The Senate parliamentarian’s ruling on the minimum wage did Democrats a favor.

The Senate parliamentarian’s ruling on the minimum wage did Democrats a favor. 

Opinion by Catherine Rampell

March 2, 2021 at 8:38 a.m. GMT+9

Senate parliamentarian Elizabeth MacDonough, seated in the back second row, third from right, talks as senators gather at the U.S. Capitol in Washington, D.C., on Feb. 10.

Senate parliamentarian Elizabeth MacDonough, seated in the back second row, third from right, talks as senators gather at the U.S. Capitol in Washington, D.C., on Feb. 10. (Senate Television/AP)

Fire the referee! Tear up the rule book! Destroy every annoying procedural barrier so that Democrats can, at long last, deliver a nationwide $15-per-hour minimum wage!

So proclaim some loud voices on the left, in the wake of the Senate parliamentarian’s ruling that a minimum-wage increase cannot be included in the covid-19 relief bill that Democrats plan to pass through reconciliation. This procedural process, which allows passage with a simple majority and no threat of filibuster, is reserved for budget-related legislation; a minimum-wage hike doesn’t qualify, the parliamentarian, Elizabeth MacDonough, decreed.

Some Democrats have vilified MacDonough. But, in a sense, she did the party a favor by allowing it to avoid an ugly intra-caucus fight.

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After all, the primary hurdle to passing a $15 federal minimum wage isn’t procedural. It’s that there isn’t unified support within the Democratic Party for the policy.

Already at least two Democratic senators have signaled reservations. This means that even if the parliamentarian had allowed the provision to remain, or even if Dems nuked the filibuster and could more easily pass any bill with a simple majority, a $15 federal minimum wage probably still wouldn’t receive enough votes to become law.

Firing or overruling the ref won’t help you if your own team can’t decide where the goal posts are.

This has been obvious for a while. Yet Democratic leaders chose to ignore the discord rather than adopt a compromise policy that might be acceptable to moderates — and still achieve, say, 90 percent of the left’s objectives. Which are, presumably, to raise living standards for as many of the working poor as possible.

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Raising the federal hourly minimum wage from $7.25 — where it’s remained since 2009 — is broadly popular among both voters and Democratic lawmakers. There’s disagreement, though, about what level it should be raised to.

The “Fight for 15” movement, launched in 2012 by fast-food workers with backing from organized labor, cultivated political support for this round-numbered, alliterative goal. The movement has had successes in places such as New York and Seattle, and the left wing of the Democratic Party has worked to expand the minimum to $15 nationwide.

But this policy’s economic and political effects might look different in areas where wages and costs of living are lower. In Mississippi, for instance, the most recent data available show that the median wage is $15 per hour. So if implemented immediately, a federal minimum at that level would apply to half of the state’s wage-earning workforce.

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It’s unclear how employers might react to a large mandated increase. Maybe they’d lay off lots of employees or reduce hours, as opponents of minimum wages generally argue. This would undercut the policy’s goal of helping low-wage workers. Or maybe employers would raise prices. Or demand higher productivity. Or accept lower profits. Or some combination of all these things.

There are, in short, a lot of margins on which employers might adjust, and economists simply don’t know what will happen. Research on the effects of past minimum-wage increases is all over the place; respected labor economists can’t even agree on how to summarize the existing literature.

It’s also unclear how well past experiences would map onto today’s unusual economic conditions. Small businesses are struggling with myriad pandemic-related challenges, and some employers are already automating out of existence low-wage jobs that might otherwise be subject to a minimum-wage hike.

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None of this has stopped advocates on either side of the debate from confidently predicting what great or terrible things a $15 federal minimum would do. Personally, I’m inclined to believe that if the increase is phased in slowly enough, the risk of large “disemployment” effects would be relatively small. And this bill does phase in increases gradually, starting with $9.50 this year and reaching $15 only in 2025.

But I’m not certain how this might play out, and you shouldn’t believe anyone who claims to be. There are risks to raising labor costs during a weak economy, when firms are already reluctant to hire. At the very least it’s safer to index the minimum wage to local economic conditions, such as median wages or cost of living, rather than implement a single nationwide rate.

Given the amount of uncertainty, it seems reasonable for someone like Sen. Joe Manchin III (D-W.Va.) to worry about the risks to his state — where the current median wage is $16.31, and where many voters are already skeptical of the Democratic agenda.

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Democrats from higher-wage states, though, have been reluctant to agree to calibrate the wage floor to local conditions, a modification that would help allay economic (and political) concerns. Perhaps some advocates have fallen so in love with an alliterative slogan that they’re not interested in designing something more politically feasible that would still help millions of low-wage workers. “Fight for a regionally calibrated wage formula!” doesn’t have quite the same ring.

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