CBO gives Senate case for raising minimum wage through reconciliation

By: - February 8, 2021 3:01 pm
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Democratic legislators could raise Nevada’s minimum wage on their own, if they wanted to. (Getty images)

WASHINGTON—The nonpartisan Congressional Budget Office in a report Monday found a gradual increase to a $15 federal minimum wage by 2025 would reduce poverty, add $54 billion to the deficit over a decade and increase pay for millions of low-income workers.

The report could help Democrats make a strong case for including a gradual federal minimum wage increase in the $1.9 trillion relief package put forth by the Biden administration. 

The reconciliation process allows legislation to pass on a simple majority vote in the Senate if it affects the federal deficit, and the CBO analysis found the minimum wage increase does that.

The report said that 900,000 people would be lifted out of poverty and 17 million would experience a wage increase under the pay boost. In the United States, about 38 million people live in poverty.

Reliance on federal social programs such as nutrition programs would decrease, but the demand for programs such as unemployment benefits would increase, as the report found that 1.4 million jobs would be cut. Spending on Medicaid would also increase, in part because Medicaid pays much of the costs for the home health and nursing care industries, and workers in those industries would be getting higher wages.

House Education and Labor Chairman Bobby Scott (D-Va.) said in a statement that Monday’s report strengthens the case for gradually increasing the minimum wage in the COVID-19 stimulus package.

The current federal minimum wage is $7.25 and the last time it was raised was in 2009, from $6.55 to $7.25.

“This nonpartisan report shows that increasing the minimum wage will act as a direct and targeted stimulus for struggling workers and their families,” he said.

“At a time when many of our essential workers are still not being paid enough to provide for themselves and their families, we must do everything in our power to give these workers a long overdue raise.”

The Biden administration has pushed for a minimum wage hike in its $1.9 trillion stimulus coronavirus relief package, though the Senate passed a messaging amendment in its debate on the budget resolution barring an increase during a global pandemic.

And not all Democrats agree with the increase.

Sen. Joe Manchin, (D-W.Va.), a key vote in a Senate split 50-50, has said that he doesn’t support a $15 minimum wage. The minimum wage in West Virginia is currently $9.50 an hour and will go up to $10.25 this year.

Nevada Democrats, who control the state Legislature, could conceivably act on their own and pass a bill creating a higher minimum wage in Nevada, or accelerating scheduled state increases, following up on 2019 legislation establishing gradual increases that top out at $12 in 2024.

“We haven’t had any discussions about accelerating minimum wage increases in the Senate yet this session,” Cheryl Bruce, executive director of the Nevada Senate Democratic Caucus told the Current last week. “But we’ll be keeping a close eye on what Congress decides to do with the federal minimum wage over the next few weeks and possibly reevaluate from there.”


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Ariana Figueroa
Ariana Figueroa

Ariana covers the nation's capital for States Newsroom. Her areas of coverage include politics and policy, lobbying, elections and campaign finance.