POSSIBILITY OF A MINIMUM-WAGE HIKE IS FAR FROM OVER

Alternative proposals for an increase in the federal minimum wage are proliferating quickly in Congress following Thursday’s procedural ruling that a $15 pay floor should not be included in President Biden’s $1.9 trillion COVID relief bill.

The situation suggests that some income break for individuals earning less than $15 an hour will eventually be put to a vote by the House and Senate, either as a standalone measure or as part of a larger bill. But no alternative has yet emerged as the likely replacement.

Several call for raising the current minimum of $7.25 an hour to less than $15, while others suggest that low-income individuals be helped through such mechanisms as tax breaks.

Many of the alternative approaches are being aired by Republicans, a reflection of polls indicating a majority of U.S. voters favor a wage hike. The federal minimum has not been raised since July 2009.

Among the newest plans is what Sen. Ron Wyden, D-Ore., and chairman of the powerful Senate Finance Committee, has dubbed Plan B, a combination stick-and-carrot approach.

Instead of requiring employers to pay workers at least $15 an hour, his proposal would levy a 5% penalty on large companies that pay their workers less than a yet-to-be-determined amount. Small businesses, conversely, would be incentivized to pay workers that undetermined amount by the offer of a tax break equal to 25% of their payroll, to a maximum of $10,000 per employee.

Sen. Josh Hawley, R-Mo., and a likely candidate for president in 2024, is expected to air a plan that similarly differentiates between large and small employers.

Only corporations with at least $1 billion in sales would be obliged to pay workers $15 an hour.  Smaller companies would not have to hit a minimum. But their workers would be entitled to what Hawley calls a Blue Collar Bonus Tax Credit, or a reduction in their taxes equal to half the difference between their pay and a “median wage” of $16.50 an hour.

Under the example released by Hawley’s office earlier this week, a restaurant worker making $12 an hour would get a tax credit of $2.25 for each hour worked, or half the difference between $12 and $16.50. That amounts to a reduction in the individual’s tax bill of $4,680 on an annual basis.