Hawley unveils alternative minimum wage hike tied to expanded tax credits

Democrats’ minimum wage increase will force restaurants out of business: Rep. Issa

Rep. Darrell Issa, R-Calif., argues moderate GOP senators have created a ‘sensible compromise’ to the Democrats’ minimum wage proposal.

Sen. Josh Hawley unveiled a new proposal on Wednesday that would use taxpayer money to increase the income of low-earning Americans, a plan that he's pitching as an alternative to Democrats' $15 minimum wage push.

Under the measure — dubbed the Blue-Collar Bonus — workers earning less than $16.50 per hour would receive a refundable tax credit worth 50% of the difference, paid out in quarterly installments. The wage cap of $16.50, indexed to inflation, could increase over time.

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The credit would only apply to 40 hours of work per week or less and would only be eligible for Americans with valid Social Security numbers, meaning that non-U.S. citizens and undocumented immigrants would be excluded.

"Wages for blue-collar workers have been stagnant for decades," Hawley said in a statement. "And government made the problem worse by shutting down the economy a year ago. It’s time we give blue-collar workers some respect and a pay raise."

For instance, a full-time worker earning $12 per hour would be eligible for a $2.25 per hour credit, meaning that individual would ultimately receive a total credit worth $4,680. The worker could expect to receive four payments of $1,170 from the IRS.

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Hawley's team told Axios, which first reported the news, that the measure could cost about $200 billion, though it has not been officially scored by the Congressional Budget Office.

The Hawley proposal comes as President Biden and congressional Democrats push to raise the minimum wage to $15 per hour over the next four years as part of a broader coronavirus relief package. But its prospects appear bleak in the 50-50 Senate after two moderate Democrats, Sens. Joe Manchin of West Virginia and Krysten Sinema of Arizona, said they do not support its inclusion in the nearly $2 trillion rescue plan.

Critics of a $15 minimum wage say it would hurt the nation's already struggling small businesses and force companies to reduce their workforce. An analysis released by the Congressional Budget Office earlier this month shows that a higher wage would cut employment by 1.4 million and would lift roughly 900,000 Americans out of poverty.

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The measure would also add $54 billion to the nation's deficit over the next decade, according to the CBO study, the result of higher prices for goods and services, such as long-term health care. The nation's deficit totaled a record $3.1 trillion for the 2020 fiscal year, and the national debt is on track to hit $28 trillion.

Although government spending on nutrition programs would decline, hiking the minimum wage would increase spending in other areas, including unemployment aid, Social Security benefits and other health care programs.

At $7.25 per hour, the federal minimum wage has not increased in more than a decade, although a growing number of states have voted to adopt their own wage increases. There are 29 states with wages above the federal minimum wage, according to the National Conference of State Legislatures. California currently has the highest minimum wage in the nation at $14 an hour.

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