Democrat Attention Shifts From Minimum Wage Hike to Penalizing Large Corporations

February 26, 2021 Updated: February 26, 2021

Senate Democrats are shifting attention to the idea of penalizing large corporations that fail to pay their workers enough to satisfy lawmakers after the body’s rules expert said a minimum wage hike can’t be included in the COVID-19 relief package making its way through Congress.

Two chairmen said they’re looking at alternatives to a hike, including a provision that would hit major companies for paying their workers less than a certain amount an hour.

The exact language of the amendment to the relief package has yet to be published. The penalty could come in the form of taking away tax breaks.

Senate Budget Chairman Bernie Sanders (I-Vt.), a self-described socialist who caucuses with Democrats, said he’d be working with colleagues to work on an amendment “to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages.”

Senate Finance Chairman Ron Wyden (D-Ore.) floated a different penalty.

“I’ve been working on a ‘plan B’ to make big corporations pay for mistreating their workers. My plan would impose a 5 percent penalty on a big corporations’ total payroll if any workers earn less than a certain amount. That penalty would increase over time. It also would include safeguards to prevent companies from trying to outsource labor to avoid paying living wages. For example, if a profitable mega corporation fires their warehouse security guard and replaces them with a contractor who makes far less, my proposal would still require that megacorp to pay a penalty,” he said in a statement.

That amendment would also include an incentive for small businesses to raise worker wages through a tax credit equal to 25 percent of wages, up to $10,000 per year per employer.

ron wyden
Sen. Ron Wyden (D-Ore.) attends a Senate Finance Committee hearing in Washington on Feb. 23, 2021. (Greg Nash/Pool via Reuters)

Democrats included the minimum wage hike in the large relief package despite Republicans arguing it has little to do with combating the pandemic and that the matter should be dealt with separately.

While House Democrats are keeping the hike to $15 an hour in their version, according to House Speaker Nancy Pelosi (D-Calif.), the White House and the Senate have signaled they’ll remove it to adhere to the decision from Elizabeth MacDonough, the chief Senate parliamentarian.

The trouble stems from Democrats using budget reconciliation to push through the package, letting the party avoid the 60-vote threshold in the upper chamber. Instead, they need only a simple majority, which they can reach with zero Republican votes.

House Democrats were reluctant to back the alternative proposals, since some want Vice President Kamala Harris to sideline MacDonough and rule as president of the Senate that the wage hike can be included in the package.

“I don’t know what is going to happen in the Senate, so I hesitate to comment on their rules over there. I think there’s broad support here for raising the minimum wage. And I think that based on what they decide to do in terms of the reconciliation package, that I assume we’ll react to that, but I wouldn’t prescribe, from my vantage point, giving them any advice on that,” House Ways and Means Chairman Richard Neal (D-Mass.) told reporters on Capitol Hill in Washington.

Others said they didn’t know of the alternatives from Wyden and Sanders, while at least one backed Sanders.

“I think that Sen. Sanders is doing the right thing by trying to include something last minute,” Rep. Alexandria Ocasio-Cortez (D-N.Y.) said, since negotiations have been predicated on a wage hike being part of the bill.

Republicans said they opposed the new proposals.

“It seems ludicrous to tax people for a job-killing measure, one that already is expected to drive $60 billion dollars of higher unemployment checks and health care,” said Rep. Kevin Brady (R-Texas), ranking member of the House Ways and Means Committee.

“President Biden and Speaker Pelosi’s far-left Democrats have done so much damage to blue-collar jobs in America already,” House Minority Whip Steve Scalise (R-La.) added. “They should be focused on helping families who are struggling, helping small businesses who are hanging on by a vine, and helping schools reopen, and stop this assault on American jobs.”