The Romney/Cotton Minimum Wage Plan Is Anti-Conservative And Embraces The Logic Of The Left

On Tuesday, Republican Senators Tom Cotton and Mitt Romney proposed a bill — currently titled the “Higher Wages for American Workers Act” — which aims to raise the federal minimum wage to $10 per hour by 2025, with this increase requiring businesses to E-Verify employees to validate their eligibility to legally work in the country.

In other words, to increase the minimum wage and stop illegal immigrants from receiving this wage increase.

According to Fox Business, “Under the Romney-Cotton plan, the federal minimum wage would climb to $10 per hour by 2025 and would then be indexed to inflation every two years. There would be a slower phase-in period for small businesses with fewer than 20 employees. The proposal would also require employers to use ‘E-verify’ to ensure that businesses are hiring documented workers and would increase the penalties for anyone who hires an undocumented individual.”

What does the “Higher Wages for American Workers Act” proposal say?

The current proposal is a one page document. It begins with the following paragraph:

“The Higher Wages for American Workers Act would support a strong labor market for American workers by gradually raising the federal minimum wage to $10 and mandating E-Verify to ensure rising wages go to legally authorized workers. Rather than destroy 1.4 million jobs like a $15 minimum wage, this proposal would raise wages for 3.5 million workers without harming the very workers it’s intended to protect. Mandatory E-Verify would preserve American jobs for legal workers and remove incentives for increased illegal immigration. Both policies work in tandem to create tighter labor markets and put upward pressure on wages.”

Next, a “highlights” section outlines its high-level objectives:

• Drives wages up through tighter labor markets.
• Protects the job market for American workers by ending illegal, black-market labor.
• Prevents massive job losses, unlike the $15 minimum wage proposal.
• Helps teenagers find their first jobs.

Then, a section titled “Mandatory E-Verify” explains how the act would enforce eligibility validation.

• Mandates E-Verify for all employers, phasing in implementation over 18 months to allow small businesses additional time to comply.
• Raises civil and criminal penalties on employers that hire unauthorized aliens and/or violate I-9 paperwork requirements.
• Prevents fraud by requiring workers 18 and older to provide a photo ID to their employer for verification, which will be cross-referenced if a photo is available through the E-Verify system.
• Clearly authorizes states to share driver’s license information/photos to improve E-Verify’s accuracy and conditions certain federal grant funds on information sharing. 
• Provides $100 million annually in automatic funding to ensure E-Verify is immune from a government shutdown, and authorizes Congress to appropriate additional funds as needed.
• Grants DHS authority to create a program to block or suspend misused Social Security numbers for E-Verify, including Social Security numbers of deceased individuals and unusual multiple uses of the same number.

Finally, the summary explains the plan regarding the “Minimum Wage Increase.”

• Gradually raises the federal minimum wage to $10 by 2025, and then indexes it to inflation every two years.
• Creates a slower phase-in for small businesses with fewer than 20 employees.
• Prevents any increase during the Covid-19 emergency.
• Increases the youth minimum wage and extends the eligible period to 180 days.
• Protects sheltered-workshops by keeping the 14(c) exemption. 

Then, a table of “scheduled minimum wage increases” under the proposal is provided, categorized by “federal minimum wage,” “small businesses,” and “youth minimum.”

Analysis — Overview

“The Higher Wages for American Workers Act would support a strong labor market for American workers by gradually raising the federal minimum wage to $10 and mandating E-Verify to ensure rising wages go to legally authorized workers.”

This opening statement assumes that a strong labor market is provided or encouraged by simply mandating that businesses pay their employees a certain amount, and that requiring registered businesses to verify the eligibility of workers will further strengthen the labor market. This assumption is far from supported by this document.

“Rather than destroy 1.4 million jobs like a $15 minimum wage, this proposal would raise wages for 3.5 million workers without harming the very workers it’s intended to protect.”

This statement is, in many ways, self-contradictory. The first part acknowledges that enforcing a higher minimum wage will destroy some number of jobs. The second part claims that enforcing a slightly lower wage increase would raise wages, while ignoring that any forced wage increase will likely result in some unemployment.

