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Minimum Wage Update: Republican Senators Offer $10 Minimum Wage Plan

Rocky Mengle, Tax Editor
·4 min read

There's a provision in the massive House budget reconciliation bill that would gradually raise the federal minimum wage to $15 per hour. (The reconciliation bill is being used to get President Biden's $1.9 trillion stimulus package through Congress without the threat of a filibuster in the Senate.) However, once the House passes the bill – which is expected to happen before the end of February – the fate of this particular proposal is in serious doubt. Senate Republicans don't like it, and a handful of moderate Democratic Senators are against the $15 minimum wage, too. Plus, the Senate parliamentarian could kick the minimum wage provision out of the reconciliation bill altogether if she determines that it doesn't sufficiently impact the budget.

So, with the $15 minimum wage plan on thin ice, maybe there's room for a compromise. Enter Senators Mitt Romney (R-Utah) and Tom Cotton (R-Ark.) with a new plan. Under their plan, the federal minimum wage, which is currently $7.25 per hour, would gradually rise to $10 by 2025. After that, it would be adjusted for inflation every two years. But there's a catch – employers would be required to use the E-Verify system to prevent the hiring of undocumented workers.

According to a plan summary, Romney and Cotton claim that their $10 minimum wage 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."

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Gradual Increase to $10 Minimum Wage

As mentioned above, the Romney-Cotton plan would raise the federal minimum wage to $10 per hour by 2025, and then adjusting it for inflation every other year. But it would increase the minimum wage at a slower rate for small businesses with fewer than 20 employees. It would also prevent any increase during the COVID-19 pandemic.

Currently, the minimum wage for new workers who are 19 years old or younger is $4.25 per hour during the first 90 days of employment. In an effort to help teenagers find their first job, the Republicans' plan would also increase the youth minimum wage and extend the eligible period to 180 days.

The table below shows how the minimum wage would increase under the Romney-Cotton plan.

YEAR

FEDERAL
MINIMUM
WAGE

SMALL
BUSINESSES

YOUTH
MINIMUM
WAGE

Current

$7.25

$7.25

$4.25

Post-Pandemic Year 1

$8.00

$7.75

$4.75

Year 2

$8.75

$8.25

$5.25

Year 3

$9.50

$8.75

$5.75

Year 4

$10.00

$9.25

$6.00

Year 5

$10.00

$9.75

$6.00

Year 6

Adjust for
Inflation

Equal to Federal
Minimum Wage

Adjust for
Inflation

E-Verify Requirement

E-Verify is an internet-based system that allows employers to confirm the employment eligibility of their workers. To use the system, employers submit information taken from an employee's Form I-9, Employment Eligibility Verification, which is then electronically compared to records available to the U.S. Department of Homeland Security and the Social Security Administration. It usually only takes a few seconds to confirm the worker's employment eligibility using the system.

The Republican Senators' plan would:

  • Mandate use of the E-Verify system for all employers within 18 months;

  • Raise civil and criminal penalties on employers that hire unauthorized aliens and/or violate the I-9 paperwork requirements;

  • Require workers 18 and older to provide a photo ID to their employer for verification, which would be cross-referenced if a photo is available through the E-Verify system;

  • Authorize states to share driver's license information/photos to improve E-Verify's accuracy and condition certain federal grant funds on information sharing;

  • Provide $100 million annually in funding to ensure E-Verify is immune from a government shutdown; and

  • Authorize a program to block or suspend misused Social Security numbers for E-Verify, including Social Security numbers of deceased people and unusual multiple uses of the same number.

This part of the Romney-Cotton plan is likely to be a non-starter for Democratic lawmakers.

State Minimum Wages

Don't forget that states can have their own minimum wage. They can be higher than the federal amount, but not lower. Check the U.S. Department of Labor's website to find your state's minimum wage.