Democrats drop minimum wage increase, aim to move stimulus package forward

Democrats have dropped raising the minimum wage as part of the stimulus package, but the administration still wants to show it’s an advocate for workers and committed to reducing income inequality. Ylan Mui joins ‘The News with Shepard Smith’ to discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Senate Democrats will abandon plans to help raise workers’ pay through tax penalties and other economic incentives that some lawmakers had considered as an alternative for hiking the federal minimum wage, according to a person familiar with the matter.

Some lawmakers last week floated a “plan B” in President Joe Biden’s $1.9 trillion Covid stimulus bill that would have punished corporations that paid workers below a certain threshold.

Senators had floated the backup plan Thursday and Friday, after the Senate parliamentarian ruled that a proposed federal minimum wage increase to $15 per hour didn’t meet the requirements that Democrats must follow to pass the stimulus bill without Republican support.

The “plan B,” championed by Senate Finance Chair Ron Wyden, D-Ore., and Senate Budget Chair Bernie Sanders, I-Vt., would have punished billion-dollar corporations that didn’t pay workers enough using various tax incentives.

Lawmakers were considering a variety of penalties, including a 5% levy on a big corporation’s total payroll if any workers earned less than $15 per hour.

The fate of the Biden administration’s first major legislation now rests in the Senate after the House passed its version of the bill early Saturday largely along party lines.

Democratic lawmakers say haste is key in passing the big-ticket stimulus. They are trying to send a final bill to Biden’s desk by March 14, when unemployment aid programs are set to expire. The House bill includes direct checks of $1,400 to many Americans, funds for vaccine distribution and $350 billion in aid to state and local governments.

Senators are expected to consider the bill in earnest starting this week and offer amendments to the legislation they received from the House. Given the setback with the parliamentarian and the tight timeline, party leaders are likely to opt to pursue an increase to the federal minimum wage in future legislation.

That’s likely to please certain outside group, including unions and the Business Roundtable that had expressed concerns that a protracted battle over a wage increase would delay urgently needed relief to workers and industries hardest hit by the coronavirus pandemic.

Given that the lower chamber approved the bill with a $15 per hour minimum wage increase, it’s likely that the Senate will pass a different version of the bill. The two chambers would then have to craft a final proposal in a conference committee.

Democrats, who hold thin majorities in the House and the Senate, decided to pursue the latest stimulus bill without input from Republicans using a process known as budget reconciliation. Though reconciliation enables a bill to pass with a simple majority vote, it also limits the provisions that can be included in the legislation.

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