Negotiations continue over House Democrats’ $15-an-hour minimum wage bill, with a new tax credit proposed for small businesses as the proposal moves toward a floor vote next week.
The Raise the Wage Act (H.R. 582) is one of the Democratic Party’s signature workforce reforms this year. Some in the party have continued to express concern that the bill goes too far in rural communities and for small businesses.
In an attempt to address those concerns, Alabama Democrat Rep. Terri Sewell is floating a proposal that would introduce a tax credit for small businesses to help them absorb the increase to the minimum wage.
The credit would be structured in a way that helps small businesses cover the increase in expenses due to higher wages. A business could receive a payment to cover a portion of the increase felt. This could be something businesses receive multiple times a year. It’s unclear whether this would be an amendment to the Raise the Wage Act or stand-alone bill, a Democratic staffer said.
House Education and Labor Chairman
It’s unclear how far the idea will go, and details are still being developed. One congressional aide familiar with the proposal said it’s likely dead on arrival as the credit could end up costing more than $10 billion over several years, with high estimates reaching $40 billion, likely turning off the moderate Democrats.
A representative from Sewell’s office questioned that high estimate of $40 billion, saying any plan the Alabama Democrat supports “would be paid for.”
The tax credit idea is still tied to a proposal to increase the minimum wage to $15, which is unworkable, Spencer said. There isn’t a small business tax credit package large enough to help businesses absorb the additional expenses tied to a $15-an-hour federal minimum wage, he said.
Concerns Still Felt
The $15-an-hour minimum wage bill, a policy priority for the Democratic party, would increase the federal minimum wage in six annual increments starting in 2020. After reaching $15 in 2025, the minimum wage then would be tied to inflation. This bill also proposes an elimination of exceptions to the minimum wage for tipped workers, teen workers, and disabled workers.
Sewell in April introduced a bill (H.R. 2080) that would have raised the federal minimum wage in different stages for different parts of the country based on regional costs of living. That effort threatened to splinter Democrats and appears to have been abandoned.
Some members remain on the fence for the primary $15 minimum wage bill.
Rep. Anthony Brindisi (D-N.Y.) said there have been a number of discussions regarding his, and other members’, concerns that the current legislation “doesn’t take into consideration different economies.”
“I represent an area that cannot absorb a $15 minimum wage as fast as other areas of the country that are perhaps a little more economically robust,” he said. His district includes Utica, Rome, and Binghamton, N.Y.
There have been talks of a longer phase in period or pairing it with a tax credit, he said. Still, leadership has had a lack of openness on any changes, he said.
Scott said July 10 that the party has the votes to support the Raise the Wage Act in its current form.
“The closer you get to a vote that’s when the deals get done. It’s going to pass. It might pass in its current form or there might be slight changes,” he said.
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(Updated to include comments from the U.S. Chamber of Commerce's Glenn Spencer.)