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+
+ - GRADUALLY RAISING THE MINIMUM WAGE TO $15: GOOD FOR WORKERS, GOOD FOR BUSINESSES, AND GOOD FOR THE ECONOMY
+
+[House Hearing, 116 Congress]
+[From the U.S. Government Publishing Office]
+
+
+ GRADUALLY RAISING THE MINIMUM
+ WAGE TO $15: GOOD FOR WORKERS,
+ GOOD FOR BUSINESSES, AND GOOD
+ FOR THE ECONOMY
+
+=======================================================================
+
+ HEARING
+
+ BEFORE THE
+
+ COMMITTEE ON EDUCATION
+ AND LABOR
+ U.S. HOUSE OF REPRESENTATIVES
+
+ ONE HUNDRED SIXTEENTH CONGRESS
+
+ FIRST SESSION
+
+ ----------
+
+ HEARING HELD IN WASHINGTON, DC, FEBRUARY 7, 2019
+
+ ----------
+
+ Serial No. 116-2
+
+ ----------
+
+ Printed for the use of the Committee on Education and Labor
+
+ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
+
+
+ Available via the World Wide Web: www.govinfo.gov
+ or
+ Committee address: https://edlabor.house.gov
+
+
+ __________
+
+
+ U.S. GOVERNMENT PUBLISHING OFFICE
+36-268 PDF WASHINGTON : 2019
+
+--------------------------------------------------------------------------------------
+For sale by the Superintendent of Documents, U.S. Government Publishing Office,
+http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
+U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
+E-mail, [email protected].
+
+
+
+ COMMITTEE ON EDUCATION AND LABOR
+
+ ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman
+
+Susan A. Davis, California Virginia Foxx, North Carolina,
+Raul M. Grijalva, Arizona Ranking Member
+Joe Courtney, Connecticut David P. Roe, Tennessee
+Marcia L. Fudge, Ohio Glenn Thompson, Pennsylvania
+Gregorio Kilili Camacho Sablan, Tim Walberg, Michigan
+ Northern Mariana Islands Brett Guthrie, Kentucky
+Frederica S. Wilson, Florida Bradley Byrne, Alabama
+Suzanne Bonamici, Oregon Glenn Grothman, Wisconsin
+Mark Takano, California Elise M. Stefanik, New York
+Alma S. Adams, North Carolina Rick W. Allen, Georgia
+Mark DeSaulnier, California Francis Rooney, Florida
+Donald Norcross, New Jersey Lloyd Smucker, Pennsylvania
+Pramila Jayapal, Washington Jim Banks, Indiana
+Joseph D. Morelle, New York Mark Walker, North Carolina
+Susan Wild, Pennsylvania James Comer, Kentucky
+Josh Harder, California Ben Cline, Virginia
+Lucy McBath, Georgia Russ Fulcher, Idaho
+Kim Schrier, Washington Van Taylor, Texas
+Lauren Underwood, Illinois Steve Watkins, Kansas
+Jahana Hayes, Connecticut Ron Wright, Texas
+Donna E. Shalala, Florida Daniel Meuser, Pennsylvania
+Andy Levin, Michigan* William R. Timmons, IV, South
+Ilhan Omar, Minnesota Carolina
+David J. Trone, Maryland Dusty Johnson, South Dakota
+Haley M. Stevens, Michigan
+Susie Lee, Nevada
+Lori Trahan, Massachusetts
+Joaquin Castro, Texas
+* Vice-Chair
+
+ Veronique Pluviose, Staff Director
+ Brandon Renz, Minority Staff Director
+
+
+ ------
+
+
+ C O N T E N T S
+
+ ----------
+ Page
+
+Hearing held on February 7, 2019................................. 1
+
+Statement of Members:
+ Scott, Hon. Robert C. ``Bobby'', Chairman, Committee on
+ Education and Labor........................................ 1
+ Prepared statement of.................................... 4
+ Foxx, Hon. Virginia, Ranking Member, Committee on Education
+ and Labor.................................................. 6
+ Prepared statement of.................................... 8
+
+Statement of Witnesses:
+ Barron, Ms. Simone, Seattle, WA.............................. 148
+ Prepared statement of.................................... 150
+ Brodeur, Dr. Paul A., ESQ., State Representative, 32nd
+ Middlesex District, Commonwealth of Massachusetts House of
+ Representatives............................................ 202
+ Prepared statement of.................................... 204
+ Gupta, Ms. Vanita, President and CEO, The Leadership
+ Conference on Civil and Human Rights....................... 135
+ Prepared statement of.................................... 138
+ Eckhouse, Ms. Kathy, Owner, La Quercia, Norwalk, IA.......... 153
+ Prepared statement of.................................... 155
+ Holtz-Eakin, Dr. Douglas, President, American Action Forum,
+ Washington, DC............................................. 36
+ Prepared statement of.................................... 38
+ Reich, Dr. Michael, PH.D., Professor, University of
+ California, Berkley, CA.................................... 169
+ Prepared statement of.................................... 172
+ Spriggs, Dr. William E., Professor, Department of Economics,
+ and Chief Economist, Howard University and AFL-CIO,
+ Washington, DC............................................. 9
+ Prepared statement of.................................... 12
+ Strain, Dr. Michael R., PH.D. Director of Economic Policy
+ Studies,, and Resident John G. Searle Scholar, American
+ Enterprise Institute, Washington, DC....................... 158
+ Prepared statement of.................................... 160
+ Wise, Mr. Terrence, Shift Manager, McDonald's, Independence,
+ MO......................................................... 31
+ Prepared statement of.................................... 33
+ Zipperer, Dr. Ben, Economist Policy Institute, Washington, DC 48
+ Prepared statement of.................................... 50
+
+Additional Submissions:
+ Adams, Hon. Alma S., a Representative in Congress from the
+ State of North Carolina:
+ Letter dated February 5, 2019 from the Economic Policy
+ Institute.............................................. 210
+ Letter dated February 6, 2019 from the Economic Policy
+ Institute.............................................. 211
+ Article: House Health Bill Would Lead to Less Coverage,
+ Higher Patient Costs................................... 263
+ Statement from Rowe-Finkbeiner, Kristin, Executive
+ Director and CEO of MomsRising.org..................... 265
+ Statement from the National Disability Rights Network
+ Opposes American Health Care Act....................... 267
+ Bonamici, Hon. Suzanne, a Representative in Congress from the
+ State of Oregon:
+ Letter dated February 5, 2019 from the Women's Coalition. 81
+ Courtney, Hon. Joe, a Representative in Congress from the
+ State of Connecticut:
+ Letter dated February 1, 2019 from OXFAM................. 72
+ Article: Hartford HealthCare to Raise Minimum Wage to $15
+ Across Health Network.................................. 269
+ Davis, Hon. Susan A., a Representative in Congress from the
+ State of California:
+ Letter dated February 6, 2019 from AAUW.................. 273
+ Mrs. Foxx:
+ Article: Seattle Small Businesswoman..................... 276
+ Letter dated February 5, 2019 from the National
+ Restaurant Association................................. 278
+ Letter dated February 5, 2019 from NFIB.................. 280
+ Replacing Employer-Sponsored Health Insurance with
+ Government-Financed Coverage........................... 282
+ Grijalva, Hon. Raul M., a Representative in Congress from the
+ State of Arizona:
+ Report: Minimum Wages and the Distribution of Family
+ Incomes in the United States........................... 60
+ Jayapal, Hon. Pramila, a Representative in Congress from the
+ State of Washington:
+ Prepared statement from Asian and Pacific Islander
+ American Health Forum (APIAHF)......................... 318
+ Lee, Hon. Susie, a Representative in Congress from the State
+ of Nevada:
+ Letter date January 28, 2019 from First Focus Campaign
+ for Children........................................... 114
+ Levin, Hon. Andy, a Representative in Congress from the State
+ of Michigan:
+ Letter date January 31, 2019 from AFL-CIO................ 102
+ Letter date January 15, 2019 from Disability Groups...... 223
+ Morelle, Hon. Joseph D., a Representative in Congress from
+ the State of New York:
+ Link: National Council on Disability..................... 229
+ Norcross, Hon. Donald, a Representative in Congress from the
+ State of New Jersey:
+ Letter dated February 6, 2019 for Communications Workers
+ of America............................................. 323
+ Chairman Scott:
+ Fact Sheet: National Employment Law Project.............. 132
+ Business For A Fair Minimum Wage......................... 250
+ Link: (Economic Policy Institute)........................ 249
+ Letter from The Episcopal Church......................... 324
+ Undersigned Organizations................................ 325
+ Tipped Wage Effects on Earnings and Employment in Full-
+ Service Restaurants.................................... 339
+ Faith-based Organizations Support The Raise the Wage Act
+ of 2019................................................ 365
+ Letter dated January 15, 2019, from the National
+ Disability Rights Network.............................. 367
+ Letter dated February 4, 2019 from the National Urban
+ League................................................. 369
+ Article: Leaked Documents Show Strong Business Support
+ for Raising the Minimum Wage........................... 371
+ Link: Center on Wage and Employment Dynamics (CWED)...... 373
+ Link: NBER Working Paper Series.......................... 373
+ Takano, Hon. Mark, a Representative in Congress from the
+ State of California:
+ Statement from the Center for American Progress.......... 88
+ Underwood, Hon. Lauren, a Representative in Congress from the
+ State of Illinois:
+ Letter dated February 7, 2019 from Advocate Aurora Health 245
+ Questions submitted for the record by:
+ Davis, Hon. Susan A., a Representative in Congress from
+ the State of California................................ 379
+ Fudge, Hon. Marcia L., a Representative in Congress from
+ the State of Ohio
+
+
+
+ Hayes, Hon. Jahana, a Representative in Congress from the
+ State of Connecticut................................... 379
+ Lee, Hon. Susie, a Representative in Congress from the
+ State of Nevada........................................ 383
+ Chairman Scott
+
+
+
+
+ Trahan, Hon. Lori, a Representative in Congress from the
+ State of Massachusetts................................. 375
+ Responses to questions submitted for the record:
+ .........................................................
+ Mr. Brodeur.............................................. 384
+ Ms. Eckhouse............................................. 386
+ Dr. Reich................................................ 387
+ Mr. Spriggs.............................................. 393
+ Dr. Zipperer............................................. 396
+
+
+ GRADUALLY RAISING THE MINIMUM WAGE
+ TO $15: GOOD FOR WORKERS, GOOD FOR
+ BUSINESSES, AND GOOD FOR THE ECONOMY
+
+ ----------
+
+
+ Thursday, February 7, 2019
+
+ House of Representatives,
+
+ Committee on Education and Labor,
+
+ Washington, DC.
+
+ ----------
+
+ The committee met, pursuant to notice, at 10:17 a.m., in
+room 2175, Rayburn House Office Building, Hon. Robert C.
+``Bobby'' Scott (chairman of the committee) presiding.
+ Present: Representatives Scott, Davis, Grijalva, Courtney,
+Fudge, Sablan, Bonamici, Takano, Adams, DeSaulnier, Norcross,
+Jayapal, Morelle, Wild, Harder, McBath, Schrier, Underwood,
+Hayes, Shalala, Levin, Omar, Trone, Stevens, Lee, Trahan,
+Castro, Foxx, Roe, Thompson, Walberg, Guthrie, Grothman,
+Stefanik, Allen, Smucker, Banks, Walker, Comer, Cline, Fulcher,
+Taylor, Watkins, Wright, Meuser, Timmons, and Johnson.
+ Staff present: Tylease Alli, Chief Clerk; Nekea Brown,
+Deputy Clerk; Ilana Brunner, General Counsel; David Dailey,
+Senior Counsel; Emma Eatman, Press Aide; Mishawn Freeman, Staff
+Assistant; Carrie Hughes, Director of Health and Human
+Services; Eli Hovland, Staff Assistant; Eunice Ikene, Labor
+Policy Advisor; Ariel Jona, Staff Assistant; Kimberly
+Knackstedt, Disability and Education Policy Advisor; Stephanie
+Lalle, Deputy Communications Director; Bertram Lee, Policy
+Counsel; Andre Lindsay, Staff Assistant; Richard Miller,
+Director of Labor Policy; Max Moore, Office Aide; Udochi
+Onwubiko, Labor Policy Counsel; Veronique Pluviose, Staff
+Director; Carolyn Ronis, Civil Rights Counsel; Dianna
+Ruskowsky, Finance and Personnel Advisor; Banyon Vassar, Deputy
+Director of Information Technology; Cyrus Artz, Minority
+Parliamentarian; Marty Boughton, Minority Press Secretary;
+Courtney Butcher, Minority Coalitions and Members Services
+Coordinator; Akash Chougule, Minority Professional Staff
+Member; Rob Green, Minority Director of Workforce Policy; John
+Martin, Minority Workforce Policy Counsel; Sarah Martin,
+Minority Professional Staff Member; Hannah Matesic, Minority
+Legislative Operations Manager; Kelley McNabb, Minority
+Communications Director; Alexis Murray, Minority Professional
+Staff Member; Brandon Renz, Minority Staff Director; Ben
+Ridder, Minority Legislative Assistant; Meredith Schellin,
+Minority Deputy Press Secretary and Digital Advisor; Heather
+Wadyka, Minority Staff Assistant; and Lauren Williams, Minority
+Professional Staff Member.
+ Chairman Scott. The Committee on Education and Labor will
+come to order. I want to welcome everyone today and note that a
+quorum is present. The committee meeting today is a legislative
+hearing on testimony on ``Gradually Raising the Minimum Wage to
+$15: Good for Workers, Good for Businesses, and Good for the
+Economy.''
+ Pursuant to committee rule 7(c), opening statements are
+limited to the chair and ranking member. This allows us more
+time to hear from our witnesses and provides members more time
+to ask questions. I recognize myself now for the purpose of
+making an opening statement.
+ Today we are here for a legislative hearing on the Raise
+the Wage Act, H.R. 582, a proposal to gradually raise the
+minimum wage to $15 an hour. I want to welcome and thank our
+distinguished witnesses for being with us today and for
+agreeing to testify.
+ Raising the minimum wage is one of the most hotly contested
+and intensely studied of all labor practices. All the time and
+research dedicated to this topic has produced a clear
+consensus: Gradually raising the minimum wage is good for
+workers, who experience a better standard of living; good for
+businesses, which benefit from having more customers and less
+turnover; and good for the economy, which is strongest when we
+lift working people out of poverty and build a thriving middle
+class.
+ Before we discuss where we are going, it is important to
+reflect on where we are today. After 10 years of no increase in
+the Federal minimum wage, minimum wage workers have suffered a
+17 percent pay cut due to inflation. Today's minimum wage
+workers making $7.25 an hour have less buying power than the
+minimum wage worker had in the 1960's.
+ The result is that the Federal minimum wage is no longer
+serving its purpose. According to a recent study, there is no
+place in America where a full-time worker who is paid the
+current Federal minimum wage can afford a modest two-bedroom
+apartment. One in nine American workers are paid wages that
+leave them in poverty even if they worked full time year-round.
+An individual earning the current minimum wage working full
+time earns only about $15,080 a year, less than the Federal
+poverty level for a family of two.
+ Do we have a chart?
+ This shows the poverty level and it shows the median wage
+and where the minimum wage has been.
+ My Republican colleagues are eager to warn the so-called
+consequences of raising the minimum wage to $15, but they
+ignore the consequences of inaction over the last 10 years.
+ If Congress fails to raise the minimum wage by mid-June it
+will be longest period of time without an increase since the
+Federal minimum wage was created 80 years ago. During that
+time, millions of workers working full time have been forced to
+live in poverty. The only radical thing about the bill is it is
+so long overdue.
+ By several standards, the proposal is a reasonable approach
+in restoring the value of the minimum wage. First, the erosion
+of the minimum wage after adjustments for inflation has meant
+that over the last five decades workers at the low end of the
+scale have drifted further away from the middle class.
+ As the chart on the screen indicates, in 1968--back to the
+same chart--the inflation-adjusted minimum wage used to be a
+little over 50 percent of the median hourly worker's wages for
+an individual working full time. Now, at $7.25 an hour, it is
+just a third of the median wage.
+ Had the 1968 minimum wage simply grown with the rate of
+increases in average wages, it would be $12 and 6 million fewer
+people would be living in poverty.
+ Second, the minimum wage has not kept up with increases in
+productivity. Between 1973 and 2017, workers' productivity grew
+by 77 percent while their wages grew by 12 percent. The
+widening gap in how much workers produce and how much they are
+paid is one major factor contributing to the historic income
+inequality we experience today.
+ If the minimum wage had kept up with worker productivity,
+it would be about $20 an hour today. Workers do not just
+deserve higher pay, they have earned that higher pay.
+ Finally, by the time the minimum wage reaches $15 an hour
+in 2024, an individual working full time with a family,
+including two children, will finally be able to earn enough to
+exceed the poverty threshold for a family of four.
+ We now have an opportunity--and a responsibility--to
+restore the value of the minimum wage, lifting millions of
+hardworking people out of poverty, and grow the economy in Main
+Street America.
+ The Raise the Wage Act does three things. First, it
+gradually increases the minimum wage in six steps to $15 by
+2024. Second, it ensures every worker covered by the law is
+paid at least the full minimum wage by creating one fair wage
+for all workers. Third, by tying future increases to median
+wages, the bill ensures that future increases in the Federal
+minimum wage are determined by economics and not politics.
+ A report published this week by the Economic Policy
+Institute details the sweeping benefits this bill will have for
+workers across the country. For example, if we pass the Raise
+the Wage Act, close to 40 million workers will receive a raise,
+including two-thirds of America's working poor and parents of
+over 14 million children.
+ This bill will stimulate the local economy across the
+country. Whereas the Republican tax bill gave the largest
+benefits to those who needed it the least, this puts money
+directly in the hands of those who are most likely to spend it
+in their communities. Over the 6-year phase-in period, the
+increase in the minimum wage should generate about $120 billion
+in additional wages, which will flow back into local
+businesses.
+ Every time we propose raising the minimum wage,
+unfortunately, opponents repeat a similar set of talking points
+that have been repeated and contradicted by evidence and
+research.
+ Today, I am confident that we will hear dire predictions
+about job losses that will result from gradually raising the
+minimum wage, but the overwhelming majority of research from
+both left-and right-leaning labor economists find few, if any,
+job loss when we gradually raise the minimum wage.
+ For example, a widely acclaimed study published by the
+National Bureau of Economic Research and coauthored by one of
+our witnesses examined 138 minimum wage increases between 1979
+and 2016. This study found that the overall number of low wage
+jobs remained essentially unchanged over 5 years following the
+increase, and there was no evidence of disemployment when
+considering higher levels of minimum wage.
+ The evidence clearly demonstrates that the Raise the Wage
+Act is a reasonable proposal and will lift millions of workers
+out of poverty.
+ We now hear calls for a regional minimum wage, but,
+unfortunately, the reality is, by 2024, $15 an hour is the
+least a person would need to afford the basic essentials
+anyplace in America. According to the MIT Living Wage
+Calculator, single working parents today, even in the poorest
+counties in the country, need at least $20 an hour to cover
+basic costs.
+ Workers should not be forced to work at poverty level wages
+regardless of where they live. A low-cost region should not be
+forced to continue to lag behind the rest of our economy.
+ H.R. 582 will begin to restore the original intent of the
+Fair Labor Standards Act, to ensure that all workers have a
+minimum living standard. And as President Roosevelt stated:
+``Our Nation, so richly endowed with natural resources and with
+a capable and industrious population, should be able to devise
+ways and means of ensuring to all of our working men and women
+a fair day's pay for a fair day's work.''
+ Today's hearing is an opportunity to examine facts and
+evidence. Raising the minimum wage to $15 an hour by 2024 in
+all regions is good for workers, good for businesses, and good
+for the economy. This hearing is a first step toward passing a
+bill that reflects our shared belief that no one working full
+time should be living in poverty.
+ And I thank you.
+ And does the Ranking Member want to speak now or in a
+minute? I can introduce the witnesses.
+ [The statement of Chairman Scott follows:]
+
+ Prepared Statement of Hon. Robert C. ``Bobby'' Scott, Chairman,
+ Committee on Education and Labor
+
+ Today, we are here for a legislative hearing on the Raise the Wage
+Act, H.R. 582, a proposal to gradually raise the minimum wage to $15. I
+want to welcome and thank our distinguished witnesses for agreeing to
+testify here today.
+ Raising the minimum wage is one of the most hotly debated and
+intensely studied labor policies. All the time and research dedicated
+to this topic has produced a clear consensus: Gradually raising the
+minimum wage is good for workers who experience a better standard of
+living; good for businesses which benefit from having more customers
+and less turnover, and good for the economy which is strongest when we
+lift working people out of poverty and build a thriving middle class.
+ But before we discuss where we are going, it's important to reflect
+on where we are today. After 10 years with no increase in the Federal
+minimum wage, minimum wage workers have suffered a 17 percent pay cut
+due to inflation. Today's minimum wage worker making $7.25 an hour has
+less buying power than a minimum wage worker had in the 1960's.
+ The result is that the Federal minimum wage is no longer serving
+its purpose. There is no place in America where a full-time worker who
+is paid the current Federal minimum wage can afford the basic
+essentials. One in nine American workers are paid wages that leave them
+in poverty, even if they worked full-time and year-round. An individual
+earning the current Federal minimum wage of $7.25 an hour and working
+full-time earns only $15,080 annually, less than the Federal poverty
+level for a family of two.
+ My Republican colleagues are eager to warn of the so-called
+consequences of gradually raising the minimum wage to $15, but they
+ignore the consequences of inaction over the last 10 years. If Congress
+fails to raise the Federal minimum wage by mid-June, it will be the
+longest period of time without an increase since the Federal minimum
+wage was created 80 years ago.
+ During that time, millions of people working full-time have been
+forced to live in poverty. The only thing radical about this bill is
+that it is so long overdue.
+ By several standards, this proposal is a reasonable approach to
+restoring the value of the minimum wage.
+ First, the erosion of the value of the minimum wage after
+adjustments for inflation has meant that, over the last five decades,
+workers at the low-end of the wage scale have drifted farther away from
+the middle class.
+ As the chart on the screen illustrates, in 1968, the inflation-
+adjusted minimum wage was a little over 50 percent of the median hourly
+workers' wages for an individual working full time. Today, at $7.25 per
+hour it is just a third of the median hourly wage of $22.36. Had the
+1968 minimum wage simply grown with the rate of increases in average
+wages, it would be nearly $12 today and 6 million fewer Americans would
+be living in poverty.
+ Second, the minimum wage has not kept up with increases in
+productivity. Between 1973 to 2017, workers' productivity grew by 77
+percent, while their hourly wages grew by just 12 percent. The widening
+gap between how much workers produce and how much they are paid is one
+major factor contributing to the historic income inequality we
+experience today. If the minimum wage had kept up with worker
+productivity, it would be about $20 an hour today. Workers do not just
+deserve higher pay, they have earned higher pay.
+ Finally, by the time the minimum wage reaches $15 in 2024, an
+individual working full time with a family and two children will
+finally be able to earn enough to exceed the poverty threshold for a
+family of four.
+ We now have an opportunity and a responsibility to restore the
+value of the minimum wage, lift millions of hardworking people out of
+poverty and grow the economy in Main Street America.
+ The Raise the Wage Act achieve three key goals:
+ First, it gradually increases the minimum wage in six steps to $15
+by 2024.
+ Second, it ensures that every worker covered under the law is paid
+at least the full Federal minimum wage by creating one fair wage for
+all workers.
+ And third, by tying future increases to median wages, this bill
+ensures that future increases to the Federal minimum wage are
+determined by economics, and not politics.
+ A report published this week by the Economic Policy Institute
+details the sweeping benefits this bill would have for workers across
+the country.
+ If we pass the Raise the Age Act, close to 40 million workers would
+receive a raise. This includes:
+ * Twenty-three million women,
+ * Thirty-eight percent of Black workers and 33 percent of Hispanic
+workers,
+ * Two-thirds of America's working poor, and
+ * The parents of over 14 million children.
+ This bill will also stimulate local economies across the country.
+Whereas the Republican tax bill gave the largest benefits to those who
+needed it the least, this bill puts money directly into the hands of
+those who are most likely to spend it in their communities. Over the 6-
+year phase in period, the increase in the minimum wage would generate
+$120 billion in additional wages, which will flow back into local
+businesses.
+ Every time we propose raising the minimum wage, opponents repeat a
+familiar set of taking points that have been repeatedly contradicted by
+evidence and research.
+ Today, I am confident we will hear dire projections about job
+losses that would result from gradually raising the minimum. But the
+overwhelming majority of research from both left-and right-leaning
+labor economists find few, if any jobs are lost when gradually raising
+the minimum wage. For example, a widely acclaimed study published by
+the National Bureau of Economic Research, and co-authored by one of our
+witnesses, examined 138 minimum wage increases since 1979 and 2016.
+This study found that the overall number of low-wage jobs remained
+essentially unchanged over 5 years following the increase, and there
+was no evidence of disemployment when considering higher levels of
+minimum wages.
+ The evidence clearly demonstrates the Raise the Wage Act is a
+reasonable proposal that would lift millions of workers out of poverty.
+ We will also hear calls today for a regional minimum wage.
+ But unfortunately, the reality is that by 2024 $15 an hour is the
+least a person would need to afford the basic essentials in anyplace in
+the country. According to the MIT living wage calculator, single
+working parents today, even in the poorest counties in the country,
+need at least $20 an hour to cover basic costs. Workers should not be
+forced to work for poverty-level wages, regardless of where they live.
+And lower-cost regions should not be forced to continue to lag behind
+the rest of our economy.''
+ H.R. 582 will begin to restore the original intent of the Fair
+Labor Standards Act: to ensure all workers have a minimum living
+standard. As President Roosevelt Stated, ``Our nation so richly endowed
+with natural resources and with a capable and industrious population
+should be able to devise ways and means of insuring to all our working
+men and women a fair day's pay for a fair day's work''
+ Today's hearing is an opportunity to examine the facts and
+evidence. Raising the minimum wage to $15 by 2024 in all regions is
+good for workers, good for businesses, and good for the economy. This
+hearing is the first step toward passing a bill that reflects our
+shared belief that no one working full-time should be living in
+poverty.
+ Thank you and I now yield to the Ranking Member, Dr. Foxx.
+ ______
+
+ Ms. Foxx. That would be wonderful, Mr. Chairman. Thank you.
+ Chairman Scott. Thank you.
+ I will recognize the Ranking Member in just a second, but
+first I will introduce our witnesses for the first panel.
+ The Honorable Dr. William Spriggs serves as chief economist
+for the AFL-CIO and is a professor in and formerly chair of the
+Department of Economics at Howard University. Formerly, he
+served as Assistant Secretary for the Office of Policy at the
+U.S. Department of Labor.
+ Mr. Terrence Wise is a father of three who works for
+McDonald's. He has been fighting for $15 and a union for over 3
+years and has become a voice for the movement, an inspiration
+for other low-wage workers. Mr. Wise has worked in the fast
+food industry since he was 16 years old and he hails from
+Kansas City, Missouri.
+ Mr. Douglas Holtz-Eakin is the president of American Action
+Forum. From 2003 to 2005, he was the sixth Director of the
+Congressional Budget Office. He has conducted extensive
+research in areas of applied economic policy, econometric
+methods, and entrepreneurship.
+ Dr. Ben Zipperer is an economist with the nonpartisan
+Economic Policy Institute. His areas of expertise include the
+minimum wage, inequality, and low-wage labor markets. He has
+published research in widely respected publications, including
+the Industrial and Labor Relations Review and the National
+Bureau of Economic Research.
+ I appreciate all of the witnesses for being here and look
+forward to your testimony. Let me remind the witnesses that we
+have read your testimony and they will appear in full in the
+record.
+ Pursuant to committee rule 7(d) and the committee practice,
+each of you is asked to limit your oral presentation to 5
+minutes. Let me remind the witnesses that pursuant to Title 18
+of U.S. Code Section 1001, it is illegal to knowingly and
+willfully falsify any Statement, representation, writing,
+document, or material fact presented to Congress or otherwise
+conceal or cover up a material fact.
+ Before you begin your testimony, please remember to press
+the button on your microphone in front of you so that the light
+will turn on and the members can hear you. As you speak, the
+light in front of you will turn green. After 4 minutes, it will
+turn yellow, indicating that you have 1 minute remaining. When
+it turns red, I would ask you to please wrap up your testimony.
+ We will let the entire panel make presentations before we
+move to member questions. When answering a question, please
+remember, once again, to turn your microphone on.
+ And before the witnesses, do you want to speak now?
+ Ms. Foxx. Yes.
+ Chairman Scott. Before the witnesses speak, I will
+recognize the distinguished Ranking Member, Dr. Foxx.
+ Ms. Foxx. Thank you, Mr. Chairman. And I apologize for
+being a little late. Many of us went to the National Prayer
+Breakfast this morning, and it went a little longer than usual.
+So we were a little slow in getting back. And I apologize. I
+promise you, I would not be late for a less worthy cause.
+ Over the last several years, the far left has begun to call
+for extreme social policies that were until recently considered
+too radical for the mainstream. But as the far left has become
+more frenetic, they have begun to demand headline-grabbing but
+unworkable policies, like free college, universal health care,
+and a more than doubling of the Federal minimum wage from $7.25
+an hour to $15 an hour.
+ Liberal activists are trying to sell a radical minimum wage
+hike as a benefit to working-class Americans. They claim it
+will redistribute wealth and provide poor Americans with a,
+quote, ``living wage,'' end quote. This is an empty promise,
+the likes of which we have not heard since the famous health
+care sales job of 2009: If you like the plan you have, you can
+keep it.
+ Raising the Federal minimum wage to $15 will not help
+anyone make ends meet. It will redistribute poverty, eliminate
+jobs, and deeply harm American workers, businesses, and the
+U.S. economy at large.
+ When the comparatively less extreme proposal of a Federal
+minimum wage hike to $10.10 was on the table in 2014, the
+nonpartisan Congressional Budget Office estimated that the
+difference, $2.85, would cost 500,000 jobs and could have
+destroyed up to a million jobs.
+ The CBO has yet to determine what the $7.75 hike under
+discussion today would do, but logic follows that the
+consequences for workers and small businesses would be even
+more severe.
+ Economists, including those who have graciously given us so
+much of their time today, can provide the numbers and
+projections and graphs we all need to see to have an informed
+discussion.
+ But we must keep in mind that we are talking about people.
+We are talking about the very people that Members of Congress
+on both sides of the aisle claim they want to serve. Workers in
+entry level jobs, workers without a GED or skill certificate,
+and tipped employees would bear the brunt of job losses caused
+by this mandate.
+ A recent study by the National Federation of Independent
+Business found that raising the minimum wage to $15 would
+destroy 1.6 million jobs and 615,000 able-bodied individuals
+would be pushed out of the work force by the year 2029. This is
+not the future Americans want, and they deserve to know the
+truth behind the talking point.
