The measure does not fall in line with the requirements to be passed via the fast-track budget reconciliation process, a source familiar with the ruling said.
The reconciliation process will allow Democrats to pass legislation without any Republican support, so long as all members of their own party are on board. Some moderate Democrats, like West Virginia Sen. Joe Manchin, had expressed reservations about the minimum wage increase.
Typically, budget reconciliation measures must affect spending or revenue.
Sen. Lindsey Graham, R-S.C., applauded the Senate Parliamentarian’s decision, saying that it will reinforce the traditions of the Senate over the long-run.
“Very pleased the Senate Parliamentarian has ruled that a minimum wage increase is an inappropriate policy change in reconciliation,” Graham said in a statement. “This decision reinforces reconciliation cannot be used as a vehicle to pass major legislative change - by either party - on a simple majority vote.”
But progressives are already expressing their displeasure with the decision to remove the provision.
“I strongly disagree with tonight’s decision by the Senate Parliamentarian. The CBO made it absolutely clear that raising the minimum wage to $15 an hour had a substantial budgetary impact and should be allowed under reconciliation," said Sen. Bernie Sander, I-Vt. in a statement.
Rep. Ro Khanna, D-Calif., who has floated a $23 minimum wage, called on Vice President Kamala Harris to “disregard and rule a $15 minimum wage in order.”
House Speaker Nancy Pelosi, D-Calif., issued a statement on Thursday saying that the measure would remain in the bill on the House floor tomorrow because Democrats believe the increase is “necessary.”
Earlier in the day, Rep Alexandria Ocasio-Cortez, D-N.Y., told reporters that critics were “lucky that progressives aren’t asking for $24 right now, or $25 right now.” She also suggested she would be more willing to accept a bill without the minimum wage hike if it was ruled “out of bounds” by the Parliamentarian and not stripped from the legislation prematurely by members of the party.
Biden has repeatedly said that no American worker should work 40 hours per week and still live below the poverty line, advocating for raising the minimum pay rate to at least $15 per hour.
The White House on Thursday put out a statement that Biden respects the Senate's process and he intends to work with Congress to identify the best avenue to advance the legislation.
Currently, the federal minimum wage is $7.25, where it has been for more than a decade.
FOX Business’ Hillary Vaughn contributed to this report.