The next COVID relief bill is currently being negotiated in the Senate after passing the House of Representatives last Friday. It contains a total of 1,400 stimulus cheques for individuals, who earn more than ‘75,000 per year ($112,500 for heads of household and ‘150,000 for couples), although the amount for individuals earning more than $100,000 per year ($150,000 for heads of household and $200,000 for couples) is fully expiring – but even this qualifying level of income could be further reduced.
After talks with some senior Senate Democrats, President Biden seems to have just agreed to lower the point at which the cheques disappear to ‘80,000 for single people and $160,000 for couples:
Biden agrees to phase out checks faster, per Dem source: pic.twitter.com/00WTBgcSPJ
— Erica Werner (@ericawerner) March 3, 2021
Centrist Democrats are also only calling for an increase in unemployment benefits of 300 dollars a week, instead of the 400 dollars a week currently included in the bill. These significant changes are particularly noteworthy because time is crucial: the relief bill must be passed before March 14 to prevent unemployment benefits from expiring, and the Senate may vote on the bill today.
The good news is that the House of Representatives will finally vote today on the Biden administration’s 1.9 trillion-dollar COVID relief plan, which provides for a stimulus payment of 1,400 dollars for those who fall below the income limits. The plan will be passed in the Democratic-controlled House of Representatives, and it is likely to be passed in the Senate through a process called “budget reconciliation,” which essentially allows lawmakers to pass tax bills faster, as it requires only a simple majority instead of 60 votes. In addition to stimulus payments, the bill also includes an increase in unemployment benefits of 400 dollars a week. The current unemployment insurance expires on March 14, setting a tough deadline for Congress to pass the relief bill.
While 1.9 trillion dollars sounds like a lot, economists generally agree that the government should spend as much as it needs to help its citizens – that’s their mission, after all – without getting upset about “what-if” problems like inflation or “overheating” the economy.
The bad news, however, is that an important part of the relief bill – raising the minimum wage to 15 dollars – is unlikely to be included. Senate MP Elizabeth MacDonough ruled yesterday that including a minimum wage increase violates the rules of what can and cannot be included in a reconciliation bill.
But according to Washington Post reporter Jeff Stein, Vice President Harris will not ignore MacDonough. That means the Senate minimum wage will be removed from the bill and returned to the House of Representatives for another vote. This also means that any attempt to raise the federal minimum wage – which hasn’t been raised since 2009 and stands at 7.25 dollars – must be introduced into a separate bill that cannot be passed through budget reconciliation because it must clear the 60-vote hurdle.
Top Democrats have already announced an alternative plan that includes a 5% tax on large corporations if they don’t raise their wages, and even tax credits for small businesses that raise their wages. But some economists are concerned that a tax misincentive or tax credits would not be enough to actually raise wages for a broad mass of workers. While many conservatives oppose the idea of a federal minimum wage of 15 dollars, American wages in general have been on the rise for decades. If the minimum wage had kept pace with worker productivity and inflation, it would now be at 20 dollars an hour.
We must also recognise the enormous impact that raising the minimum wage would have on the people who have been most damaged by the pandemic. The Economic Policy Institute (EPI) recently published an analysis of wages last year and found that average inflation-adjusted wages in the US actually increased in 2020. Great news, right? Wrong! The EPI found that average wages have risen because the composition of the American workforce has changed so drastically – a large proportion of those who lost their jobs during the pandemic were those who earned a low wage, about 14 dollars an hour or less. By contrast, people earning 25 dollars an hour or more could see a total increase in jobs in 2020.
With so many low-wage jobs gone, the illusion arises that there has been progress rather than relegation. A minimum wage of 15 dollars would change the lives of so many Americans, and its exclusion from the next stimulus program is a major disappointment.