+ More than half of the private sector work force goes to
+work each day at a small business, and these are the workplaces
+that would struggle the most under this mandate. Many job
+creators would be forced to reduce workers' hours, let
+employees go, or close their doors for good. It would also lead
+to accelerated workplace automation, something many Democrats
+oppose.
+ The NFIB study also found that raising the minimum wage to
+$15 an hour would result in a $2 trillion reduction in real
+economic output, a $980 billion reduction in real GDP, and a
+$103 billion reduction in personal disposable income.
+ The title of this hearing aims to focus this discussion on
+the impact this mandate would have on workers, businesses, and
+the economy. It conveniently leaves out students--and with good
+reason. Eighty-three percent of economists agree that raising
+the minimum wage to $15 an hour would have a negative impact on
+youth employment.
+ According to the Bureau of Labor Statistics, 2.3 percent of
+hourly workers are paid at or below minimum wage--2.3 percent
+of hourly workers are paid at or below minimum wage. Almost
+half of those workers are under the age of 25. These are
+individuals at the start of their careers or filling part-time
+or summer jobs.
+ With the Democrats' proposal, we run the risk of seeing
+these types of jobs eliminated altogether. That means even
+fewer young Americans will leave educational institutions or
+join the work force with minimal work experience.
+ Not every kid is lucky enough to have a parent who pays for
+his or her cell phone and other expenses. We need to give them
+a chance to build their skills, build a life, and hope that
+someday very soon they run for Congress.
+ Since January 2017, the number of job opportunities
+available across the country has swelled from 5.6 million to
+more than 7 million. And thanks to the Republican Tax Cuts and
+Jobs Act, wages are up and experiencing sustainable, organic
+growth.
+ We want that strong economic growth to continue. Mandating
+a $15 minimum wage would have serious negative consequences for
+students, workers, and small businesses.
+ I yield back, Mr. Chairman, and thank you again for your
+patience.
+ [The statement of Mrs. Foxx follows:]
+
+Prepared Statement of Hon. Virginia Foxx, Ranking Member, Committee on
+ Education and Labor
+
+ Over the last several years, the far-left has begun to call for
+extreme social policies that were, until recently, considered too
+radical for the mainstream. But as the far-left has become more
+frenetic, they have begun to demand headline-grabbing but unworkable
+policies like free college, universal health care, and a more than
+doubling of the Federal minimum wage from $7.25 an hour to $15 an hour.
+ Liberal activists are trying to sell a radical minimum wage hike as
+a benefit to working class Americans. They claim that it will
+redistribute wealth and provide poor Americans with a ``living wage.''
+This is an empty promise the likes of which we have not heard since the
+famous healthcare sales job of 2009: ``if you like the plan you have,
+you can keep it.'' Raising the Federal minimum wage to $15 will not
+help anyone make ends meet. It will redistribute poverty, eliminate
+jobs, and deeply harm American workers, businesses, and the U.S.
+economy at large.
+ When the comparatively less-extreme proposal of a Federal minimum
+wage hike to $10.10 was on the table in 2014, the nonpartisan
+Congressional Budget Office estimated that the difference--$2.85--would
+cost 500,000 jobs and could have destroyed up to 1 million jobs. The
+CBO has yet to determine what the $7.75 hike under discussion today
+would do, but logic follows that the consequences for workers and small
+businesses would be even more severe.
+ Economists, including those who have graciously given us so much of
+their time today, can provide the numbers and projections and graphs we
+all need to see to have an informed discussion. But we must keep in
+mind that we're talking about people. We're talking about the very
+people that Members of Congress on both sides of the aisle claim they
+want to serve. Workers in entry-level jobs, workers without a GED or
+skills certificate, and tipped employees would bear the brunt of job
+losses caused by this mandate.
+ A recent study by the National Federation of Independent Business
+found that raising the minimum wage to $15 would destroy 1.6 million
+jobs, and 615,000 able-bodied individuals would be pushed out of the
+work force by the year 2029. This is not the future Americans want, and
+they deserve to know the truth behind the talking point.
+ More than half of the private sector work force goes to work each
+day at a small business, and these are the workplaces that would
+struggle the most under this mandate. Many job creators would be forced
+to reduce workers' hours, let employees go, or close their doors for
+good. It would also lead to accelerated workplace automation, something
+that many Democrats oppose.
+ The NFIB study also found that raising the minimum wage to $15 an
+hour would result in a $2 trillion reduction in real economic output, a
+$980 billion reduction in real GDP, and a $103 billion reduction in
+personal disposable income.
+ The title of this hearing aims to focus this discussion on the
+impact this mandate would have on workers, businesses, and the economy.
+It conveniently leaves out students, and with good reason. Eighty-three
+percent of economists agree that raising the minimum wage to $15 an
+hour would have a negative impact on youth employment.
+ According to the Bureau of Labor Statistics, 2.3 percent of hourly
+workers are paid at or below minimum wage. Almost half of those workers
+are under the age of 25. These are individuals at the start of their
+careers or filling part-time or summer jobs. With the Democrats'
+proposal, we run the risk of seeing these types of jobs eliminated
+altogether. That means even fewer young Americans will leave
+educational institutions or join the work force with minimal work
+experience.
+ Not every kid is lucky enough to have a parent who pays for his or
+her cell phone and other expenses. We need to give them the chance to
+build their skills, build a life, and hope that someday very soon, they
+run for Congress.
+ Since January 2017, the number of job opportunities available
+across the country has swelled from 5.6 million to more than 7 million.
+And thanks to the Republican Tax Cuts and Jobs Act, wages are up and
+experiencing sustainable, organic growth.
+ We want that strong economic growth to continue. Mandating a $15
+minimum wage would have serious negative consequences for students,
+workers, and small businesses.
+ ______
+
+ Chairman Scott. Thank you very much.
+ We will now hear from Dr. Spriggs.
+
+ STATEMENT OF THE HONORABLE WILLIAM E. SPRIGGS, PROFESSOR,
+DEPARTMENT OF ECONOMICS, AND CHIEF ECONOMIST, HOWARD UNIVERSITY
+ AND AFL-CIO, WASHINGTON, DC
+
+
+ Dr. Spriggs. Thank you, Chair and Ranking Member Foxx and
+members of the committee, for the opportunity to testify before
+the committee today on gradually raising the Federal minimum
+wage.
+ I am pleased to offer this testimony on behalf of the AFL-
+CIO, America's house of labor, representing the working people
+of the United States, and based on my expertise as a professor
+in Howard University's Department of Economics and as a former
+Assistant Secretary for Policy in the Department of Labor.
+ I want to start by stating clearly that the AFL-CIO
+endorses this legislation.
+ The response of American policymakers from the Great
+Depression was more than stopping the economic slide. The
+policy concern was that the Great Depression launched a
+downward spiral in wages and prices, a deflation that stunted
+economic recovery.
+ Many of the policies that were put in place back then
+assured the Great Recession would not repeat the Great
+Depression. Unemployment insurance and Social Security proved
+essential stopgaps to the slide in household incomes in 2008
+and 2009.
+ Today, despite record job growth over a record period, the
+response of wages has been stingy. Productivity continues to
+grow, but wages have struggled to stay ahead of very modest
+inflation. The result is labor's share of income continues to
+slide. America needs a raise.
+ What Congress and President Roosevelt did in the face of
+the Great Depression was to reforge and perfect our Union, just
+as Abraham Lincoln and the Republican Party perfected the
+American Union by ending slavery. A New Deal was struck to
+ensure that a government of the people could be for the people.
+Going forward, a new American value would be enshrined: Work
+would have dignity and working hard would pay.
+ It is a little over 9 years since Congress has raised the
+minimum wage, as the chair mentioned. It is time for a raise.
+ Since 1938, Congress expanded coverage and improved
+standards of the original bill. It created a healthy and
+expanding economy. Those original components in the 1938 bill
+had exemptions that, however, were not benign. They have had
+long-lasting effects in creating substantial racial and gender
+inequalities.
+ The reason for those initial exclusions of agricultural
+workers and domestics was so specific to the South in the
+1930's and 1940's because 57 percent of America's farm
+population lived in the South and 51 percent of its
+agricultural workers were African American.
+ The reason the exclusion was so devastating to African
+Americans is that from 1930 to 1940, 40 percent of Southern
+Blacks were in agriculture. Because many Latino workers at the
+time in the Southwest were agricultural workers, this also hurt
+Latino workers.
+ This same Southern exceptionalism argument was raised in
+the fight for the Fair Labor Standards Act, except in the guise
+of a regional wage variation.
+ The Fair Labor Standards Act passed in 1938 under President
+Roosevelt established a minimum wage of $0.25 an hour effective
+October 24, 1938. The act called for minimum wage to increase
+to $0.40 an hour October 1945. Raises since then have required
+amendments to the act.
+ Early votes on raising the minimum wage showed the national
+consensus on raising the wage and the importance of maintaining
+a decent floor of wages. That first increase, the biggest
+increase in the raise of the minimum wage of 87 percent, was
+approved by 90 percent--90 percent--of House Republicans.
+ To fix the gap that was caused by excluding agricultural
+workers and domestic workers, in 1966 House Republicans voted
+60 percent to close that gap and raise the wage. That was the
+biggest raise when you look at the workers who have been
+excluded, agricultural workers who predominantly lived in the
+rural South.
+ Congress' purpose was to prevent competition based on
+lowering wage cost. It was to ensure that we would do this
+based on competition, on rising productivity.
+ You have a chance here to live up to the legacy of
+Congresswoman Mary Norton, the first Democrat woman in Congress
+who chaired this committee, the first woman to chair this
+committee, who forged ahead on this legislation, to make sure
+that all workers would rise, there would not be a regional
+differentiation.
+ You have the chance to live up to the legacy of Adam
+Clayton Powell, the first African American to chair this
+committee, to extend the coverage to agricultural and domestic
+workers.
+ You have the opportunity to live up to the legacy of
+Congresswoman Shirley Chisholm, the first African American
+woman to serve in Congress, who made sure that domestic workers
+would see coverage.
+ You have a chance to return the minimum wage to a decent
+wage that enshrines American values that work will pay, that
+all workers will have dignity. This act gives you that
+opportunity to fulfill that legacy.
+ [The statement of Dr. Spriggs follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ Mr. Wise.
+
+ STATEMENT OF MR. TERRENCE WISE, SHIFT MANAGER, MCDONALD'S,
+ INDEPENDENCE, MO
+
+ Mr. Wise. Thank you, Chairman Scott and Ranking Member Foxx
+and members of the committee. Thank you for the opportunity to
+testify today.
+ My name is Terrence Wise, and I am a 39-year-old second-
+generation fast food worker from Kansas City, Missouri, and I
+am honored to speak with you today about the Raise the Wage
+Act.
+ I began fighting for $15 an hour and a union 6 years ago,
+because I knew just asking my boss for a raise and benefits
+wouldn't do. I felt the struggle of raising a family on low
+wages my whole life.
+ It began in South Carolina. I grew up in government housing
+with my two brothers and sister. My mother worked full time at
+Hardee's for 30 years, and my dad served as a cook in the
+military. My mom would wake me up at 4 a.m. early before she
+left for Hardee's, and it was my job to get my siblings up and
+ready to go to school. It was also my job to be home when the
+mailman arrived to sign for the food stamps.
+ Even with two full-time incomes and food stamps, my family
+still had to skip meals. One winter, I didn't even have a coat
+until my guidance counselor at school gave me one from the lost
+and found. Hardworking people with two full-time incomes
+shouldn't live like this in the richest Nation on earth.
+ I was a great student, and by the eighth grade I was in all
+advanced placement classes. My teachers were saying things
+like, ``Terrence, you are going to be great. You are going to
+do good things.'' I wanted to be a Gamecock at the University
+of South Carolina. I was going to be a writer. But I went to
+work at the age of 16 to try to help my family survive.
+ One day I came home from school, there were no lights, no
+food in the fridge. So I got my first job at Taco Bell, making
+$4.25 an hour, but I knew my family needed the money
+desperately. My first paycheck was 150 bucks, and it all went
+on the light bill. One job wasn't enough, so I got a second job
+at Wendy's.
+ I tried to balance both work and school. I had all A's in
+my classes. But I started falling asleep in classes. And now
+teachers were asking me, ``Terrence, what is wrong?'' I told
+them I was working two jobs, had to survive. I didn't need AP
+Calculus to run the numbers at home. It wasn't enough to
+survive. It wasn't even enough for basic necessities.
+ I had left school and my dream of college, and at 17 I
+dropped out and became a full-time worker, and I have been
+working in fast food ever since.
+ Now I have a family of my own. I have three daughters, ages
+17, 15, and 13, and my fiancee is a home healthcare provider.
+Neither one of us make enough money to make ends meet, and I
+have worked two jobs most of my life. I would leave for Burger
+King at 2 o'clock, then leave from there and arrive at
+McDonald's and work the overnight shift, 10 p.m. to 6 a.m. I
+couldn't get my jobs to line up with my off days, so sometimes
+I would work weeks without a day off.
+ My family has been homeless, despite my two incomes and my
+fiancee's. We have endured cold winters in Kansas City,
+homeless in our purple minivan. I would see my daughters in the
+back tossing and turning.
+ Try waking up in the morning and getting ready for school
+and work in the parking lot. That is a memory I can never take
+away from my children and something a parent should never have
+to go through. You should not have multiple jobs in the United
+States and nowhere to sleep.
+ I work for McDonald's, the second largest employer in
+America, and I still rely on food stamps and Medicaid. Like
+other working people in America fighting for $15 and a union, I
+want to stand on my own. I want to provide my girls with three
+meals a day and give them the opportunities I didn't have.
+ This movement has changed our entire country. Many people
+didn't believe $15 an hour was possible, but it has become a
+reality for 22 million workers across the country.
+ Seventy-five percent of voters in Kansas City voted for a
+$15 minimum wage in 2017. Workers won that victory by taking
+big, bold action, like going on strike. We even slept on the
+steps of city hall for a week in our Fast for $15.
+ It was a huge victory for us until the State legislature
+preempted the minimum wage, returning it to $7.65. Missouri
+voters increased the minimum wage in 2018, but we are still not
+achieving $15 an hour, the minimum we need to support our
+families. That is why we need Congress to take action to raise
+the Federal minimum wage.
+ I often imagine what $15 an hour would mean for me and my
+family. It would mean I could keep food on the table, we
+wouldn't have to worry about doing homework in the dark, and I
+could get the girls school supplies whenever they needed them.
+ But what would $15 an hour really mean? It means that my
+daughters could meet their grandmother for the first time. She
+lives in South Carolina and we just have never been able to
+afford to travel to meet her.
+ Low-wage workers like me will continue to organize and
+fight for economic justice. My coworkers and I have lifted our
+voices from the steps of city hall in Kansas City, at the White
+House, and now here today on Capitol Hill.
+ Everyone who works in this country deserves access to the
+promise that America made to each and every one of us--life,
+liberty, and the pursuit of happiness--and $15 an hour brings
+us closer to living out our values as a Nation. The Raise the
+Wage Act will do just that, and I urge members of this
+committee to raise the wage, you know. Act quickly to pass this
+bill.
+ Thank you, and I look forward to answering any questions.
+ [The statement of Mr. Wise follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ Dr. Holtz-Eakin, good to see you.
+
+ STATEMENT OF DR. DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN
+ ACTION FORUM, WASHINGTON, DC
+
+ Mr. Holtz-Eakin. Good to see you, Chairman Scott, Ranking
+Member Foxx, members of the Committee. It is a privilege to be
+here today. I am going to make three very simple points and
+then I look forward to your questions.
+ The first point is that the labor market is working very
+well right now, with increased work, especially for those with
+low skills and marginal attachment to the labor force, and
+rising real wages.
+ The second is that increasing the minimum wage to $15 would
+damage these employment prospects, and the preponderance of the
+research evidence comes down on that side.
+ Then the third point is that, for those who deservedly
+would like to help those in poverty while working, the minimum
+wage is very poorly targeted to solve that problem.
+ Let me go through those.
+ The U.S. labor market is working very well right now. There
+were 304,000 jobs created in January. There have been over 13
+million jobs created in the past 5 years. The unemployment rate
+is down to 4 percent and has been even lower recently. At the
+moment, there are more job openings, 6.9 million, than there
+are unemployed people, 6 million, and that has been true since
+March 2018.
+ The U.S. labor market has been able to create that many
+jobs by the miracle of pulling into the labor market and into
+productive work people who had not been participating. The
+overall labor force participation rate has jumped from its low
+of 62.4 percent to 63.2. For prime age workers, it has
+rebounded by two full percentage points and is up to 82.6
+percent.
+ I think most importantly, the number of discouraged
+workers, those who have just given up looking, has dropped in
+half over the past 5 years, from nearly 900,000 to 420,000.
+ At the same time, we are seeing real wages grow. There is a
+flood of people into the labor market. Real wages are now
+growing at 3 percent a year. That is a very successful story
+and one that I think that members of the committee should be
+proud of.
+ Going forward, if we are to raise the minimum wage to $15,
+the preponderance of the research evidence that I go through in
+my written testimony, and I will be happy to elaborate in the
+Q&A, it would indicate that it would hurt the employment
+prospects, especially of those people you care about the most,
+those with little skills, little experience, least attachment
+to the labor market. This is often not taking the form of the
+caricature of throwing someone out of their job, but simply
+denying the employment growth that would give people an
+opportunity in the future.
+ I think it is important to note that the nonpartisan
+Congressional Budget Office reaches the conclusion that raising
+the minimum wage hurts employment prospects. It is their job to
+present to you, as the Members of Congress, the consensus of
+the research literature, and that is exactly the consensus that
+they find.
+ I think it is important as well to note that more than
+doubling the minimum wage is an enormous change, and previous
+research will probably give us little guidance as to the
+magnitude of the impact. That is outside of the range of
+historical experience. Its damage is likely to be much, much
+greater than previous studies have shown.
+ And the combination of the large increase and then indexing
+the minimum wage to the median wage sends a strong signal to
+employers that these jobs, the ones for those with low skills,
+marginal attachment to the labor force, little education, are
+jobs that they are going to be unable to have going forward.
+They are going to replace them with automation and other means.
+So, the employment prospects are probably even more damaging
+than previous indications.
+ The last point is that, if you care about those in poverty
+who are working, as you should, the minimum wage is a poor
+instrument to address that problem. Eighty percent of minimum
+wage workers are not in poverty, and one-third of the young who
+earn the minimum wage are living with their parents and are in
+households that make more than $100,000.
+ Knowing the wage a person makes does not tell you about the
+characteristics of their household, and as a result, only 6.7
+percent of the benefits of a $15 minimum wage would go to those
+who are in poverty. This is not a good instrument for solving
+that problem.
+ And the key economic fact that it is important for the
+Committee to remember when they discuss this is that passing a
+law to make the minimum wage $15 doesn't mean there is any more
+money. You have to go get that money from somebody else.
+ So, to get the money for someone who has a job, you are
+going to have to deny someone else a job and effectively take
+money from people who are looking for work and give it to
+people who have work. That seems like an incredibly perverse
+redistribution, one I would encourage the Committee not to
+take.
+ Thank you.
+ [The statement of Mr. Holtz-Eakin follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ Dr. Zipperer.
+
+ STATEMENT OF DR. BEN ZIPPERER, ECONOMIST, ECONOMIC POLICY
+ INSTITUTE, WASHINGTON, DC
+
+ Mr. Zipperer. Chairman Scott, Ranking Member Foxx, and
+members of the committee, thank you for the opportunity to
+testify on the importance and necessity of increasing the
+minimum wage to $15 per hour.
+ Raising the national minimum wage is well overdue. Workers
+paid today's Federal minimum wage are, after adjusting for
+inflation, paid 29 percent less than their counterparts 50
+years ago. This is despite the fact that, as the figure on the
+monitor shows, the Nation's productivity has doubled over that
+time period. Had the minimum wage kept pace with labor
+productivity over that time period, the minimum wage today
+would be worth more than $20 per hour instead of the $7.25 it
+is today.
+ Gradually increasing the national minimum wage to $15 by
+2024, as proposed by the Raise the Wage Act of 2019, is an
+important corrective to our failure to raise the minimum wage.
+The proposal automatically indexes future minimum wage
+increases to median wage growth, so that low-wage workers will
+share a common trajectory of wage growth with a broader labor
+market.
+ Finally, gradually phasing out the separate lower wage for
+tipped workers will help to eliminate disparities in labor
+protections between tipped workers and the rest of the labor
+force.
+ My colleague David Cooper at the Economic Policy Institute
+has estimated that raising the minimum wage to $15 by 2024
+would lift the pay of about 40 million workers. Affected
+workers who work year-round would receive a raise on the order
+of about $3,000 per year. This is enough to make a tremendous
+difference in the life of a preschool teacher, a bank teller, a
+fast food worker, more than half of whom earn less than $15 per
+hour today.
+ Minimum wages are one of the most well-studied topics in
+economics. Although there sometimes appears to be much
+controversy over the size of the employment effects of the
+minimum wage, the weight of recent evidence shows that minimum
+wages have worked exactly as intended, by raising wages without
+substantial negative consequences on employment.
+ In a review of all research published in the 15 years since
+2001, the economists Paul Wolfson and Dale Belman found that
+the average estimated employment effect was very small.
+ In addition, in research I coauthored with Sylvia
+Allegretto, Arindrajit Dube, and Michael Reich, we found that
+studies using the most high-quality, credible research designs
+also found small to no employment effects.
+ These findings, taken together, suggest that both the
+average study, as well as the best research, show that there
+has been little downside to raising minimum wages.
+ Current research also suggests that even the highest
+minimum wages our country has experienced have helped raise
+wages without reductions in employment. In new research on 138
+State-level minimum wage increases I coauthored with Doruk
+Cengiz, Arindrajit Dube, and Attila Lindner, we found that the
+highest minimum wages we studied did not adversely affect
+employment.
+ Important new scholarship by Ellora Derenoncourt and Claire
+Montialoux also demonstrates that the highest national minimum
+wages the United States has experienced significantly raised
+wages without reducing the employment of low-wage workers.
+ Because the evidence shows that there has been little
+downside to both minimum wages in general and also even to
+minimum wages at their highest points in U.S. history, larger
+increases in the minimum wage are economically justified.
+ Larger increases are also necessary because workers in
+every region of the country will soon need at least $15 per
+hour in wage income in order to pay for basic necessities. My
+colleagues at the EPI have developed a concept of family
+budgets to delineate how much a family will need to earn every
+year in order to pay for basic necessities.
+ By 2024, in all areas across the United States, even a
+single adult with no children will need to be earning more than
+$15 per hour in order to achieve a modest but adequate standard
+of living, according to their family budget.
+ As a result, anything less than a $15 minimum wage by 2024
+will not adequately carry out this key purpose of the Fair
+Labor Standards Act, which is to, and I quote, ``to protect the
+Nation from the evils and dangers resulting from wages too low
+to buy the bare necessities of life.''
+ Minimum wages have long been an effective tool for
+maintaining adequate pay, but the failure to adequately raise
+the Federal minimum wage has denied American workers
+significant improvements in their standard of living.
+ By raising the Federal minimum wage to $15 by 2024, we will
+finally deliver a much-needed boost in wage income and increase
+the value of the minimum wage to a level that ensures the
+lowest wages we pay workers are not poverty wages.
+ [The statement of Mr. Zipperer follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ We will now recognize members for questions, and they are
+subject to the 5-minute rule, beginning with the gentleman from
+Arizona, Mr. Grijalva.
+ Mr. Grijalva. Thank you very much, Mr. Chairman.
+ And if there is no objection, Mr. Chairman, I would like to
+enter this report into the committee record. And that is from
+the Washington Center for Equitable Growth, entitled ``Minimum
+Wages and the Distribution of Family Incomes in the United
+States.'' In essence, this report States that if the minimum
+wage had been $12 in 2016, over 6 million fewer people would be
+living in poverty today.
+ If there is no objection, Mr. Chairman?
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Mr. Grijalva. Thank you, sir.
+ In strong support of the $15 minimum wage. And I do want to
+thank Mr. Wise and Dr. Spriggs for your testimony. It was
+excellent and kind of left me without too many questions, to be
+honest with you.
+ And with the chair's indulgence, I think that it is way
+past time that we move forward to raise the minimum wage. And
+as we do that, Mr. Chairman, I think it is important that the
+members understand that it is important to tackle other
+inequities that are in our basic minimum wage protections.
+ It is long past time for Congress to end discrimination
+against agricultural workers in the Fair Labor Standards Act,
+period. So today, I introduced the Fairness for Farm Workers
+Act; and in doing so, simultaneously, Senator Harris has
+introduced the identical piece of legislation in the Senate.
+And this act, basically, the Fairness for Farm Workers Act
+would extend overtime protections to farm workers and eliminate
+some remaining exclusions for farm workers from minimum wage
+protections.
+ These protections were first enacted, as Dr. Spriggs so
+eloquently gave us the history of it, and surmised at the end,
+I believe very accurately, that those exceptions were made out
+of political expediency and racism, and that needs to be
+addressed.
+ That inequity that exists, Mr. Chairman, as you well know,
+it is a discrimination issue. We have to end this
+discrimination against farm workers. The treatment of farm
+workers in this country has been and continues to be unjust,
+unreasonable, and unsustainable.
+ My legislation, the Fairness for Farm Workers, would
+eliminate the minimum wage and overtime discrimination farm
+workers face in the act.
+ So I know I will be working with you on that. Your
+leadership on this is not only welcome but, as you have offered
+your support, thank you very much, Mr. Chairman. I look forward
+to working this out. And I think it is important that we deal
+with raising the minimum wage, but also have an opportunity to
+reform the whole package as we move along.
+ With that, Mr. Chairman, like I said to the two witnesses,
+you left me with no questions, and I yield back.
+ Chairman Scott. Thank you.
+ The gentlelady from New York, Ms. Stefanik.
+ Ms. Stefanik. Thank you, Mr. Chairman.
+ And thank you to our witnesses for being here today.
+ We agree on this committee of the importance of economic
+opportunity for American workers and American families. We
+agree that we need to focus on real wage growth. We agree on
+the pathway out of poverty. What we don't agree with is how to
+get there. We have different solutions about how to achieve
+those goals.
+ We are living in a dynamic, growing economy today, and we
+must start talking about the future of work. What do I mean by
+that? As we have seen over the last decade, the composition of
+our work force is rapidly changing, as is the type of work
+Americans, especially young Americans, are engaging in. We are
+increasingly seeing a rejection of traditional employee-
+employer relationships for nontraditional, dynamic career
+paths, like the gig economy or side hustles or self-employment.
+ In my district, I represent 40 percent of the geography of
+New York State. It is a very rural region, and we are very
+familiar with this discussion. Our economy in UpState New York
+is very distinct from the economy in Manhattan and DownState
+New York.
+ My question to Mr. Holtz-Eakin is, on the future of work,
+how does this proposal not embrace opportunities in the gig
+economy in the 21st century? And how does this proposal also
+not take into account the differences between rural parts of
+this country and urban parts of this country, in terms of cost
+of living, other issues, challenges small businesses are
+facing?
+ Mr. Holtz-Eakin. Congresswoman, you have heard a lot of
+discussion about the history, but the only real question facing
+the committee is, do you want to raise the minimum wage going
+forward, and to do it nationally and for all workers, tipped
+and nontipped?
+ That is a very different proposal than even some of the
+things we have evidence from in the research. This would hit
+all labor markets, rural labor markets and urban identically.
+It would hit tight labor markets and loose labor markets.
+ One of the striking characteristics of the recovery has
+been a very unevenness across the geography of the United
+States, and it would not recognize that. It would not recognize
+the need for businesses in those areas to have a cost structure
+they can afford. It would hurt the entrepreneurship in places
+that are struggling. It is a very blunt instrument, and, as I
+said, that blunt instrument does not land on those who need it
+the most, working poor.
+ And so I think that is one of the things that jumps out of
+the literature. And I worry a lot about a proposal that is not
+tailored to the circumstances of the labor market and doesn't
+target those who need the help the most, especially at a time
+when the labor market is actually, on the whole, doing
+remarkably well.
+ And I think the thing I would emphasize is we are seeing
+people entering work who we just did not think would come back.
+No one thought we could continue to create 200,000 jobs a year
+in 2018, and the economy has. That is a remarkable
+accomplishment. Those families will forever be better from
+having that opportunity.
+ Ms. Stefanik. My next question is, one problematic aspect
+of this legislation, one of the many problematic aspects is the
+elimination of the tip wage and tip credit.
+ I have a local assemblyman who is a Democrat who represents
+Plattsburgh, which is in my district, and he recently
+highlighted why this is problematic. He included a local
+restaurant employee on his website who would have been greatly
+harmed by the elimination of the wage tip credit.
+ I quote: ``Generally has relied on tips to supplement her
+wages. She makes $7.50 an hour, but often with tips this salary
+is doubled or even tripled because of tipping. This not only
+provides her with money in her pocket each day, but it helps to
+stabilize and even augment her income to provide food, formula,
+and diapers for her children. Each of her fellow servers has
+different life situations, but what they all seem to agree on
+is that they definitely make more money as a server than if
+they had taken a more restrictive set wage position.''
+ Can you talk about why the elimination of the wage tip
+credit is problematic and does not allow this dynamism that we
+are seeing in the current economy?
+ Mr. Holtz-Eakin. Certainly. As you know, those who are
+tipped workers are guaranteed to get the minimum wage. If they
+don't receive tips that are sufficient to do that, the owner of
+their establishment will pay them the minimum wage.
+ So forcing them to do that anyway raises the cost in the
+business, there is no way around it, and once again you have
+the problem, where does that money come from? As I said in my
+opening statement, they have to go take it from someone else,
+and that might be someone they choose not to hire.
+ And that is the definition of lack of dynamism. I am not
+going to take advantage of opportunities to expand my
+employment base, offer new services, grow as a business. This
+has exactly that characteristic.
+ And I would point out that in D.C., which we watched
+carefully, there was a ballot referendum that said we are going
+to raise this minimum wage for tipped workers. It was
+overturned by the D.C. Council because the tipped workers
+themselves said, no, this is bad for us.
+ Ms. Stefanik. And that was a similar experience in New
+York. Tipped workers were vehemently opposed to this policy and
+organized very effectively.
+ Thank you. I yield back.
+ Chairman Scott. Thank you.
+ The gentleman from Connecticut, Mr. Courtney.
+ Mr. Courtney. Thank you, Mr. Chairman.
+ And, again, I applaud the fact that week No. 1 of this
+committee we are taking up an issue which, again, I think
+restores the legacy of this committee in the past, as Dr.
+Spriggs so powerfully described.
+ You and I and a couple of us were around in 2007, the last
+time the Federal minimum wage was increased, from $5.15 to
+$7.25. Again, it was done gradually over a period of about 3 or
+4 years. I remember the Republican votes that reported that
+bill out of the committee, and I remember it was in May 2007,
+after the new Congress or the 110th Congress, that President
+Bush signed that into law.
