AOC calls GOP’s $10 minimum wage pitch ‘legislated poverty’ as Democrats push for $15

Mitt Romney and Tom Cotton counter Democrats’ plan to raise wages over five-year period

Alexandria Ocasio-Cortez has shot down a pitch from Republican lawmakers to increase the federally set minimum wage to $10 as “legislated poverty” following a push among congressional Democrats and the White House for a $15 minimum wage.

In their Higher Wages for American Workers Act, GOP senators Mitt Romney and Tom Cotton proposed raising the federal hourly minimum from $7.25 to $10 over a five-year period. It also would penalise employers who hire unauthorised immigrants.

“When members of Congress fight to set the minimum wage below a living wage, they are playing a role in creating and preserving poverty in the United States,” the New York congresswoman said on Tuesday. “The $15/hr proposal with multi-year phase in is already a deep compromise. $10 an hour is legislated poverty.”

The Economic Policy Institute has found that the minimum wage, if adjusted for inflation, should have exceeded $15 by 2020. It has not been raised since 2009.

“Yet since the late 1960s, lawmakers have let the value of the minimum wage erode, allowing inflation to gradually reduce the buying power of a minimum wage income,” according to a 2019 report.

Gradual increases over the following years were outpaced by the decline in wage value, the organisation reported.

President Joe Biden and Vice President Kamala Harris support raising the federal minimum wage to $15, but the president has raised doubts whether it would survive inclusion in a proposed $1.9 trillion coronavirus relief package that is critical to his administration’s Covid-19 response plan.

The House Budget Committee advanced relief legislation on Monday, and the full House of Representatives is set to hold a vote on Friday.

Senator Bernie Sanders and congressional Democrats have included the Raise the Wage Act, which would add $2.25 to the federal minimum every year through 2025. Every year after that, the wage would be indexed to median wage growth.

The senator has said he is “confident” that parliamentary rules will allow the Senate to include the wage increase as part of a reconciliation process that would allow Democrats to bypass Republican support to pass it.

Raising the federally set minimum wage to $15 an hour would lift nearly 1 million people out of poverty and raise wages for millions of Americans, according to the latest assessment from the federal government’s nonpartisan budget office.

The Congressional Budget Office also reported that the wage increase could raise the federal deficit by $54 billion over 10 years, a more dramatic increase than one predicted in a similar CBO report from just two years ago.

An analysis from the Economic Policy Institute called the report’s predicted impacts to job losses “just wrong and inappropriately inflated relative to what cutting-edge economics literature would indicate”.

The 2021 CBO report says a wage increase could lead to 1.4 million job cuts by 2025, but it also would lift 900,000 people out of poverty and raise incomes for 17 million people, or roughly 10 per cent of the US workforce. Another 10 million workers who earn slightly more than $15 per hour would also see pay raises.