizable budgetary impact.
But the Senate’s so-called Byrd rule requires that such fiscal impact can’t be “merely incidental” to the underlying policy proposal. The minimum wage measure amounts to a mandate on private businesses to increase what they pay to low-wage workers.
Despite the ruling, Speaker Nancy Pelosi, D-Calif., said the relief package the House takes up Friday would include a minimum wage boost.
“House Democrats believe that the minimum wage hike is necessary," she said in a statement. "Therefore, this provision will remain in the American Rescue Plan on the Floor tomorrow."