The fundamental reality of mandatory minimum wages is that many small businesses survive along very tight economic margins. Even a modest increase in wages can skew their margins from positive to negative, meaning that jobs are inevitably affected. The claim that this legislation would increase wages “without harming the very workers it’s intended to protect” is unsubstantiated given that it doesn’t even acknowledge the impact any wage increase has on businesses.

“Mandatory E-Verify would preserve American jobs for legal workers and remove incentives for increased illegal immigration. Both policies work in tandem to create tighter labor markets and put upward pressure on wages.”

This is simply untrue. There is a quantum logical leap between “mandatory E-verify” and “preserving American jobs for legal workers,” with the void missing evidence that the “American jobs” — which is a meaningless platitude — are designed and provided only for legal workers. Increasing wages will drive up the cost of legal services, which would only fuel the desire in the marketplace for cheaper — and therefore, often illegal — labor. While “legal” companies may comply and verify the eligibility of their workers, they will bear the burden of increased wage costs. Their customers will then bear the burden of increased service costs. This will only widen the “cost gap” between legal and illegal services, providing further incentive for illegal labor and, therefore, further incentive for illegal immigration.

Analysis — Highlights

• Drives wages up through tighter labor markets.
• Protects the job market for American workers by ending illegal, black-market labor.
• Prevents massive job losses, unlike the $15 minimum wage proposal.
• Helps teenagers find their first jobs.

These “highlights” are based on unsupported premises. Forcing businesses to increase wages does not necessarily “drive wages up” if those jobs no longer exist or are “replaced” by illegal and cheaper alternatives. Markets which are inorganically controlled by the federal government may be “tighter” in terms of legislation, but this doesn’t necessarily amount to market “strength” or “success.”

Given the federal government’s consistent inability to monitor or control illegal immigration, there is no evidence to suggest that requiring businesses to E-verify — thereby further shifting responsibility from the government to businesses, as we will discuss later — would prevent an illegal labor black-market. In fact, by forcing legal businesses to increase wages, there may be further need for cheaper labor, which inevitably results in enabling those willing to risk prosecution in return for business opportunities.

The claim that this legislation would “prevent massive job losses” is entirely subjective. Yes, on a basic level, increasing the minimum wage to $10 instead of $15 will likely result in fewer job losses, because $10 is less than $15. However, two policies can be bad at once, and just because one policy is preferable to another does not mean that the lesser of the two policies is itself optimal.

Analysis — No link between mandatory E-Verify and minimum wage increase

The claim that “both policies work in tandem to create tighter labor markets and put upward pressure on wages” is somewhat invalid given that these policies are mutually exclusive. Ultimately, this is an attempt to achieve a fundamentally non-conservative policy goal — to increase the minimum wage on a federal level, thereby accepting the Left’s premise — while avoiding all responsibility for controlling illegal immigration by placing the burden on small businesses.

Employers are already required to verify that their employees are eligible to work. According to the U.S. Citizenship and Immigration Services, employers must “verify employment authorization and identity of new employees.” The addition of E-Verify simply enforces the use of an online verification system.

Generally, validation of work eligibility is already the law, so it’s unclear what such a policy has to do with an increase in minimum wage. Indeed, most items in the “Mandatory E-Verify” section outline understandable and agreeable improvements to the employee verification process. What is missing is the link between such security improvements and minimum wage increases to achieve the supposed goal of working “in tandem to create tighter labor markets and put upward pressure on wages.”

Conclusion

There are several key problems with this proposal.

1. The policy link between higher wages and immigration validation is unsupported.
2. The assumption that increasing the minimum wage has optimal economic results is unsupported by both economists and past evidence.
3. Agreeing to increase the minimum wage “in return” for supposed improvements in illegal immigration controls is foolish. Firstly, it accepts the Left’s premise that an increase in minimum wage is economically optimal. Secondly, it shifts the burden of responsibility for immigration control from the government (who are failing) to small businesses.

Ultimately, this proposal is fundamentally non-conservative in nature. The control of illegal immigration must be a central pillar in the Republican manifesto moving forward, but potentially meaningless legislative decoration should not be celebrated in return for the economic disaster which could be triggered by opening the door to ongoing minimum wage increases.

Ian Haworth is an Editor and Writer for The Daily Wire. Follow him on Twitter at @ighaworth.

The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.

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