Lewis Morris / February 25, 2021

The GOP’s Alternative Minimum Wage

Tom Cotton and Mitt Romney team up to counter the Bernie Sanders-led Democrats.

Republican Senators Mitt Romney of Utah and Tom Cotton of Arkansas have announced a plan to raise the federal minimum wage that they claim will meet the needs of lower-income workers without harming small businesses and killing jobs. An important part of the calculation is that the Romney-Cotton plan will also make the E-Verify system mandatory, ensuring that workers are legal.

The two senators propose to raise the minimum wage to $10 an hour by 2025, then peg that wage to inflation for automatic adjustments every two years. They arrived at the $10 number after consulting a 2019 wage report by the Congressional Budget Office that found a $10 minimum wage was less likely to cost jobs. According to CBO estimates, phasing in a $10 minimum wage over five years would cost approximately 100,000 jobs on the high end, with a median estimate of virtually no job loss at all. Many states — especially the most populous ones — already have minimums at or above $10 an hour.

The same CBO estimate found that a $15 minimum wage phased in over the same time frame, which is the current Democrat plan, would cost anywhere from 1.3 million to 3.7 million jobs. Only three states have wages at or higher than $13 an hour. The Democrat wage-hike plan also does not include pinning the wage to inflation, and it certainly doesn’t make E-Verify mandatory.

“Our legislation would raise the floor for workers without costing jobs,” Romney said in a statement, “and automatically increase the federal minimum wage every two years to match the rate of inflation. Additionally, our bill would protect American jobs by requiring employers to use E-Verify to ensure that businesses cannot hire illegal immigrants.”

The Democrat plan isn’t nearly as economically sound as what Republicans have offered in large part because Democrats don’t really care about American business. Democrat Representative Ro Khanna (People’s Republic of California) proclaimed any business that can’t afford to pay $15 an hour shouldn’t exist. Such contempt for America’s small business owners to go along with ignorance of simple economics is par for the course in the modern Democrat Party, and the leftist hardliners will surely push back against the Romney-Cotton proposal as not being high enough to “help” low-wage workers. The fact that millions of those people will not be able to get a job precisely because of a minimum wage that is too high is apparently beside the point.

The mandatory E-Verify provision will of course make the Romney-Cotton plan a nonstarter with Democrats, but also with some businesses. E-Verify, which allows businesses to confirm the legal status of immigrants they hire, is currently a voluntary system. It is deeply unpopular with some businesses, and a number of employers have steadfastly refused to use it. However, if it does become mandatory, use of E-Verify will stabilize the labor market and protect jobs for American citizens. It will also help reduce illegal immigration since jobs are often what bring people across the border.

There may be room to debate the exact size of the minimum wage hike, if the class-warfare Dems can be kept in their box. That’s a big if, but some Senate Democrats, like Joe Manchin of West Virginia, have signaled that the $15 minimum wage may be too high. With an evenly divided Senate, there will have to be some give and take if any progress is to be made. Mandatory E-Verify, though, is likely dead in the water.

Biden appears determined to open up the borders and go back to the Obama-era come-one, come-all immigration policy. The illegal immigrants he plans to let flood into the country will need jobs, and compelling employers to check the status of immigrant employees runs counter to that. It can never be said enough, however, that unbridled immigration puts downward pressure on wages and makes jobs tougher to come by for working citizens.

Of course, the federal minimum wage ought not to even exist, but the Romney-Cotton plan at least offers a reasonable solution that reduces the harm to business while protecting American workers. For these reasons, Democrats will surely fight against it because they are more interested in political victory than long-term economic stability.

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