It Only Takes One
Given the 50-50 split in the Senate, it only takes one Democrat defection to kill any piece of legislation if no Republicans play ball.
Possible Defections
There are three Democrat Senators in the pool of potential defectors.
- Joe Manchin, Wet Virginia
- Kyrsten Sinema, Arizona
- Jon Tester, Montana
Minimum Wage Defection Found
The Wall Street Journal reports Manchin doesn’t support Biden’s $15 minimum wage proposal.
Manchin proposes the current federal minimum wage of $7.25 should be raised by a smaller amount.
Manchin seeks $11 adjusted for inflation in future years. West Virginia’s current minimum wage is $8.75.
Reconciliation Issue
Manchin is not the only problem Biden has with the minimum wage.
Note that a hike in the minimum wage is not a budget item subject to reconciliation rules.
That means it would take 60 Senators to go along if any Republicans were persistent with a filibuster.
Killing the Filibuster
What about killing the filibuster rule?
That idea does not work because Manchin and possibly other Democrat Senators are against killing the filibuster process.
Compromise?
Might there be a compromise?
That’s possible. The $11 proposal of Manchin could fly or perhaps something a bit higher like the Arizona minimum wage of $12.15.
Possible Republican Defections in Smaller Hike
- Arkansas Min Wage $11.00
- Maine Min Wage: $12.15
- West Virginia Min Wage: $8.75
- Arizona Min Wage: $12.15
Manchin would go along with $11 or possibly slightly higher. Sue Collins in Maine might easily go along with $12.15. Arkansas is more of a wild card but perhaps Tom Cotton or John Boozman would go along with $11.00.
There are no Arizona Republican Senators in play (both are Democrats) but $12.15 and seems like a possible target.
My guess is either $11.00 or $12.15 will fly especially if small businesses are exempt.
The key is avoiding a filibuster. That may take exemptions for small businesses.
In practice, however, a small business exemption might not mean much. It will be hard for small businesses to attract people at $7.25 if everyone else is paying $11.00 or $12.25.
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Regarding point #3, Manchin is willing to go along with Biden’s $1.9 trillion proposal.
Mish
The whole point is the minimum wage is not supposed to be a living wage, and no matter how high minimum wage is no one should strive to work for it. Better ways to help lower income workers would be to create a refundable payroll tax credit and to cap the monthly health care premium based on net income or enact a penalty on businesses based on difference that lowest 10% of paid workers and 10% highest workers pay in monthly health care premiums.
I think a better alternative is the government to live within their means, balance their budget and pay down debt as most Americans do. I have yet to hear ANY incentives to business to stimulate the economy.
Biden is an ABSOLUTE IDIOT (this includes the fools that voted for him) to propose increasing the minimum wage. You have businesses that are collapsing and you are going to propose this wage increase. Only a fool would believe this.
Latest reports are Biden ready to drop the increase in minimum wage
Part of the pubs argument against raising the wage is it prevents many entry level jobs from being filled by young people. Something to get their career started. They have a point. Maybe they should consider having a minimum based on age. <18 get $11, 18-22 get $13 22+ get $15. I guess the counter argument will be people would be fired once they turn 18 or 22 and replaced with someone younger.
I read that this was part of getting the $1.9t stimulus through. The dems get their money while the pubs get the minimum wage. It was a tradeoff.
I’m in the lower Midwest, Indianapolis area. We’ve seen a massive build-up of warehouse operations. They get filled by various mass production companies or retail distribution for the CVS, Walmart, Amazon, etc.. Sometimes small scale to mid-scale industrial comes on-line. Current pay in the Indy metro for Amazon is $17/hour.
Halfway between Cincinnati and Indy is a Honda plant. They were starting at $17+/hour through a temp agency. Pay is right around $20/hour if hired into Honda as a Honda employee. They located the plant in the boonies to avoid Indiana’s UAWs past in other parts of the state. They have trouble keeping people because the surrounding area can’t provide a decent, reliable workforce. Others get burned out making the drive from Indy or Cincinnati. In the last few months they’ve been doing more direct hiring to attract employees.
