Bowing to a ruling from the Senate parliamentarian, the Democratic majority in that chamber has abandoned efforts to mandate a $15 minimum wage as part of the planned $1.9 trillion economic support package under the simple-majority reconciliation process. The attempt was necessary because 60 senators, the minimum needed to break a filibuster, do not back the proposal, which would more than double the current federal hourly minimum, $7.25, by June 2025. In fact, there are not even 50 votes for it. Two Democratic senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, are on record in opposition.
Democrats need to bow to that reality, too -- not by giving up on a higher minimum wage, but by seeking to raise it to a somewhat more modest figure than $15 per hour. Such a compromise might even attract Republican support. Republican Sens. Mitt Romney of Utah, and Tom Cotton of Arkansas have three GOP co-sponsors for their bill to raise the federal minimum to $10 per hour over five years. Like the Democratic plan, the Romney-Cotton bill would preserve the minimum wage's value in real terms with periodic automatic increases after the five-year phase-in. This is already within one dollar of Manchin's recommended $11 minimum. Meanwhile, self-styled populist Sen. Josh Hawley, R-Mo., has said he could support a higher minimum wage, though he would limit the $15 minimum to companies with sales of $1 billion or more.
The point is that there is growing bipartisan recognition in the Senate that the federal minimum, last raised 11½ years ago, has lost about a third of its purchasing power since 1970, and that something should be done about it. Yet there is also concern about the job-destroying potential of going to $15 everywhere in the country by 2025. A recent Congressional Budget Office report found that the Democratic proposal would indeed lift nearly 1 million workers out of poverty, but also reduce labor demand to the tune of 1.4 million jobs. This is not surprising given that the $15 minimum would likely represent an unprecedented level of 60% of the median wage, assuming modest overall compensation growth between now and 2025. The percentage would be even higher in low-cost states, and of course the adjustment would be toughest for small restaurants and other mom-and-pop businesses. By comparison, the minimums in most of the United States's peer countries cover between 45 and 50% of the median.
That would be a useful benchmark for U.S. lawmakers, too, if they are looking for a way to maximize benefits of a higher minimum while minimizing job loss -- bearing in mind that the latter risk, too, is borne by low-income workers. Further support for the working poor should come through permanent increases to the Earned Income Tax Credit, a federal wage subsidy that the Democratic-backed stimulus package already boosts, but for one year only. Progressives have made $15 a national cause, and their movement has greatly raised awareness regarding the federal minimum's stagnation. Now is the time, though, for those in favor of a higher minimum to practice the art of the possible.