+ And, again, Dr. Spriggs, thank you again for sort of
+reminding us of the forensics of the minimum wage, that it
+really historically has been really a very strong bipartisan
+issue, and it is far too long that Congress has not revisited
+that standard.
+ And, again, Mr. Wise, I want to thank you for your
+incredibly powerful testimony here today, bringing this down to
+real life and also talking about sort of the grassroots organic
+support that is out there, and we have seen that in
+referendums. And the $15 benchmark has really started to
+happen, again, without Congress necessarily doing it yet, but
+certainly showing that it is not going to wreck the U.S.
+economy for employers to do the right thing.
+ I would like, Mr. Chairman, to just enter a statement that
+Hartford HealthCare, which is one of the largest employers in
+the State of Connecticut, just announced about a few weeks ago,
+that they are going to raise the minimum wage for their work
+force, which is about 2,500 strong, to $15 an hour this spring.
+They are not waiting until 2024. And, again, they have entry
+level staff folks that are there. That is a really important
+decision that the employer made to do that.
+ And, again, I think it is because of the work that folks
+like Mr. Wise and some of the others out in the audience here
+with red shirts, tee shirts here today, have really raised this
+issue, so that it is making its way into the corporate
+boardrooms that this is something important to do.
+ So, again, I would like to ask Dr. Zipperer just a question
+about what has been happening to wage rates since the Great
+Recession and the fact that, again, we finally are starting to
+see an uptick in terms of wage, but this is 10 years after the
+Great Recession. As you point out, this job market has been in
+a trajectory that certainly precedes this administration,
+although it is continuing to move forward, and I think we all,
+as Americans, support that.
+ But, I mean, how would you explain, again, the fact that we
+have not seen the wage growth concurrent with the economic
+growth? And the recent uptick in wages, I mean, this is
+happening at the State level in terms of minimum wage
+increases. Is that a part of the story about why we are finally
+starting to see some wage growth?
+ Mr. Zipperer. Thank you for the question.
+ We are starting to see wage growth, as you noted and as Dr.
+Holtz-Eakin noted in his testimony, which, thankfully, is a
+good thing. At the same time, I think we are seeing that wage
+growth because the labor market is becoming tighter and
+employers are competing more for workers.
+ At the same time, that wage growth is not actually
+sufficient or adequate enough for many workers, in the sense
+that the lowest wage workers in particular, what we are
+discussing at this hearing, need a much more substantial boost
+in wage income than they are going to see from tight labor
+markets alone.
+ Mr. Courtney. Well, thank you.
+ And to drive that point home, Mr. Chairman, I have
+correspondence from Oxfam America, which, again, shows an
+economic analysis that, again, we need that sort of push from
+the bottom, which a minimum wage increase has been bipartisanly
+supported in the past, and I would ask that be admitted into
+the record.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Mr. Courtney. And I also just would like one last comment.
+You know some of us who serve on committees like Armed
+Services, as my friend from New York, you know we get a chance
+to interact with other countries, with codels and overseas. I
+am co-chairman of the Friends of Australia Caucus, which is a
+developed economy somewhat on par with the U.S. They have
+actually a minimum wage commission which raises the minimum
+wage outside of politics, on a yearly basis. It is $17.70,
+Australian dollars. If you convert that into U.S. dollars
+today, it is about $14.
+ That is the one economy in the sort of developed world that
+actually did not take a hit during the Great Recession. Again,
+their banking system, frankly, was more regulated and I think
+withstood what was going on internationally there.
+ But nonetheless, I mean, they are a growing economy. Their
+minimum wage, which has been automatically increased because of
+a nonpartisan commission, has shown that, in fact, it doesn't
+hurt economic growth. It actually stabilizes a family's income
+and increases their purchasing power.
+ I yield back.
+ Chairman Scott. Thank you very much.
+ The gentleman from Kentucky, Mr. Comer.
+ Mr. Comer. Thank you, Mr. Chairman.
+ And I appreciate everyone being here.
+ I think it is interesting that the panel will admit that we
+are finally having wage growth, which is something that I think
+both parties agree is needed in America. One reason, and the
+main reason we are having wage growth, is because there is a
+shortage of workers in America. It is basic supply and demand.
+ In my district in Kentucky, I have Paducah, which is a
+headquarters for the regional office for U.S. Bank. They just
+recently raised their minimum wage to $15 per hour for all of
+their employees. They did that without legislation, without
+government intervention. Basically, it is the supply and demand
+as a result of having a strong economy.
+ So my question is--and I want to make this Statement. While
+proponents of a $15 minimum wage foresee consumers absorbing
+the effects of this proposal through increased end cost, many
+smaller businesses in my district in Kentucky wouldn't be able
+to sustain charging such radically increased prices.
+ Dr. Holtz-Eakin, do you agree that raising prices is not
+always an option for many businesses in rural or low-income
+areas? And can you elaborate on the effects of such a bloated
+minimum wage would have on these entrepreneurs who are the
+backbone of our economy?
+ Mr. Holtz-Eakin. As I said, if you pass a legislated
+increase in the minimum wage, not a voluntary one as U.S. Bank
+had, there is no more money at the moment that becomes law. So
+you have to go figure out where you are going to find it.
+ One possibility is charge your customers more to get the
+money. If you are unable to do that, and a lot of people are
+not going to be able to do that, another possibility is you
+take the thinner nonexistent profit margins of an
+entrepreneurial business, a startup, and squeeze it down even
+further. They will likely fail, and thus those jobs would go
+away. Or you can take it out of your labor cost somehow by not
+hiring additional workers when you otherwise might.
+ And this is just like ``Casablanca'': You round up the
+usual suspects and figure out where you can do it, if at all.
+ Mr. Comer. Dr. Holtz-Eakin, you make it clear that a
+minimum wage increase would not affect all areas the same. A
+recent study by the University of Kentucky suggests that for
+many families below the poverty line in Kentucky a lack of
+hours worked rather than a low wage or minimum wage is the
+primary challenge.
+ Right now, the average worker in poor families in Kentucky
+are out of the work force more than 4 months out of the year.
+Won't a higher minimum wage set up additional barriers to
+employment and risk more workers being out of the work force
+for longer periods of time?
+ Mr. Holtz-Eakin. It is certainly a concern that I have
+tried to emphasize in my testimony.
+ We do have some, for example, recent evidence out of the
+Seattle increase in the minimum wage which shows 10,000 jobs
+lost, but also diminished hours worked by those affected by the
+increase. That is another channel by which you squeeze down
+your costs, but that means less income for those individuals.
+ And, again, my concern is that is something Seattle did.
+That is very different than doing it to the entire United
+States, including your district in Kentucky.
+ Mr. Comer. Absolutely.
+ Let me ask one last question. You also stated that 5.1
+million jobs have been added over the past 2 years. How would
+this dramatic increase affect the progress created by recently
+enacted legislation, such as our tax reform bill of the last
+Congress? How would this impact that if we passed this proposed
+minimum wage increase?
+ Mr. Holtz-Eakin. So, as I noted in my testimony, my
+colleague Ben Gitis and I used a published estimate of the
+impact of increases in the minimum wage on the growth in
+employment going forward, and it would more than offset those
+5.2 million jobs. So, we would set back the progress we have
+made, the dramatic progress in getting Americans back to work,
+including those who previously didn't work. I think that is a
+concern.
+ Mr. Comer. I think we have seen last month, with record job
+growth, over 300,000 new jobs added to the economy, I believe
+as a direct result of, first of, the new administration and the
+last Congress focusing on reducing regulations; second, on
+reducing taxes. We have got the economy growing for the first
+time in a long time. We are starting to see wage growth.
+ So I believe that we finally have America on the right
+track economically, and I think we need to think long and hard
+before we go back to a Congress of passing lots and lots of
+legislation, increasing regulations, more government, bigger
+government, because what we see now from an economic
+standpoint, in my opinion, is working.
+ Thank you, Mr. Chairman. I yield back.
+ Chairman Scott. Thank you.
+ The gentleman from the Northern Mariana Islands, Mr.
+Sablan.
+ Mr. Sablan. Thank you very much, Mr. Chairman, for having
+this hearing.
+ Thank you, everyone, for coming and testifying.
+ I wasn't going to speak, but, Mr. Wise, please keep telling
+your story. You are sharing your life story. And I am sure you
+have heard it before, but if you haven't, let me tell you, sir,
+that you are a good father.
+ My only regret is that one of you sitting there as a
+witness probably couldn't hear what you were saying. And you
+are telling a real life story, and someone is saying, no,
+according to the literature on economics and all of these
+things.
+ We are not creating big government here. We are trying to
+create increased wages for those like you, and I am very proud
+to do so.
+ Mr. Chairman, I would like to yield my time to the
+gentleman from Virginia, Mr. Bobby Scott.
+ Chairman Scott. Thank you, and I appreciate the time.
+ Dr. Spriggs and Dr. Holtz-Eakin, I talked about the
+reasonableness of the tipped minimum wage because a tipped
+worker would be made whole if the tips don't amount to the
+minimum wage. That sounds reasonable, but how often is the
+deficiency actually in practice made up?
+ Dr. Spriggs. My experience at the Department of Labor was
+this is one of the more troubling areas for us to figure out
+the proper regulation of what to do with tips, and for those
+who think that it is clear cut, that is because they haven't
+tried to solve this problem.
+ We know this is the major portion of wage theft that takes
+place. It puts the women, and there are disproportionately
+women who rely on tip wages, at a huge disadvantage because
+they are, by necessity, having to deal with ugly customers, and
+they need the tip, and it opens up a huge window for misconduct
+and sexual harassment that is hard to close.
+ If you set the minimum wage higher and you don't move the
+tip, then you create a bigger regulatory issue of how do we
+collect the information to know whether the workers got the tip
+money? Many restaurants want to pool the tips and then dole it
+out so that the workers sometimes don't even get the tips. It
+is all well and good if you are in a high, fancy restaurant,
+and it is mostly men who work there do well, but for the
+overwhelming majority of women who have this job, it is not the
+historical record. This is the biggest area of wage theft to
+try and get the owners of the restaurant to actually pay the
+tipped workers the gap. And as that gap gets bigger, the
+vulnerability of those workers is going to increase.
+ Chairman Scott. Dr. Zipperer, do you know how often the
+tipped workers are actually made whole? Have you done studies
+on that?
+ Mr. Zipperer. There is research about the preponderance of
+wage theft, and that especially falls on tipped workers
+because, like the other witness pointed out, regulation and
+oversight of this issue is really difficult. In addition, the
+Department of Labor, under a recent set of investigations,
+found that of the restaurants they investigated, about 84
+percent of investigations resulted in wage and hour violations,
+and a substantial fraction of those were due to failures in
+enforcing the tips standard that we are talking about. Workers
+in the food, and drink, and restaurant industry are much more
+likely to experience wage violations than in other industries.
+ Chairman Scott. So although it may be reasonable in theory,
+the workers never get the deficiency made up. Is that right?
+ Mr. Zipperer. I think it is very difficult to enforce in
+practice which is one reason why you see those kind of
+disparities. You also see that in states that have adopted a
+single minimum wage for tipped workers and non-tipped workers
+alike that wages inclusive of tips are about 14 percent higher
+in those states, and poverty rates for tipped workers are
+significantly lower in those States with a single minimum wage.
+ Chairman Scott. Does the gentleman yield back? Do you yield
+back?
+ Thank you. The gentleman from Kansas, Mr. Watkins.
+ Mr. Watkins. Thank you, Mr. Chairman. Thank you all very
+much for being here. I especially want to say thank you to Mr.
+Wise. Your testimony was very moving. It is not easy putting
+yourself and your struggles out there, and doing so is very
+impactful, and it touches on why we do what we do to try and
+make the country a better place.
+ Now, that being said, I am right down the road on I-70. I
+live in Topeka, and so if you need to join a support group for
+the Chiefs AFC championship loss, then hit me up.
+ But sir, we disagree. I think this is a classic example of
+legislation that feels good but doesn't do good. It feels good
+when you pit up employer versus employee. But I have helped
+create hundreds of jobs, respectfully, before this, and I would
+move heaven and earth to find and keep good employees. And that
+comes at a cost, a cost I am more than willing to pay when I
+find good employees.
+ So listen. The CBO published in a 2014 study that a 10
+percent or a $10 minimum wage would cost a half a million jobs.
+Harvard Business School said every dollar increase would result
+in a 4 to 10 percent increased likelihood of a restaurant
+closure. So my question is to you, Dr. Holtz-Eakin. So I
+represent a lot of poor communities throughout southeast
+Kansas. I am going to share with you some thoughts they shared
+with me. I just want you to reflect on them, and some of them
+will be things that were written up in your testimony, but bear
+with me.
+ A $15 minimum wage will attract more qualified applicants,
+and I won't hire entry level people. Another entrepreneur said
+I would have to pay everybody more. If I have to pay the
+dishwasher $15 an hour, then I have got to pay the cooks more
+than that. I will just replace H.R. with automation. Prices for
+everything go up.
+ So my question is simply to reflect on that so I know what
+to tell my constituents.
+ Mr. Holtz-Eakin. I want to just echo your observation that
+the issue here is not about the depth of compassion for people
+who are working and poor. The issue is what are the outcomes of
+the proposed legislation. And my concern is that the outcomes
+include worsened conditions for exactly those people and the
+possibility of reduced employment for them, reduced hours if
+they are working, the loss of the establishments that have
+traditionally employed them, and all of those things you are
+seeing when you say well, I am going to have to pay other
+people, you are going to get wage compression. And that is
+going to say well, we will cutoff a certain category, whether
+they are teens or folks who never finished community college.
+We are just not going to look at those guys. We can get the
+other ones. We will do that because we are paying everybody
+more.
+ And those are just people who are running the numbers and
+by necessity trying to keep their business going. It is not an
+act of anything other than necessity, and I worry about those
+acts being played out across the country.
+ Mr. Watkins. Thank you, Doctor. Thank you all, and Mr.
+Chairman, I yield my time.
+ Chairman Scott. Thank you. The gentlelady from Oregon, Ms.
+Bonamici.
+ Ms. Bonamici. Thank you very much, Chairman Scott, and
+thank you for introducing the Raise the Wage Act which I am
+proudly cosponsoring because this is a long overdue
+conversation about gradually increasing the Federal minimum
+wage to $15 an hour. And as you pointed out, Mr. Chairman, in
+your opening remarks today, an individual working 40 hours a
+week and earning the Federal minimum wage earns $15,080
+annually. Annually. Putting a family of two below the Federal
+poverty level, and that is unacceptable that someone working
+full time is living below the Federal poverty level.
+ And as Mr. Wise's testimony so poignantly showed, when
+workers are paid wages that leave them in poverty, they
+struggle. They struggle to pay for rent, essentials like food,
+transportation, skyrocketing child care costs. So the Federal
+minimum wage has been stagnant for too long. It has contributed
+to income inequality, and I am glad we are having this
+conversation today.
+ So I am from Oregon, and I have to tell you that years ago,
+I was kind of surprised to learn that there was actually such a
+thing as the subminimum wage for tipped workers because we
+don't have that in Oregon. We have a thriving restaurant
+industry. People come to Oregon for restaurants. So I was
+really actually shocked to learn that people could be paid less
+than minimum wage. It was really surprising.
+ In Oregon, more than 100 years ago, even before the Fair
+Labor Standards Act was enacted, Oregon became one of the first
+States to enact a minimum wage. It was intended to address
+gender disparities for workers, yet still today the majority of
+workers earning minimum wage are women and people of color,
+according to data from the Bureau of Labor Statistics.
+ So Dr. Spriggs, in your testimony you talked about the
+history of the Fair Labor Standards Act and some of the
+compromises that were made to pass the bill, and I know
+Representative Grijalva mentioned this, but those compromises
+later exacerbated racial and gender wage gaps. So how have
+women and people of color been disproportionately affected by a
+low Federal minimum wage, and how will the Raise the Wage Act
+address these persistent wage gaps?
+ Dr. Spriggs. Thank you very much, Congresswoman, for the
+question and thank you for your comments.
+ Yes. I think we need to look back at 1966 when 60 percent
+of Republicans agreed to expand coverage and get rid of the
+exemption for agriculture and many service sector workers which
+included restaurant workers. Unfortunately, the restaurant
+workers were subject to this creation of a subminimum for tip.
+The tip wage itself has a very racist origin. It was originally
+because the servants happened to be black, and it was the habit
+not to think about you have to pay them, and the tip was meant
+in lieu of wages.
+ When we closed the gap in 1966 in terms of coverage, we
+have to remember that many of those workers, because they were
+agriculture workers, lived in the south, in the rural south,
+and they lived in States that did not have State minimum wages.
+There was nothing below them. So the studies that have been
+cited by Ellora Derenoncourt and by Claire Montialoux highlight
+that when that was closed, first, these workers didn't get paid
+a dollar an hour, so the initial expansion of coverage to
+include these rural workers was to get them to $1 which was a
+34 percent raise. In other words, they were getting close to
+$0.80 an hour, and then because they were included, they went
+to $1.60. We doubled their wages.
+ Ms. Bonamici. Thank you. And I want to get another question
+in.
+ Dr. Spriggs. Yes. I want to tell you really quickly the
+punch line. The punch line is that black child poverty in this
+country went from nearly 70 percent to 40 percent in that 3
+years simply by covering 30 percent of African Americans who
+had been denied that coverage--
+ Ms. Bonamici. Right.
+ Dr. Spriggs [continuing]. and raising their wages. So that
+was the biggest effect we have ever had in lowering poverty
+from any program. It took us until 1990 to break that record,
+to get black child poverty back below 39 percent.
+ Ms. Bonamici. Long past time to complete the work. I also
+wanted to talk about or also point out that when low wage
+workers--they spend their earnings. They go right back into the
+economy.
+ In Washington County, Oregon, which is just west of
+Portland, the Portland metro region, the minimum wage there is
+$10.75 an hour currently. Someone making minimum wage would
+have to work 73 hours a week to afford a one-bedroom apartment,
+and that is what we are seeing in other areas as well. A full-
+time worker should be able to afford basic needs like housing.
+And Dr. Zipperer, you mentioned a family budget calculator, and
+I liked your quote about protecting the Nation from the evils
+and dangers resulting from wages too low to buy the bare
+necessities of life. So who benefits from this gradual increase
+to $15 by 2024, and why is it important to establish that as a
+Federal floor rather than leaving the issue up to States?
+ Mr. Zipperer. Thank you for your question. It is important
+to establish a Federal floor because many States don't actually
+increase their minimum wage or increase it adequately, and
+Federal action is the only way that we are going to actually
+achieve a national minimum wage that would provide a wage
+standard high enough so that all people in all areas of the
+country will be able to afford the basic necessities for their
+families.
+ At the Economic Policy Institute, we have developed what we
+call family budgets to delineate how much a given family type
+in a given area of the country needs every year to pay for
+housing, food, transportation, child care, and other
+necessities. These are extremely conservative amounts. They
+don't allow for any saving whatsoever, no saving for
+retirement, no saving for buying a home, no saving for
+emergencies. And even with these conservative amounts, we find
+that in every city and in every county of the country, by 2024,
+workers will need $15 per hour working full time in order to
+meet their family budget. Two adults working 40 hours a week,
+52 hours--52 weeks a year at $15 per hour each, will earn less
+than their family budget in every area of the country.
+ Ms. Bonamici. Thank you very much. And Mr. Chairman, I
+request unanimous consent to enter into the record a letter
+from the Women's Coalition outlining the importance of passing
+the Raise the Wage Act to help address wage gaps for women.
+ Chairman Scott. Thank you without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Ms. Bonamici. And I yield back.
+ Chairman Scott. Thank you.
+ The gentleman from Texas, Mr. Taylor.
+ Mr. Taylor. Thank you, Mr. Chairman. I appreciate the
+opportunity to be here. Dr. Holtz-Eakin, just a question for
+you. I was going over your testimony last night, and something
+that really struck me was the study that you did in 2015, and
+in that study you determined--and I will just read your
+testimony back to you, but using the most recent academic
+literature, the study found that a $15 per hour Federal minimum
+wage resulted in the loss of 3.3 million to 16.8 million jobs
+with a middle estimate of 6.6 million jobs lost, and I just
+wanted to understand. So that is a range, and clearly it is all
+bad. I don't think anybody here wants to lose a job, right? We
+want to create jobs. I think everybody here agrees on that
+basic premise. But can you explain why there is a range in
+estimates and sort of--if you don't mind?
+ Mr. Holtz-Eakin. So there is a range from analyzing the
+data, and the imprecision with which statistics delivers the
+truth, right, it doesn't say literally this is exactly what
+will happen.
+ Mr. Taylor. Sure.
+ Mr. Holtz-Eakin. It says, you know, given the variation in
+the data, it can go from here to here, and we want to
+acknowledge that you can't know with great certainty.
+ Mr. Taylor. Ok.
+ Mr. Holtz-Eakin. And I just want to emphasize that says if
+we look historically at changes in the minimum wage, we have
+limited ability to say precisely what will happen. That gives
+you a range. We have even less ability to say what will happen
+if we go forward in a fashion that is much more dramatic, more
+than doubling and then indexing permanently the minimum wage.
+This is an unprecedented experiment, and I think we know very
+little about what will actually happen.
+ Mr. Taylor. And then just as a policymaker, where are these
+losses? I mean, are these happening in high-income areas? Are
+they happening in--you know, high cost of living areas like New
+York City? Are they happening in low-cost areas like, say,
+Kansas? Are they happening in suburban areas like where I
+represent in Plano, Texas? Are they happening in urban areas,
+rural areas? Where are we losing jobs? So you are estimating
+millions of jobs being lost. Where are they lost?
+ Mr. Holtz-Eakin. So you can split the economy in a variety
+of ways. I would say the most important way to split it is to
+look in the labor force and say let's look at the whole labor
+force. It is hard to discern an impact. Let's look more closely
+at those people who have little education, little skill, little
+experience, say, a teenager. They are going to be priced out of
+the labor market. You are not going to find--I will speak from
+experience. I never found $30,000 worth of productivity in my
+kids. So they are just not going to get hired. And so, you
+know, that will show up right away.
+ If you look further at the places they are most likely to
+be employed, that is going to be retail. That is going to be
+restaurants and bars, and that is where you are going to find
+the employment losses. And then across geography, you can just
+see places where you have concentration of low-wage workers as
+the labor force base, and that is where you are going to see
+the losses.
+ Mr. Taylor. Ok. And then just shifting over to another
+piece of your testimony I was reading last night, and I will
+just read this sentence to you. Seattle's minimum wage law, so
+we are going to Seattle now, has caused low wage work hours to
+decline by 9.4 percent. Consequently, even among low-wage
+workers who were still employed and earned slightly higher
+wages, their average monthly earnings on net declined $125 per
+month.
+ So in addition to Seattle losing 10,000 jobs which is what
+your testimony was, what your written testimony is, you watched
+the people that still managed to keep their jobs, their hours
+declined, and so their incomes also declined, right?
+ Mr. Holtz-Eakin. Yes.
+ Mr. Taylor. So you have lost jobs.
+ Mr. Holtz-Eakin. Yes.
+ Mr. Taylor. You have lost income. My question is what has
+happened to those workers? Are those workers leaving the labor
+force? Are they moving somewhere else where they can get a job?
+Are they going into the welfare system? What happens to these
+people that lose their jobs? What happens to the families that
+lose income as a result of the policy, the $15 policy that was
+implemented in Seattle?
+ Mr. Holtz-Eakin. So Seattle is of interest because No. 1,
+it is the top line number, $15, that has focused a lot of
+attention. No. 2, it came along with the city deciding to have
+a policy violation built in and had the University of
+Washington study this closely using a research design that is
+the gold standard for those who think that minimum wage doesn't
+hurt workers. And so these findings are troubling for that
+reason.
+ The thing it doesn't include is a followup for where
+everyone goes, but the logical conclusion is we have seen a
+little bit of them moving outside the city to get work. That is
+actual in the study. You can see people trying to work outside
+the municipal limits, but also you would expect people to
+simply leave Seattle. If there is not going to be a work
+opportunity, they are going to try elsewhere.
+ Mr. Taylor. Ok. Thank you. Mr. Chairman. I yield back.
+ Chairman Scott. Thank you.
+ The gentleman from California, Mr. Takano.
+ Mr. Takano. Mr. Chairman, thank you. I would like to begin
+my questioning by asking unanimous consent to submit a
+Statement into the record from the Center for American Progress
+dated January 16th, 2019 which praises the Raise the Wage Act.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Mr. Takano. Mr. Zipperer, Mr. Holtz-Eakin cites, you know,
+a Seattle study showing harm being done. I would like to know
+what the impacts of the minimum wage increases in places like
+Seattle, San Francisco, and New York have been?
+ Mr. Zipperer. All right. Thank you for the question.
+Regarding Seattle and the study that Dr. Holtz-Eakin cited,
+that study is based on a completely flawed comparison of
+Seattle where wages are rising extremely fast during the study
+period with other areas of Washington State that do not look
+like Seattle or are not comparable to Seattle and not a good
+point of comparison. And so that is why I don't think that
+study coming from the University of Washington is informative
+in any way about the consequences of the Seattle minimum wage
+increase.
+ At the same time, there are also studies that use a variety
+of case studies and not just focus on a single city but that
+focus on six cities including Seattle, also Chicago and a
+couple of cities in California like San Francisco, and they
+studied the effects of the minimum wage increases there on
+restaurant employment and workers' earnings in restaurants.
+That study conducted by Sylvia Allegreto, Anna Godoy, Carl
+Nadler, and Michael Reich and others at the University of
+California Berkeley found that those minimum wage increases in
+those cities, in all of those cities, raised the wages of
+restaurant workers without any negative consequences for
+employment.
+ Mr. Takano. Thank you. I appreciate that.
+ I appreciate my Republican colleagues inviting, you know,
+Mr. Holtz-Eakin to give us, you know, the conservative point of
+view. I imagine that my colleagues on the other side of the
+aisle respect your hard headed analysis of our economy. And we
+Democrats are advocating for the minimum wage at $2.15 or at
+$15 an hour. Of course, we are interested in trying to raise
+the incomes, and I am curious. I want to know, you know, in
+some of your past writings, especially on immigration reform.
+Do you still hold to your beliefs that immigration reform and
+welcoming immigrants into our economy ultimately will raise the
+wages of American workers?
+ Mr. Holtz-Eakin. Absolutely.
+ Mr. Takano. Can you expound on that a little bit more?
+ Mr. Holtz-Eakin. Sure. If you look at the research on the
+impact of immigration on native born workers, you find that
+immigrants are, on average, complements to those native born
+workers meaning in economic terms when they arrive, they raise
+the wages of the native born workers. Immigrants are
+disproportionately entrepreneurial. They start businesses at a
+higher rate. They bring capital at a higher--workers at a rate
+above the native born. They work longer. They retire later.
+They are a source of enormous vitality to the U.S. economy, and
+no one should misunderstand that.
+ Mr. Takano. So you would counsel, you know, my Republican
+colleagues to push for immigration reform and to welcome
+immigrants into our economy?
+ Mr. Holtz-Eakin. I have for my entire career, and you have
+seen my success.
+ Mr. Takano. And you maintain that immigrants do not depress
+wages, but they actually have either no effect on wages but
+actually ultimately increase those wages because our
+productivity goes up as an Nation.
+ Mr. Holtz-Eakin. I am convinced that the blanket statement
+no one's wages ever go down is probably wrong. Blanket
+statements are always wrong in economics. But I think the vast
+amount of evidence is that they are beneficial to the wages of
+native born workers.
+ Mr. Takano. Of course, I believe that we need a strong, you
+know, baseline of a minimum wage. We need immigration reform to
+reduce the effect of the shadow economy so that people, you
+know, are not being exploited by employers who are taking
+advantage of their undocumented status.
+ I mean, we can argue about where that minimum wage should
+be set, but do you also believe that as well, that a shadow
+economy is not good for us?
+ Mr. Holtz-Eakin. I think it is terrible if we have
+circumstances that permit people to be exploited by the
+workers, and that is a real issue, and it ought to be taken
+seriously by everyone in this committee. The place where we
+disagree is on the minimum wage, and what I would say to you is
+it is not that you don't want to try to do something. This is
+the wrong thing to do. We have a lot of evidence in the earned
+income tax credit that it promotes work and helps these people.
+Try the noncustodial tax credit. There are a variety of
+alternatives. This is just the single worst way to try to help
+these people.
+ Mr. Takano. Fair enough. Fair enough. We simply disagree on
+the level of the minimum wage, but you know, we do agree on
+immigration reform and the value of immigrants in our economy.
+Thank you.
+ Chairman Scott. Thank you.
+ The gentleman from Georgia, Mr. Allen.
+ Mr. Allen. Thank you, Mr. Chairman, and thank you for
+holding this hearing and talking about, you know, the creation
+of jobs and the opportunities available out there.
+ I am from the State of Georgia. We have a little fast food
+company down there. Mr. Wise, your testimony was very
+impressive, but I can tell you. If you had gone to work for
+Chick-fil-A, you would probably own your own restaurant by now.
+It is an amazing story. You need to check them out, you know.
+Obviously you have a passion for that business, and you have
+remained in it, and in fact, they will actually put you through
+college. Amazing company.
+ And in fact, we have had enormous job creation in Georgia.
+The wage situation is--I mean, for example, with truck drivers.
+I mean, they are making in excess of $80,000 a year, full
+benefits, full medical, and there are also companies working
+with the drivers to make sure they are not out of town more
+than maybe two nights a week. So we are trying to address this
+booming economy. Georgia has created over 800,000 jobs in the
+last four or 5 years, and frankly, everywhere I go, everybody
+needs workers.
+ So Dr. Holtz-Eakin, how would increasing the minimum wage
+to $15--I guess I have two questions. One, how in the world do
+you live off $15 in Washington D.C.? I mean, I spend 36 weeks
+up here. This is the most expensive place to live I have ever
+lived in my life. I mean, you look at Georgia and the cost of
+living in Georgia. I mean, it is maybe a third of Washington,
+DC. based on my experience.
+ So how can you just blanket the country with, say, you
+know, like in Washington, DC, maybe the minimum wage should be
+$30 an hour. Who knows? I mean, why stop at 15? I mean, if you
+are talking about a living wage based on, in my experience, the
+cost of living up here. So No. 1, what do you think it will do
+to a State like Georgia with an incredible economy, and No. 2,
+how do you, like, divide up the country and say Ok, this is the
+blanket policy? Can you answer those questions?
+ Mr. Holtz-Eakin. Well, first of all, I am not an expert on
+Georgia, but I will say that your characterization matches the
+data for the U.S. as a whole where we do have more openings
+than unemployed as I mentioned in my opening Statement. That is
+the market's way of raising wages, and wages are rising. Our
+best measure of real wage growth is the employment cost index,
+kind of a nerdy thing you don't need to know. But if you look
+at that, it was growing about 1 and a half percent a couple
+years ago. It is now up to three. It is doubled.
