Raising the US minimum wage: what just happened and what comes next?

It was a major plank of the Democratic plan to “build back better” – raising the federal minimum wage from $7.25 to $15 an hour as a way of boosting the economy during the pandemic and tackling poverty and income inequality. But on Thursday the much-vaunted plan hit a roadblock in the US Senate, which has knocked the proposal sideways.

‘We need $15’: US minimum wage ruling a personal blow for millions of workers

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So what happened, and is this game over for the $15 minimum wage?

What happened?

The idea of pushing up the minimum wage in stages to $15 in 2025 was included in Joe Biden’s $1.9tn stimulus package that seeks to support vaccine distribution and an extension of unemployment benefit among other pandemic provisions.

The minimum wage element of the bill was a very big deal. It would increase the incomes of 27 million Americans, with almost 1 million people lifted out of poverty, according to the Congressional Budget Office.

The Democrats have decided to fast-track the bill as a way of avoiding Republican opposition through a channel known as “budget resolution”. That would provide for a simple majority vote in the Senate, avoiding the dreaded filibuster where 60 votes have to be attained – an impossible task given Republican intransigence within the new evenly split 50-50 Senate.

The snag is that budget resolution is subject to strict limits on how it is applied, designed to prevent political leaders packing the bill with all sorts of goodies entirely unrelated to federal revenue or spending. The unelected keeper of those restrictions is Elizabeth MacDonough, the grandly titled Senate parliamentarian, who announced on Thursday that in her reading of the rules the $15 minimum wage was extraneous to budget legislation and thus had to be removed.

How did that go down?

Advocates of raising the minimum wage were incensed. Bernie Sanders, a longtime champion, said he strongly disagreed with the decision, which he blamed on “archaic and undemocratic rules”. Elizabeth Warren and many others said it was time to end the filibuster so that the provision could pass the Senate regardless, while the idea of firing MacDonough was also floated.

By contrast, the top Republican on the Senate budget committee, Lindsey Graham, said he was “very pleased” by MacDonough’s intervention.

Would it have passed in any case?

There were some doubts that the stimulus bill would have passed with the minimum wage increase contained in it. Two Democratic senators on the right of the party, Joe Manchin from West Virginia and Kyrsten Sinema from Arizona, had both put up resistance, and even Biden himself openly expressed skepticism that the provision would “survive”.

The irony is that a $15 minimum wage is hugely popular among Americans of all political persuasions, with two-thirds supporting it, according to a 2019 poll by the Pew Research Center. Take Florida – the state voted for Trump in November, but it also backed by 60% a ballot initiative raising the minimum wage to $15 over the next five years.

So what’s next?

There are several directions in which the tussle could now go. Kamala Harris, as president of the Senate and the final arbiter on the chamber’s rules, has the authority to overrule the parliamentarian. But such a power has not been wielded since Nelson Rockefeller in 1975, and, besides, the White House has indicated that the vice-president will not take that route.

An alternative “plan B” is emerging whereby the Democrats would replace the minimum wage provision in the stimulus bill with a tax penalty on large corporations paying workers less than $15 an hour. Democratic leaders think that such a tax mechanism might be more resilient in meeting the requirements of budget resolution.

Working against that will be the desire of the White House to pass the stimulus bill quickly and not experience any further delays. A crunch deadline is fast approaching – on 14 March the existing jobless benefits start to expire and the Biden administration is keen to prevent unemployed workers falling into even greater hardship.

Amid the plethora of possible next steps, one thing is certain: the fight for $15 is not over. In the past eight years the push for a decent minimum wage has snowballed across the US and around the world into a formidable movement, and no number of objections from unelected rules-keepers will hold it back for long.