Romney-Cotton, a Cancun cabbie and the minimum wage debate
Several years ago, while attending a gathering of economists in Cancun, Mexico, I decided to hire a cab for a tour of the area during an afternoon break. After jumping in, I asked the driver to take me to the center of town, away from the resort-stuffed beach area and, along the way, to tell me about the local economy, where people live and shop, and what they do for a living.
I learned quite a bit more than that, including something applicable to the minimum wage debate taking place in Washington.
During the 30-minute ride, I learned about his family’s hopes and dreams. “If your dreams come true, what will you be doing next year?” I asked.
“My dream? To make it to America and get a job earning your minimum wage to send money home,” I remember him replying. This job would make him the highest paid member of his family. “Our future would be much brighter,” he continued. “I’ve seen other people do it.”
I thought about this conversation while reading about the new proposal from Sens. Mitt Romney (R-Utah) and Tom Cotton (R-Ark.), which would raise the minimum wage to $10 per hour in four steps by 2025. They notably allow for a slower move for firms with 20 or fewer employees. After hitting $10, the wage would be adjusted for inflation every two years. The Romney-Cotton proposal competes with a $15-by-2024 plan being pushed by President Biden, Sen. Bernie Sanders (I-Vt.) and others in the $1.9 trillion stimulus bill making its way through congress.
Recognizing that when a wage is administratively set above a market clearing level, the quantity of labor supplied exceeds the quantity demanded (i.e., it creates unemployment), Romney-Cotton attempts to compensate through tighter controls on the employment of undocumented workers. Thus, if passed, their package would make American employers and employees even more conscious of nationality. Any aspiring immigrant workers and their families — here legally or not — may unavoidably bear an even larger stigma than they do today.
Despite this notion — and even though a majority of states already have a higher-than-federal minimum wage, and therefore will not be as affected by the proposal — a higher minimum will be seen as a stronger invitation to people in my Cancun cabbie’s situation. Coupled with other pending proposals to provide annual federal payments for each child, which amount to the makings for a minimum national income, efforts to cross the border will become even more strenuous.
That’s part of why it’s hard to understand what’s driving Romney and Cotton. Perhaps it’s well-intended paternalism or a strategic political move to find an acceptable minimum wage compromise in the ongoing stimulus bill debate.
Moreover, they come from prospering, low unemployment, right-to-work states, where 3 percent or less of the population is estimated to be undocumented. I note, though, that the Arkansas state minimum wage is already $11 per hour; the rate for Utah is $7.25, the same as the federal. I am left with the question: Why would Sen. Romney seek to impose a higher minimum wage than the people of Utah have chosen?
But there is an even greater puzzle, given our ongoing efforts to wall out workers even as we entice them with a higher minimum wage. As a nation, we aspire to embrace the noble, but perhaps unattainable, words found in the Declaration of Independence penned by Thomas Jefferson: “We hold these truths to be self-evident, that all men are created equal…”
How tightly do we cling to this truth? Is that why so many of us are deeply troubled by our inability to find an orderly process to enable people to enter and become a part of this nation? We may also recall the words of George Orwell in “Animal Farm” — “All animals are created equal, but some are more equal than others.”
Let’s move in the direction of Jefferson, and not the astute observation of Orwell.
Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson College of Business and Behavioral Sciences.