Sen. Chuck Grassley, chairman of the Finance Committee, said there was a possibility that stimulus negotiations could include a discussion of a Democratic proposal to raise the minimum wage. (AP Photo/Andrew Harnik)
They also said Democrats hoped to develop a bipartisan compromise on a higher wage standard similar to the last increase in the minimum wage enacted in 2007, as part of a package that included tax incentives for small businesses, which would be designed to overcome hurdles faced by Biden's agenda in a closely divided Congress.
Both parties remain divided on a pandemic response bill. Democrats back a $2.2 trillion pandemic relief package, H.R. 8406, passed by the House 214-207 on Oct. 1, while Senate Republicans are arguing for a $500 billion package. Instead of cutting a deal, both sides have signaled a willingness to wait, for now, for two runoff elections in Georgia on Jan. 5 to settle which party will control the Senate before addressing the fallout from the novel coronavirus, which causes the respiratory disease COVID-19.
As both sides prepare for the next Congress, Sen. Chris Coons, D-Del., an adviser to the Biden campaign, said a proposal for a $15 minimum wage could become a factor in talks aimed at framing a big stimulus package in early 2021. He said Democrats planned to explore worker incentives — including a possible minimum wage increase — that could move in a pandemic response package or other tax legislation with new tax breaks and other incentives for small businesses.
"We have to do more to provide support to small business. That's got to be married up with support for the millions of Americans who are unemployed and who are struggling," Coons told Law360.
He and several other senior Democrats emphasized the need to have a fair blend of measures that deliver aid and higher wages to workers and that provide incentives to businesses.
In a speech on Monday, Biden stressed a higher wage standard would be key to his plan to strengthen the middle class. "When we build back better, we'll do so with higher wages, including a $15 minimum wage nationwide, better benefits, stronger collective bargaining rights that you could raise a family on," Biden said.
Proponents said they believed there was an opening to build public support and to appeal to lawmakers in both parties representing 29 states with a higher state minimum wage than the federal standard. For example, voters in Florida this month approved a proposal to raise the state standard from $8.56 to $15 by 2026. Supporters also point to a Public Agenda/USA Today/Ipsos national survey showing an uptick in the share of respondents supporting a higher minimum wage, from 66% in February to 72% in August.
On the other side, Sen. Todd Young, R-Ind., chairman of the National Republican Senatorial Committee and a member of the Senate Finance Committee, said Republicans would argue states should take the lead in raising state wage benchmarks when needed — in lieu of any change in the federal standard — because of regional differences in labor market conditions.
Instead of a minimum wage increase, he said, Republicans would try to expand incentives in the 2017 Tax Cuts and Jobs Act i n order to spur economic growth and higher wages over time.
"We've proved through our previous tax reform and regulatory reforms that we can grow wages up to a higher level, perhaps beyond the $15 level that many Democrats have been for," Young told Law360.
Despite likely opposition by many GOP lawmakers to a minimum wage increase, Finance Committee Chairman Chuck Grassley, R-Iowa, said there could be negotiations in the next Congress if Democrats insist on developing legislation similar to 2007's minimum wage increase , which included tax incentives for small businesses.
"That's usually the way it is," the senator told Law360. He referred to past efforts led by Democrats to try to combine a minimum wage increase with small-business tax incentives.
But Grassley made clear he probably would lean against a minimum wage increase in 2021, in part because of concerns about the ability of small businesses to absorb higher wage costs during the pandemic.
"That is a big difference" from 2007, Grassley said. He was working from his home in Iowa this week, after announcing Tuesday that he had been exposed to the coronavirus and was waiting for test results from his physician.
Despite their concerns, Grassley and Sen. Rob Portman, R-Ohio, said there was a possibility that stimulus negotiations could include a discussion of a Democratic proposal to raise the minimum wage combined with business tax incentives in the coming months.
Portman said such a discussion likely would include an expansion of provisions in the 2017 Tax Cuts and Jobs Act, which expanded Section 179 incentives for small business: roughly doubling the cap for full expensing of qualified property to $1 million and raising the threshold for phasing out the dollar-for-dollar deduction for such property from $2 million to $2.5 million. Lawmakers in both chambers have been weighing a number of incentives aimed at helping small businesses during the pandemic, including ideas promoted by business advocates.
"We could look at Section 179. That's what we did last time," Portman said. He referred to a provision in the 2007 law that extended a higher cap on full expensing and a higher threshold for phasing out the deduction under Section 179.
Some GOP lawmakers in both parties also have been promoting an extension of full expensing, or 100% bonus depreciation, for business equipment, which under the 2017 law will last through 2022 and then be phased down for four years and eliminated at the end of 2026.
While Republicans try to promote several business incentives in pandemic response legislation, Democrats said they would be willing to discuss such ideas as they try to build consensus for possibly including a minimum wage increase in a stimulus package in the next Congress. A similar plan to raise the minimum wage to $15 over six years, H.R. 582, passed the House, 231-199, in July 2019 and then stalled in the Senate.
Sen. Tim Kaine, D-Va., said he believed Biden would continue to make a higher minimum wage a priority and said the push could gain traction with some lawmakers in both parties. Kaine said the proposal could move as part of a stimulus package, but would need to be paired with incentives for small business similar to those enacted in March in the Coronavirus Aid, Relief and Economic Security Act, which included forgivable loans under the Paycheck Protection Program and an employee retention tax credit.
"You have to grapple with the effect that it has on small business," Kaine told Law360. "There's so many different ways that you can deal with it."
--Editing by Robert Rudinger and Joyce Laskowski.
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