On Friday, Senate Finance Committee Chairman Ron Wyden (D-Ore.) revealed the “Plan B” of Democrats to increase the minimum wage after the Senate parliamentarian ruled that an earlier effort by House Democrats to raise the $15 an hour federal minimum wage did not comply with special budget laws.
Wyden is proposing a workaround solution that, if all of its employees receive less than a certain amount, will place a 5 percent tax penalty on large companies, with the penalty rising over time.
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The language would mean that large corporations, even though they are not required by law to pay workers more than the existing federal minimum wage of $7.25 an hour, would have a substantial financial incentive to increase salaries.
As Chairman of the Finance Committee, I have been working on a ‘plan B’ that will make big corporations responsible for their employees being mistreated. My proposal will place a 5 percent penalty on the overall payroll of a large organization if any employees make less than a certain amount. “Over time, the penalty will increase,” Wyden said in a statement.
On Friday, a senior Democratic staffer said Senate Majority Leader Charles Schumer (D-N.Y.) is looking at incorporating such a clause to the COVID-19 relief package of $1.9 trillion. As soon as next week, he is scheduled to carry the legislation to the floor.
Wyden said his bill would provide protections to discourage firms from exporting jobs from evading the penalty.
“For example, if a successful mega business such as Walmart fires the security guard of a store and replaces it with a much less profitable contractor, my plan will also force Walmart to pay a penalty,” Wyden said.
Wyden wants to promote what he considers “the smallest of small businesses” to increase the salaries of employees by providing companies that improve wages with an income tax deduction equivalent to 25 percent of wages, up to $10,000 a year per employer.
This week, Senate Parliamentarian Elizabeth MacDonough dealt a significant setback to the Democrats by recommending a plan to increase the minimum wage under the control of the Senate Committee on Health, Education, Labor and Pensions, mainly a legislative reform with only an incidental budgetary impact.
As a consequence, the plan by President Biden to increase the minimum wage to $15 an hour will not be passed by the Senate by a simple majority vote.
The Byrd Rule of the Senate demands that measures contained in budget reconciliation packages, which can be approved with simple majority support, yield adjustments in spending outlays or revenues that are not simply incidental to their political consequences.
“While talks continue, I think this ‘plan B’ provides us with a way to step forward and get this done through the process of reconciliation,” Wyden said.
In more than a decade, jobs have not had a federal pay increase. We can’t afford to have millions of employees earning hunger salaries, workers who are disproportionate, people of color, women and critical workers such as fast food workers and home health aides, he added.
If Democrats are unable to find a way to fit the minimum wage increase into the $1.9 trillion COVID-19 relief bill they plan to pass under special budget laws, to meet the 60-vote threshold to resolve a filibuster, they would need to reach a compromise with at least 10 Republicans.
This week, Sens. Mitt Romney (R-Utah) and Tom Cotton (R-Ark.) proposed a plan to raise the minimum wage to $10 an hour in 2025 and tie the rise in salaries to crack down on employers who recruit illegal immigrants, showing the wide gulf between the problem of Democrats and many Republicans.