+ And so we are seeing real wage growth, wages above
+inflation start to move, and that is a valuable thing. That
+happens at different rates across the country because we have
+different economic labor markets. There are hundreds of local
+labor markets in the United States. Tailoring a policy to
+Washington, DC. will destroy the State of Georgia, and we
+shouldn't do it that way, and I think that is one of my biggest
+concerns about this is it is a dramatic increase, and it is
+nationwide.
+ Mr. Allen. It is like, you want do level the playing field
+across the country and penalize a State like Georgia, you know,
+like I said. And like I said, there is no way you can live off
+$15 an hour, and my only experience is here in Washington. I
+don't know what it would be like, say, in other large cities,
+but--
+ Mr. Holtz-Eakin. You do want to level the playing field in
+the sense of giving everyone the same opportunity.
+ Mr. Allen. Right.
+ Mr. Holtz-Eakin. The trouble is having the same minimum
+wage makes sure that is not level, and that is what I am
+concerned about.
+ Mr. Allen. Well, I ran a small business for 35 years, and
+of course, right now we are looking for people. We have no one
+on our payroll that is making less than $15 an hour. And of
+course, we are recruiting the best and the brightest, and we
+don't mind paying more for the best and brightest because they
+are more productive and tend to be more passionate about their
+work and that sort of thing, so--
+ Well, thank you again. You know, I don't think this one
+size government program fits all is the answer. I think we have
+got to look at it city by city, but again, we have got to keep
+the economy growing. Thank you very much, and I yield back.
+ Chairman Scott. Thank you. The gentlelady from North
+Carolina, Dr. Adams.
+ Ms. Adams. Thank you, Mr. Chairman, and to the Ranking
+Member as well. Let me thank all of the witnesses for your
+testimony today, and Mr. Wise, thank you for sharing your
+story.
+ A couple of months ago we were scheduled to have a hearing
+on how terrible it would be to have a $15 minimum wage. I sort
+of agree with my colleague, Mr. Allen. I would go for the 30.
+It was fortunate--it was unfortunate, though, that hearing was
+canceled because we had hard-working folks from many of our
+service industries in Washington that day, all fighting for $15
+because they know that $15 is the bare minimum an individual
+must earn to raise a family today.
+ And I was able to meet with many of them that day, and I
+met many of them throughout my legislative career, and these
+workers, as Mr. Wise has said, work two and three jobs to feed
+their families and still, it is not enough. Working hard is not
+enough if you don't make enough, and on 7.25, you can't
+survive.
+ I remember in 2006 when I fought for the minimum wage to be
+raised from $5.15 to $6.15 in the North Carolina General
+Assembly. I fought 9 years to get that done, and it is pretty
+shameful today that 12 years later, the Federal minimum wage
+and the State minimum wage in North Carolina has only increased
+a mere $1.10.
+ The question is not does it make sense to increase the
+minimum wage to $15. The question is who in their right mind
+would disagree? You know, Dr. Spriggs, I have a question for
+you. I am interested in why generally wage increases no longer
+seem to be tied to worker productivity, and if you can just
+briefly describe how the key labor market institutions are
+functioning today, I would appreciate that.
+ Dr. Spriggs. Thank you very much, Congresswoman. We have
+tried this experiment over the last 40 years that you don't
+need a minimum wage, you don't need unions, you don't need any
+of the labor market safeguards and institutions we put in place
+at the time of the Great Depression where we learned that real
+wages can fall.
+ The problem today is we are now 10 years into the--almost
+10 years into the recovery. It is been 9 years since the labor
+market started this string of consecutive job growth, and yet
+it is only now, only now that real wages are rising and really
+only because inflation was negative at the end of the quarter.
+So the lack of a floor affects workers because increasingly
+economists have come to understand that competitive firms don't
+really face a flat wage curve. The belief that employers can
+hire as many workers as they wish at a flat wage is not true.
+They face an upward sloping demand curve which means, and from
+an economist perspective, they act like a term that you might
+be familiar with, the monopsony which means that the market
+wage should be higher in order to be closer to what the
+clearing wage would be.
+ And those firms are, in fact, hiring fewer workers than we
+would expect in a competitive environment. That is why when we
+do experiment after experiment and we analyze this, we simply
+don't see the negative wages. And workers who are unionized
+simply run into a stonewall because firms know that the respect
+is not there for bargaining for higher wages, and so we have
+not been able to see wages rise that much even in the
+bargaining sector.
+ Ms. Adams. Can you speak briefly to the importance of
+indexing wage increases and elimination of subminimum wages in
+addressing weakened labor market institutions?
+ Dr. Spriggs. In the past, when you look at the increases in
+the minimum wage, it was one of the charts that was put up
+before. You saw that even though Congress wasn't consciously
+doing it, it was raising the minimum wage in line with
+productivity and in line with the median wage and in line with
+the poverty level. When that consensus broke in 1969, you saw
+these things move in all sorts of different directions.
+ And so the purpose of indexing is because it has become
+increasingly difficult now that everyone does not agree that
+work pays and all work is dignity. It has become such a
+political item that it is necessary to put in the indexing
+because before this was not partisan. Republicans overwhelming
+agreed with Democrats. The whole country agreed work has to
+have dignity, and work must pay. That is an American value.
+ Ms. Adams. Absolutely. Dr. Zipperer, just quickly. If the
+wage had kept pace with how productive workers are on the
+whole, how much would it be today?
+ Mr. Zipperer. If the wage had kept pace with labor
+productivity over the last 50 years? If the minimum wage had
+kept pace with labor productivity over the last 50 years, the
+minimum wage today would be closer to $20 an hour.
+ Ms. Adams. Thank you, sir.
+ I yield back, Mr. Chair.
+ Chairman Scott. Thank you. The gentleman from Michigan, Mr.
+Walberg.
+ Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
+panel for being here.
+ Recently my office received a letter from Daniel, a
+constituent in my Michigan district, who has worked in the
+restaurant industry as a bartender for over 20 years. He
+described how he has the potential to make well above the
+minimum wage with the tips and appreciates the freedom that the
+restaurant industry provides to move to different restaurants
+at significant increases and security that can best meet his
+personal needs.
+ Dr. Holtz-Eakin, this Raise the Wage Act would eliminate
+tip credit, as I read it, requiring all employers such as these
+restaurants where Daniel works to pay cash wages equal to that
+of the full minimum wage. What effect do you believe this
+policy will have on the take-home wages of Americans like
+Daniel who work in the restaurant industry?
+ Mr. Holtz-Eakin. So it is a good question. I think there
+are two possibilities that jump out. The first would be by
+forcing the equalized the minimum wage. You are raising the
+cost of labor for that establishment, and the worst-case
+scenario is that Daniel no longer gets to tend bar, and if he
+can't find another job, that his take home pay is undeniably
+diminished. He might have to take another job somewhere else
+and hopefully be Ok. But that is one channel.
+ The second is that the tip--you know, if it becomes known
+that he is being paid, people stop tipping, and to the extent
+that happens, he may not come out ahead. He may come out
+behind, but those are the two channels that would be in play.
+ Mr. Walberg. It takes away that flexibility and security to
+a great degree of being able to know that if I go to another
+restaurant that has a larger clientele or whatever else, it
+could impact me at the tip credit as well.
+ Mr. Holtz-Eakin. It is in a small way a little labor market
+where, you know, there is a return to his skills, his service,
+his productivity, and the better he is, the more tips he will
+get, and this breaks that link as well.
+ Mr. Walberg. In looking at what has happened to restaurants
+and other businesses in cities that have eliminated the tip
+credit, what has been the outcome?
+ Mr. Holtz-Eakin. I will have to get back to you on the tip
+credit, per se. I don't have that at my fingertips. I will just
+note that I think the restaurant industry is the one that jumps
+out as a concern in the Raise the Wage Act. You know, in my
+testimony I showed some of the historical evidence from 2014
+and 2015 where we looked at what happened to restaurant
+employment in those municipalities that raised their minimum
+wages versus those that did not, and it is right in the data.
+ The employment growth just slows down, and this is at a
+time when we are starting to see the economy finally ramp up.
+But I am afraid this act would repeat that in a much bigger way
+for the Nation as a whole.
+ Mr. Walberg. Does any data show that the tip credit really
+allows workers to earn less than the minimum wage?
+ Mr. Holtz-Eakin. The law says they can't earn less than the
+minimum wage. I am sympathetic to Dr. Spriggs' observation that
+compliance is an issue. I am not a compliance expert, but I
+would take those comments seriously and make sure that we have
+things that are--effective laws that can be monitored and
+enforced.
+ Mr. Walberg. Ok. Thank you. I yield back.
+ Chairman Scott. Thank you. The gentleman from New Jersey,
+Mr. Norcross.
+ Mr. Norcross. Thank you, Chairman, Ranking Member, and I am
+here proud to cosponsor along with the chairman the Raise the
+Wage Act, but I want to start out by thanking the witnesses,
+but particularly those behind you who are the real faces of
+minimum wage, and certainly that is the reality.
+ So let's talk about myth versus reality. 1950. Minimum wage
+was increased by 88 percent. Unemployment decreased. The stock
+market went up. Thirty years ago the CEO made 30 times the
+average worker. Today, the CEO makes 347 times. That is the
+reality of what is going on.
+ Mr. Chairman, this is America. You work hard, you play by
+the rules, you are supposed to be able to make it. Right now,
+that is not the case. It has been 11 years since we voted, 10
+years since that raise went to the minimum wage. We do need to
+raise the wage, and I reach across the aisle because what
+happened last time, 348 votes in the house, that was
+Republicans and Democrats.
+ Eighty votes in the Senate to raise the minimum wage. We
+can do this because you know it is the right thing to do. It is
+predictability. It is not $15 an hour tomorrow. This is over
+years that this comes in. I worked for minimum wage. I was a
+single dad trying to raise my kid. I know it was tough. Today,
+it is impossible, but I will tell you that if the minimum wage
+kept up with inflation and productivity, it would be $18 an
+hour. That is the path that we follow that if you work hard,
+you play by the rules, that the boss doesn't keep everything,
+and that is what we have seen happen. But the real surprise is
+not that you can't make it, but you don't even come close, do
+you, Mr. Wise? You don't even come close.
+ But the remarkable thing, to my colleagues, raising the
+minimum wage to $12 would reduce government spending on
+entitlement programs by $17 billion. People want to work. They
+want to be able to provide their family. They want the dignity
+of going to work each day, but they need to be able to make it
+in this country. I am so proud to say my Governor signed in the
+$15 an hour wage predictability over the next 6 years. It is
+not happening overnight. Let's think about it. If it has been
+10 years and it is going to take us another 6 years, that is 16
+years to raise the wage to $15 an hour. It is not this
+overnight crisis that they are trying to build.
+ My friends here in Washington, please. It is time to wake
+up. We took care of the CEOs for you who voted for that tax,
+1.3 trillion to that top 1 percent. It is time to help these
+people, the ones that vote in your districts, the ones who need
+it.
+ Mr. Wise, why are you here today advocating on behalf of
+the minimum wage? Why is this important to you?
+ Mr. Wise. Well, you know, it is like you said, and that is
+what my mom told me. She told me work hard, be a good citizen,
+and everything will be Ok. That is what Mom told me, and I
+thought that would be the case. I worked hard, doubly hard, two
+jobs to try to provide for my three girls. When I had to start
+skipping meals, you know, substituting sanitary products for my
+daughters, making them use tissue, just doing anything to
+survive and get by even though I was doing everything right,
+everything Mom said, but it was obviously something terribly
+wrong.
+ And I know that my fight doesn't end today here in this
+building. I have got to continue to fight in my city and all
+across the country until every worker is earning a living wage,
+and not only that, until we can work to get legislation to
+create an easier environment for us to have a union and be able
+to have collective bargaining, a seat at the table. So this
+fight is something that I have been waiting on my whole life.
+This is a way we have got to change this country. There is no
+individual solution to social, economic, and political
+problems.
+ So I have been able to come together with my coworkers from
+not only Kansas City but across the country to change the
+narrative in this country. Before we organized 6 years ago, no
+one talked about wage inequality. Nobody talked about unions. I
+wasn't taught this in school, but I have been able to learn
+through the movement that this is what it is going to take, me
+and my coworkers behind me continuing to stand together and
+tell our stories because it is real, and this is how we live
+every day.
+ Mr. Norcross. Thank you, Mr. Wise.
+ Please. Let's work together. Let's take care of all
+Americans. Let's give them a chance to have the dignity of the
+American dream, of being able to make it because you are doing
+the right thing. I yield back.
+ Chairman Scott. Thank you. The gentleman from Texas, Mr.
+Wright.
+ Mr. Wright. Thank you, Mr. Chairman, and thank all four of
+you gentlemen for being here today. Dr. Holtz-Eakin, you made a
+point earlier that is worth repeating, and that is that this is
+not about compassion, and, indeed, it is not. In fact, what is
+before us today is a very poor measure of compassion because we
+have to be concerned about the unintended consequences of this
+bill just like we should be with every bill that we discuss and
+vote on.
+ Raising the minimum wage is great for people who get to
+keep their jobs, and of course, that is the concern is the
+effect it will have on jobs because we are not talking about
+merely raising the minimum wage. We are talking about doubling
+it. That is a shock to the system of any small business, any
+small business owner, and they have to make that calculation.
+They have to balance whether they can keep all the jobs they
+have or eliminate jobs in order to accommodate a sudden, what,
+100 percent spike in their wages they have to pay.
+ So we have to be concerned what effect this is going to
+have, and we have already discussed--I had some questions about
+rural versus urban, and you have already discussed that because
+I have both in my district. What I am concerned about, though,
+and is the studies that show, what impact doubling the minimum
+wage would have in terms of business closings, not just
+employee reduction. Do you have any information on that?
+ Mr. Holtz-Eakin. I don't have a specific estimate of that.
+I think again, one of the concerns is that this is an
+experiment that has never been run. We have never doubled the
+Federal minimum wage. We are trying to learn from other things
+that were far more modest. They happened in a locality or a
+State, smaller at the national level, so but there is no
+question that one of things you would expect to happen is for
+those firms with thin profit margins, that they in the end may
+just not be able to make it, you know, and they will close
+their doors. And I don't--I have little question about the
+direction. I don't know the magnitude.
+ I think the other thing to think about with that this is
+different and important is that yes, it is over a number of
+years, and it is laid out in the act. That means that right
+now, those firms know, they can look forward with complete
+certainty that these low-skill, low-experience workers are
+really expensive, and they will stay expensive forever because
+it will be indexed at the end, and they will find ways to stop
+having counter service and automate things in ways that we have
+seen in other parts of the economy. It will just accelerate
+that. And so the jobs won't just be lost for a moment. They
+will be gone.
+ Mr. Wright. Right. Well, I want to repeat what has been
+said before, and that is that all of us up here share the same
+goal in terms of wanting to increase the livelihood of
+Americans, expand economic opportunity and progress for
+Americans, but I don't believe doubling the minimum wage is the
+right way to go.
+ Thank you, Mr. Chairman, and thank you, Dr. Holtz-Eakin.
+ Chairman Scott. Thank you. Thank you. Did you want to
+respond to that? Ok. Thank you.
+ The gentlelady from Pennsylvania, Ms. Wild.
+ Ms. Wild. Thank you, Mr. Chairman. Thank you all for being
+here, and thank you to all of you who are here as witnesses to
+this.
+ It is such an important issue, and it is one that I, as a
+freshman legislator, campaigned on, to raise the minimum wage,
+and I feel very deeply that we should. I am from Pennsylvania,
+one of the 22 States that still has a minimum wage of $7.25 an
+hour. So as I understand it, Mr. Wise, you are a little bit
+ahead of us in Missouri. I guess you just raised it up to $8.60
+an hour, is that correct, from $7.85 an hour last year? So
+Missouri was still ahead of Pennsylvania with our $7.25 an hour
+minimum wage.
+ Mr. Wise. That is correct.
+ Ms. Wild. Well, Mr. Wise, let me just say this, and I am
+going to talk kind of quickly because I have a lot of things I
+want to say or to ask and only a limited amount of time. I
+really appreciate your courage and your willingness to be here
+today and to talk so candidly about your own experience and
+your family's experience. It is not an easy thing to do, and I
+recognize that. I also admire your fortitude and your
+commitment to your family. And I admire that you are engaging
+your daughters in activism and helping them to understand what
+it means to fight for social justice, so thank you for all of
+that.
+ We just talked a minute ago about the minimum wage in
+Missouri which I understand is $8.60 an hour now, and if I may,
+how much are you now earning at McDonald's?
+ Mr. Wise. Well, after 20 years in the industry, I do make
+$11 an hour at McDonald's.
+ Ms. Wild. Ok. Twenty years in the industry. And you know,
+my colleague, Mr. Allen, made a reference to your passion for
+the fast food industry. Would I be correct in assuming that it
+is not so much a passion for the fast food industry as it is
+the only job that you could get when you had to drop out of
+school to help support your family?
+ Mr. Wise. Well, that was the opportunity I had at the
+chance, you know. All labor has dignity. My mom worked for the
+company Hardee's for 30 years. She enjoyed her work. I enjoy my
+work.
+ Ms. Wild. Good. I am glad to hear that. Now, there was also
+a reference made to tractor-trailer operators making $80,000 a
+year and so forth. Have you ever explored other opportunities
+such as driving a truck?
+ Mr. Wise. Well, you know, when I worked--and many Americans
+work doubly hard. For example, I worked Monday 4 p.m. to 11
+p.m. and had to be right back up Tuesday morning at 4 a.m. to
+return to work, so there is no flexibility in scheduling. I
+work very hard, and there is really not time, you know, to go
+back to school, to search that extra education. And the last I
+checked, it is really not free in this country.
+ Ms. Wild. Well, and that is where I was going with that
+line of questioning, and it is as much a Statement as it is a
+question. For you to pursue something like a tractor-trailer
+position, aside from the fact that it would take you away from
+your family, it would require additional training and time that
+you don't have, correct?
+ I ask these questions not in any way intended to embarrass
+you. Do you and your family rely on any form of public
+assistance?
+ Mr. Wise. Well, currently, Medicaid. My daughters have and
+my fiancee did while she was pregnant with my last child, but
+she doesn't any more. And we were receiving stamps up until a
+few years ago, but they said that we were making too much, and
+those got cut. But we still do rely on Medicaid, food pantries,
+any way to get by.
+ Ms. Wild. And how many hours a week are you working?
+ Mr. Wise. Me, right now, I work just at McDonald's but I
+work over 50 hours a week, you know.
+ Ms. Wild. And what about your fiancee? How many hours a
+week does she work?
+ Mr. Wise. Well, she is a home healthcare, and she works
+four 12s, so 48 a week.
+ Ms. Wild. Ok. And you told us when was the last time you
+got a raise?
+ Mr. Wise. Oh. Oh. Well, it has been a while.
+ Ms. Wild. Ok. You have told us you have been in the
+business for 20 years. When is the last time you--ballpark it.
+When is the last time you got a raise?
+ Mr. Wise. About 3 years ago.
+ Ms. Wild. And you are at $11 an hour now. Ok. So I am going
+to turn the my attention to Dr. Holtz-Eakin in my last 30
+seconds here. Dr. Holtz-Eakin, what would you propose to Mr.
+Wise as to what he should do to lift his family out of
+generational poverty?
+ Mr. Holtz-Eakin. I don't have specific career advice for an
+individual. The decision in front of the committee is whether
+to do the Raise the Wage Act, and I would simply argue that it
+is more likely to damage his prospects and people like him than
+to help on average, and that seems unwise. This is a compelling
+story. It can be played out in even greater numbers if the
+wrong policies are put in place. That seems unwise to me.
+ There are other things that we have done, earned income tax
+credit that I mentioned, that have both promoted work and
+targeted effectively on those in poverty who are working,
+clearly the case with Mr. Wise, and thus allowed people to
+work, allowed them to be above the poverty line that were very
+successful. Those would be the subject of attention, I would
+think, not this.
+ Ms. Wild. But you would agree that Mr. Wise's story is just
+one of hundreds of thousands across the country of people who
+are working more than full-time hours and are living in
+poverty?
+ Mr. Holtz-Eakin. Mr. Wise's story is one of millions of
+labor market stories, and I guess it comes as a perception that
+somehow I don't care about those stories when you look at the
+data. The data give voice to all those stories simultaneously.
+They tell us on average how things will work out. They will be
+worse, not better. I don't want that.
+ Ms. Wild. I am sure Mr. Wise will advise his children about
+that data.
+ I yield back.
+ Chairman Scott. The chair recognizes the gentleman from
+North Carolina, Mr. Walker.
+ Mr. Walker. Thank you, Mr. Chairman.
+ Mr. Wise, I first want to say how much I respect the
+willingness to be vulnerable like this in a National forum. I
+also admire the fact of how intricately involved you are in
+your daughter's life. The line that jumped out at me, I believe
+that you said earlier, was all work has dignity, and I
+certainly agree with that, and thank you for your courage and
+being here today.
+ Mr. Holtz-Eakin, I have a couple questions for you if I
+could get to that. I believe our colleagues have proposed--I
+think the number comes down to about a 107 percent increase in
+the minimum wage. What percentage was the minimum wage
+increased by the last time in 2007? Would you have those
+numbers?
+ Mr. Holtz-Eakin. I don't have them in front of me, but it
+is much, much lower. I mean, it was about a $2 increase.
+ Mr. Walker. Ok. So percentage wise, it is about 40, 45
+percent, somewhere in that range. Would you say there were some
+disruptions in the labor market immediately following the
+minimum wage increase, and could you take just a few seconds or
+a minute to describe those for us?
+ Mr. Holtz-Eakin. So that minimum wage increase was
+implemented during the depths of the Great Recession and the
+early parts of the recovery. If you look in the data, teen
+unemployment is markedly higher there. I think there is little
+reason to doubt that is, in part, attributed to the minimum
+wage increase, a weak economy, very, very few skills in that
+population. They didn't get hired.
+ Mr. Walker. Back in my home area of Greensboro, I think of
+my friend who has a yogurt shop there in Northern Greensboro.
+It is not his primary source of income because they just kind
+of break even, but he has about six to eight individuals who
+make around $8 to $10 an hour. It is basically an after-school
+for some younger people to be able to have some time. I think
+he even has some of his family members just to cover some
+shifts there. I know this , and I have talked with him about
+this, if they were to go to $15 an hour, he would be defunct.
+The place would no longer be in business. If we were to move
+forward on such standards that are suggested, do you think that
+there would be a drastic change to specifically the labor
+market if this was to be adopted?
+ Mr. Holtz-Eakin. This is, I think, a recipe for very few
+opportunities for the younger, less skilled, less experienced
+workers, and that first step on the job market ladder of
+success is an incredibly important one, and I think that is
+something to be deeply concerned about. As I mentioned in my
+opening, I think it has been underappreciated what went on in
+2018. The fact that the economy, having already reached low
+levels of unemployment, could pull so many people into the
+labor market and into employment, over 200,000 jobs a month,
+means that we were taking people who had given up, who had no
+attachment to work, and now they have one. Anything that does
+that has great long-running success. This might do the reverse.
+ Mr. Walker. Well let's speak, then, on the younger people.
+I remember my first job there in my small town in Milton,
+Florida. I worked at the Piggly Wiggly grocery store for $3.35
+an hour. I did get wise to who might tip me $0.50 for carrying
+their bags out back when you could do that. To add or pad that
+a little bit.
+ What kind of benefit is it to some of our younger people to
+be able to develop these entry-level skilled positions or even
+those skilled positions? Can you speak to the generalization of
+that? I know that is not a hard data point, but do you have any
+evidence supporting that?
+ Mr. Holtz-Eakin. We know that work is good for people.
+People want to work. They feel better when they work. There is
+an enormous amount of on-the-job skills that are learned,
+especially early, and those skills are general skills that
+transfer from job to job. So getting people in, acquiring those
+skills is a very important part of the labor market dynamics.
+ Mr. Walker. And one potential effect of more than doubling
+the Federal minimum wage is that small businesses will simply
+close the doors as I have mentioned. This is extremely
+concerning to me as we have over 890 small businesses in North
+Carolina alone employing about 1.6 million workers.
+ Any evidence showing that increasing the minimum wage to
+$15 could possibly lead to some of these businesses closing
+like the one that I mentioned. Do you have other evidence to
+support that?
+ Mr. Holtz-Eakin. I would be happy to get it back to you
+with as to estimates. That is an important dynamic. I think it
+is especially important right now. One of the characteristics
+of the U.S. economy is that we have seen fewer business
+startups than historically. Indeed, a couple years back,
+business startups fell for the first time below business
+closings. That lack of dynamism I think is troubling. We don't
+want to get in the way of that.
+ Mr. Walker. And I think we all should be sensitive to some
+of the families and with Mr. Wise's situation, people that
+there is a gap that cut through here, and our heart goes to out
+to them. The financial crisis, as a former pastor I can tell
+you I have witnessed it firsthand. But I worry about this one-
+size-fits-all where even some of these proposed minimum wages
+are even standard of living in places like New York and Boston
+and other places.
+ And with that, I will yield back to you and I will close
+out. Yield back to the chairman.
+ Mr. Holtz-Eakin. I guess the one thing I would note for
+this committee, especially this Committee on Education and
+Labor, the troubling data point in my mind is the fact that if
+we look at our National Assessment of Education Progress, the
+NAPE scores, we have got somewhere between a quarter and a
+third of fourth and eighth graders who aren't reading at grade.
+They are seriously deficient, and they can't do math at grade.
+They are seriously deficient. If you want to have a recipe for
+a big problem going future, let that continue. That is a
+problem.
+ Chairman Scott. The gentleman from Michigan, Mr. Levin.
+ Mr. Levin. Thank you, Mr. Chairman.
+ Dr. Holtz-Eakin, I am glad to hear you are in favor of a
+massive investment in public education. That would be great to
+raise those scores.
+ Mr. Chairman, if it is all right, I would like to submit
+for the record a letter from the AFL-CIO legislative director,
+Bill Samuel, about our hearing topic today.
+ Thank you.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHIC] [TIFF OMITTED] T5268.089
+
+ Mr. Levin. Thank you.
+ So I appreciate all four of you coming. I have learned a
+lot listening to you.
+ Dr. Holtz-Eakin, I wanted to ask you, you have been a
+professor and worked in government so many distinguished
+contributions, have you ever written in favor of raising the
+minimum wage at any level, written a paper, published a paper?
+ Mr. Holtz-Eakin. No.
+ Mr. Levin. You have never supported raising the minimum
+wage?
+ Mr. Holtz-Eakin. I have never written a paper on that, no.
+ Mr. Levin. Ok. What do you think the ideal minimum wage is,
+or should there be one at all? Perhaps--it is a perfectly
+legitimate position--just leave it to market forces, would that
+be your position?
+ Mr. Holtz-Eakin. I would prefer to have subnational minimum
+wages which are tailored to the labor market conditions where
+people are actually working. So I have lots of reservations
+about any number for the Federal minimum wage. It doesn't match
+any labor market.
+ Mr. Levin. Even $5 an hour, say, $2 an hour?
+ Mr. Holtz-Eakin. We are already at 7, so 5 would be fine.
+ Mr. Levin. Were you opposed to going to 7?
+ Mr. Holtz-Eakin. I didn't have an opinion on that debate,
+to be honest.
+ Mr. Levin. You didn't?
+ Mr. Holtz-Eakin. I was not at this table and was not asked.
+ Mr. Levin. I know you weren't at this table, but you are an
+important thinker on these. I am being, in all seriousness, I
+am just trying to understand.
+ Mr. Holtz-Eakin. I know. I am being serious too. I am not a
+fan of minimum wage increases for the reasons I explained at
+the outset.
+ Mr. Levin. Thank you. That is what I thought.
+ Mr. Holtz-Eakin. And--no, it is this and this very
+particular thing: If you do it, the best possible outcome is no
+harm. The only debate we have is over how much harm. And the
+nature of that harm is to take money from people who don't have
+a job and give it to people who do have a job. I don't think
+that is right.
+ Mr. Levin. I don't think the data support that, but I
+appreciate your point of view. In fact, in 1949, according to
+Dr. Spriggs' figures, we raised the minimum wage by 88 percent
+and 91.4 percent of Republicans voted in favor of that. So we
+have raised the minimum wage significantly before.
+ In this case, we are talking about raising it over a 5-year
+period. So the notion that my friends, some of my friends on
+the other side of the aisle talking about a shock, this
+immediate thing of doubling the minimum wage, that is factually
+completely inaccurate. That is not what we are proposing.
+ We are proposing raising it to get it back toward what it
+was, not toward what it was as a percentage of productivity,
+but at least toward what it was in dollar figures, close to
+what it was in earlier times.
+ Mr. Wise, I really was interested in something you said a
+couple of times about you are not just here advocating for a
+living wage for your family, but also for the freedom to form a
+union. Could you explain that a little further?
+ Mr. Wise. Well, yes. It is kind of like, you know, you get
+more done together than you can alone, and that was evidenced
+in my life. Like I said, I have asked the boss for a raise in
+the nicest ways for years, tell him I need benefits for years,
+and it just falls on deaf ears.
+ And not only that, but when you look back at American
+history, when we join a movement we learn about history. We
+know that for women to get voting rights, they had to come
+together collectively. Any labor laws that we want or any
+advances in the labor movement, we had to do it together. To
+end slavery, it took a movement, civil rights movement, to
+improve the lives of people in this country.
+ And that is what it is all about. And that is what I like
+to instill in my daughters as well, that we get more done
+together than we can alone, and we can go so much farther as
+long as we stand together. And a union, you know, going to work
+every day now is like going into a dictatorship, you know. I
+have no voice, no opinion.
+ I can remember the first job at Taco Bell, we at least had
+a comment box. Now those have all but been eliminated from the
+workplace. So to be able to come together and have a seat at
+the table with my employer where we can negotiate healthcare
+and wages. That is the benefits of a union.
+ Mr. Levin. Thank you so much for coming today and for
+speaking the truth for your leadership on this national stage.
+The truth of the matter is that we need to raise our wages for
+everybody to a basic level of dignity, but unless workers have
+the power and the freedom to form unions in this country, which
+they don't today, we are at 6 percent of the private sector
+being unionized, we will never raise the standard of living for
+the middle class in this country.
+ And I just want to point out that people have this idea of
+a lot of workers in my area, auto workers, it is like, you
+know, they represent the sort of middle class of working class
+people getting a piece of the middle class. A hundred years
+ago, when auto workers were in the same fight you are now, my
+friend, they were poor workers in incredibly unsafe jobs, and
+it was only by coming together to form a union that they got
+their little piece of the middle class. So keep on speaking the
+truth, and thank you so much for your testimony.
+ I yield back, Mr. Chairman.
+ Chairman Scott. Thank you.
+ The gentleman from Tennessee, Dr. Roe.
+ Mr. Roe. Thank you, Mr. Chairman. And thank all the
+witnesses for being here, and I appreciate that.
