UNITED STATES – FEBRUARY 25: Activists call on Congress to pass the $15 federal minimum wage hike. … [+]
Bad news this week for low income workers. This week, complex parliamentary rules stopped the Senate from including a $15 minimum wage in President Biden’s relief package. So even though polls show a $15 minimum wage is one of the most popular policy ideas in the country, Republicans seem to have successfully blocked it.
The federal minimum wage has sat at $7.25 per hour since 2009. Democrats want an increase up to $15 per hour, phased in over several years. But they can’t vote on it due to the threat of a Republican Senate filibuster, which needs 60 votes to overcome. They hoped to include the increase under special budget reconciliation procedures, which can’t be filibustered. But the Senate parliamentarian ruled the increase isn’t sufficiently relevant to the budget for inclusion, due to the so-called “Byrd rule,” named after legendary Senator Robert Byrd (D-WV).
Clear as mud so far? Basically, the Senate has become anti-democratic (the political philosophy, not the party) where you need 60 votes to do anything substantive, because the filibuster’s use has risen sharply. Because each state gets two Senators, and Republicans increasingly control elections in smaller states, the Republicans’ current 50% of seats only represents 43.6% of the population. Republican Senators haven’t represented a majority of the population since 1996, but they controlled the chamber 57% of the time until now.
Well, if Washington WRE -2.6% can’t act, what about the states? 29 states and the District of Columbia exceed the federal minimum wage, covering a little over 60% of the U.S. workforce. Red states like Missouri, Arkansas, and Florida have higher minimums, but those came through ballot initiatives. For states without ballot options, such as Texas, Wisconsin, and North Carolina, higher minimums are very unlikely due to Republican control of state legislatures.
Maybe businesses will raise wages? Amazon AMZN +1.2%, which already pays a $15 hourly minimum, has endorsed Biden’s proposal. Costco has announced a minimum wage of $16 per hour, and Wal-Mart says its workers will soon “average” $15 per hour, although their starting hourly wage remains at $11. It supports some unspecified increase in the hourly federal minimum, but not to $15.
But companies have their own reasons for raising wages. Amazon wants to continue its long and successful track record of blocking unionization, mobilizing against a current vote at an Alabama warehouse (including posting anti-union messages in workers’ bathrooms.). Wal-Mart is headquartered in Arkansas, where voters approved a phased-in $11 per hour minimum in a 2018 ballot initiative. But businesses usually show a lot of solidarity in resisting government mandates, especially in the employment arena, so they aren’t the solution for the worst-off workers.
Amazon’s case does show another road for raising wages—unions. For decades, U.S. labor law has been tilted heavily against unionization. Organizers are fired illegally, companies hire “consultants” that infiltrate worker groups, spying on and messaging constantly against unions, and spend huge sums on lawyers who delay and fight underfunded organizing drives.
President Biden, a self-described “union guy,” wants to change that, but he will be limited to executive actions, not significant legislation. Decades of unfair treatment have weakened private sector unions in particular, so there’s a long hill to climb. And the same Republican Senators now blocking a higher minimum will strongly oppose legislative efforts to level the playing field for unions.
Will the market itself fix the wage problem? There is some potential help if we run a “high pressure” economy, with high levels of continuing growth and not worrying about inflation. (Fed chairman Jerome Powell has endorsed that policy.). That can eventually pressure employers to raise wages. Prior to the pandemic, we had historically low levels of unemployment and that was finally beginning to move labor income upward, although we need years of tight markets to make substantial improvement.
But even tight markets didn’t always benefit low-wage workers. Brookings Institution researchers found that prior to the pandemic, a majority of white male workers had “upward occupational transitions” to better jobs. But black and Hispanic men, and women of all races and ethnicities, did not. The researchers identified “53 million low-wage workers” who were “churning through low-wage jobs.” (That churning costs employers, so a higher minimum wage can help employers reduce turnovers costs, even though many of them—especially small businesses—don’t see that.)
So while our lowest-paid workers continue to bear disproportionate burdens from Covid-19, job and income loss, evictions, and poor health care, they aren’t getting help on their low wages. Women have taken on more unpaid care work, leading more of them to drop out of the labor force altogether, in what Vice-President Harris has called a “national emergency.” And non-white workers are disproportionately hit, due to their concentration in bad jobs and structural racism and discrimination.
A minimum wage increase would help those at the bottom of the labor market, help push up wages for the many just above them who also are struggling, and reduce turnover costs for businesses. But Republicans seem to have blocked it for now, and states and market forces alone won’t solve the problem.
I’m an economist at the New School’s Schwartz Center (https://www.economicpolicyresearch.org), currently writing a book for Columbia University Press on cities and