Economy & Business

The Cotton-Romney Plan to Raise the Minimum Wage Without Killing Jobs

Former Massachusetts Governor Mitt Romney speaks to the media after meeting with President-elect Donald Trump in Bedminster, N.J., November 19, 2016. (Mike Segar/Reuters)
Democrats’ minimum-wage plan likely would cost more than 1 million jobs. The latest GOP proposal likely wouldn’t cost any.

Republican senators Tom Cotton of Arkansas and Mitt Romney of Utah formally introduced their bill to raise the minimum wage on Tuesday. While congressional Democrats have rallied behind a bill to more than double the federal minimum wage (from $7.25 now to $15 in 2025), the Cotton-Romney plan would raise the minimum wage to $10 by 2025 and then tie it to inflation (indexing it every two years to the chained Consumer Price Index). The Cotton-Romney bill would also mandate that within 18 months of passage all businesses use the E-Verify system to ensure all employees are legal workers.

“This is a labor bill,” a Cotton aide told reporters during a background briefing on Monday. The architects of the bill believe that by tying mandatory use of the E-Verify system to the minimum-wage hike the legislation will tighten the labor market and put upward pressure on wages.

How did Romney and Cotton specifically settle on $10 as the right number for the federal minimum wage — and not, say, $9 or $12? A Romney aide pointed to a 2019 report by the Congressional Budget Office that found that a $10 federal minimum wage likely wouldn’t cost any jobs in its median estimate. The CBO high-end estimate of jobs lost for a $10 minimum wage was 0.1 million jobs (the report looked at minimum-wage proposals that were not tied to mandatory use of the E-Verify system). The Romney aide noted that a lot of research indicates that pegging the minimum wage to no more than half of the national median wage will have a negligible impact on employment levels.

As for the job losses caused by the $15 minimum wage that congressional Democrats want? The aforementioned 2019 CBO report found that a $15 minimum wage would cost 1.3 million jobs in its median estimate and 3.7 million in its high-end estimate. A CBO report from this year analyzing Democratic legislation to hike the minimum wage to $15 said: “For 2025, the average estimate is that employment would be reduced by 1.4 million workers; the median estimate is 1.0 million workers. The mean exceeds the median in this case because there is a significant possibility of large reductions in employment. CBO estimates that there is a one-third chance of that effect’s being between about zero and 1.0 million workers and a one-third chance of its being between 1.0 million and 2.7 million workers.”

National Review’s Robert Verbruggen takes a closer look at the Cotton-Romney bill here.

“American workers today compete against millions of illegal immigrants for too few jobs with wages that are too low — that’s unfair,” Cotton said in a statement. “Ending the black market for illegal labor will open up jobs for Americans. Raising the minimum wage will allow Americans filling those jobs to better support their families. Our bill does both.”

“For millions of Americans, the rising cost of living has made it harder to make ends meet, but the federal minimum wage has not been increased in more than ten years,” Romney said in a separate statement. “Our legislation would raise the floor for workers without costing jobs, 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. We must create opportunities for American workers and protect their jobs, while also eliminating one of the key drivers of illegal immigration.”

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