+ In our State of Tennessee, we recognize that we think the
+way out of poverty are skills. In our State, we provide free
+community college and free technical school. Anybody there. And
+if you have lost your job and you want to get educated, we have
+a Tennessee Reconnect, where you can go to community college or
+you can go to a technical school. We have 27 of them in the
+State for free.
+ So that is one of the ways we are attacking this low wage.
+And what I have seen in my district is I think it is going
+away, the minimum wage issue and debate. Right now we have a
+lot more job openings than we do people filling those jobs even
+where we are. And there is a help wanted sign literally
+everywhere.
+ And I just looked the other day for H2 workers around the
+country, H2A workers. The highest is $15.03. That is in
+Washington State. The national average is almost $13 an hour.
+And in my district, it is $11.74 an hour. That is now. Five
+years from now, it is going to be $15 an hour. There are fast
+food restaurants in my area that are paying $15 an hour today.
+ I can get you a manufacturing job in my hometown today if
+you are willing to work and you can pass a drug test for $19 an
+hour. And the skills gap that Dr. Holtz-Eakin is talking about
+is where one of the biggest problems are, low-skill workers who
+don't have those skills.
+ I looked up a couple things. I think the minimum wage $15
+an hour may be very appropriate. It could be even more if you
+lived in San Francisco. And I just did a few calculations while
+we are having this. The median price of a home in San Francisco
+is $1.4 million.
+ Let me run down where I live. I live in the wealthiest
+county in my district, and the median price of a home is
+$148,000. Seattle, $725. I have got a town I represent where
+$90,000 is a median price of a home. Fifteen dollars an hour
+there is totally different than $15 an hour in New York City or
+San Francisco or in Bend, Oregon, where it is $433,000 for a
+home, or Portland where it is $449,000 for a home.
+ So I just looked those numbers up just a moment ago. In
+Kansas City, it is $147,000, a little cheaper place to live
+than Washington or these other places.
+ And if my colleagues on the other side of the aisle are
+willing to do this, I am more than willing to look at a minimum
+wage if you will look at the Medicare Wage Index, where the
+Federal Government says it is Ok to pay me and my hospital
+where I live 73 cents on the dollar and pay people in
+California $1.50 to do exactly the same thing.
+ The government is already making a difference in what they
+pay, depending on where you live. So it makes sense to let
+local communities decide those things, based on the economic
+conditions in that community.
+ I would like to yield to Dr. Holtz-Eakin, if he could
+comment on that.
+ Mr. Holtz-Eakin. I would comment on two things: First, I
+commend you for your discussion about the community colleges.
+There is an enormous amount of evidence that is a relatively
+low-cost, very valuable way to go in getting workers new skills
+or skills to begin with. And I think that is something to think
+about more broadly for the U.S.
+ And then I have said this many times today, I won't belabor
+it, there are hundreds of local labor markets that are very,
+very different, and to just jack up a national average to $15
+is going to dramatically impact some of them, because it is
+inappropriate.
+ Mr. Roe. And I agree with that. And I think where we are, a
+wage, a minimum wage, there is no question, to hire qualified
+people, you have to pay more than $7.25 unless it is a high
+school student that is just entering the labor force.
+ And I think the other thing that I took a little bit of
+offense at today is I have been an employer my entire life, and
+I didn't keep everything. I provided health benefits and
+retirement benefits because why? The most valuable person in my
+business were my employees. They were the most valuable person
+I had. I value them. Right here in this U.S. Congress where I
+hire people, the most valuable people are my employees who work
+with me every day.
+ So I certainly know if you have got a good employee, that
+is the most valuable person in there and you are going to pay
+them what you can afford to pay them to keep them in your
+business. And with a growing labor market, they have more
+options, and that is a good thing when a person can go from one
+job to another and transport and make more money, and that is
+what we are seeing right now and it is about time for middle
+class working people--and I grew up in that kind of family, my
+dad was a factory worker and my mother was a bank teller--to
+see wages going up for middle class people.
+ I yield back.
+ The Chairman. Thank you. The gentlelady from Washington,
+Ms. Jayapal.
+ Ms. Jayapal. Thank you, Mr. Chairman. And thank you all for
+being here.
+ I am from Seattle. I proudly represent the district that
+passed the highest minimum wage in the country. I was on the
+committee that wrote the legislation. I have heard testimony
+for years similar to some of the testimony we have heard here.
+And I want to start by saying none of that would be possible
+without the work of people like Mr. Wise and all of the people
+that are in the room that have been on the streets, that have
+been in your employer's workplaces demanding a $15 minimum
+wage. That is where the energy has come from.
+ I also want to say, Dr. Spriggs, that we are proud in
+Washington State to have one of the highest minimum wages in
+the country indexed to inflation, going all the way back to
+1998. And from 2001 onwards, we have indexed our minimum wage.
+And that was part of--that was really the product of a strong
+labor movement.
+ So you articulated so beautifully why it is important to
+have collective bargaining, to have organizing, in order to
+really work with employers to make sure that workers who are
+driving profits--because let's be clear about where profits
+come from, they come from workers who drive those profits--are
+rewarded for that.
+ So, Mr. Wise, I just wanted to give you a little bit more
+of a chance to talk also about your colleagues. You have spoken
+so beautifully about your own situation. Tell me if that
+experience reflects what your colleagues are also feeling at
+McDonald's?
+ Mr. Wise. It has. And I can tell you even before this
+moment and before the movement, you know, I would work every
+day with my colleagues and we would share the same stories of
+how we struggle to pay bills, come to work depressed because
+the gas is up, you know, skipping meals, the same thing.
+Whether it was Suzy, my Hispanic coworker, Ellen, my white
+coworker, me myself, we all were going through the same trials
+and dilemmas. And we all did what? Woke up every day and went
+to work. It is not like we weren't working hard.
+ And another thing I looked around, the myth of this being
+jobs for teenagers. These are McDonald's workers with me here
+today. We are hardworking adults raising families, you know
+what I am saying? So it was no way, no individual way to fix
+the problem by ourself. We would just soak in it and go to work
+and take it. But we figured out quickly that when you can
+organize, come together and amplify your voice, you know, act
+like a union even before we win our union, we were able to get
+things done. We were able to change the narrative in this
+country.
+ Like I said, 6 years ago we started hearing about 15. That
+number 15, Amazon and everyone else you hear, it just didn't
+come out of thin air. These employers didn't wake up oneS day,
+you know what, let's go 15. That is because of what workers in
+this room and myself have been doing to change the narrative
+around the country.
+ Ms. Jayapal. Thank you so much, Mr. Wise. And I would just
+say that the argument around youth employment has been proven
+false over and over again. When we have the debate in
+Washington State, the reality is the majority of minimum wage
+workers today are not teenagers, and I think it is exactly what
+you said.
+ I wanted to just say to Dr. Holtz-Eakin that you quoted a
+study on Seattle and the effects of the minimum wage increase.
+Are you aware, Dr. Wise that study--I assume you are quoting
+the study from 2017. Are you aware that the exact same
+researchers put out a study a year later that countered
+everything that they said, almost every everything that they
+said in the 2017 study? And just a yes or no or is fine,
+because I want to go to Dr. Zipperer.
+ Mr. Holtz-Eakin. I would disagree they countered
+everything. I know there is another study.
+ Ms. Jayapal. Ok. So there was another study done by the
+same researchers that had substantially different results than
+that first study. So, Dr. Zipperer, can you speak to what the
+research shows around the effects of the Seattle increase in
+the minimum wage?
+ Mr. Zipperer. I think there is a study that you are
+referring to or a set of studies by the researchers at the
+University of Washington. And, like I mentioned earlier, I find
+both sets of those studies to be completely uninformative about
+the consequences of the Seattle minimum wage. Those studies
+find that there are large negative consequences to employment
+of certain groups of workers and--
+ Ms. Jayapal. You are talking about the 2017 study?
+ Mr. Zipperer. About the 2017 study.
+ Ms. Jayapal. But can you speak about the most recent
+research that actually counters that and shows that our minimum
+wage in Seattle has actually increased wages for people that
+were earning the minimum wage?
+ Mr. Zipperer. The second study that you referred to put out
+by those researchers found that workers who had jobs prior to
+the minimum wage increase benefited tremendously from the
+minimum wage increase, and that they saw higher earnings
+overall and did not see increased chances of disemployment.
+ Ms. Jayapal. Thank you. Let me just mention that we talked
+about the tip penalty. That is what I call it, the tip penalty,
+because part of what happens is that workers who are under a
+tip, as Dr. Spriggs said, are subject to all kinds of issues;
+but in addition to that, it is front-of-the-house workers
+versus back-of-the-house workers when you talk about tips.
+ And so I think we are going to talk about this on the next
+panel, and I have many more questions and things to say, but I
+see that my time has expired, Mr. Chairman, so I will yield
+back.
+ Chairman Scott. Thank you.
+ Mr. Meuser from Pennsylvania.
+ Mr. Meuser. Thank you, Mr. Chairman. Thank you, Dr. Foxx.
+Thank you all for testifying. We appreciate it.
+ The former Governor of Indiana, Mitch Daniels, had a
+saying, and it was: My job is to grow the disposable income of
+Hoosiers. Governor Daniels had that quote put up actually on
+the door of each of his Cabinet Secretaries' offices. When I
+served as Revenue Secretary for the Commonwealth of
+Pennsylvania, I truly shared this vision, and spoke to my
+department and other Cabinet members about the importance of
+that role.
+ Government does have a responsibility to help competitive
+businesses and their families flourish by creating an
+environment for opportunities for all Americans to achieve
+economic prosperity and help improve family sustaining wages.
+However, history shows and data that I review proves that when
+government takes an overreaching posture, there are,
+unfortunately, unintended consequences.
+ So I will start with Mr. Eakin. A $15 minimum wage would
+have the largest impact on small businesses and on young people
+entering the job market, 2.6 percent of employees at small
+businesses earn the minimum wage. Large businesses, it is a
+little bit less, 1.5 percent.
+ I represent a rural, hardworking district in Pennsylvania
+with thousands of small family businesses. I fear that these
+small businesses in my district would be negatively affected in
+the event that a $15 minimum wage was implemented.
+ As someone who helped myself grow a small business into a
+large business that has, well, a minimum wage much higher than
+the minimum, I think as most companies do, an implementation of
+a $15 minimum wage would put tremendous pressure on small
+business owners. I would think that the business would first
+attempt to raise prices, which is very difficult to do in
+competitive markets, global markets.
+ Next, the company would be forced to cut staff, letting go
+of workers who had done nothing wrong. And when that still
+wouldn't be enough, business owners would be forced to take
+away raises historically given to employees who had worked with
+the business for a longer period of time. And then after that,
+just be concerned with survival.
+ Can you outline, Mr. Eakin, how historically small
+businesses have dealt with government-mandated minimum wage
+increases?
+ Mr. Holtz-Eakin. You have walked through the logic. It is
+the same logic I discussed earlier. There aren't many places to
+go. You raise prices, lay people off, don't hire new people,
+don't give raises, squeeze your payrolls wherever you can
+because you must. And small businesses have the least
+capability to survive that, and so, you know, you worry about
+the impact on them.
+ That is part of the cost of this policy. The emphasis has
+been on the benefits, but what I wanted to emphasize was if you
+have a job and you get this raise, that is the good news. The
+bad news is only under 7% of those benefits go to people in
+poverty.
+ And so the notion that this is an effective way to provide
+the benefit of poverty alleviation is vastly overstated. It is
+a poor instrument for that, and it has significant costs to
+sectors of the economy like the small business and sectors of
+the labor force who are young and unskilled or least educated.
+And that is the unintended consequence that I think has to be
+focused on.
+ Mr. Meuser. Regarding the Seattle study, and it is
+certainly quoted often, but not only were there job losses but
+even the workers who kept their jobs had their hours cut,
+reduced, which more than offset any pay increase.
+ As a result, my information says the earnings went down
+$125 per month for those workers who kept their jobs. Are these
+the kind of tradeoffs Congress should keep in mind when
+considering an increase in the minimum wage?
+ Mr. Holtz-Eakin. Yes, absolutely. I do want to say I admire
+Seattle because they decided to check on the success of their
+policy. I think they are to be lauded for that. And these are
+very carefully done series of studies. There are other studies
+which can test results. I mean, that is the way you learn. I
+applaud that entire effort.
+ But there is a big difference between Seattle deciding to
+do that, praying that I am wrong, those impacts happen to
+Seattle and that is their decision. It is very different to do
+it at the national level, and that is what is being proposed.
+ Mr. Meuser. And as well on a national level, the economies
+of scale clearly are different from one area to the cost of
+living in a city. So that in itself answers doing such a
+mandate nationally.
+ Mr. Holtz-Eakin. I agree.
+ Mr. Meuser. Thank you.
+ I yield back my time, Mr. Chairman.
+ Chairman Scott. Thank you.
+ The gentlelady from Minnesota, Ms. Omar.
+ Ms. Omar. Thank you, Chair, and thank you, Ranking Member,
+for this important conversation. Thank you to our expert
+panelists for having this really important conversation.
+ As a union member, I fought to make sure that for dignified
+work there was dignified pay. And so I wanted to have a little
+conversation with you all about what that looks like here and
+the moral imperative that we have to make sure that happens.
+ So, Mr. Wise, thank you so much for your brave testimony
+and thank you for sharing your story. I wanted to get on the
+record if you knew what the yearly pay for the CEO of
+McDonald's was?
+ Mr. Wise. Yes. He makes over $30 million a year, the CEO.
+ Ms. Omar. So the CEO of McDonald's gets paid $21.8 million.
+Can you share with us what someone in your position at
+McDonald's gets paid annually?
+ Mr. Wise. Not that much. Not even a fraction of that. But I
+make $11 an hour at my job currently.
+ Ms. Omar. So the median pay for a McDonald's worker was
+$7,000 in 2017. And that is the pay gap between the CEO that is
+making 21.8 to the 7,000 that a worker who has put in 40 hours
+a day gets paid. And to me, that just morally does not sit
+well.
+ Dr. Spriggs, I wanted to see if we can talk a little bit
+about the type of work. I know my colleague earlier from New
+York said something about different types of work and why it
+wasn't valuable for everyone to be paid a minimum wage of $15.
+ Can you walk us through the different kinds of jobs and if
+there have been places like Minnesota or Minneapolis,
+Minnesota, that has increased the minimum wage or places like
+Seattle, if there have been types of work that have shifted out
+of that city or that State because of the increase of that
+minimum wage.
+ Dr. Spriggs. Thank you, Congresswoman. I mean, one of the
+interesting things about Seattle is that their wage
+distribution totally shifted up. And one of the surprises for
+the researchers was they anticipated that the way that the wage
+would move that nothing would appear above $20 an hour, and
+certainly those types of jobs mushroomed. And I think that is
+the point. When we raise wages from the bottom, we really
+change the way in which the labor market functions to really
+allocate workers more fairly.
+ A large share of the minimum people who would be affected
+by this wage have associate's degrees. It is very hard to
+understand the pressures that keep those wages down. So this is
+an important change in the labor market.
+ A lot of people have been saying that, well, you know, the
+cost of living is different. They are looking as if you make
+$174,000 a year and have health insurance. Yes, it is a
+different cost of living and maybe you might want to address
+someone like that. But if you are a low-wage worker in Alabama,
+you don't have Medicaid. If you are a low-wage worker in rural
+parts of Alabama, you have to have a means of transportation to
+get to a job. If you are in a city like Washington, DC, you
+have Medicaid and you have public transportation.
+ So you can't really look at the differences in the cost of
+living in the way that people want to propose it here, because
+of the barriers that face workers in these low-wage
+communities. Their communities appear to be, quote/unquote,
+``low cost,'' but they are very high cost. They get low wages.
+And this was in the debate originally in 1937, where people
+from low-wage areas wanted to argue about low cost. They just
+haven't lived the life of a low-wage person.
+ Ms. Omar. Yes. And, Doctor, thank you so much for
+mentioning that, because I want to draw attention to testimony
+that we have here in written. I don't think the owners of La
+Quercia are here from Norwalk, Iowa. They are in a city that
+has 8,000 people and they have decided to pay minimum wage and
+they are still able to operate.
+ So when we are talking about paying people a minimum wage,
+we are talking about making sure that there is value in the
+work that they are doing, and that uplifts workers. It makes
+sure that they continue to do the hard work. It uplifts that
+community. It uplifts that city. It uplifts that State because,
+in return, you also get people who are paying more taxes and it
+creates an economy that is thriving. So it is not only morally
+just for us to raise the minimum wage; it is economically
+feasible and necessary.
+ Thank you so much. I yield back my time.
+ Chairman Scott. Thank you.
+ The gentleman from Wisconsin, Mr. Grothman.
+ Mr. Grothman. Thank you. Mr. Holtz or Dr. Holtz-Eakin, I am
+going to give you some questions. As I understand it, this
+bill, if you were going to increase the minimum wage from about
+7 and a half to $15 an hour the amount you are paying somebody
+for 1 week of full-time wages--and it is beyond just wages,
+right, because you have social security, employer's social
+security taxes and workers' comp. I get your increase, your
+cost goes up from about 325 to 650 bucks a week per employee.
+Is that true?
+ Mr. Holtz-Eakin. That sounds right.
+ Mr. Grothman. Ok. Over time--we have kind of covered this
+area before, but if your cost of anything in life goes up from
+325 to 650 bucks per week, do you try to make adjustments if
+you are writing that much bigger of a check?
+ Mr. Holtz-Eakin. Certainly. You will try to use less of
+whatever is more expensive.
+ Mr. Grothman. Anywhere in life?
+ Mr. Holtz-Eakin. Yes.
+ Mr. Grothman. Ok. I am looking at something that was found,
+a Brookings Institution study, Pathways to Higher Quality Jobs
+for Young Adults. It points out even later in life people have
+a tendency to make more money if they were working when they
+were 16 or 18 years old. Is that true?
+ Mr. Holtz-Eakin. Yes.
+ Mr. Grothman. Is it important, therefore, in life that we
+have young people get jobs?
+ Mr. Holtz-Eakin. I believe so, yes.
+ Mr. Grothman. Ok. And as you mentioned, if we increase the
+cost of hiring somebody or if we double the cost, somehow you
+are going to scramble to write less of those checks, whether
+you put in--I am told from McDonald's, my local McDonald's
+owners they can put in a lot of equipment that causes you to
+hire less people. Maybe you could cut hours, Ok. Maybe some
+marginal restaurants will close. Who is most likely to get laid
+off when those things happen?
+ Mr. Holtz-Eakin. The people with the least skills, the
+least education, the least experience, the least ability to
+contribute to the enterprise.
+ Mr. Grothman. I will even ask Dr. Zipperer, is there any
+doubt that if you double the check you are writing that you are
+going to somehow try to scramble to write all those checks? Do
+you believe that?
+ Mr. Zipperer. I think that we have heard these kinds of
+scare stories about almost every--
+ Mr. Grothman. If you owned a restaurant--I will put it this
+way: If you owned a restaurant, because we are talking about a
+restaurant worker here, and you were told--and I think right
+now the vast majority of people in our society, at least
+restaurants in my area, judging from the signs out front, are
+paying more than minimum wage.
+ But let's say you had to jump how much you were paying
+somebody from $325 to $650 a week, you know, don't you think
+you would try to hire less people or it would affect the way
+you run the business? Just like anywhere else in life, if the
+cost of something doubles, you maybe want to use less of it,
+not use it at all. Do you think that is true?
+ Mr. Zipperer. I think what the research shows on
+restaurants and their responses to minimum wage increases is
+that restaurants don't employ fewer workers after a minimum
+wage increase, but they do change how they operate. In
+particular, the two channels by which they adjust to a minimum
+wage increase are, one, it makes it easier for them to hire
+workers and so worker turnover falls. That is actually a large
+cost saving for low-wage businesses like restaurants and helps
+them absorb the minimum wage increase.
+ Mr. Grothman. I will give you one more question, because
+they only give us 5 minutes.
+ I will ask Mr. Wise a question, because I have only got a
+minute left. Have you told us here you have been working for
+your business or for where you work now for 20 years?
+ Mr. Wise. I have been in the fast food industry for 20
+years and McDonald's for the last six.
+ Mr. Grothman. For 6 years, Ok, and you are making 11 bucks
+an hour right now?
+ Mr. Wise. Oh, yes.
+ Mr. Grothman. Have you applied to work anywhere else?
+ Mr. Wise. Well, when you look across my city and across
+many cities in the country, these are the fastest growing jobs,
+service-based jobs.
+ Mr. Grothman. I know. I am just saying like in my area we
+got manufacturing. Sometimes people shift from that sort of
+thing to manufacturing. Maybe they look for fast food where you
+have a chance to move up and become a shift manager, or
+whatnot. I am just saying, have you done anything in the last 6
+years to try to look for a job that pays more than 11 bucks an
+hour?
+ Mr. Wise. Well, I am a manager. I have been to management
+training classes. I have been to Safe Serve. I have been
+certified.
+ Mr. Grothman. Have you looked for any other jobs anywhere
+else that pay more than 11 bucks an hour?
+ Mr. Wise. Less than half of my city makes less than $15 an
+hour. There aren't jobs readily available.
+ Mr. Grothman. Have you applied for any other jobs?
+ Mr. Wise. Oh, definitely. I have looked for jobs in my
+city, you know. They are all low-wage jobs. They are paying
+poverty wages.
+ Mr. Grothman. Somebody else talked about drive trucks. Have
+you ever tried to do that sort of thing?
+ Mr. Wise. No, I never tried driving tractor-trailers or
+anything like that.
+ Mr. Grothman. Not even tractor-trailer, just delivery
+truck, that sort of thing.
+ Mr. Wise. No.
+ Mr. Grothman. Ok, thanks.
+ Chairman Scott. Thank you.
+ The gentlelady from Nevada, Ms. Lee.
+ Mrs. Lee. Thank you, Mr. Chairman.
+ For much of my career, I have focused on helping young
+children graduate from high school, some of the most at risk
+students in Nevada. And poverty is the most significant barrier
+to educational success. And I would like to say that a story
+like Mr. Wise's is the exception, not the rule.
+ But when you think about the stress that you as a young man
+and your family went under, having to work two and three jobs
+to make ends meet, then you having to pitch in and, thus,
+dropping out of high school, to me that depicts that not only
+are we talking about minimum wage, but we are talking about a
+lost opportunity cost.
+ And the Congressman Grothman who asked you about did you
+apply for another job, well, a lot of jobs that are higher
+paying require additional training. And if I recall, you
+basically said there were weeks on end where you had days where
+you did not have a day off. Is that correct?
+ Mr. Wise. Yes.
+ Mrs. Lee. So I think we need to take note of the lost
+opportunity cost of not increasing a minimum wage here.
+ So I want to thank you for the courage that you had in
+giving that testimony. I think it was incredibly important.
+And, again, I wish it were one that isn't as common as it is.
+ And I now want to ask Dr. Zipperer a question with respect
+to that. Looking at these barriers in youth, I am hoping that
+you can inform us what the impact of increasing the minimum
+wage will have on children in our country.
+ Mr. Zipperer. Thank you for the question. My colleague
+David Cooper at the Economic Policy Institute has recently
+conducted an analysis showing the benefits of raising the
+minimum wage to $15 by 2024. And in particular, raising the
+minimum wage to that level by 2024 would raise the wages of
+parents of nearly 14 million children. That is nearly one-fifth
+of all U.S. children would have a parent that experienced a
+minimum wage increase.
+ Mrs. Lee. Thank you.
+ Mr. Chairman, I request unanimous consent to offer this
+letter into the record from First Focus Campaign for Children,
+explaining the economic impact of increasing the minimum wage
+on children in our country.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHIC] [TIFF OMITTED] T5268.090
+
+ Mrs. Lee. Mr. Zipperer or Dr. Zipperer, I have another
+question. There is this fear-mongering about the notion of
+workers losing their jobs because of an increase. Can you tell
+us how or why this notion of job loss is misleading, and is it
+possible that workers would be able to work fewer hours but
+still earn a stronger income, thus having the time to pursue,
+perhaps, education that would put them in a position to achieve
+a higher-paying job?
+ Mr. Zipperer. Thank you for the question. Yes, I think
+there are three ways in which this phrase ``job loss'' is
+misleading when we are talking about the minimum wage. First is
+that the vast body of research published in the last 15 years
+or at least since 2001 establishes very clearly that the
+employment effects of the minimum wage are small to zero. That
+is the average study in that literature.
+ And I would argue, in my judgment, the best studies also
+strengthen that conclusion, finding little negative employment
+effects of the minimum wage. So that is the first way in which
+job loss is misleadingly characterized as the consequences to
+the minimum wage.
+ The second reason is that even studies that either find or
+assume that there is going to be job loss, typically the
+benefits to workers outweigh the job loss that those workers
+experience. So just looking at it from terms of cost and
+benefits, raising the minimum wage still has benefits that
+outweigh the cost.
+ The third point and the reason why job loss is a misleading
+phrase applied to the minimum wage, is that, just as you
+indicated at the end of your question, if there is some
+reduction in the number of hours worked by workers, which I
+don't necessarily subscribe to, but if that is the case,
+workers can still earn more over the course of the year because
+they are earning a higher wage and, therefore, would be better
+off.
+ Mrs. Lee. And perhaps spend time with their family as well.
+ One final thing. Oh, I am sorry, I think I am going to run
+out of time, so I will yield the floor. Thanks.
+ Chairman Scott. The gentleman from Pennsylvania, Mr.
+Thompson.
+ Mr. Thompson. Thank you, Chairman. Thanks for hosting this
+hearing. It is a very important topic.
+ You know, I don't want anyone who is a primary earner in
+their home, you know, responsible to provide for their family
+to earn just minimum wage. You know, and I don't care what that
+minimum wage level is, to tell you the truth. You know, it will
+always be the minimum wage.
+ And some of the consequences that we have seen is that we
+will see that raising minimum wage, you know, raises the cost
+of many basic necessities. We also see that more times than not
+minimum wage increases results in the Federal income threshold
+for what qualifies as poverty to go up, sweeping more families
+technically into poverty. And if it is done technically, it is
+done for good reasons, because the value of that earned dollar
+lessens.
+ But, again, I want to say I don't want to see anyone who is
+supporting a family who is the primary earner earn minimum
+wage. That is why I work so hard to support restoring ladders,
+rungs on a ladder of opportunity. And this committee did great
+work in that area with the Career and Technical Education bill
+President Trump signed. I believe it was on July 31st we were
+at the White House.
+ We put an additional billion dollars on top of what we
+already invest in career and technical education training. And
+we know there are 7 million jobs that are out there today, and
+that number is climbing. It is compounded and getting larger
+because of the retirement of the baby boomers, but it is also
+growing because of the growth of the economy and the jobs that
+are being created.
+ So I am not saying those opportunities are equal. I mean,
+sometimes communities and cities, places, for whatever, based
+on whatever is going on there, perhaps they don't have as many
+opportunities; but nationwide, that is the scenario that we are
+seeing. And that is why I, when it comes to better wages,
+especially for those who are primary providers for their
+families, I want them on those ladders of opportunity. And I
+think this committee did some really good work to restore that
+with resources and reforms to that program.
+ I also get the point--and, unfortunately, she left. I
+appreciated the passion of the gentlelady from Seattle. You
+know, it is situational. It is geographical. And just to share
+a couple numbers. I am from Pennsylvania. In Pennsylvania, the
+average, the median home value in Pennsylvania is $172,000. In
+our largest city--I tried to pick a big city that compared to
+Seattle, you know--it is $158,500 right now, and that was after
+a 12.7 percent increase in value this past year. Washington
+State, it is $379,500. And in Seattle, the median home value is
+over $725,000. I get it. But that is a geographical issue. That
+is not a one-size-fits-all solution of a Federal minimum wage.
+ And so I appreciate her passion and I appreciate her local
+leadership of serving the folks in Seattle who are incurring
+such a--I mean, it is just a--what a terrible situation for
+folks who are living paycheck to paycheck and struggling.
+ And so, Dr. Holtz-Eakin, great to see you again. A real
+quick question here: Your testimony cites a 2014 study by
+Jeffrey Clemens and Michael Wither that shows a hike in the
+minimum wage is likely to increase the occurrence of unpaid
+internships.
+ Would a 107 percent increase in the Federal minimum wage
+hurt students and young adults who are trying to enter into
+that work force and to get that basic experience, you know, to
+be able to launch successful careers that hopefully eventually
+will be with family sustaining wages?
+ Mr. Holtz-Eakin. I have an intern program. I don't know if
+I would if you doubled the minimum wage. They are paid minimum
+wage. And that is an issue. And that is the starting rung, and
+everything I have said earlier today applies to the intern
+programs across this country as well as the full-time
+employees.
+ Mr. Thompson. Thank you.
+ I know we have another panel, so in the effort of
+efficiency I will yield back, Mr. Chairman.
+ Chairman Scott. Thank you. Thank you.
+ The gentlelady from Georgia, Mrs. McBath.
+ Mrs. McBath. Thank you, Mr. Chairman. And I want to thank
+you for holding this hearing today. And I would like to thank
+the witnesses who are here to discuss the importance of raising
+the Federal minimum wage for Americans.
+ It is time for us to raise the minimum wage and to have
+these very, very important conversations. Too many in our
+Nation are working hard, but are definitely not seeing their
+wages budge. The Federal minimum wage has been stuck at $7.25
+per hour since 2009. And in that time, costs have gone up
+significantly.
+ In my home State of Georgia, the minimum wage workers make
+only $7.25, and even for those who work 40 hours per week, it
+is nearly impossible for them to make a living. Now, this
+translates into lost value and lost purchasing power for the
+American worker, not just for those that are earning the
+minimum wage, but also for those that make more that have not
+seen wage growth in a resurgent economy.
+ We need to raise the minimum wage to help families make
+ends meet, but we also need to do it in a way that protects
+jobs and small businesses in our communities. Our country is
+made up of many different regional economies, but only one
+Federal minimum wage across the board.
+ This is an old model that truly ignores the basic reality
+of cost of living differences. The cost of everything from rent
+to a carton of milk to a haircut is different from one part of
+the United States to another, and our minimum wage should
+account for those differences. $1 in Macon, Georgia, is
+different than $1 in Roswell, Georgia. And $1 in Roswell is
+different than a dollar in San Francisco and New York City. We
+need a Federal minimum wage policy that works for rural,
+suburban, as well as urban Americans. A $15 minimum wage might
+be right for San Francisco, but what about Birmingham? What
+about Cleveland? What about Houston and Raleigh?
+ Jared Bernstein, who served as a member of President
+Obama's Economic team and he also held the post of Deputy Chief
+Economist at the U.S. Department of Labor between 1995 and
+1996, he discussed this very topic in an article that he wrote
+for the New York Times, when the Obama Administration proposed
+to raise the national minimum wage to $10.10. He wrote: When we
+adjust the national minimum wage of $10.10 for regional
+differences, these are the amounts you would need to have the
+same buying power: $11.94 in Washington, DC. and $11.40 in
+California, but only $8.90 in Alabama and $9.08 in Kansas.
