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Democrats to devise stimulus backdoor for $15 minimum wage

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  • A federal minimum wage hike was struck from the stimulus package on Thursday.
  • Sen. Bernie Sanders said Democrats instead will propose to strip tax deductions from large corporations who don’t pay workers at least $15 an hour.
  • He also said they would provide incentives to small businesses so that they can raise wages.
  • Visit the Business section of Insider for more stories.

Sen. Bernie Sanders said Democrats would try to devise a backdoor to implement a $15 minimum wage after a pay hike was struck from the $1.9 trillion stimulus package on Thursday evening — a major setback for progressives.

Senate parliamentarian Elizabeth McDonough ruled that a $15 minimum wage violated the strict guidelines of the reconciliation process. It’s the legislative method Democrats are using to approve the package in a party-line vote without Republican support.

In a statement, Sanders criticized McDonough’s decision. “It is hard for me to understand how drilling for oil in the Arctic National Wildlife Refuge was compliant with the Byrd rule, but raising the minimum wage is not,” the Vermont Democrat said, referring to a part of the 2017 GOP tax law allowed through reconciliation.

Then he said he will work with other Senate Democrats on “an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages.”

There were early signs of Democratic support for the move on Thursday evening. Sen. Brian Schatz of Hawaii tweeted “COUNT ME IN” on the Sanders proposal.

Sen. Ron Wyden of Oregon, chair of the tax-writing Senate Finance Committee, also said in a statement: “I’m looking at a tax penalty for mega-corporations that refuse to pay a living wage.”

Democrats are rushing to approve the emergency spending package ahead of March 14, the deadline when enhanced unemployment insurance starts to expire. The House is set to vote on the relief package, which contains a gradual wage increase to $15 an hour among other provisions like stimulus checks, unemployment aid, and vaccine funds.

Speaker Nancy Pelosi said the pay bump would remain in the legislation.

“House Democrats believe that the minimum-wage hike is necessary,” Pelosi said in a statement. “Therefore this provision will remain in the American Rescue Plan on the floor tomorrow.”

Yet designing and gathering support for a new plan to raise wages could complicate the swift timeline Democrats are pursuing. Some centrist Democrats may be reluctant to increase taxes on businesses during the economic downturn.

It’s unclear whether the proposal would be supported by Sen. Joe Manchin, a key West Virginia Democrat. The Sanders provision would also have to clear a set of rules governed by the parliamentarian.

Congress hasn’t raised the minimum wage since 2009, and it stands at $7.25 an hour. Experts say hourly workers have borne a disproportionate burden of the pandemic, suffering large job losses in the service and leisure sectors of the economy in particular.

“Workers of color, women, and younger workers are overrepresented in minimum wage jobs,” Elizabeth Pancotti, policy director of Employ America, said in a recent interview.  “Politically, we’ve forgotten about these workers in the past ten years and in the covid crisis. We didn’t implement hazard pay, mandatory paid sick leave, or a lot of policies for workers who are still at work.”

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