A group of Republican senators recently introduced legislation to raise the federal minimum wage , thereby creating the possibility of negotiating differences with a bill introduced by Sen. Bernie Sanders (I-VT) and 30 Democratic co-sponsors . A compromise could mean higher pay for millions of low-wage workers in 2024 and beyond, particularly in low-wage, low-cost areas.

“We need to have a responsible conversation about how to increase the minimum wage for American workers,” said Sen. Bill Cassidy (R-LA), one of the bill’s sponsors and ranking member of the Senate Committee on Health, Education, Labor, and Pensions, of which Sanders is the chairman.

He’s right. The cost of living has increased by about 40% since Congress last raised the minimum wage in 2009 to $7.25 per hour. Working full-time at that rate yields $15,080 in annual income. It is difficult to live on that amount anywhere in the nation, even for single adults.

And although most states have pushed their minimums higher, 15 still set their minimum wage at the federal benchmark. Another five, all in the South, default to the federal $7.25 standard because they have not passed minimum wage laws.

Introduced by Sen. Tom Cotton (R-AR) and five colleagues, the GOP bill is intriguing in many ways. It backs up recent party rhetoric about helping blue-collar workers by improving wages — albeit modestly and at a much slower pace than the Democrats’ latest proposal. The legislation also would require employers to use the E-Verify system to prevent hiring illegal immigrants and impose penalties for failure to do so.

“Despite rising costs of living, the federal minimum wage has not been increased in more than a decade, which has left millions of Americans struggling to make ends meet,” Sen. Mitt Romney (R-UT) said. “Our proposal would raise wages for millions of workers without risking jobs and tether the wage to inflation to ensure it keeps up with rising costs. Additionally, requiring employers to use E-Verify would ensure that the wage increase goes to legal workers, which would protect American jobs and eliminate a key driver of illegal immigration.”

Republicans typically are leery of adding regulatory burdens to employers. Shifting the focus of preventing illegal immigration to employers and tightening enforcement could denote a significant policy change. Such policies could slow the inflow of low-skilled labor and provide domestic workers with more leverage to improve their pay and working conditions.

Although their endpoints are far apart, $11 an hour in the GOP bill compared to $17 in the Democrats’, many provisions lend themselves to compromise. Both propose gradual raises over the next four or five years which then would be indexed to the cost of living.

As shown in Table 1 below, increases in the Sanders bill would start at a higher level by jumping to $9.50 in 2024. The minimum wage then would rise by $1.50 each year. The Cotton bill would raise the minimum by 75 cents per hour each year. A hypothetical compromise splitting differences could raise the minimum by $1.50 in 2024 and $1.25 in 2025, followed by $1.00 annual increases over the next three years, thereby pushing the minimum wage to $13 in 2028. Congress then could evaluate and adjust the minimum wage if needed and begin indexing it to inflation. The Cotton bill does feature slower minimum wage hikes for businesses with fewer than 20 employees, which could affect negotiations.

Table 1

Senate Minimum Wage Bill Timelines & Possible Compromise

(dollars/hour)

Setting a national minimum wage is difficult politically. State and local economies vary significantly . For example, both average salaries and cost of living in states with the highest, Massachusetts and Hawaii, respectively, are more than 70% greater than in Mississippi, one of the poorest, where the average salary is $45,000 and the cost of living is $32,000.

As of Monday, 22 states increased their minimum wages, raising pay for an estimated 9.9 million workers and resulting in $6.95 billion in additional income, the left-leaning Economic Policy Institute estimates. Minimum wages in Maryland, New Jersey, and upstate New York reached or exceeded $15 an hour for the first time, joining California, Connecticut, Massachusetts, Washington, and the rest of New York. Seven more states have passed legislation or ballot measures to reach or surpass $15 an hour in the coming years: Delaware, Florida, Hawaii, Illinois, Nebraska, Rhode Island, and Virginia. Washington has the highest state minimum wage, increased from $15.74 to $16.28 due to an inflation adjustment.

Still, by increasing the federal minimum to $17 an hour over five years, the Democrats’ Raise the Wage Act of 2023 would affect 28 million workers, 19% of the United States workforce, the EPI estimated last July. The legislation would increase wages by about $86 billion for the country’s lowest-paid workers, with the average affected full-time worker receiving an extra $3,100 per year. In Mississippi, the EPI estimated that, among the 36% of workers directly affected in 2028, average wages would rise by $4,822 in 2023 dollars. And because California, Hawaii, Washington, and the District of Columbia have set minimum wages to rise to close to, or above, $17 an hour, only a small number of their workers would be affected.

Sponsors of the Republican bill chose to increase the minimum more slowly to $11 by 2028, emphasizing that the Democrats’ bill would raise labor costs too rapidly and cause unacceptable levels of job loss. After the Congressional Budget Office recently analyzed the economic effects of the Democrats’ bill, Cassidy released a statement estimating that increasing the federal minimum to $17 an hour would result in the elimination of up to 1.4 million jobs over 10 years.

On the other hand, the Republican bill’s goal to reach $11 an hour in four years could be overly cautious, especially as inflation and other developments may cause more states to raise their minimums. Of the six states represented by the Republican bill’s sponsors, two already have minimums at or above its $11 target: Maine (Sen. Susan Collins) at $14.15 and Arkansas (Cotton) at $11. Ohio’s (Sen. J.D. Vance) minimum is just under, at $10.45. West Virginia’s (Sen. Shelley Moore Capito) minimum is $8.75. Only Louisiana (Cassidy) and Utah (Romney) are among the states operating at the federal minimum.

Given this backdrop, splitting the difference between the two bills by gradually raising the minimum to somewhere in the vicinity of $13 an hour by 2028 falls within the realm of possibility. Republican proposals to mandate the use of E-Verify to screen out illegal immigrants and to tighten employer penalties merit consideration. A compromise would neither get Democrats all they want nor be risk-free for Republicans, but it would be both a symbolic and tangible act of support for workers struggling to pay their bills.

Karl Polzer is founder of the Center on Capital & Social Equity .