+ My goal is truly to make sure that folks in rural
+communities, communities of color, and distressed communities
+are not adversely affected by well-intentioned minimum wage
+policies that raise the minimum wage to a higher point or to a
+point that is higher than the local economies can handle.
+ Now, we are all in agreement that the minimum wage needs to
+be raised to help Americans, but I would like to learn more
+about how this will be received in every part of the country.
+ So, Mr. Zipperer, my question is for you, would the $15
+minimum wage under this bill be applied with any consideration
+for differences in local cost of living or is it just one flat
+rate across the country?
+ Mr. Zipperer. The $15 minimum wage bill of the Raise the
+Wage Act of 2019 is $15 across the country, but States, cities
+if they can, and localities could raise their minimum wage
+above that if they desired.
+ Mrs. McBath. So my followup question is, does the $15
+minimum wage have the same purchasing power in Washington, DC,
+that it does in rural parts of the country?
+ Mr. Zipperer. No, it has different purchasing power in
+different parts of the country. But in all parts of the
+country, including the cities you mentioned, Houston,
+Cleveland, Raleigh, and in rural parts of the country, rural
+counties in every State of the United States, workers will need
+at least $15 an hour in order to purchase basic necessities
+that attain them a modest yet adequate standard of living.
+ Mrs. McBath. And, Dr. Zipperer, have you heard of the term
+``regional price parity?''
+ Mr. Zipperer. Yes, I have.
+ Mrs. McBath. Can you explain its meaning and why it exists?
+ Mr. Zipperer. Regional price parities are a tool that we
+can use to calculate the differences in the cost of living
+across different areas of the country.
+ Mrs. McBath. Last word: I believe that workers in every
+part of the country, they deserve a raise, most definitely. So
+I thank you for answering my questions.
+ And I thank you, Mr. Chairman, for holding this hearing. I
+hope this is the beginning of what I believe will be very
+thoughtful and inclusive discussions about how we can raise the
+minimum wage to a living wage for all communities. And I yield
+back my time.
+ Chairman Scott. Thank you.
+ The gentlelady from Massachusetts, Mrs. Trahan.
+ Mrs. Trahan. Thank you, Mr. Chairman, and thank you for
+holding these hearings. Thank you for hanging in with us today.
+I know it is a long day to sit on this panel.
+ I grew up in a family that needed two incomes. My mother,
+she juggled multiple part-time jobs while I was growing up,
+working more than 40 hours a week and managing to raise us
+children. So sometimes, you know, when you are removed from
+that, it is easy to forget that it doesn't leave a lot of time
+to look for another job. So, Mr. Wise, thank you. I appreciate
+your testimony.
+ Dr. Zipperer, I want to talk about women and families and
+the impact that the minimum wage has. Women are nearly two-
+thirds of workers paid the Federal minimum wage of $7.25 per
+hour. Women are also two-thirds of tipped workers for whom the
+Federal minimum cash wage is just $2.13 per hour.
+ Throughout my career, I have seen the pay gap in action
+time and again. Women's overrepresentation in low-wage jobs is
+one factor driving the persistent wage gap. Women working full
+time year-round typically are paid just 80 cents for every
+dollar paid to their male counterparts, and this gap is even
+wider for women of color.
+ Congress has raised the minimum wage only four times in the
+past 40 years and enacted the last increase a decade ago. A
+woman working full time at minimum wage earns just $14,500
+annually, nearly $5,000 below the poverty line for a mother
+with two children. You know all this.
+ Dr. Zipperer, what do we know about how the minimum wage
+would impact the gender pay gap, and what is the evidence from
+States on how the minimum wage could impact the gender pay gap?
+ Mr. Zipperer. That is a great question. It is true that the
+minimum wage disproportionately raises wages for women. It
+benefits women more than men, and that is because, as you
+outlined in your question, unfortunately, our country's economy
+pays women excessively low wages. If we were to raise the
+minimum wage to $15 by 2024, the majority of workers that would
+benefit from that are women. Close to about 58 percent of the
+workers who would benefit from a minimum wage increase of that
+kind would be women.
+ The minimum wage has long been an important tool to reduce
+gender wage gaps. In particular, the minimum wage has the
+strongest effects on reducing inequality for women, in that it
+brings up women at the bottom of the pay scale toward the
+middle much more strongly for women than it does for men.
+ Mrs. Trahan. Terrific. Thank you. I appreciate that.
+ You know, I know my colleague from Michigan asked about
+unions and the impact that the minimum wage will have on
+unions, but if I could just ask one followup question on his
+terrific inquiry. I do believe that unions have built the
+middle class. And what should we consider here in Congress--and
+if this is a better question for you, Dr. Spriggs, feel free to
+jump in.
+ What should we consider here in Congress to better support
+men and women in labor so that all workers see improved
+conditions beyond increasing the minimum wage?
+ Dr. Spriggs. Just as we are having this discussion to
+modernize the minimum wage, we need to have discussions to
+modernize our labor laws to restore the ability of American
+workers to organize. Today, the penalties for violating labor
+law are de minimus. It is far cheaper for a firm to fire
+workers, to intimidate them, then it is for them to let them
+have a voice. It is unfair to have employers engaged in closed
+conversations with employees to intimidate them out of their
+democratic right to vote about whether they want to be in a
+union.
+ There are a number of other changes we need to make to make
+sure that workers will be at the table so that as productivity
+continues to increase, workers get to say, where is my share of
+the productivity increase, which hasn't happened in the last 40
+years.
+ Mrs. Trahan. Thank you. Thanks so much for all your
+testimony, and I yield back.
+ Chairman Scott. Thank you. The gentleman from New York, Mr.
+Morelle.
+ Mr. Morelle. Thank you, Mr. Chairman, for holding this
+valuable hearing to discuss gradually raising the minimum wage.
+And thank you to the panel and the witnesses for being here
+today to share their expertise.
+ I do want to note, in my home State of New York we have one
+of the highest minimum wages in the nation. And I was proud to
+support gradually increasing the minimum wage to $15, which is
+what it is in the city of New York and other parts of New York.
+It is going to be $15 in just a few years, as we deal with some
+regional differences. And that happened, I had the privilege of
+being the majority leader in the assembly when we do that. And
+I look forward to hopefully achieving that here in the Nation's
+Capitol as well, to ensure that all Americans working full time
+can live safely and sustainably above the poverty line.
+ If I might, Mr. Chair, I would like to ask Dr. Zipperer if
+you would just talk about the studies evaluating minimum wage
+increases. Is it your view that raising the minimum wage will
+result in negative economic consequences for low-wage workers,
+as some have suggested?
+ Mr. Zipperer. No, it is not my view. I think that the best
+studies show that minimum wages have been very successful in
+raising the wages of low-wage workers without those negative
+employment effects, but you also don't have to take my word for
+it. You can just look at the studies published over the last 15
+years and that the average study and the typical study finds
+very small to no employment effects.
+ Mr. Morelle. If I might just followup with you, Dr.
+Zipperer, obviously, people have testified it is important that
+the Raise the Wage Act have a gradual increase, the cost
+adjustment over time, which obviously benefits so that, from a
+public policy point of view, 10 years don't go by, 6 years go
+by without an increase and you are essentially having to jump
+up a considerable degree in a single year.
+ Have you calculated what the $15 minimum wage, if it were
+enacted today, what it would translate to in 5 or 6 years, in
+terms of what the adjustment would bring us to?
+ Mr. Zipperer. Right. So under the Raise the Wage Act of
+2019, a $15 minimum wage would be fully phased in by 2024. And
+if you account for projected increases in the cost of living
+over that time period, that is equivalent to about a $13
+minimum wage today.
+ Mr. Morelle. Got you. So there obviously would be some
+erosion because of the impacts of inflation so $15, as we are
+thinking about it in 2024, isn't the same as $15 today. It is
+$13. Is that what I understand?
+ Mr. Zipperer. That is correct.
+ Mr. Morelle. Thank you. If I could just followup, relative
+to that in the purchasing power, I have given some thought to
+trying to understand what the historical high point was of the
+minimum wage relative to the median wage of the American worker
+and, in a sense, what is the $7.25 minimum wage compared now to
+that median or typical worker's wages. Do you understand that
+question? Could you comment on that?
+ Mr. Zipperer. Yes. Thanks for the question. So, at the
+highest point, the minimum wage in 1968 was close to about 53
+percent of the full-time, full-year workers' median wage at
+that time period. Now, the national minimum wage of $7.25 is
+about a third or about 32, 33 percent of the full-time, full-
+year median wage.
+ Mr. Morelle. Which is obviously a dramatic, dramatic
+decline, more than half. In 1960--what year did you quote, the
+first--
+ Mr. Zipperer. 1968 is the high point of the minimum wage.
+The minimum wage has fallen since 1968 over the last 50 years.
+It has fallen in real terms, terms adjusted for the increase of
+cost of living, by about 28, 29 percent.
+ Mr. Morelle. Obviously, dramatic.
+ If I might, Mr. Wise, and thank you for your testimony
+earlier today and for being a part of this. But could you just
+describe the challenges that your family would face in your
+situation during a family emergency when you had an unexpected
+expenditure of an essential? How do you and your family and
+others presumably in the same situation, how do you respond to
+that? How do you deal with that?
+ Mr. Wise. Well, first and foremost, it is frightening,
+because we are truly one missed paycheck away from being
+homeless. So there is no such thing as being sick or having to
+call in or a family emergency. Refrigerator breaking down, car
+breaks, any of that going out is catastrophic, basically, for
+me and my family. So it is just--it is all pure luck, you know,
+hoping everything is Ok every day.
+ Mr. Morelle. And if I could also, Dr. Spriggs, what are, in
+your view, the lasting impacts to wage and wealth levels to
+regions of the country from the minimum wage coverage
+exclusions in the Fair Labor Standards Act of 1938?
+ And just as a followup, would a regional minimum wage in
+2019 lock in income and wealth disparities that were born of
+that racially motivated exclusions to the FLSA?
+ Dr. Spriggs. Thank you for the question. The only example I
+can give you of a proposal to do, quote/unquote, ``parity pay''
+is from the Third Way. And when you look at the chart of what
+they think are the areas that have these wonderful lives at low
+wages because of pay parity, it looks exactly like a
+distribution of the Black population.
+ If you agree to those regional pay ideas, which Congress
+debated extensively in 1937 and rejected, extensively in 1966
+and rejected, you won't be accepting a new idea, you will be
+cementing an old idea that got rejected twice and you will
+create a racial pay disparity.
+ It will be, once again, America understands the problem, we
+are going to pass a labor law that improves the lives of
+American workers, and Black workers will be told, the bus is
+full when it pulls out. If you do that, that is what you will
+be doing.
+ Mr. Morelle. Thank you for the question.
+ Just in closing, Mr. Chair and colleagues, I just do note
+that I represent a district in New York State, but many people
+when they hear the words ``New York'' assume it is metro New
+York and the city, where now the minimum wage is $15 an hour.
+Despite that, and I live in a community of about a million
+people in the Rochester, New York, metro area, Upstate New
+York, there were concerns about how the increase in the minimum
+wage would impact an economy that is the vestiges of a
+manufacturing economy and transitioning.
+ And despite all the concerns that we heard from people
+about raising the minimum wage, it has really been something
+that has been greeted largely with support, certainly from the
+labor community and from people who are working very, very hard
+to make ends meet. And from what I can see, it has benefited
+our community greatly, and I certainly hope we pass this
+legislation in the Congress and make it the law of the land. So
+thank you.
+ Thank you again, Mr. Chairman. I yield back my time.
+ Chairman Scott. Thank you.
+ And next is the gentlelady from Washington, Dr. Schrier.
+ Ms. Schrier. Hi. Good afternoon. Thank you, Mr. Chairman.
+ And I want to thank all of you. I have really enjoyed your
+testimony today.
+ I really appreciate, first of all, Dr. Spriggs, your
+comments in particular about tipping, because I was unaware of
+that history, and I think that was very eye-opening.
+ I also wanted to thank you all, but I also appreciate the
+clarification about Washington State. That is where I am from.
+We are gradually increasing to a $15 minimum wage, and it has
+worked well for the State.
+ The one study out of the University of Washington got a lot
+of eyes when that first came out, but it has become clear that
+is an outlier study and that for the most part we have done
+very well with this. Businesses are thriving, and people are
+thriving.
+ I would also, for people up here who think that $15 is too
+much, I would just note that although my district starts in the
+suburbs of Seattle, in Seattle proper you need to have a salary
+of at least $70,000 a year to afford a one-bedroom apartment.
+ And so I want to just remind everybody that we are talking
+about a minimum, and that $15, as we have heard many times, is
+a minimum for the whole country, and there are parts, like
+where I live, where you would need far more.
+ I did have a question to just drill down a little bit on
+tips, because I want to make sure that we are taking care of
+everybody.
+ The way that I am wrapping my head around this is I think
+about all of the workers in a restaurant, for example, and that
+if we have, for example, a $15 minimum wage for the wait staff,
+and they get generous tips on top of that, but the chef in the
+kitchen is not getting that added bonus and maybe isn't getting
+tipped out enough from the wait staff or the host. And so I
+want to think through whether there might be unintended
+consequences in the social relationships at work.
+ I also wanted to talk about the difference between when you
+have a subminimum wage, you know, $2 or whatever it is, and
+then workers are reliant on tips, which to me seems very
+tenuous, versus people who are guaranteed that if they don't
+make at least 15 an hour that they will have that as a floor
+and the tips would be over and the difference in poverty level
+between those two groups.
+ Dr. Spriggs, maybe I will go to you.
+ Dr. Spriggs. I would like to speak to that first. And thank
+you very much for the question because it gets to people who
+think this is easy to regulate.
+ The way that many restaurants run, they either force
+pooling of the tips, so that the host who might get a bigger
+tip or the waiter who might get the bigger tip can then share
+it with busboys.
+ Some restaurants violate the law because they consider some
+back workers who should get a minimum wage. They think they are
+supposed to get tipped. It is a nightmare. And when the wages
+are pooled, now, at some high-end restaurants, perhaps they let
+the staff control it, but many restaurants want to claim the
+pool tips are theirs, and then we dole them out to make sure we
+meet the minimum, it gets very complicated.
+ And, yes, the social relations are complicated because time
+and again, unfortunately, there is a difference between the
+race and gender of these different jobs, and inevitably that
+causes a friction in and of itself in terms of who will get
+what.
+ So it is going to be a more fraught problem if the real
+minimum goes up and the tip minimum stays down, because the gap
+that has to be made up is going to be bigger and bigger and
+bigger. There is no assurance that will happen.
+ And people need to remember that it is not the fancy
+restaurants that people in this room go to. The bulk of these
+workers are at low wage restaurants. They don't work where the
+tip is going to be $25. They work where the tip is going to be
+$3.
+ So it is far more complicated to regulate than people
+understand, and this is the true solution. It closes a gender
+inequality bigger than anything else we could do to close the
+gender inequality when it comes to wage theft sexual
+harassment.
+ Ms. Schrier. Thank you.
+ Chairman Scott. Thank you.
+ The gentlelady from Ohio, Ms. Fudge.
+ Ms. Fudge. Thank you very much, Mr. Chairman.
+ And thank you all so much for being here. Forgive me. I
+have had three committee hearings today, so I have been in and
+out. So if I ask you something that has already been asked,
+please forgive me.
+ Dr. Holtz-Eakin, when I was in earlier I heard you talking
+about ``these people.'' Who are ``these people'' that you--you
+have used the word ``these people'' at least three times while
+I was sitting in this room. Who would you describe as ``these
+people''?
+ Mr. Holtz-Eakin. I am not sure what the context was,
+Congresswoman.
+ Ms. Fudge. You were talking about that $15 wouldn't help
+``these people.'' So who are ``these people''?
+ Mr. Holtz-Eakin. The workers that I am most concerned about
+are those with the least skills, education, and experience.
+ Ms. Fudge. So are they poor? Are they Black? Are they
+White? Who are ``these people''? I am just saying that you
+shouldn't use it if you don't know what you are talking about.
+ Mr. Holtz-Eakin. I know who I am worried about in the labor
+market, and those are the people.
+ Ms. Fudge. I think it is very insensitive. But neither here
+nor there.
+ Dr. Spriggs, corporations are making more money today than
+they have ever made. They are making even more money this year
+as they have benefited from the Republican tax scam giveaway to
+the richest people in this country. We have also reduced what
+they would pay in estate taxes. So we have basically said to
+them: Rich people, we want you to get richer.
+ It is ridiculous to me, knowing that the wage gap is
+getting bigger, the wealth gap is getting bigger, that someone
+would say to me that because someone makes $15 an hour, there
+is no money to pay them. I just don't understand it.
+ Dr. Holtz-Eakin, I am assuming you make more than $15. I
+don't want to make an assumption, but do you make more than $15
+an hour?
+ Mr. Holtz-Eakin. I assume so. I am not paid by the hour.
+ Ms. Fudge. If you give me your salary for last year, I will
+tell you how much you make an hour. I am sure it is more than
+$15. And the sky is not falling. The sky is not falling because
+you make more than $15 an hour, and it will not fall if these
+people sitting in this room make $15 an hour.
+ It is just not believable to me that you could say that if
+we pay people $15 an hour, everything is going to collapse. You
+know what I mean? You have to stop crying wolf. It is not true.
+There is no evidence to prove it is true.
+ What we are doing today is saying that we have the ability
+to pay people a decent wage, but we refuse. We have the
+ability, but we have not the will. So it is Ok for rich people
+to get richer and poor people to get poorer.
+ I just think it is ludicrous to say that the richest nation
+in the world cannot pay people a decent wage. It is
+unconscionable, it is mean, and it is cruel.
+ And with that, Mr. Chairman, if someone would like to claim
+the balance of my time. Does someone need my time?
+ Chairman Scott. You can yield to the gentlelady from
+Connecticut.
+ Ms. Fudge. I will.
+ Mrs. Hayes. Good afternoon, everyone. I am sorry. I have
+been in and out as well, but I have been following the
+testimony on the TV screen. I had a couple committee hearings
+as well.
+ First of all, thank you all for being here. Thank you all
+in the galley for coming out to support.
+ Mr. Wise, I am particularly moved by your testimony. And I
+hope I can impress upon you that your work is not in vain, that
+your work has value.
+ And what we hear people talk about is that minimum wage
+being attributed to people who have the least skill, the least
+education. But how about the least opportunity? One does not
+impact the other.
+ I always excelled in school. I always did a good job. But
+then life happened. So if you don't have access to those same
+opportunities.
+ I heard one of my colleagues say that he could not imagine
+living on $15 in a city like Washington where the cost of
+living is so high. How about the reality of living on $7? And I
+think that is the conversation that we should be having.
+ And people are always quick to pick out someone who has
+done it as if this is the rule instead of the exception. And,
+again, it is just that life happens, and maybe somebody got,
+you know, a good opportunity or caught a break. But that is not
+the rule.
+ And then the other thing. I am just listening to all of
+you: Well, what have you done? My colleagues are always asking:
+Well, what have you done to lift yourself out of poverty? What
+have you done? You can go be a truck driver. What if you don't
+want to be a truck driver?
+ Shouldn't you have the right to live out your best life, to
+live the future that you want for yourself and not this by-
+default position that you are placed in because you are
+attempting to survive?
+ Has your housing cost increased over the last 10 years?
+ Chairman Scott. The time of the gentlelady from Ohio has
+expired. You will be recognized for your full 5 minutes
+shortly.
+ The gentlelady from North Carolina, the Ranking Member.
+ Mrs. Hayes. Mr. Wise, I am still talking to you. Has your
+housing cost--
+ Chairman Scott. You will be recognized after Dr. Foxx.
+ Mrs. Hayes. Oh, I am sorry.
+ Ms. Foxx. Thank you, Mr. Chairman.
+ Dr. Holtz-Eakin, I am interested in the workers who would
+be affected by a 107 percent increase in the Federal minimum
+wage.
+ Individuals under 25 years old make up only one-fifth of
+hourly workers, but they account for about half of hourly
+workers making the minimum wage. Only 7 percent of workers
+earning wages between $7.25 and $15 live in poor households.
+ In your view, is increasing the minimum wage to $15 an
+anti-poverty policy?
+ Mr. Holtz-Eakin. I don't think it is an effective anti-
+poverty policy. As I mentioned at the outset, it is fairly
+poorly targeted on poverty. And in those cases where it
+actually does affect the poverty population, the impact may be
+negative.
+ Ms. Foxx. Thank you very much.
+ Let me follow this train of questioning with you. We had
+what many are calling a surge in job creation in January,
+304,000 new jobs, nearly doubling expectations. Over the last
+year, average hourly earnings rose by 3.2 percent, average
+weekly earnings rose by 3.5 percent. And with last month's job
+surge, the labor force participation rate ticked up to 63.2
+percent.
+ There are more jobs than job openings, as you have said and
+we have said, more jobs at higher wages, and now people who
+have been the most discouraged and on the sidelines are
+reentering the work force.
+ Based on your research and experience, are you concerned
+that more than doubling the Federal minimum wage would reverse
+these positive trends for workers and the economy?
+ Mr. Holtz-Eakin. I am very concerned about that. The
+research would indicate that is exactly the part of the labor
+market that would be most deeply affected. And we are finally
+making some progress. It would be a shame to go back the wrong
+way.
+ Ms. Foxx. Great.
+ You know, I have always emphasized making sound policy
+decisions based on evidence. But my husband told me a long time
+ago that too many people in elective office make decisions
+based on emotions and not on evidence. But as I told him, I am
+going to start with evidence always. I can get emotional if I
+have to, but evidence is the best way to go.
+ When it comes to the radical proposal before us to increase
+the Federal minimum wage by 107 percent, however, it is hard to
+find convincing evidence because the proposed policy change is
+so extreme.
+ Would Congress be making a sound policy decision from an
+evidence-based perspective if legislation were enacted to more
+than double the Federal minimum wage, impacting businesses and
+workers around the country?
+ Mr. Holtz-Eakin. In my judgment, that would be a very
+unwise thing for the Congress to do. It is not just the 107
+percent nationwide, which is unprecedented, and as a result,
+any of the research that we have that shows negative impacts
+doesn't even come close to capturing the impact of that kind of
+a change. You also do the indexing at the end of that to the
+median wage. That is unprecedented and leads to permanent
+incentives to restructure businesses away from having jobs for
+that particular part of the labor market.
+ Ms. Foxx. In your testimony, you note the large job losses
+in California and New York due to the recent increases in their
+State minimum wages. These job losses may surprise some people
+because these areas have a relatively high cost of living and
+are high average income States.
+ What do these States' experiments tell us about what would
+happen in other regions of the country if a mandate to impose a
+$15 minimum wage around the country was enacted?
+ Mr. Holtz-Eakin. I think the lesson of these State-based
+minimum wage increases is that there are people who will be
+just fine. We do see that.
+ But the people who are affected are the ones who are
+probably the least well-off in the labor market, for the
+reasons that I have outlined before; that not all of these
+changes come through the stereotype of someone getting kicked
+off their job. It is the raise you don't get, the hours you
+don't work, the person who doesn't get hired.
+ And a lot of this is not, you know, the bear at the door.
+It is the termites in the woodwork taking out the vitality of
+the economy.
+ Ms. Foxx. Thank you very much. I yield back.
+ Mrs. Hayes. Thank you, Mr. Chair.
+ Mr. Wise, back to you. Back to my previous question. Has
+the cost of your housing increased?
+ Mr. Wise. Yes. Yes, it has.
+ Mrs. Hayes. I heard you talk about purchasing school
+supplies for your daughter. Has the cost of those supplies
+increased?
+ Mr. Wise. Yes, they have, over the years.
+ Mrs. Hayes. Has the cost of food increased?
+ Mr. Wise. Definitely.
+ Mrs. Hayes. Have you had to get a prescription for yourself
+or your children?
+ Mr. Wise. Yes.
+ Mrs. Hayes. Have those costs increased?
+ Mr. Wise. Yes, they have.
+ Mrs. Hayes. Ok.
+ So to Dr.--I am sorry, I can't read your whole name, I am
+so sorry, I don't mean to--when you talk about corporations and
+the effect that this will have on the economy, have
+corporations stalled their price increases to wait for people
+who are living in poverty under minimum wage to catch up? If
+everything else is increasing except for their wages, are
+corporations held to the same standard where they are stalling
+to wait for people's wages to catch up?
+ Mr. Zipperer. If I understand the question correctly, I
+think it is the case that businesses in general in this
+country, unfortunately, have not paid low wage workers well
+without the help of a minimum wage increase.
+ Mrs. Hayes. So if only 7 percent of minimum wage workers
+live in poverty, how could raising those workers to $15 have
+the catastrophic effects that we are hearing about? If it is
+such a small number, if it is such a small number in the
+overall economy and the overall number of workers, I just heard
+only 7 percent of minimum wage workers live in poverty, so how
+could that small number disproportionately impact the overall
+economy if that group is lifted up?
+ Mr. Zipperer. I don't think that there will be disastrous
+effects of a $15 minimum wage. But you might be interested in
+hearing from Dr. Holtz-Eakin.
+ Mrs. Hayes. Yes. I am interested to hear your response.
+ Dr. Spriggs. I want to help out here. In 1966, when we
+expanded coverage for the minimum wage, suddenly 20 percent, 20
+percent of the American work force suddenly had coverage and
+protection, which means this is a bigger experiment than what
+you are talking about right now and when you think about what
+we did. Twenty percent of the entire American work force had
+not been protected. We raised their wages from $0.80, because
+on average that is what they made, to $1.60.
+ Mrs. Hayes. I was here for that.
+ Dr. Spriggs. We doubled it.
+ Mrs. Hayes. Yep.
+ Dr. Spriggs. And yet, employment did not fall. And in those
+states that had no State minimum wage employment did not fall
+because those States would have been the ones most impacted.
+ So the evidence, the experience, the real experience, not
+some theoretical experience, the actual experience of the
+American people in the work force was when we doubled the
+minimum wage, which 61 percent of Republicans voted for, and
+gave 20 percent of these workers access to protection, poverty
+went down. Their employment did not go down. It was helpful.
+And it got the Black poverty rate for children down to 39
+percent, the lowest it was until 1994.
+ Mrs. Hayes. Thank you. I guess, Dr. Spriggs, you would do
+well to answer the next question.
+ When we talk about the improvement in the economy and the
+jobs numbers goes up, every month we hear about all of the
+people who have entered the work force, does this include
+minimum wage workers around the country?
+ Dr. Spriggs. Yes, it does.
+ Mrs. Hayes. So that number, although we are talking about
+more people are employed, does not accurately reflect an
+increase in living conditions, our communities improving,
+because although people are employed, it does not sound like
+they are at a livable wage.
+ Dr. Spriggs. That is correct. And increasingly, it has been
+difficult for us to deliver lower poverty levels simply from
+higher levels of employment and from economic growth. When we
+disconnected the minimum wage from a living wage and you look
+at the poverty, this is why it took from 1969 to the 1990's to
+get Black child poverty back down below the level it was in
+1969.
+ Mrs. Hayes. Thank you. Thank you so much.
+ And I guess the last thing I would say is, with all due
+respect, the fact that you don't know how much you make or what
+that translates to over a specific amount of time is more
+telling than anything else you could ever say, because I bet
+you every single person in this galley knows exactly how much
+they make. They know exactly how much they will lose if they
+are late, if they don't show up, if they call out, if it is a
+holiday. They know exactly to the penny what that means for
+them and their family.
+ I have been them. I know what that feels like, and that
+should be all you need to know.
+ Mr. Chair, I yield back.
+ Chairman Scott. Thank you.
+ The gentleman from Indiana, Mr. Banks.
+ Mr. Banks. Thank you, Mr. Chairman.
+ There has been a lot of focus today on how this proposal
+will destroy jobs, and rightfully so. You have already heard a
+lot about the NFIB study, but another recent study using the
+methodology of the Congressional Budget Office found that this
+proposal would cost my home state, the State of Indiana, 64,130
+jobs in 2020 alone.
+ This isn't just a number. That is nearly 65,000 Hoosiers
+losing the dignity that comes from having a job and being able
+to provide for themselves and their families. At a time when we
+have nearly 7 million jobs that cannot be filled, it is
+incredibly reckless to rob people of their livelihoods in order
+to live up to a campaign talking point.
+ I have heard from local business owners in my district who
+believe this legislation would have a disastrous effect on
+their ability to grow and hire Hoosiers. One business owner who
+runs a number of local franchises conveyed to me that
+approximately 25 percent of his staff would need to be cut to
+account for this proposal. He would also be forced to raise
+prices in his restaurants by 2 to 4 percent just to stay in
+business.
+ Another constituent of mine who owns a number of
+restaurants as well and employs nearly 250 people told me that
+the tipped wage provisions of this bill would force him to cut
+half of his staff just to stay afloat, along with across-the-
+board menu prices as well. Think about that. Anywhere from one
+in four to one in two workers unemployed who are then forced to
+pay higher prices after losing their jobs.
+ And as if that wasn't bad enough, there is evidence that
+this will actually reduce income for low wage workers. By
+making labor more expensive, fewer workers will be hired, and
+the ones that do keep their jobs will work fewer hours, which
+translates into lost income.
+ And, in fact, that is exactly what we saw in Seattle. The
+city of Seattle recently, as you know, increased the minimum
+wage to $15 an hour. And a study from the University of
+Washington found that this reduced the number of hours worked
+in low wage jobs by nearly 7 percent and lower take home pay
+for low wage workers by $74 a month. That is right, the minimum
+wage increase actually resulted in lower overall wages.
+ Now, I take personal offense to this conversation as well
+because in high school and college, my folks didn't have enough
+money to pay for my college degree. So I worked low-wage,
+minimum wage jobs to be able to save up for college and make
+ends meet. So this conversation reminds me of just how
+important jobs like these are to those Americans who are
+hopeful to 1 day pursue the same American dream that I have
+been able to live in my life.
+ So, Dr. Holtz-Eakin, can you expand on the insights of
+these studies from the University of Washington, the NFIB
+study, the Congressional Budget Office statistics, specifically
+how minimum wage laws actually can reduce the income of low
+wage workers?
+ Mr. Holtz-Eakin. I am happy to, Congressman.
+ First, in the interest of clarity, none of these studies
+indicate that overall employment in the economy is at a
+decline. The economy will continue to grow. There will be fewer
+jobs created than otherwise would have been. That is the nature
+of the loss. Those jobs are going to be concentrated in a
+particular part of the labor market, which is the low wage, low
+skill, little experience part of the labor market that you
+started out in.
+ And the adjustments that businesses of all sizes will be
+forced to make will be either to charge higher prices or cut
+their labor bill somehow, and that means cutting back on
+raises, cutting back on hiring, cutting back on hours of work.
