House Democrats prepare to push for $15 federal minimum wage, setting up clash with big business
- Democrats plan to advocate for a $15 per hour federal minimum wage when they take control of the House next month.
- The federal pay floor has not gone up since 2009, though numerous states and localities have passed measures to raise wages.
- Adjusted for inflation, the spending power of the lowest paid worker has fallen nearly 40 percent in the last five decades.
- President Trump and Senate Republicans likely will not support a federal minimum wage increase, but Democrats see the issue as a strong message ahead of the 2020 election.
In winning control of the House, Democrats earned a chance to put their economic priorities front and center.
They will soon push for a higher federal minimum wage — setting up a fight between labor rights advocates who say bosses have shortchanged workers and opponents who argue the policy will hamstring small businesses.
The campaign for a $15 per hour minimum wage has gained traction around the country. Three states have passed laws to gradually raise their wage floors to that level, more than double the federal $7.25 per hour. Major cities including San Francisco and Seattle have also hiked base pay to $15 per hour.
When Democrats take a House majority next month for the first time since 2011, the power shift will give the campaign for a federal minimum wage hike its most credibility in years. Adjusted for inflation, the spending power of the lowest paid worker has fallen nearly 40 percent in the past five decades. The federal minimum wage rose to its current level in 2009. Many Democrats consider the lack of another increase a shortcoming that the party needs to address swiftly.
Rep. Bobby Scott, D-Va., who will likely lead the House Committee on Education and the Workforce next year, has backed legislation to gradually increase the minimum wage to $15 per hour. House Minority Leader Nancy Pelosi, the favorite to become speaker in January, supported the bill. Scott would move to raise the wage floor in one of his first acts as chairman, and has no interest in making the minimum any less than $15, according to a Democratic aide who declined to be named.
Republicans, who will still control the White House and Senate, appear to have little appetite for a federal minimum wage hike. A Wednesday morning hearing on a $15 minimum wage before the Education and Workforce Committee's Subcommittee on Workforce Protections will offer some clues into how the messaging battle will play out starting in January. The GOP still leads the committee until next month.
(The Wednesday hearing was canceled after a homophobic blog post written by a Republican witness, San Diego State University professor Joseph Sabia, surfaced. Sabia did not immediately respond to CNBC's request for comment).
Even if Democrats fail to raise the federal pay floor, they see the message as a winning one. The party has hammered the GOP as out of touch with workers and friendly to corporations. The minimum wage fight will offer ample opportunities to drill into that argument ahead of President Donald Trump's 2020 re-election bid.
"Next year, this Committee will work to build an economy that works for everyone, not just the wealthy few," Scott said in a statement Friday after the release of a solid November jobs report. He cited "raising the federal minimum wage" as one of the tools to reach that goal.
Republicans appear unlikely to get behind the policy. While Trump has voiced support for a higher minimum wage, he has typically said states should decide their own pay floors. A $15 minimum wage would also have a tough path in the Senate, where the GOP will control 53 of 100 seats next year. Powerful business groups including the U.S. Chamber of Commerce have also opposed the proposal.
Senate Majority Leader Mitch McConnell's office declined to comment on next year's legislative agenda. The White House did not respond to requests to comment.
Federal minimum wage fails to keep up
In pushing for a higher federal minimum wage, Democrats have argued that the pay floor has failed to keep pace with rising costs for consumers. The federal minimum wage peaked in 1968 at $11.83 per hour in 2018 dollars, and has not approached that level in decades.
Wage growth has started to pick up more in recent months in a tight labor market. Average hourly earnings rose at a 3.1 percent pace in November from the previous year. But real wages adjusted for inflation have barely budged: They even fell in October from the previous year.
Numerous states and localities have moved to raise their minimum wages in recent years, though only some have gone as far as $15 per hour. At the start of 2019, 29 states will have a higher pay floor than the federal $7.25 per hour, according to the National Conference of State Legislatures. Even pro-Trump states such as Arkansas and Missouri voted last month to hike their minimum wages, which advocates touted as major victories.
Only two — Georgia and Wyoming — will have a lower minimum wage of $5.15 per hour. But most employees will still receive the U.S. minimum wage there. The remaining states will have a pay floor of $7.25 an hour.
When states have a higher minimum wage than the federal level, the state rate applies, with exceptions for some workers.
With progress toward increasing the pay floor at the federal level stalled, activists pushing for legislation to raise wages have largely focused on states and localities. Fight for $15, an organization started in 2012 when fast-food workers walked off the job in New York, has been at the forefront of the campaign for a $15 per hour minimum wage.
"House Democrats are prioritizing their move to raise the federal minimum wage to $15 an hour because the Fight for $15 has changed the conversation on wages and politics in America," said Allynn Umel, organizing director of Fight for $15.
"This movement will grow until all working people win $15 an hour and the right to join a union, no matter where they work," Umel added.
Labor rights advocates saw another victory in October, when corporate behemoth Amazon announced it would raise its minimum wage to $15 per hour for all U.S. employees. A tighter labor market that makes workers harder to find, as well as political pressure from Sen. Bernie Sanders, I-Vt., contributed to the company's decision.
$15 federal minimum wage faces a steep climb
While advocates for a higher minimum wage have victories to point to around the country, passing a $15 per hour wage floor could prove daunting at the federal level. Opponents argue that level will stifle businesses in areas where workers do not face the cost of living they do in major cities such as New York and San Francisco. They also contend that higher wages will lead to employers cutting back on workers' hours.
As a candidate in 2016, Trump said he would rather "leave it to the states." While the president has not discussed the issue much recently, his top economic advisor criticized the federal minimum wage in October.
"My view is a federal minimum wage is a terrible idea, terrible, and will damage particularly small businesses," National Economic Council Director Larry Kudlow said at an event hosted by The Washington Post. "To force them to kind of take a payroll increase would be silly."
He also noted that "Idaho is different than New York" and "Alabama is different than Nebraska."
Powerful business group have also lined up against the a $15 per hour federal minimum wage. The U.S. Chamber of Commerce, which bills itself as the world's largest business organization, has criticized the proposal.
Marc Freedman, vice president of employment policy at the Chamber of Commerce, said many businesses "do not have the ability to absorb an increase in their labor costs" to $15 per hour, which he called a "dramatic escalation." He argued that "small businesses are least positioned to absorb that level of impact," especially in less affluent parts of the country.
Freedman did not say whether the organization would back a different federal minimum wage between $7.25 and $15 per hour. He noted, though, that the Chamber would want provisions that benefit employers to go along with a wage-floor increase.
Even if Democrats have a tough time passing a higher federal pay floor, they see the issue as a winning one as they try to contrast themselves from Republicans. A Pew Research Center poll in late 2016 found 58 percent of Americans favor a $15 per hour minimum wage, versus 41 percent who oppose it.
The Democratic Party sees the minimum wage as part of a broader strategy to cast itself as the party of working people. The push to hike the federal pay floor, along with proposals aimed to reduce corruption in government and money in politics, boost health and child care benefits and cut drug prices, all fit into a Democratic strategy to paint the party as better for the working class than Republicans.
Pelosi and numerous other Democrats have used recent developments — including Trump's trade war with China and some early signs of cracks in a strong economy — as an argument for their agenda.
"November's jobs report shows an economy straining beneath the weight of a callous GOP special interest agenda that has ransacked the economic security of hard-working families to enrich the already-wealthy," Pelosi said in a statement last week after the jobs report release.