Minimum-Wage Proposal in Covid-19 Aid Plan Divides Senate Democrats


WASHINGTON—Sen.

Joe Manchin

of West Virginia may be the most vocal Democrat sharing his concerns about the minimum-wage increase included in his party’s $1.9 trillion coronavirus relief bill—but he isn’t the only one with misgivings.

As the House prepares to pass the relief bill later this week and send it to the Senate, Democratic leaders will have to contend with the quieter but broader pack of Senate Democrats who have problems with the legislation. And in order for Democrats to pass the bill without GOP support, they can’t afford to lose a single vote within their own ranks.

Mr. Manchin and Sen.

Kyrsten Sinema

of Arizona are the only two Democrats to say outright they oppose increasing the minimum wage to $15 an hour by 2025, up from $7.25 currently. But 10 other Senate Democrats haven’t signed onto stand-alone legislation increasing the minimum wage to that level, and some have voiced objections to the current structure of the pay boost, setting the stage for possible revisions.

“Everyone is going to have things that they want to see in the bill, and we’ll work hard to see if we can get those things in the bill, but job number one is to pass the bill,” Senate Majority Leader Chuck Schumer (D., N.Y.) told reporters Tuesday.

The legislation, which is backed by President

Biden

and expected to pass the House later this week, would provide $400-a-week unemployment benefits through Aug. 29, send $1,400 per-person payments to most households, provide billions in funding for schools and vaccine distribution, expand the child tax credit, broaden child-care assistance and bolster tax credits for health insurance.

Democrats broadly support the bill as they wrangle over portions of the legislation, including the duration of unemployment benefits and how to target the direct payments. But the minimum wage has emerged as the most contentious.

Sen.

John Hickenlooper

(D., Colo.) said he is concerned about the impact of a $15 wage on small businesses and was reviewing possible ways to shield smaller firms from the new labor costs. Some Democrats are exploring offering tax relief to small businesses under the wage increase.

“I think small business has got to be kept in mind, and I think there are a number of different variations that are being proposed that help insulate the impact in terms of small business,” Mr. Hickenlooper said.

‘I think small business has got to be kept in mind,’ said Sen. John Hickenlooper (D., Colo.).



Photo:

alexander drago/Reuters

A particularly thorny area is how to raise the minimum wage for workers who earn part of their income through tips, including servers and bartenders. The relief bill would raise the minimum wage to $15 for all workers and stop businesses from paying tipped workers as little as $2.13 an hour, so long as those employees earn at least the minimum after tips are added.

“If the minimum-wage provision is in the bill with the elimination of the tip credit, it would make it very hard for me to support it,” said Sen.

Angus King

(I., Maine), who caucuses with Democrats and supports the overall increase to $15 an hour. He worried that the increased labor costs for businesses could cause them to cut employees. And during the pandemic, “a lot of restaurants are just hanging on by the thread,” he said.

Worker advocates say the proposed change would mean servers and others would have more consistent income and face less wage theft. The restaurant industry says the existing tip structure means many jobs already pay well above the minimum wage and the new law would put jobs at risk while restaurants are still hurting from the pandemic.

Some Republicans have also signaled support for a wage increase, but haven’t embraced the Democrats’ plan.

“I just want to make sure that whatever ends up happening doesn’t somehow disincentivize hiring,” said Sen.

Marco Rubio

(R., Fla.).

Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona may have the most leverage with a Senate that’s evenly divided between the two parties. WSJ’s Gerald F. Seib explains how they could determine the fate of the Biden administration’s agenda. Photo: Reuters

GOP Sens.

Mitt Romney

of Utah and

Tom Cotton

of Arkansas on Tuesday introduced legislation that would increase the minimum wage to $10 an hour over four years, beginning once the pandemic has ended, and require all employers to use E-Verify, which allows them to check prospective workers’ immigration status.

Meanwhile, Mr. Manchin has said he would support raising the minimum wage to around $11.

White House press secretary

Jen Psaki

said President Biden supports the $15 wage and is waiting to hear whether it can be included in the package under Senate rules.

“There’ll be an opportunity for Senator Manchin and others to put forward ideas and proposals, and we’ll see where that process lands,” she said Tuesday.

To pass the relief package, Democrats are using a process tied to the budget, known as reconciliation, that will allow them to advance the bill with just a simple majority, rather than the 60 votes most bills need. That will enable Democrats to pass the legislation without GOP votes in the 50-50 Senate, with Vice President

Kamala Harris

casting the tiebreaking vote.

But Senate rules require that measures passed under reconciliation must be directly tied to the budget. It isn’t clear that raising the minimum wage will be considered permissible by the Senate parliamentarian, a decision which could come as soon as Wednesday.

Senate Budget Committee Chairman

Bernie Sanders

(I., Vt.) said Monday he was confident the parliamentarian would permit the minimum-wage increase and that the bill wouldn’t be changed to placate more centrist Democrats.

“I think we’re going to pass it as it is,” he said. “The Democrats are going to support the president of the United States and the overwhelming majority of the American people want to pass this Covid emergency bill.”

‘The overwhelming majority of the American people want to pass this Covid emergency bill,’ said Sen. Bernie Sanders (I., Vt.).



Photo:

erin scott/Reuters

Some progressive Democrats in the House have said they plan to call on the White House and Senate to overrule the parliamentarian if she rules against including the minimum wage in the bill, possibly opening a split within the party. Several Senate Democrats, including Messrs. Manchin and King, have said they oppose changing the rules that have historically applied to the reconciliation process.

The minimum wage isn’t the only area where Democrats are still seeking changes to the bill. Many Democrats would like to extend enhanced federal unemployment benefits through September, rather than through August, as the House bill does.

“Why would you want to create yet another cliff in the middle of the August recess?” asked Senate Finance Committee Chairman

Ron Wyden

(D., Ore.)

But making changes to the House bill in the Senate will be delicate, because senators can’t increase the overall price tag of the bill. Increasing the duration of unemployment benefits by a month would require lawmakers to cut around $50 billion elsewhere.

“If you were to ask me if I prefer to extend that unemployment benefit through September, I’d say yes,” said Sen.

Chris Van Hollen

(D., Md.) “But if you told me in order to accomplish that I had to reduce the size of the child tax credit, I’d say no,” he said.

Write to Kristina Peterson at kristina.peterson@wsj.com and Andrew Duehren at andrew.duehren@wsj.com

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