A Grand Bargain on Wages and Immigration?

(Bloomberg Opinion) -- Mitt Romney and Tom Cotton have an intriguing idea. The two Republican senators want to raise the minimum wage, which progressives like, but pair it with stronger national enforcement of laws against hiring immigrants without legal work permits, which many conservatives support.

This is a much more reasonable idea than an alternative approach laid out last week by their fellow Republican, Senator Josh Hawley. And it potentially offers a roadmap to accomplish something Democrats seem unlikely to be able to achieve on their own: a substantial raise for low-wage workers.

As written, however, the Romney/Cotton proposal is more of a troll than a serious legislative initiative. It combines an immigration measure unlikely to appeal to progressive activists with a wage increase so small they are certain to oppose it.

Their bill would raise the minimum wage to $10 per hour by 2025. That's a significant boost over the current federal minimum of $7.25. But state and local minimum-wage laws mean that the average minimum-wage worker in the U.S. already makes $11.80 an hour. And that was before voters in Florida, the third-largest state, approved a measure that will raise the state's hourly minimum wage to $10 this year and $15 in 2026.

Even Cotton's relatively poor and very right-wing home state of Arkansas currently has an $11 minimum wage. So why would Democrats entertain a proposal that, after four years, would leave it a dollar short of that?

Short answer: They wouldn't, and they shouldn't. But a higher number would be tempting.

Senate rules prohibit including an increase to $15 per hour by 2025 as part of President Joe Biden's Covid relief bill, which was Democrats' original plan. Meanwhile, Senator Joe Manchin has made it fairly clear that he favors a minimum-wage increase but thinks it should be more gradual than what his fellow Democrats propose.

Then there's Hawley's proposal — a tax credit for low-wage workers that would cover 50% of the difference between their hourly wage and $16.50 an hour.

This is supposed to answer conservative concerns that wage regulations kill jobs by providing an explicit subsidy. But the structure of Hawley's proposal creates very high implicit marginal tax rates on workers. According to one analysis, when state rates and payroll taxes are factored in, some workers would be facing nearly 100% marginal rates. You could try to rejigger the wage subsidy idea into a more workable form, but it would need a gentler phase-out and consequently become a lot more expensive. Unless Republicans suddenly get interested in raising taxes on the rich, Hawley will need to go back to the drawing board.

By contrast, the proposal from Romney and Cotton could have legs. Manchin is talking about an $11 minimum wage, and there's no clear vehicle to enact one in a Senate governed by the filibuster rule. If a few Republicans were interested enough in stronger immigration enforcement to sit down with a labor-friendly Democrat such as Ohio's Sherrod Brown and hammer out a bill that included a minimum wage of $11 or higher, it would be hard for progressives to dismiss.

As for E-Verify itself, the immigration program Cotton and Romney want to make mandatory: The idea is perhaps overrated by its proponents but is not something Democrats should reject out of hand. In fact, they endorsed E-Verify, which requires employers to confirm that all new hires are eligible to work in the U.S., in their 2008 platform. Democratic senators have supported the program as part of comprehensive immigration reform.

And from a policy standpoint, it's hard to argue that a stronger E-Verify program would be harmful. One study of state-level E-Verify mandates found no wage benefits for native-born workers, while likely-illegal workers tend to switch to smaller employers who find ways to evade the mandate. Another study found wage declines for illegal male workers offset by an increase in labor force participation by undocumented women — and wage increases for legal immigrant workers and for U.S.-born Hispanic men.

The program creates some real hardships for undocumented workers, who deserve more sympathy, and an extra layer of paperwork for employers. But if it works as a bargaining chip to secure a raise for millions of low-paid workers it's worth the price.

The more consequential opposition to E-Verify, of course, comes from businesses. (It's no accident that, even in red states, mandatory adoption of E-Verify rules is relatively rare.) Yet it is this very opposition that provides Democrats an opportunity.

What Democrats should want on immigration is not continuation of the cozy status quo, but a grand bargain that includes legal status and a path to citizenship for millions of long-settled undocumented people. And what they should want for workers is that anyone who has a job in America makes enough to live in America.

Bipartisan talks on immigration are nonexistent at the moment, while negotiations over a national minimum wage are fraught. A wage/enforcement deal that makes life uncomfortable for the Chamber of Commerce might be exactly the thing that drags Republicans back to the table on immigration while allowing the Biden administration to deliver on its promise of a wage increase.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Yglesias writes the Slow Boring blog and newsletter. A co-founder of Vox and a former columnist for Slate, he is also host of "The Weeds" podcast and is the author, most recently, of "One Billion Americans."

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