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Josh Hawley to introduce minimum wage proposal tied to tax credits

Sen. Josh Hawley (R-Mo.) is jumping on the minimum wage bandwagon and will introduce an alternative to Democrats' proposal on Wednesday that would use federal dollars to increase low-earning workers' income, Axios has learned.

Why it matters: Hawley, a Trump-style Republican who's considered a likely 2024 presidential contender, is breaking with the mainstream GOP orthodoxy in suggesting that he believes the federal minimum wage is too low.

  • He's known now for his role in objecting to the certification of President Biden's election, but as a likely 2024 candidate, his proposal is worth watching for what it says about the shifts in Republican ideas.

The politics: Hawley plans to pitch "The Blue Collar Bonus" as a populist, pro-worker proposal.

  • Hawley's team estimates it would likely cost roughly $200 billion, something traditional Republicans will balk at, though it hasn't been officially scored.
  • Hawley told Axios he also would support a $15 minimum wage for workers of large corporations that generate at least $1 billion in annual revenue.
  • The measure would also benefit low-wage workers who have been hit hard by the coronavirus pandemic.

The bill: Hawley is proposing a three-year program that would increase worker wages in 2021, paid by taxpayers rather than employers.

  • Those making below $16.50 per hour would receive a refundable tax credit worth 50% of the difference, paid out in quarterly installments. The $16.50 could increase over time, as it would be tied to the Consumer Price Index.
  • The credit would only apply to 40 hours or less of weekly work.
  • Only American workers with valid Social Security numbers would be eligible, meaning non-U.S. citizens and undocumented immigrants would be excluded.

Between the lines: Hawley's plan would immediately be implemented in the 2021 tax year, expiring in 2024.

  • The Democrats' plan to increase the minimum wage to $15 per hour would be phased in by 2025. Same for a $10 per hour proposal released Tuesday by GOP Sens. Mitt Romney (R-Utah) and Tom Cotton (R-Ark.).
  • Biden has promised to promote a standalone bill to raise the minimum wage.

What he's saying: "The bill is targeting folks who are making $34,000-$35,000 a year and less," Hawley said. "This is targeted toward people who have been the hardest hit, who are trying to get back on their feet."

  • "Federal policy has helped create, over the last 30-40 years, flatlined wages for blue collar workers," he added. "We need to have a broader discussion about a number of those policy choices. A lot of it has to do with our trade policies, and the policies that we pursued with globalization, that have been very bad choices."

Foreseeable problems: The subsidy would disproportionally benefit those in states that have kept their minimum wages low.

  • It's also an incredibly complicated bill, which could make it difficult for workers to properly estimate their take-home.

What's next: The Senate parliamentarian will decide as early as today whether Democrats’ provision can be included in the COVID stimulus package and voted on through budget reconciliation.

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