+And if you are one of those people who is lucky enough to
+maintain their job, but is not getting a raise and getting
+their hours cut, you could end up with less income.
+ Mr. Banks. Another study suggests that 2.3 percent of the
+American workers actually receive minimum wage or work in
+minimum wage jobs. And of those 2.3 percent, most of them are
+under the age of 25, which reflects upon the story that I have
+lived as well. They work those jobs to pursue something better,
+the proverbial American Dream.
+ I am struck at the outset of this hearing, Dr. Zipperer
+admitted--he conceded over and over again, although not on
+the--we can debate the scale, but he conceded over and over
+again the negative impact that proposals like this would have
+on low-wage workers all over the United States of America.
+ This conversation is concerning to me. It is concerning to
+not just business owners in my district but those who work in
+jobs like these. It would have a disastrous effect.
+ And with that I yield back.
+ Chairman Scott. Thank you.
+ I yield to myself for 5 minutes.
+ Dr. Spriggs, do you know if the poverty rate is connected
+to the minimum wage at all?
+ Dr. Spriggs. It no longer is connected to the minimum wage,
+though when Congress formulated the minimum wage they clearly
+had the intent that workers would not have to say: ``I hope to
+1 day get to be poor. I hope that 1 day I will get a raise so I
+can get up to the poverty level.'' That is what Congress was
+trying to avoid. They wanted work to have dignity. And everyone
+agreed, Republican and Democrat, that should be an American
+principle. So no longer--
+ Chairman Scott. So increasing the minimum wage will not
+affect the poverty rate?
+ Dr. Spriggs. It would not affect the poverty rate because
+there is little evidence that it would create a sufficient
+inflationary force that the poverty level would go up. As the
+Congresswoman said, it is not enough workers, and it is not a
+big enough part of cost. And as the Congresswoman was
+suggesting, if CEO pay goes up and that doesn't affect cost, if
+profits go up and that doesn't affect price, as she was saying,
+prices went up without wages going up, so why should we think
+that if wages go up that would happen?
+ Chairman Scott. I just wanted to correct that for the
+record, because there was a suggestion that if we increase the
+minimum wage, we would be affecting the poverty rate. We would
+just be affecting how many fewer people would actually be poor.
+ You say on the uniform Federal minimum wage, why that is
+important. If you had a subminimum wage for some States that
+didn't apply or a region minimum wage that was lower, would
+some States be able to attract businesses by bragging about the
+fact that you could underpay your workers?
+ Dr. Spriggs. There will be an attempt, I am sure, for some
+States to brag about it as they do brag that they are not
+union, that they do brag about other weak investments. So I am
+sure that some States may wish to brag that, yes, we pay our
+workers less.
+ Chairman Scott. You had a chart that showed the support for
+increasing the minimum wage amongst Republicans. Are there any
+Republican States or States that are considered Republican
+States that have recently voted to increase its minimum wage by
+referendum?
+ Dr. Spriggs. Yes. Several of the states are states headed
+by Republican Governors who through public referendum have
+shown that this is something that the American people agree
+with, and they think it is part of their standard.
+ So whether it is the efforts in Arkansas or the efforts in
+some other States, Florida has raised its minimum wage, we have
+had a number of victories in red States because of the people
+you see with these red shirts and the efforts of organized
+labor and the efforts of Americans of all stripes who
+understand this is the right thing to do.
+ Chairman Scott. Thank you.
+ And, Dr. Zipperer, a lot has been said about job loss, and
+we found a couple of studies that have suggested that there
+would, in fact, be job loss. Overall, of all the studies done,
+what is the conclusion drawn?
+ Mr. Zipperer. Overall, the recent set of scholarship over
+the last 15 years finds that on average the minimum wage does
+not have negative effects on employment but, in fact, raises
+wages for low wage workers.
+ Chairman Scott. What is the importance of making the
+increase in the minimum wage gradual rather than all at once?
+ Mr. Zipperer. It is important to allow employers time to
+adjust to the new higher wage standard. That is why past
+Federal increases and other State and city level increases
+include a gradual path to their ultimate minimum wage standard.
+So raising the minimum wage gradually to $15 by 2024 as time
+passes and the cost of living increases, that is equivalent to
+raising the minimum wage to roughly about $13 today.
+ Chairman Scott. Thank you. And can you say a bit about the
+demographics of who minimum wage workers are and their
+likelihood of actually spending the increase?
+ Mr. Zipperer. Yes. So low wage workers are actually an
+incredibly diverse population. They are mostly women. They are
+more likely to be people of color, more likely to be Black or
+Hispanic than White workers. They are likely to be low wage.
+ If you were to raise the minimum wage to $15 by 2024, the
+average age of who would get a wage increase, the average age
+would be about 35 years old. Most low wage workers are not very
+young at all, primarily because so few teenagers work to begin
+with.
+ Chairman Scott. Thank you.
+ My time has expired. I would ask unanimous consent that a
+letter led by the National Employment Law Project and co-signed
+by 500 worker organizations be entered into the record. Without
+objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. I remind my colleagues that pursuant to
+committee practice, materials for submission to the hearing
+must be submitted to the committee clerk within 14 days
+following the last day of the hearing, preferably in Microsoft
+Word format. Materials submitted must address the subject
+matter of the hearing. Only a member of the committee or an
+invited witness may submit materials for inclusion in the
+hearing record.
+ Documents are limited to 50 pages each. Those longer than
+50 pages will be incorporated in the record by way of an
+internet link that you must provide to the committee clerk with
+the required timeframe, but please recognize that years from
+now that link may no longer work.
+ I want to thank our witnesses for your participation today.
+What we have heard is very valuable. Members of the committee
+may have additional questions, and we ask the witnesses to
+please respond to those questions in writing. The hearing
+record will be held open for 14 days to receive those
+responses.
+ I remind our colleagues that pursuant to committee
+practice, witness questions for the hearing must be submitted
+to the majority staff or the committee clerk within 7 days to
+allow ample time for witnesses to respond. Questions must
+address the subject matter of the hearing.
+ Thank you.
+ And that concludes the first panel. We will have a 15-
+minute break before the next panel. We expect votes presently.
+And as soon as the votes are over, we will return for the
+second panel. Thank you. We are in recess.
+ [Recess.]
+ Chairman Scott. The committee will come back to order. We
+will now introduce the second panel.
+ Ms. Vanita Gupta is president and CEO of the Leadership
+Conference on Civil and Human Rights, the Nation's oldest and
+largest civil rights organization. Ms. Gupta is an experienced
+leader and litigator who has devoted her entire career to civil
+rights work. Before joining The Leadership Conference, she
+served as Acting Assistant Attorney General and the head of the
+U.S. Department of Justice's Civil Rights Division.
+ Ms. Simone Barron has been a full service restaurant
+employee for nearly 33 years. She has worked in several cities
+across the country, including Indianapolis and Chicago, and has
+lived and worked in Seattle for the past 17 years.
+ Ms. Kathy Eckhouse is founder and co-owner of La Quercia, a
+producer of artisan cured meats made with nonconfinement,
+antibiotic-free, sustainable raised pork from family farmers in
+the Midwest. Based in Norwalk, Iowa, the company produces
+products that are sold throughout the U.S. and Canada.
+ Michael Strain is the Director of Economic Policy studies
+at the American Enterprise Institute, AEI. He oversees the
+institute's work in economic policy, financial markets, poverty
+studies, technology policy, energy, economics, healthcare
+policy, and related areas.
+ Professor Michael Reich is Professor of Economics at the
+University of California, Berkeley, where he is also the co-
+chair of the Center on Wage and Employment Dynamics. The
+professor has published over a dozen books and over 120 papers
+and in the past decade has authored numerous policy and
+scholarly studies on living wages and minimum wages.
+ Representative Paul Brodeur is serving his fifth 2-year
+term in the Massachusetts State House representing the
+residents of the 32d District in Middlesex, just north of
+Boston.
+ He was the House Chairman of the Joint Committee on Labor
+and Workforce Development during the 2017-2018 legislative
+session. He was successful in convening negotiations between
+labor unions, religious organizations, community groups,
+business trade groups, and employer advocacy organizations to
+reach a landmark agreement which, among other provisions,
+raises the state's minimum wage to $15 an hour by 2023.
+ We appreciate all of the witnesses for being here today and
+look forward to your testimony. Let me remind the witnesses
+that we have read your testimony and the testimony in full will
+appear in the hearing record. Pursuant to committee rule 7(d)
+and the committee practice, each of you is asked to limit your
+oral testimony to a 5-minute summary of your written Statement.
+ Let me remind the witnesses that pursuant to Title 18 of
+the U.S. Code, Section 1001, it is illegal to knowingly and
+willfully falsify any Statement, representation, writing,
+document, or material fact presented to Congress, or otherwise
+conceal or cover up such a material fact.
+ Before you begin your testimony, please remember to press
+the button on your microphone in front of you so it will turn
+on and members can hear you. As you begin to speak, the light
+in front of you will turn green. After 4 minutes, the light
+will turn yellow to signal that you have 1 minute remaining.
+When the light turns red, your 5 minutes have expired, and we
+ask you to wrap up.
+ We will let the entire panel make their presentations
+before you move to member questions. When answering a question,
+please remember to once again turn on your microphone.
+ We will start with Ms. Gupta.
+
+ STATEMENT OF MS. VANITA GUPTA, PRESIDENT AND CEO, THE
+ LEADERSHIP CONFERENCE ON CIVIL AND HUMAN RIGHTS
+
+
+ Ms. Gupta. Chairman Scott, Ranking Member Foxx, and members
+of the committee, my name is Vanita Gupta, and I am President
+and CEO of The Leadership Conference on Civil and Human Rights,
+a coalition of more than 200 national organizations working to
+build an America as good as its ideals. Thank you for the
+opportunity to testify here today about the minimum wage.
+ The Leadership Conference strongly supports H.R. 582, the
+Raise the Wage Act of 2019. Gradually raising the Federal
+minimum wage to $15 an hour by 2024, indexing it to median
+Federal wages, and ensuring that all tipped workers, working
+people with disabilities, and young people get paid at least a
+full minimum wage is essential for working people to cover
+basic expenses like housing, food, transportation, childcare,
+healthcare, and other necessities.
+ Congress has not raised the Federal minimum wage of $7.25
+hour since 2007, and the tipped minimum wage has been stuck at
+$2.13 an hour since 1991.
+ First, the Raise the Wage Act of 2019 is a step in the
+right direction toward closing the gender pay gap. In a 2018
+report that we prepared with the Georgetown Center on Poverty,
+we found that nearly half of working people in our country are
+paid less than $15 per hour, 55 percent being women. The
+National Women's Law Center and the National Employment Law
+Project have noted that women of color are more likely than any
+other group to be paid the lowest wages.
+ Second, on the tipped minimum wage, it is really important
+to note its history. Before the Civil War, tipping was largely
+frowned upon in the United States, but after the war the
+practice of tipping proliferated, and at that time the
+restaurant and hospitality industry hired newly freed slaves
+without paying them base wages. The effect was to create a
+permanent servant class for whom the responsibility of paying a
+wage was shifted from employers to customers, and having to
+depend on tipping put African-Americans in an economically and
+socially subordinate position.
+ The Fair Labor Standards Act then established a bare
+minimum floor for tipped wages only in 1966, and it increased
+to $2.13 an hour in 1991, still leaving tipped workers earning
+far below their basic needs.
+ Third, as with the tipped minimum wage, the subminimum wage
+under Section 14(c) of the FLSA that allows people with
+disabilities working in segregated settings to be paid less
+than the minimum wage leaves this already vulnerable community
+that much more vulnerable to poverty and exploitation.
+ I previously served as head of the Justice Department's
+Civil Rights Division from 2014 to 2017, where I oversaw the
+Disability Rights Section. In 1999, in Olmstead v. L.C., the
+Supreme Court held that under the Americans with Disabilities
+Act unjustified institutional isolation of persons with
+disabilities constitutes discrimination. And, unfortunately, 20
+years after Olmstead and almost 30 years after the passage of
+the ADA, too many people with disabilities spend their time in
+segregated workshops or day programs with some paid just
+pennies per hour.
+ While in theory segregated settings provide job training
+and experience to people with disabilities and help them find
+regular employment in their community, the reality is that too
+many remain stuck in segregated settings for years.
+ Cases that the Department of Justice investigated to
+enforce Olmstead's community integration mandate illustrate the
+deep concerns with 14(c) employment, and one of those cases
+involved Oregonians with disabilities, people like Gabrielle
+who dreamed of saving up money to buy a home, who assembled
+nut-and-bolt kits and knee pads in a sheltered workshop for
+$100 to $150 per month. And after the settlement, she began
+working as a grooming assistant at a dog daycare earning more
+than $9 an hour. And as she told a local media outlet, ``I feel
+better about my life, and I ended up buying that house.''
+ Some states and localities have taken action to raise the
+minimum wage, and while these States and localities should be
+applauded, Federal action is needed to establish a higher
+universal floor for wages. The Leadership Conference opposes
+prevention laws that allow states to prevent cities and
+counties from raising the minimum wage and proposals like a
+regional minimum wage that could be misused by employers and
+further calcify racial and gender inequities.
+ At the 1963 March on Washington for Jobs and Freedom, one
+of the founders of The Leadership Conference, Black labor
+leader A. Philip Randolph, noted, ``Nor is the goal of our
+civil rights revolution merely the passage of civil rights
+legislation. Yes, we want accommodations open to all citizens,
+but those accommodations mean little to those who cannot afford
+them.''
+ Working people should be allowed to live with dignity and
+have the dignity of a fair paycheck, and that is what the Raise
+the Wage Act of 2019 would do. And I want to thank you for the
+opportunity to testify at today's hearing.
+ [The statement of Ms. Gupta follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ Ms. Barron.
+
+ STATEMENT OF MS. SIMONE BARRON, SEATTLE, WA
+
+
+ Ms. Barron. Good afternoon and thank you, Chairman Scott
+and Ranking Member Foxx, for the opportunity to testify today.
+ My name is Simone Barron. I am the mom of a smarty-pants
+teen boy. I am a semi-professional actor, and I have worked in
+the full-service restaurant industry for nearly 33 years. I
+have worked in several cities across the country, including
+Indianapolis and Chicago, but I am coming to you today from
+Seattle, Washington, where I have been a tipped worker there
+for the past 17 years.
+ Today the minimum wage in Seattle is $15 an hour, and it is
+supposed to be a paradise for employees like myself. Instead, I
+am watching my income drop as the mandated wage rises. As I
+have learned that Chairman Scott has proposed to raise the
+Federal minimum wage to $15, I am here to tell you to, to warn
+you, and to share with you my experience as a full-service
+restaurant worker living in a city with a $15 an hour minimum
+wage.
+ To understand my predicament, you first must need to
+understand my industry a bit. Control over my earnings is one
+of the biggest perks of working in the restaurant industry. The
+harder I work to show hospitality to my guests, the better my
+tip, and that is an average of 20 percent that I can garner on
+about every bill.
+ The standard tipping model also has a cost of living
+increase built into it, too. As the cost of goods go up, menu
+prices go up, and so do my tips.
+ Contrary to the rhetoric of my industry's critics, I am not
+forced to rely on tips. I have been able to thrive on tips.
+Historically, in short four-to 6-hour shifts, I can earn $25 to
+$50 an hour, and that is enough to make a life for myself and
+my son.
+ In Seattle, the rapidly rising minimum wage has upset this
+beneficial arrangement. Without getting into the nitty-gritty
+details, you should know that Seattle is one of a handful of
+locales in the country that doesn't count my tips toward my
+hourly wage. What this means in practice is that the pressure
+other businesses are feeling under the 15 is magnified in full
+service restaurants.
+ Things have started to change in Seattle in our industry in
+ways that have negatively affected workers like myself. At my
+restaurant, it was the loss of tipping. As 15 went into effect,
+some restaurants made the decision to change the tipping model
+either in favor of a flat stagnant wage or replaced with
+service charges to substitute for tipping.
+ The math on that is pretty simple. If you are forced to
+give a raise to tipped employees who are already making
+hundreds of dollars a night in tips, where does the money to
+pay for it come from without a huge jump in prices. Well, my
+employer, who is a leader in our restaurant community, took
+away tip lines and went to a service charge model in order to
+keep his restaurants sustainable for as long as possible.
+ Service charges are a mandatory charge to a guest that must
+be filtered through the employer and in which the employee
+receives a percentage instead of a customer tip. In my case, I
+receive only 14 percent of my sales from a 20 percent service
+charge on a bill. So from a $100 sale, I receive $14 on my
+paycheck as a salary commission instead of the $20 or more in
+cash tips that I could have received before. The other $6 is
+then retained by the house to be paid out to support other team
+employment costs and benefits like insurance and vacation.
+ The few dollars an hour increase in my minimum wage doesn't
+cover the loss of income because of not receiving tips. Under a
+service charge model, it is less about how I use my knowledge
+and skills to maximize my income. I am no longer bothered to
+give excellent service to receive that tip but must instead
+sell you the most expensive item on the menu to make the sale.
+The minimum wage increase has literally changed my job from the
+art of service to a routine sales job.
+ I used to work four shifts a week and made enough money to
+raise my son, pay my rent, go to school, and be part of a
+vibrant arts community. With the cost of living skyrocketing
+and the impact of the minimum wage increase on my income, I had
+to get a second job and work 6 days a week.
+ I couldn't sustain that pace. Now I worry every month about
+paying my rent, and this is a worry that I never had until the
+minimum wage increase impacted my job. I have had to give up my
+passion for acting, I no longer can take trips with my kid in
+the summers, and my smaller income all goes to bills. All my
+time goes to picking up just one more shift.
+ I have many friends who have lost their jobs because of the
+rise in the wage. And these are not people of privilege. These
+are working folks, people who have invested in their jobs,
+moved up ladders through experience and education, worked hard
+to grow their jobs, only to lose their jobs because of a policy
+forced on their employers.
+ My friend, JW, is one of those. He worked his way up from a
+busser to a sommelier over years of experience but lost his job
+because the restaurant he worked closed in Seattle because of
+the minimum wage increase.
+ My friend, Ritu was excited when she opened her pizza
+place. As an Indian female business owner, she was proud that
+all of her hard work and experience had led her to a place
+where she could be an owner. After the increase, she closed
+because she could not make the numbers work.
+ And these are just two of several dozen stories.
+ Now, I understand the typical arguments for legislating
+higher wage rates, and I especially understand that in Seattle,
+where the cost of living is incredibly high, but there is no
+free lunch here. Under our minimum wage increase, tipped
+workers are losing our incomes and moving backward to $15 an
+hour. And I would happily trade my gig in Seattle for the
+golden days in Indianapolis, a so-called low-wage market, where
+I wouldn't be working more for less and watching my financial
+stability whittle away as the minimum wage rises.
+ Unfortunately, if Chairman Scott's one-size-fits-all bill
+is passed, I won't even have that option to consider.
+ Thank you, and I would be happy to answer questions.
+ [The statement of Ms. Barron follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you.
+ Ms. Eckhouse.
+
+STATEMENT OF MS. KATHY ECKHOUSE, OWNER, LA QUERCIA, NORWALK, IA
+
+
+ Ms. Eckhouse. My name is Kathy Eckhouse. I am the co-owner
+with my husband of La Quercia in Norwalk, Iowa. We make award-
+winning cured meats, like prosciutto and pancetta. We source
+exclusively from family farms in the United States, primarily
+in Iowa and Missouri. I strongly support raising the Federal
+minimum wage to $15 by 2024 as called for in H.R. 582 because
+it will be good for businesses, workers, and our economy.
+ We founded our business in 2000 and by 2004 we were able to
+build our own production facility. We started with just
+ourselves and now have 60 employees. Our products are sold
+across the United States and Canada in large grocery chains
+like Hy-Vee and Whole Foods as well as independent shops.
+ We have always paid a livable wage, and that is an
+important factor in our success. We are a meat processor, a
+generally low-paying sector of the economy. We have been
+committed from the start to true sustainability and livability
+in our work chain from the farmers to our employees.
+ Our starting hourly wage for production staff is $12 to $14
+an hour, depending on experience. The cleanup crew, which works
+a later shift, gets a $2 an hour premium. Anyone with us for 2
+years or more is currently making at least $16 to $17 per hour
+plus a quarterly bonus equivalent to a week's wages. We also
+provide paid time off, paid maternity leave, and other
+benefits. All our employees work full-time year round.
+ The Raise the Wage Act does not call for a quick jump to
+$15. It calls for gradually raising the minimum wage to $15 by
+2024 which will give businesses time to adjust and experience
+the benefits of higher wages.
+ Reduced turnover is one benefit. High employee turnover is
+common in low wage industries. Turnover is costly for a
+business in terms of both money and time, requiring advertising
+open positions, screening applicants, training, and onboarding.
+ Employees new to our operation or any operation are less
+productive. It takes at least 3 months for an employee to learn
+our particular processes and be efficient, even those who
+worked in meat processing plants before. It takes a year for
+true proficiency. We see more waste, more downtime, and more
+inefficiency on our production line with newer staff. That is
+costly.
+ In addition, not spending time on a constant cycle of
+rehiring and training frees us to look beyond the day to day to
+innovate and grow our business. It encourages employees to be
+part of that process, too, as they develop new skills and
+techniques and familiarity with our work.
+ A minimum wage that covers the basics like rent, groceries,
+and transportation reduces turnover, reduces employee stress,
+and allows them to be more focused and productive at work.
+ It also has a broader societal impact. When businesses pay
+wages that are not enough to live on, the costs of necessities
+get partly shifted to the community at large, the taxpayer-
+funded government assistance programs and food banks, for
+example. It also means that our business is subsidizing the
+profits of low pay competitors.
+ This is not a fair or efficient way to run an economy.
+Workers in one business are the consumers for another. Minimum
+wage increases put money in the hands of people who will spend
+it. Increased wages mean increased consumer spending.
+ My home, State of Iowa uses the Federal minimum wage floor
+of $7.25, as do 20 other States. In 2017, Iowa enacted a law
+that blocked cities or counties from setting higher minimum
+wages, and it is unlikely that Iowa will raise our state
+minimum wage ahead of the Federal. We need a Federal increase
+to ensure that wherever people live and work in Iowa or around
+the country and whoever they work for, they can at least meet
+their basic needs.
+ For 80 years, the Federal minimum wage has set the national
+wage floor. I do not support a regional approach to the Federal
+minimum wage. Nobody should receive a geographical penalty on
+their wages.
+ Raising the minimum wage is not a threat to business.
+Inadequate wages are, weakening the consumer demand that
+businesses depend on to survive and grow. The minimum wage is
+the floor in working people's lives and should enable a minimum
+standard of living that workers and businesses can build on, as
+we have.
+ This is why I have joined with businesses across the
+country to call for raising the Federal minimum wage. It is
+time to get moving to $15 by 2024 to help businesses, workers,
+communities, and the economy to thrive.
+ Thank you for having me today, and I am happy to answer
+questions.
+ [The statement of Ms. Eckhouse follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you. Dr. Strain.
+
+STATEMENT OF DR. MICHAEL R. STRAIN, PH.D, DIRECTOR OF ECONOMIC
+ POLICY STUDIES, AND RESIDENT JOHN G. SEARLE SCHOLAR, AMERICAN
+ ENTERPRISE INSTITUTE, WASHINGTON, D.C.
+
+ Mr. Strain. Chairman Scott, Ranking Member Foxx, and
+members of the Committee, thank you for the opportunity to be
+here today to discuss raising the Federal minimum wage to $15
+per hour. It is an honor. Congress should not increase the
+minimum wage to $15 per hour. The benefits of doubling the
+minimum wage would accrue to middle class households while the
+cost would be borne by workers with relatively fewer skills and
+less experience.
+ It is already difficult enough for workers without a
+college education, workers trying to get their start in the
+labor market, and more vulnerable workers, including the
+formerly incarcerated, to find jobs. Congress should not erect
+a barrier in their paths in order to legislate a raise for the
+middle class.
+ Increasing the minimum wage to $15 per hour would very
+likely result in significant reductions in employment. For
+context, consider the Congressional Budget Office's analysis of
+President Obama's proposed $10.10 minimum wage. CBO found that
+would cost half a million jobs. Importantly, CBO also found
+that the extra earnings generated by a $10.10 minimum wage
+would accrue to households above the poverty line. Three
+dollars out of every $10 of extra earnings would go to
+households earning more than triple the property line, while
+only $2 in every $10 would go to the working poor. Fully $8 in
+$10 of extra earnings generated by the $10.10 minimum wage
+would go to families in the working and middle classes and not
+to the working poor.
+ CBO's analysis then highlights several important tradeoffs
+for minimum wage increases. First, they reduce employment while
+raising earnings. Second, most of the benefits of increases go
+to families that aren't in poverty, while most of the costs are
+borne by the least-skilled and least-experienced workers in the
+labor market. These tradeoffs are only more severe for a $15
+minimum wage, because $15 is such a high-wage floor.
+ It is hard to overstate how high this wage floor would be.
+Over half of all workers in Mississippi and Arkansas make less
+than $15 an hour. In 20 States, half of all workers earn less
+than $17 an hour. Nationally, around one-third of workers, one-
+third earn less than $15 per hour.
+ Given how many workers earn at or just above $15 per hour,
+a $15 wage floor would be extremely disruptive to the labor
+market and would likely cause significant employment reductions
+and other unintended consequences. It is hard to forecast with
+confidence how severe employment reductions would be, because a
+$15 minimum is so far outside our evidence base. But research I
+have done studying previous minimum wage increases finds that
+larger increases produce disproportionately larger employment
+reductions. In other words, if employment fell by X percent
+when we last increased the minimum wage, my expectation is that
+employment will fall by more than X percent as the minimum wage
+goes higher and higher.
+ The productivity of workers, the additional revenue they
+are able to generate for their employer for each hour they
+work, is the primary determinant of their wages. Why would a
+firm pay a worker $15 per hour when that worker is only
+generating, say, $9 in revenue for every hour he or she works?
+If a firm paid this high minimum wage to that worker, it would
+be losing money every hour he or she worked. Businesses can
+absorb and have absorbed minimum wage increases through
+channels other than reducing employment, but they can only cut
+profit margins so much or raise the prices they charge for
+goods and services so much higher.
+ Doubling the Federal minimum wage will leave many with no
+choice other than to cut jobs. This is particularly true if
+Congress indexes the minimum wage to median wage growth or to
+any other measure of price or wage inflation. Research I have
+done shows that preventing the value of the minimum wage from
+eroding over time through indexing leads businesses to reduce
+employment more than they otherwise would. My research finds
+the magnitude of employment reductions is three times more
+severe in the presence of indexing.
+ Raising the minimum wage to $15 an hour sends us into
+unchartered waters. It is imprudent. It is a very risky gamble,
+with the employment opportunities and livelihoods of the least
+skilled, least experienced, and most vulnerable workers in the
+United States bearing the risk. There are better ways to help
+the working poor than a policy that risks putting so many of
+them out of work. Thank you.
+ [The statement of Mr. Strain follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you. Dr. Reich.
+
+STATEMENT OF DR. MICHAEL REICH, PH.D., PROFESSOR, UNIVERSITY OF
+ CALIFORNIA, BERKLEY, CA
+
+ Mr. Reich. Thank you, Chair Scott, Ranking Member Foxx, and
+the other members of the committee, for the opportunity to
+testify today about the Raise the Wage Act of 2019.
+ I want to begin--and this is not planned--by talking about
+Amazon. Amazon announced last October it was going to raise its
+minimum wage for all its workers--temporary, seasonal regular,
+250,000 workers in the United States--to $15 an hour. It was a
+substantial increase, even in rural areas and in low-wage areas
+of the South. These are for the big warehouse centers that they
+maintain.
+ This was a good business decision by Amazon. It has not
+disrupted those local labor markets, those rural labor markets.
+In fact, Amazon, the only disruption I guess is that Amazon got
+850,000 requests for a job at Amazon, quite a large number,
+reducing their recruitment and retention costs.
+ I wanted to make five points or touch on five points. Well,
+rather than say what they are I will just go through them,
+because I don't have enough time to do the prelims. First of
+all, the increase from $7.25 to $15 is over 6 years, is
+surprisingly smaller than it might appear. First, $15 in 2024
+is about $13 or $13.33 in 2019 dollars, depending on which
+price series and forecast you use.
+ Second, entry-level wages in unskilled jobs in our low-wage
+states, not just in high-wage states, in our low-wage states
+are already near or above $9. We heard some testimony, some
+comments earlier today to that effect in North Carolina. And
+those wages are going to go up anyway, 3 percent per year has
+been the forecast that was mentioned. That would bring you to
+$10.50 anyway by 2024.
+ So an increase from $10.50 to $13 is about a 30, 35 percent
+increase, 5 percent per year. That is well within the range of
+previous experience. If you want to calculate it another way,
+you could say that the increase from $9, the entry-level pay
+today, to $13.33 is a 48 percent increase. That sounds high,
+but it is over 6 years, so it is about 8 percent per year. By
+comparison, most of the 140 or more State and Federal minimum
+wage increases of the past 35 years have averaged between 6 and
+9 percent. Some of the citywide minimum wage increases have
+been as high as 28 percent in a given year.
+ Now, 5 years ago, many minimum wage experts, including
+myself, told officials in Seattle and Los Angeles that a $15
+minimum wage would be a bold experiment into unchartered
+territory. In 2019, however, we have the early results from
+many recent minimum wage experiments. These include States like
+California and Massachusetts that are $12 an hour, New York
+City that is at $15, San Francisco is at $15, Seattle is at $15
+and so forth. So the increase in real wages from H.R. 582
+actually does lie within our historical experience. That means
+that the studies that researchers have done does provide a good
+roadmap to what the likely effects are going to be.
+ Now, I want to emphasize that the studies that minimum wage
+economists have done have really changed in their findings over
+the last 30 years, especially in the last 10 years and even in
+the last year. Increasingly, we find very small effects of
+minimum wages on employment. It is really important to be up to
+date when doing a review of this literature. And these new
+studies are of better quality, they have better data than the
+old ones, and they have been influential.
+ In 2015, a panel of prominent economists put together by
+the University of Chicago Booth School of Business asked the
+panel what would be the likely effects of a $15 minimum wage?
+This was in 2015. An overwhelming majority did not think it
+would have a substantial negative effect on employment. Since
+then, we have had further improvements in our research methods
+and the datasets that we can use to study the effects of
+minimum wages.
+ These newer studies really supersede the estimates from the
+old ones. It is just not Ok anymore to rely on these very old
+studies. We now, for example, have excellent estimates of the
+effects on all jobs. Our older studies used to look at teens
+and restaurant workers, and we would then try to guess how many
+workers would be affected throughout the labor force. CBO just
+took a guess at that in 2014.
+ What do these studies tell us? Well, I review the
+literature in detail in my submitted testimony. In one
+sentence, I would say the new studies indicate that a $15
+minimum wage by 2024 will work as it was intended to, that is
+intended to, increase pay, will have minimal to no adverse
+effects on employment.