Day cares in this area pay mid teens.
All of these employees are going to demand a decent hike in pay if minimum wage goes up to $15/hour. Watch for more push to unionize and calls to go on strike from these employees. Once all the other jobs are paying similar wages, why work the harder job, the job with the worse hours, etc.? If we get $15/hour min., the economic results will be interesting.
There is an easy solution, fair to everyone.
Replace the min wage with a maximum wage.
For all corporations of any type including all LLC’s and Non-Profits.
No person or subcontractor can earn more than 12 times what the LOWEST paid worker of said entity earns. Eliminate all so called incentives, bonus, special privileges or ANY other compensation including commissions. All wages should be limited to the same time period all employees of said corporation will be paid by the hour, day, week, month or year.
You get the idea if the CEO wants to make $5,000,000 annually the lowest paid employee or subcontractor would earn $416,667 for that same year.
On the other hand, if the lowest paid worker receives $30K per year the highest paid employee would receive $360K.
Sole proprietorships, not incorporated (not hiding personal assets behind legal skirts) would be exempt.
Issue solved, thank you
You know that the USSR model failed right?
So by your logic, someone who hustles hard and earns great commissions isn’t entitled to them if he somehow reaches more than 12x the pay of the lowliest employee? Good luck with that.
Companies would easily get around your limits. They’d just split into many smaller companies based on wage scale. So the Joes Widgets would split into Joes Widgets Janitors (lowest pay), Joes Widgets Salesforce, Joes Widgets Manufacturers, Joes Widgets Accounting (highest) and so on. All perfectly legal and all with their own pay scale.
Not to mention many companies offer stock options. The price can vary widely per year depending on how the company is doing. So would stock prices have to be manually restricted somehow if the CEO shares went up a lot?
The USSR model doesn’t work.
Here’s the dirty little secret to the Dems push for $15. Many union contracts are written so that the union wage is a derivative of the local minimum wage. Unions always want to make relatively more than the lowly min wage worker. If it goes to $15, union pay automatically adjusts. Payment to unions for Dem election support. As union wages go up, union dues go up. As union dues go up, union bosses pay goes up. And around and around we go.
when do I get my check?
I did work in a Jack-in-the-box one summer in Houston when I was in High School for the minimum wage. Everyone spoke English. Obviously, now only the counter help speaks English, and it is their second language. Immigration kept costs down since I was in high school, automation now will do the same.
What would $15 today be worth in 1974? I’m getting $3.12.
7.50 now would be worth 1.43 in 1974.
1974 was the year of Whip Inflation Now. Minimum wage in 1974 was 2.00.
Other factors which have wildly inflated since then but are not captured in official government stats are housing (including apartment rent), college and healthcare. Generally anything which can be financialized and local, state income, state property and federal taxes including social security and Medicare.
Wake me up when the masses storm The Fed.
As has been talked about already, $15/hr is far too high in many areas of the country. That will be a drain on all businesses in areas where it is not necessary – and hand-in-hand with that, it will result in a lack of opportunity for those it is supposed to help.
As in the setting of interest rates by the Fed, there is no way that one minimum wage could possibly be appropriate across the entire country – unless it is set at or below the minimum economically feasible level found across the country and those areas that ‘need’ a higher wage are adjusted by competition.
That sort of describes the current condition – but there are always those that take advantage of the super low level to argue they are providing jobs when they may just be indenturing their workers. That is the main benefit that I see in raising the federal minimum wage. If raised to a level that pulls people up economically in the ‘lower lying’ areas, it can be a positive force. The issue is that (at least to date) it never keeps up. Tying it to inflation would help, but as everyone here knows, the current measures of inflation are generally BS. It would be better than nothing, though.
You can forbid employers to hide below $15, but you cannot force them to hire at $15 or above… I mean if someone has less skills and cannot give an employer more than about $10 extra profit per hour, he/she will simply be unemployed forever. And unable to build up some skills. That’s the side effect nobody is talking about.
Dems control Congress and the White House and they can’t get this through? It looks like they “fight for” yet never seem to get it done. We have seen this before. Deja vu.
