Democrats should take the Romney-Cotton proposal seriously

Republican Sen. Mitt Romney of Utah is making a credible bid to be the most significant policy entrepreneur of the Biden era.

His first endeavor was a far-reaching plan to overhaul how America supports families with children, replacing the Temporary Assistance for Needy Families block grant and the Child and Dependent Care Tax Credit with a much more generous, simpler, and more comprehensive monthly per-child allowance. While there has been some criticism over details of the plan (such as how it is paid for), the overwhelming tone of the response from the left has been extremely positive. And while fellow Republican senators like Marco Rubio and some conservative think-tankers have attacked the plan, it has won more support from other parts of the conservative commentariat. If Romney is able to drag even a couple of GOP senatorial gadflies along with him, and thereby shape the bill that the Senate ultimately writes, he could significantly alter the tenor and shape of American politics and policymaking — decidedly for the better.

Now comes a new initiative — in conjunction with fellow Republican Sen. Tom Cotton of Arkansas — to tie an increase in the minimum wage to mandatory use of E-verify to prevent the hiring of undocumented immigrants. The proposal has met with a similarly mixed reception on the right, winning strong support in some conservative quarters and vehement opposition from others (generally the same libertarian-leaning and business-oriented ones that opposed his child allowance plan). The question is whether Democrats and progressives take this latest idea as seriously as they took his last one.

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I think they should — not only for political reasons, but for substantive ones.

The political reasons are easy to outline. It costs Democrats little to nothing to encourage this kind of policy entrepreneurship, while the potential benefit is significant. True, Romney's proposed $10 minimum wage is clearly too low — but it's higher than the current minimum, and establishes in principle that Republicans can vote for a minimum wage hike. Now they're just arguing over the price — which, with Democratic Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia on record as opposing using reconciliation to get a $15 minimum wage enacted, was an argument the Senate was going to have to have on a bi-partisan basis anyway.

Meanwhile, Democrats could benefit from embracing the principle that immigration should operate through legal channels and not outside them. E-verify is consistently popular, and is also something that former President Donald Trump campaigned on and then abandoned due to pressure from business. If the proposal is a bluff, then, there would seem to be value in calling it.

But the substantive reasons to take Romney's proposal seriously are more significant.

The debate over immigration's effect on labor is usually fought over questions of supply and demand. It seems like common sense that an increase in the supply of labor must drive down wages, particularly in those sectors where native-born workers are competing directly with immigrants, and this can happen narrowly, in a particular sector or locale. But phrased most broadly, this is the lump of labor fallacy — the false assumption that there is a fixed amount of work available, and that therefore higher immigration means more competition for that pool. In fact, the amount of work available is a function of economic activity, and immigrants — whatever their documentation status — add to that activity, and thereby create jobs as well as taking them. In addition, because of their greater mobility, newly-arrived immigrants can make labor markets more responsive overall to changes in economic conditions, creating significant positive externalities that benefit native workers. Even economists, like George Borjas, who are friendly to restrictionist arguments have noted this important effect.

These aren't the only ways immigration affects the labor market though. There's also the question of how it affects the ability of labor to organize and bargain — and that's a point where legal status becomes highly germane.

Consider a plant with a poor safety record. The owner of that plant is naturally going to prefer a workforce that is unable to complain about the situation — and someone afraid of deportation is going to be far more reluctant to blow the whistle than someone living and working legally. The same goes for a firm with abusive management, or one that cheats its employees come payday. It's not that such abuses don't happen in contexts where most workers are legal residents — there's a reason why the largely Black workforce in Amazon's Bessemer, Alabama, warehouse are fighting to unionize — but the opportunity for redress is much less when the workforce is substantially undocumented.

More to the point, the very fact that documented workers have to compete with workers who are unable to fight for their rights weakens their own bargaining clout. That's one plausible explanation for why those who suffer most from wage competition with undocumented immigrants are other recent immigrants — they are competing directly for the same jobs with people who employers know have less bargaining leverage. It's also why even programs designed to bring foreign workers in legally — like H-2A visa programs for agricultural workers, or H-1B programs for skilled workers — can tilt the playing field in management's direction. Because these workers cannot freely seek other employment under the terms of their visas, they have limited bargaining leverage. But because their leverage is limited, management's options are expanded, and everyone's leverage is reduced.

That's why it's important for progressives to oppose two-tier labor markets, where some workers have more rights than others. The logic behind e-verify is the same as the logic behind a higher minimum wage: both aim to directly bolster the position of workers against management. Indeed, a higher minimum wage is potentially an effective deterrent to undocumented immigration in its own right, precisely because it removes one incentive for management to prefer labor willing to work at a lower wage point. Add comprehensive immigration reform to the mix, which would make it easier and cheaper to obtain legal status, and you've attacked the basis for that two-tier market from three complementary directions.

E-verify has its own problems, of course. It can only be effective if businesses that flout it are punished, which they rarely are. It's also relatively easy for a prospective employee to circumvent by borrowing someone else's identification. Civil liberties advocates frequently raise the worry that to make it work, e-verify will have to evolve into a national biometric identity card. None of these concerns should be dismissed out of hand.

But neither are they reasons not to take the Romney-Cotton proposal seriously. If e-verify isn't the optimal mechanism for ensuring that American businesses hire people who are here legally, then their proposal is still an opening to discuss what a more optimal mechanism might be.

That discussion would be worth having even if it meant trading an important progressive priority for something conservatives care more about. In this case, where the two issues are mutually-reinforcing in strengthening the bargaining position of American workers, it shouldn't be seen as a trade at all.