How to Get the Wage Hike Through Budget Reconciliation
Shawn St Peter • February 26, 2021
It can be done, but should it?
The Senate Parliamentarian ruled tonight that the $15 Minimum wage cannot be included in the Budget Reconciliation bill as currently worded. This is a blow to many progressives, including budget committee chair Senator Bernie Sanders. But there is still a path to get a wage hike included in the American Recovery Act – the real question is not how, but if we should do it.
Costco plans to edge up its starting wage to $16 an hour starting next week, CEO W. Craig Jelinek said on earlier today. This comment came in front of the Senate Budget Committee during a hearing on pay at large retail and fast-food employers. More and more, big business is coming out in favor of the $15 minimum wage, while small business is against it. And this conflict is one reason that it’s passage as part of the Covid relief package, or the “American Rescue Plan” is in jeopardy. I have my reservations about the $15 minimum wage and its effect on the economy, but for me, that big business is favoring it is telling.
In some circles, the $15 minimum wage is being called a livable wage. And it may be, but it camouflages the true way to income equality and a livable salary. The focus on the wage s the wrong focus. And that is why big business wants to keep the focus on a number and the wage. Because any wage you set can be absorbed, not just into prices, but managed through labor allocation practices. Change hours, limit hours, and mix labor costs (balance wages of staff across working hours. Costco already stated that more than 50% of their employees make over $25 an hour, so a few dollars at the low end won’t impact them much.
What would impact them is a drive to convert part time employees, particularly those at the highest hours of part time work (30 hours in most states) to full time employees. Full time jobs that include benefits are more valuable than the wage increase, I believe. And more costly to the employers.
In either case, there is a very easy way to ensure that a wage increase is included in the American Recovery Plan – do not change the minimum wage, but instead include a new tax on companies that is dollar for dollar on all employee wages that are below the minimum you set. So if you want a $15 dollar wage floor, set the tax on any salary that is under this and a business will be forced to pay $2 for every $1 of salary for those under $15. So for a $10 worker, they would have to pay an additional $10 per hour in taxes.
Because it will be a tax, it directly impacts revenue so there is no question that it will pass. You can phase it in the same way the minimum wage was going to be.
This wouldn’t preclude a separate effort to increase the minimum wage and make it a better program. For me, I think that it should be something that is regional, tied to local cost of living, and includes an annual review based on inflation. You could set up the parameters for this pretty easily in a tax, much more so than in the minimum wage directly (and maybe something like this gets a Joe Manchin on board).
And with a tax, it’s also easy to set the rate to be aimed at increasing full-time employment and benefits, potentially giving employers who offer that kind of program a reduction in the actual minimum wage.
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Note – this article was written by ChatGPT. I asked it to write an explainer post for my website in the style of Malcolm Gladwell. As part of this week’s podcast, I had ChatGPT co-produce it with me. It came up with script suggestions. I asked it to help me write an explainer companion post for the website. I did not really like the first one it wrote, and so I tried asking for different types of articles, asking for a particular style(witty, snarky, etc) or well know writers (Bill Simmons, Malcolm Gladwell). The below is the one by Gladwell, which I liked the best.
I have made no edits.
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