Relying on 100% lockstep voting is not many people’s definition of full control. You might be underestimating the accountability to constituents felt by Manchin, Sienema, and Tester. A chacun son un.
That has always been their excuse for not passing promised legislation. The dog (Republicans) ate my homework.
“That has always been their excuse for not passing promised legislation. The dog (Republicans) ate my homework.”
Over-simplified observation.
*The Dems may be underestimating the effect a min wage hike this large has on small biz, especially in rural areas with lower costs of living.
*The Pubs may be overestimating the effect on job creation that increased payroll costs have on wealthy campaign donors…..who apparently create loads of jobs every time we cut their expenses. (In China, Mexico, India …)
Between the whole Dems vs Pubs duel to the death routine lies us, I’m sick of brainlessly fighting for one side or the other, let’s talk specifics for a change, somewhere in the middle.
Are you calling Republicans Pubs? Why?
There’s absolutely no question wages have to go up at the low end.
There’s absolutely no question an increase in min wage will hurt small biz, kill jobs.
Many of those jobs are going anyway, to automation, globalization or the corporate “Walmart effect”.
That said –
If we don’t increase min wage, those workers are on food stamps, public housing, welfare and other forms of taxpayer assistance.
Here’s an idea, tax incentives or credits to small businesses to offset the difference.
As a small biz myself, I’m lucky, my bias clarified –
My own business flourishes when more consumers are available, however other members will point out, say, a hardware store, will lose to Home Depot. (acknowledging Carl R’s point here)
So, why not modify tax code according to number of employee’s vs profit margin?
This is a rough, simplistic idea, throwing out in real time, wrinkles and all.
Federal Minimum wage change is a mistake. There’s no way that a one size fits all for the whole country makes sense. $11/hr huge money in small town Texas and other fly over states but that same $11/hr is nothing in big coastal cities like NY/LA etc.
It should be set at the state level and even there probably can’t be a 1 size fits all but rather a floor and then individual cities (or counties) can adjust based on local living conditions (ie NY city needs are different from small town upstate NY like Syracuse).
The problem with small business incentives is what constitutes a small business. For example Starbucks is a big business but if you are a single franchise owner with just 8-10 employees are you a small business or will you be considered large? The distinction there would be massive and need to be sorted out in some manner or else the local Joes Coffee would get breaks that a single franchise owner would not and that’s not fair.
Valid point about cost of living differentials nation wide, though, there has always been a fed min wage standard, states increase in area’s when necessary.
-Currently, Texas adheres to the fed $7.25 rate, New York is $12.50.
As for this – “The problem with small business incentives is what constitutes a small business.”
Again, valid point, like I said ” … simplistic idea, throwing out in real time, wrinkles and all.”
On another Mish thread, Carl R mentioned a similar example to a hardware store owner vs an Ace hardware franchise owner. vs Home Depot – this is why I mentioned profit margin as part of the formula.
That was a tentative thought, though likely relevant, this could also be considered government “picking winners”, but these “winners” would be the small guys vs corporations swimming in cash that pay D.C. lobbyists in conjunction to campaign “donations” to sway policy that inevitably hurts small biz.
Both small biz and low end wage earners are at disadvantages and we need both to improve, our current Federal tax code and regulatory policies further hurt them to the benefit of large corp’s, I say we change that.
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I wrote about this earlier. I agree $15.00 is tough. I can easily see it negotiated down to $11.00 but how does the parliamentarian approve this as part of reconciliation? I don’t see it personally. It’s the weakest part of Biden’s package.
My guess is the $15.00 rate is part of Biden’s negotiated platform with progressives. Intuitively higher wages should increase unemployment and automation. One annectdote, NY raised the minimum wage last year. In response one supermarket in the area reduced hours. They later went out of business but just to be clear the business failure was not linked to higher wages
Is there a known reason they don’t remove their heads from dark places and institute a COLA for min wage? Seems idiotic to bend the lowest paid workers over like this when we can’t touch a billionaire’s second yacht.