+ I have to say, of course, that I have been a participant,
+an active participant in doing these studies. My most recent
+one looked at minimum wages in six cities that are the pioneers
+in going above $10 all the way. By 2016, they were $13, which
+is the equivalent of--well, it is higher than what $15 would be
+in 2024. And those included some low-wage cities or low-cost
+cities like Chicago as well as San Francisco and Seattle and so
+on. And we found, a very careful study, that it did not have
+any effect on restaurants' employment.
+ Why does the minimum wage have such small effects? We are
+also making progress on that front. Labor demand might fall,
+that is true, but automation is really overrated. A lot of it
+has already happened. It is going to happen anyway, because
+technology costs are falling. Don't blame the minimum wage for
+the good effects of automation. Labor supply has not been
+mentioned very much, but labor supply of low educated workers
+is going to increase, especially those who have young children
+and high child--
+ Chairman Scott. Summarize the rest of your testimony. You
+are about a minute and a half over.
+ Mr. Reich. I am not following what you are saying. I still
+have a minute and a half, right?
+ Chairman Scott. No, you are over a minute and a half.
+ Mr. Reich. Oh, my God. Ok. I will bring it to a close. All
+right. I will bring it to a close.
+ I will just say very briefly that there are price
+adjustments that will occur that are pretty small that could be
+handled by most industries. Individual businesses can't
+understand how much the prices are going to go up, because they
+are just an individual business. But these costs are changing
+for all businesses, and when you do the math, simple math, you
+find very small price increases. The latitude to increase
+prices is more limited in manufacturing, but we have already
+lost all or most of our low-wage manufacturing.
+ And then we are going to have an economic stimulus, because
+there will be more consumption demand. The effects will be
+greater in the low-wage cities--low-wage states, I am sorry.
+And the low-wage States will have a more educated, more
+healthy, and a bigger work force. So I would say, contrary to
+the fears that some people have said that you have to look only
+at cost, in fact, the effects are going to be much better in
+the low-wage States.
+ Thank you. And apologize for going over.
+ [The statement of Mr. Reich follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Representative Brodeur.
+
+ STATEMENT OF THE HONORABLE PAUL A. BRODEUR, ESQ., STATE
+ REPRESENTATIVE, 32ND MIDDLESEX DISTRICT, COMMONWEALTH OF
+ MASSACHUSETTS HOUSE OF REPRESENTATIVES
+
+ Mr. Brodeur. Good afternoon, Mr. Chairman, Ranking Member
+Foxx, and members of the committee.
+ My name is Paul Brodeur, and I have the honor of serving
+the residents of Melrose, Wakefield, and Malden in the
+Massachusetts State Legislature as their State Representative.
+ I wish to share my perspective on the success we have had
+in the Commonwealth of Massachusetts confronting the problem of
+wage stagnation while creating a stronger economy by increasing
+our minimum wage to $15 an hour by 2023. Two years ago, under
+the leadership of our Speaker, Robert DeLeo, I was appointed to
+serve as the House chair of the Joint Committee on Labor and
+Workforce Development.
+ The Commonwealth faced significant challenges. Despite
+historically low unemployment rates, income inequality was
+growing. New jobs were being created at a promising rate, but
+overall wage growth remained stagnant. Like you, our committee
+held extensive hearings and heard many hours of testimony. The
+statistics and expert testimony were compelling, but I was
+particularly struck by the stories we heard from Massachusetts
+workers and their families. We heard from single moms and dads
+that were working multiple jobs, teens who helped their
+families make ends meet, and families who have been working
+paycheck to paycheck for generations.
+ We also heard from employers who care deeply about their
+workers, but were concerned about the impacts on their
+businesses. In particular, middle-skilled jobs went unfilled,
+which limited their business growth. And we heard from folks
+who want to get ahead, who want the training and skills to move
+out of low-wage jobs but cannot, because they do not have the
+time, energy, or money to seize those new opportunities.
+ In response, our committee convened negotiations among a
+broad coalition of community organizations, religious groups,
+labor unions, and representatives of businesses, both large and
+small. Ultimately, we were successful in passing into law a
+bipartisan bill, which improved the financial stability of
+working families in the Commonwealth within a robust Statewide
+economy. Here is what shaped our efforts: We knew from our past
+experience that previous increases to our minimum wage had
+produced economic gains for workers while unemployment
+decreased and business confidence increased.
+ Looking forward or projecting ahead, the Massachusetts
+Budget and Policy Center testified that nearly one-quarter of
+Massachusetts workers would benefit from an additional gradual
+increase in our minimum wage, and that this would include
+nearly one-fifth of all working parents in Massachusetts. We
+also knew that these working families will spend their
+additional income on our main streets and in our downtowns.
+These observations of our past experience, coupled with
+projections based on sound economic principle, led us to
+raising our minimum wage.
+ During our deliberations, we considered a regional minimum
+wage, but rejected implementing one. We found it is very
+difficult to draw those lines, particularly when geography is
+not a clear indicator of cost of living. Locking certain
+regions of our State into lower wage status by using regional
+wage boundaries would detract from our hard work in investing
+in and revitalizing those cities, towns, and neighborhoods that
+needed help the most.
+ Similarly, we rejected the creation of a training wage or
+teen minimum wage. Now, we all agree on the importance of
+getting that first job. It can be an incredible learning
+experience and can be a foundation for lifetime success.
+However, the testimony we heard and the statistics we reviewed
+told a more complicated story about teen employment.
+ Teen workers are responsible in Massachusetts for nearly a
+fifth of household income amongst our poorest families. These
+teens are not merely working a summer job for extra spending
+money, but they are functioning as breadwinners for their
+families or earning money to further their education. Creating
+a complicated training wage system that few would use or a teen
+wage that would push other low-wage workers, including seniors,
+out of the job market was inconsistent with our goal of helping
+working families.
+ So, contrary to what you may think, Massachusetts isn't
+populated exclusively with elitist, wealthy, Ivy Leaguers. We
+are a diverse state of financiers and family farmers, laborers
+and lawyers, researchers and entrepreneurs, blue bloods and
+blue-collars. We have a proud history of tackling hard problems
+by working together to solve them. Finding a balance between
+these diverse and often conflicting interests was at the
+forefront of our work in raising up the minimum wage.
+ I appreciate the opportunity to address you today. I thank
+you for the opportunity, and I am available to answer any
+questions you might have.
+ [The statement of Mr. Brodeur follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. Thank you. Thank you.
+ We will now recognize members in the order of appearance
+this morning, and the first one is Representative Adams of
+North Carolina.
+ Ms. Adams. Thank you, Mr. Chair, and thank you, Ranking
+Member. And thank you all for your testimony and for being here
+today to our second panel of witnesses.
+ We have been here a while and we have had I think a lot of
+testimony and certainly testimony to the fact that poverty
+level wages don't instill dignity. That is the first thing I
+want to say. Equality makes dignity, and dignity demands a job
+and a paycheck that lasts throughout the week, and I am quoting
+Dr. Martin Luther King on that.
+ I am glad that we split today's hearing into two parts,
+because I don't think enough is said about the positive impact
+that raising the minimum wage has on our economy as a whole.
+Too often we view economic progress as a zero-sum game where if
+workers win, employers lose. But our economy is built by
+consumers. The more money Americans have in their pockets, the
+more they can spend on the goods and services that American
+businesses produce. So don't take my word for it, a consensus
+of economists say the same thing.
+ And with that, Mr. Chair, I want to enter into the record
+two letters, both from the Economic Policy Institute, one from
+Senior Economist and Director of Policy Heidi Shierholz, and
+the other signed by a collection of over 100 of our Nation's
+leading economists.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Ms. Adams. All of these individuals are in support of the
+notion that a $15 minimum wage is beneficial to our economy and
+is long overdue.
+ Ms. Eckhouse, you state in your testimony that when workers
+have more money in their pockets, they spend it. Why is it
+that--so why is it that it is so important for a business,
+including a business like yours that does not sell directly to
+consumers?
+ Ms. Eckhouse. Thank you for your question, Congresswoman.
+ One thing that is very important to us is, of course, what
+we make is sold to be eaten, and people need to be able to buy
+it so that they can enjoy it and we can continue as a business.
+So that is the first element. People have to have money in
+their pockets to buy food, and we make food. That is one thing
+that we do.
+ The other thing that is important is that if people in our
+employ or in other companies' employ have more money, they can
+do things like purchase goods and services in their
+communities, and that is really important.
+ Ms. Adams. Ok. Everybody has to eat, and we heard this
+morning from laborers, workers who are in the fast food
+business and other businesses who have a difficult time trying
+to make the ends meet for their family.
+ Professor Reich, the research and the testimony of Ms.
+Eckhouse clearly makes a compelling case that increasing the
+minimum wage boosts consumer spending. What about savings?
+ Mr. Reich. First, I think her argument is borne out by a
+number of studies from the Federal Reserve Bank of Boston that
+show that the bigger the wage increase, minimum wage increase,
+the more consumer spending goes up. I think people who are
+making the minimum wage, most of them aren't saving, and
+probably most of their income, most of their increased income
+goes to items like food, to buying a used car.
+ The other effect that it has is on improving credit scores.
+And if you improve credit scores, you know, you have much lower
+interest rates and you can borrow. So ultimately, maybe it will
+get you to savings, but I don't think at $15 we are talking
+about a lot of savings.
+ Ms. Adams. Ok. Can you make the argument that raising the
+minimum wage allows individuals and families to make
+investments that provide long-term sustainable returns?
+ Mr. Reich. Well, first of all, I think people who are
+struggling to make ends meet every month--and that isn't just
+people who are below the poverty line, it is many people who
+are above the poverty line. The Federal Reserve just did a
+survey showing about one-third of Americans couldn't meet a
+sudden $400 financial requirement. One-third, that is a very
+large number.
+ Anyway, people who are struggling on a day-to-day level
+like that aren't--you know, they are having a hard time being
+organized. They are having a hard time getting their kids to
+school, getting their cars to work, dealing with all the
+disruptions that everyday life has. And so I think if they want
+to, you know, be able to invest in training and education, it
+requires more income. Often it requires more time, you know,
+being able to work.
+ Ms. Adams. Ok. Thank you very much.
+ Mr. Chair, I yield back.
+ Chairman Scott. Thank you. Ranking Member Foxx, do you want
+to be recognized?
+ Ms. Foxx. Would you recognize Mr. Comer?
+ Chairman Scott. Ok.
+ The gentleman from Kentucky, Mr. Comer.
+ Mr. Comer. Thank you, Mr. Chairman.
+ And, Ms. Barron, I really appreciated your testimony. The
+minimum wage is often talked about as a policy to help low-wage
+or lesser skilled workers, but you didn't seem to fit in either
+of those categories. You are earning a good living--
+ Ms. Barron. I do, yes.
+ Mr. Comer [continuing]. in the restaurant business. But
+that was because of your skills and your work ethic--
+ Ms. Barron. Yes.
+ Mr. Comer [continuing]. and your experience. Seattle's $15
+minimum wage did not appear to help you. Would it have been
+better for the city of Seattle to just not do that and not try
+to help you?
+ Ms. Barron. I didn't ask for the help. I was doing just
+fine. We don't have a tip credit in that city, and that is
+another reason why it just is not working out.
+ Mr. Comer. That is my experience. I was a state legislator
+for 11 years in Kentucky, and I look back from a historical
+standpoint and there were a lot of bills that passed with good
+intentions but had unintended consequences. And I want to say
+it sounds like a policy that was supposed to help workers now
+appears to be doing the opposite in Seattle.
+ As we are considering a legislative proposal to radically
+increase the Federal minimum wage and eliminate the tip credit,
+what would you want us to take into consideration, based on
+your experience?
+ Ms. Barron. I would say take into consideration tip credit
+for sure. I mean, that is one of the reasons why tipped workers
+in Seattle are having a hard time now. The tip models are
+changing, and we are losing money. And, you know, I lose money
+on a daily basis under a service charge, which is something
+that is going citywide now.
+ And so I would say you have to look at this whole
+situation. It is a one-size-fits-all deal, and it doesn't fit
+everything. So please, you know, look at it a little closer.
+ Mr. Comer. And I couldn't agree more that one size does not
+fit all, because the economy in Washington State is
+significantly different than the economy in rural Kentucky,
+where I represent. So I appreciated that.
+ Dr. Strain, as you noted in your testimony, there are large
+regional differences in cost of living and average income.
+Obviously, the cost of living in Seattle is significantly
+higher than it is in Monroe County, Kentucky, where I reside.
+Can you elaborate on how a $15 minimum wage may result in
+disproportionate job losses in regions that have lower cost of
+living and lower average incomes?
+ Mr. Strain. Yes. In addition to those differences, there
+are also differences in the existing minimum wages. Some States
+follow the $7.25 Federal minimum. Other States have
+significantly higher minimum wages. And, you know, the
+important thing to consider is how big of a shock will this be
+to the employers of low-wage workers?
+ There are many businesses who will see the cost of
+employing minimum wage workers double. There are some
+businesses who will see the cost of employing minimum wage
+workers not double, but go up by 50 percent or something like
+that. And it stands to reason, and the evidence bears out, that
+the larger that shock and the larger the increase, the harder
+it will be for businesses to deal with that without reducing
+employment.
+ Mr. Comer. And I will say again what I said in the first
+segment of testimony this morning. I believe that we are in a
+position in America now where we are finally starting to see
+wage growth. I think it is a result of policies over the last 2
+years from a regulatory standpoint and from a lower taxation
+standpoint. Hopefully, we won't do anything to deter the job
+growth that is being created just from the market. There is a
+shortage of workers. It is basic supply and demand.
+ So I appreciate you all's testimony. Thank you, Ranking
+Member Foxx, for letting me ask questions.
+ And I yield back, Mr. Chairman.
+ Chairman Scott. Thank you. The gentlelady from Oregon, Ms.
+Bonamici.
+ Ms. Bonamici. Thank you, Chairman Scott.
+ And to the witnesses, I apologize I was not here to hear
+you present your testimony, but I certainly have reviewed it. I
+think it is important to keep in mind as we have this
+conversation about the Raise the Wage Act, which I am proud to
+support, that the increase is phased in. It is not all of a
+sudden. And also, low-wage workers spend their additional
+earnings. They go right back into the local economies.
+ Ms. Gupta, in your testimony, you talk about how over 31
+million children, two out of every five children live in
+households with at least one working person earning less than
+$15 an hour. Can you talk a little bit about how--because we
+talked a lot about the wage earners, but can you talk a little
+bit about the children and how these low incomes affect them,
+their health, their education as they are growing up?
+ Ms. Gupta. Yes. Thank you, Congresswoman, for the question.
+Everyone should be paid fairly, including young people. And
+some young people working--some young working people I should
+say currently being paid the lower youth subminimum wage, they
+are also students. Some of them are the sole family wage
+earner. We heard from Mr. Wise this morning, who talked about
+his own experience being the main provider for his family and
+being unable to do so on the existing minimum wage.
+ The National Employment Law Center notes that of the 18-and
+19-year-olds that are enrolled in college, 70 percent are
+working. And so that is why we have to be paying attention to
+the role that young people play in their families. For many of
+them, they really are, you know, mainstream supporters and
+earners for their families and have a lot of other obligations.
+ Ms. Bonamici. So it is fair to say that the children who
+are being raised by parents making less than minimum wage are
+affected as well. It doesn't just affect the wage earner; it is
+affecting their families and their children as they are growing
+up, because they might not have the food and resources and
+healthcare they need.
+ Ms. Gupta. Absolutely.
+ Ms. Bonamici. And also, Ms. Gupta, I want to get a couple
+questions in. Oregon is one of those States that prohibits
+employers from paying tipped workers a subminimum wage. I said
+this morning I was surprised to find out that there were other
+states that allowed a subminimum wage. Research demonstrates
+that workers in the seven States that have eliminated
+subminimum tipped wage continue to receive tips from customers.
+Businesses have not suffered hardship.
+ In your testimony, you discuss the origins of the tip
+minimum wage, which are intertwined with the history of slavery
+in this country. Why do some states still continue to allow it
+and who would benefit from gradually phasing it out, as
+proposed in the Raise the Wage Act?
+ Ms. Gupta. Well, the civil rights history I think or the
+history of the tip minimum wage is crucial to understanding why
+States need to move away from it. The reality is that poverty
+rates for people who work for tips are more than twice as high
+as rates for working people overall. And the people most
+affected are women of color, low-wage earners. The median
+annual income for tipped workers of color is $14,300. For black
+working people, it is even lower at about $12,900 per year.
+ And as we noted, tipped workers have not received a raise
+in 28 years, but the actual racial impact and the gender impact
+of the current policies in states that have frozen the tip
+minimum wage for so long really disproportionately impacts
+women of color in families.
+ Ms. Bonamici. Thank you.
+ And, Dr. Reich, thank you for your testimony. The most
+recent increase to the Federal minimum wage a dozen years ago
+did not address inflation rates, or in my State of Oregon, we
+indexed to inflation, based on the CPI.
+ And I wonder if you could talk a little bit about how $15
+in 2024 does not equal $15 in today's dollars. When you adjust
+past increases to the Federal minimum wage for inflation, how
+does the Raise the Wage Act compare? Based on your research,
+can you address projected effects on employment?
+ Mr. Reich. On employment? Well, first, the question on
+indexing, there are about ten states that index their minimum
+wages, and I couldn't find any difference on the employment
+effects in the states that do and the states that don't.
+ The States that do index and have for a long time, like
+Washington and Oregon, are actually a very interesting research
+topic, because in the rest of the country the real minimum wage
+has fallen where there hasn't been indexing and it stayed at
+$7.25. So you see an increase in the minimum wage, but then in
+the subsequent years the real value decreases. So, you know,
+are we really observing an increase in the minimum wage when we
+look at those events? In the index states, we do see those
+events. So I think that is--and in those states, we don't see
+negative effects on employment from indexation.
+ Indexation means that there is a planful, you know,
+approach to the minimum wage each year, which means a small
+couple of percent increase rather than the kind of sawtooth
+pattern that we have, we have big increases every 10 years or
+so followed by long periods where we don't.
+ Ms. Bonamici. Thank you.
+ And I yield back. Thank you, Mr. Chairman.
+ Chairman Scott. Thank you.
+ The gentleman from Kansas, Mr. Watkins.
+ Mr. Watkins. Thank you, Mr. Chairman.
+ Dr. Strain, you bring up the fact that there is a lack of
+international evidence regarding the effects of doubling
+minimum wage. In fact, you explained how States who increase
+their minimum wage are taking on a gamble. Now, I asked for
+international comps because I have lived outside the U.S. most
+of my career. I have been to about 75 countries, and I have
+never seen a country with more economic opportunity and more
+freedom and a chance to advance as the United States.
+ So my question is, why is there a lack of international
+evidence that might compare to what this committee is
+considering today?
+ Mr. Strain. Well, I think it serves to highlight how major,
+how big of a decision this would be for the Congress. There are
+not countries that have gone up to a level like $15, because
+$15 is a very high wage. There is a reason why in the United
+States only until very recently no states had gone up to $15,
+and there is a reason why the Federal minimum wage is less than
+half of $15.
+ Mr. Watkins. Can you think of any other nations in
+particular that might have come close?
+ Mr. Strain. I think Great Britain is around $12 or so.
+ Mr. Watkins. All right. That is all I have.
+ Thank you, and special thanks to Ms. Barron. I really
+appreciate your willingness to come and speak with us today.
+Your testimony was very moving and you are very selfless. Thank
+you.
+ Ms. Barron. Thank you.
+ Chairman Scott. The gentleman yields back.
+ The gentlelady from Florida, Secretary Shalala.
+ Ms. Shalala. Thank you very much, Mr. Chairman.
+ Just to begin, Florida's minimum wage as of January 1st is
+$8.46. It does increase with the rate of inflation, but a
+living wage in Miami-Dade, in my district in particular, would
+have to be almost $13. So I very much support this gradual
+increase.
+ If I could start with Mrs. Eckhouse, I am very excited to
+see you, because I get your meat through Murray's.
+ Ms. Eckhouse. Wow, I am thrilled. Thank you.
+ Ms. Shalala. I have to disclose that. So I am a big fan.
+ Ms. Eckhouse. Wow, that is really exciting. Thank you so
+much.
+ Ms. Shalala. I am interested because you are in the middle
+of Iowa, obviously in a small--it looks like a small town in
+Iowa. Tell us a little about the turnover rate, how long your
+employees have worked for you, because I have always been
+interested in when you raise wages what that actually does with
+turnover and retention. You obviously have done this over a
+long period of time.
+ Ms. Eckhouse. So we opened our plant--we built our plant in
+2004 and we opened it in 2005, in February. Our longest term
+employees have been with us since then, just a few. And we have
+had periods of greater and lesser turnover, but we do have a
+lot of loyalty among our employees. They appreciate that we pay
+high wage to them, as high as we can manage, that we give them
+regular increases in their wage. And we have a lot of other
+elements that we offer to our employees in addition to their
+hourly wage or their salary.
+ But we have--we really--given the industry that we are in,
+which is the meat processing industry, we have a relatively low
+rate of turnover among our employees; and that is, as I said in
+my testimony, really critical to us, because, like all
+businesses, what we do is unique, but ours is possibly more
+unique than others, which I realize is not a grammatically
+correct formulation. But really, what we do is unusual and we
+need to train people very carefully to do a good job. And it
+takes a long time to train them, and to have people walk out
+the door because they can get more money somewhere else, that
+is damaging to us as a business and discouraging to us as well.
+ Ms. Shalala. Thank you very much.
+ Dr. Reich, I have been very interested in your work for
+some time, and I am particularly interested in the discussion,
+and you are talking to us a little about the offset for minimum
+wage, the SNAP program, for example. And that is, by raising
+the minimum wage, I believe we would save money on the
+Supplemental Nutrition Assistance Program, because there would
+be less people using that program as the minimum wage went up.
+ Mr. Reich. That is right. I looked at not just the rules,
+which say that there is a ceiling above which you are no longer
+eligible for the SNAP program, and that it is not really--or to
+mix my metaphors up, I guess, it is not a cliff. You don't fall
+off it all of a sudden. It is a gradual decline in the food
+stamps that you get. And when I compared that across states
+with different minimum wages and try to make everything else
+controlled so that it was a controlled experiment, we found
+that, indeed, higher minimum wages led to lower food stamp
+expenditures as well as food stamp enrollments.
+ Ms. Shalala. I appreciate that.
+ Mr. Chairman, just raising, increasing the minimum wage in
+my State of Florida to $10.10 per hour would decrease SNAP
+expenditures by $290 million. So when we talk about raising the
+minimum wage, we have to look at how it would offset certain
+Federal programs and actually create an offset that would be
+significant for the Federal Government.
+ Thank you. I yield back.
+ Chairman Scott. Thank you. The gentleman from Idaho, Mr.
+Fulcher.
+ Mr. Fulcher. Thank you, Mr. Chairman.
+ I think my question is best geared toward Dr. Strain. In
+our State of Idaho, approximately 65 percent of our commerce in
+the tax receipts come through what would be considered a small
+business or ag-based economy. And I just try to look at this,
+and I understand what my good colleague from Florida just
+mentioned about the potential offsets with Federal programs,
+but that is taxpayer money as well. If we take that minimum
+wage to $15 in our State, where does that money come from?
+ Mr. Strain. Well, the money comes from smaller profit
+margins for businesses that can continue to employ workers. The
+money comes from employing fewer workers and finding more cost-
+effective ways for businesses to conduct their operations
+without workers. So one obvious example of that is switching
+from human cashiers to automated kiosks and things of that
+nature.
+ You know, there is no kind of magic source of money for
+these things. When Federal regulation says that you can't pay a
+worker less than $15 an hour, businesses take that as a given
+unless they break the law. And, of course, there is a
+nontrivial rate of subminimum wage payments. The higher the
+minimum wage goes, the more of a problem that will be.
+ But businesses take that as a given and then decide whether
+or not it makes sense to hire the next worker. And the concern
+is that businesses will decide it does not make sense to hire
+the next worker.
+ Mr. Fulcher. Thank you. So in our situation potentially as
+policymakers, we would need to go into this understanding that
+part of the calculus, part of the result, part of the impact of
+implementing this would be that we are knowingly redistributing
+that revenue from one party to another, because what I am
+hearing you say is that the prices would have to go up or they
+would have to figure out how to put cost down in some other
+area.
+ Mr. Strain. Yes. One way to think about it in those terms
+is that you are taking money away from low-skilled, less
+experienced workers and giving it to workers who get to
+continue keeping their jobs, who will disproportionately be
+higher skilled workers with more experience. And, you know, I
+think the position that you are in is to decide whether that is
+a good tradeoff.
+ Mr. Fulcher. Thank you, Dr. Strain.
+ Thank you, Mr. Chairman. I yield back.
+ Chairman Scott. Thank you. The gentleman from Michigan, Mr.
+Levin.
+ Mr. Levin. Thank you, Mr. Chairman.
+ With permission, I would like to submit for the record a
+letter from I think 10 or 12--I didn't count them--
+organizations representing disability rights groups, just an
+incredible range of groups, the Autism Society of America,
+Disability Rights and Education Defense Fund, National Down
+Syndrome Congress, supporting the bill.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Mr. Levin. And, Ms. Gupta, I would like to ask you a
+question about this very matter, their letter. The FLSA has a
+provision, section 14(c), as you know, that allows individuals
+with disabilities to be paid a subminimum wage. As your
+testimony States, some are paid as little as pennies an hour.
+Why is it important to phaseout 14(c) to ensure all people in
+this country are paid a fair wage, as these groups are
+requesting?
+ Ms. Gupta. Thank you, Congressman. Section 14(c) of the
+FLSA was actually written at a time when individuals with
+disabilities were predominantly housed in institutions and
+endured long-term segregation. At that time, there were no
+statutory requirements that would support individuals with
+disabilities in the workplace, and individuals with
+disabilities didn't actually have legal protections from
+discrimination.
+ And when Congress passed the ADA in 1990, it ushered in a
+new era, and then the Supreme Court issued their Olmstead vs.
+L.C. opinion. And the reality is that people with disabilities
+deserve to work alongside friends, peers, and neighbors without
+disabilities. They deserve to earn fair wages, to access equal
+opportunity for advancement. And the 14(c) of the FLSA has
+really locked classes of people with disabilities, particularly
+with intellectual and developmental disabilities, into really
+degrading subminimum wage and sheltered workshops.
+ Mr. Levin. And I assume it almost assures their continued
+dependence on family or Federal dollars of other kinds to be
+able to live and have food and shelter and so forth.
+ Ms. Gupta. That is right. It has created an increased long-
+term dependency and, of course, this also can create deeply
+kind of humiliating and personal experiences that make people
+with disabilities feel like kind of subhuman.
+ Mr. Levin. Yes. I have to say, Mr. Chairman, for 4 years I
+ran the work force system of the State of Michigan, and one of
+the most delightful parts of my job was handling all the areas
+that help people with disabilities live independently and gain
+employment. And it was probably the area I learned the most in,
+but also we really do a disservice to huge swathes of our
+population if we say that they don't deserve to earn a basic
+minimum wage. So thank you for that.
+ Dr. Reich, I would like to ask you a question I don't think
+has come up that much. And I don't know if there is good
+research on this or not, but I feel like these discussions
+about the minimum wage lack imagination. And your profession is
+famous for lacking all imagination, so maybe it is an unfair
+question.
+ There are profound, profound effects on the economy of
+having more money in working people's pockets. Is there
+research to show the economic impacts to the restaurant, to,
+you know, the local store, to the barber shop, to the auto
+dealer when people are making more money in the community, and
+what happens, where that money goes and what it does to Main
+Street?
+ Mr. Reich. Thanks for the question. I know of two studies
+on spending effects of the minimum wage. One is done at the
+Federal Reserve Bank in Chicago, in the research department,
+and the other more recently the Federal Reserve Bank of Boston.
+ Both found big spending effects, because people had more
+money in their pockets. And the Boston one actually looked most
+closely at food--restaurant spending, rather. And it found that
+while restaurant prices went up, restaurant sales also went up.
+So the prices did not deter people going to restaurants at all.
+ Mr. Levin. You know, I think that is such a profound point.
+I know from my own experience that the restaurant industry is,
+you know, is a big opponent of this. And I just think that the
+experience in States and cities that have raised their minimum
+wage, and when you visit them they have unbelievably thriving
+restaurant scenes and high, high employment.
+ So I really hope that we will pass this bill and we will
+allow workers to have more dignity and more self-sufficiency in
+our country, and it will actually help grow our economy and
+make it more fair. Thank you very much.
+ I yield back, Mr. Chair.
+ Chairman Scott. Thank you.
+ The gentleman from Pennsylvania, Mr. Thompson.
+ Mr. Thompson. Chairman, once again, thank you for this
+marathon hearing.
+ Thanks to all of our panelists that are here. I appreciate
+that. I just want to make a comment, then I have got a couple
+questions. My comment is, I don't know how many of you have
+ever--I spent 28 years before I came to Congress serving
+individuals facing life-changing disease and disability. I have
+spent a lot of time in supported workshops, supported
+employment sites. I spent a career trying to help adapt
+equipment, help look at facilitating processes, you know, to be
+able to help people achieve a competitive level of work.
+ And you can do all that, and there are still individuals
+with some very severe complex disabilities who you throw by the
+wayside by eliminating piecework or subminimum wage, you know,
+folks who are just so complex in their disability. But I
+challenge you if you have not, where these folks are still
+working--and, unfortunately, a lot of them have lost their jobs
+and are no longer able to have that sense of accomplishment,
+that thing that defines them, the pride that they take.
+ The coolest place I have ever been is in one of those sites
+on payday. And those checks, some of those checks aren't very
+large, but you would think that the way they receive it was
+like for a million dollars. The self-esteem, the work.
+ And so before you throw people with complex severe
+disabilities under the bus with some type of flawed policy that
+ignores the needs of the very, very disabled. We are not
+talking about--you know, I worked to help facilitate people
+back into life in a full and robust way. I encourage you to
+check that out.
+ Dr. Strain, I want to just--the first question is about the
+future of a lot of minimum wage jobs. As I travel around, I am
+from a very rural district. You know, I go into grocery stores,
+self-checkout counters now. Restaurants, there is no wait
+staff, you order on electronically. Gas stations. I mean, all
+just kind of a lot of places where--not everywhere, but a lot
+of minimum wage jobs that I have heard referenced today, I
+mean, they are low-skilled jobs and so technology is
+eliminating a lot of those. It is not going to totally
+eliminate them, but--and that is really why I look to a ladder
+of opportunity. You want people to do better in life, help them
+connect with the work that this body has already done, in terms
+of career and technical education training, skills-based
+education.
+ Dr. Strain, any thoughts on how the advancement of
+technology in some of these settings where we have low-wage
+jobs are impacting low-wage jobs?
+ Mr. Strain. Yes. I think that is an excellent point. The
+cost of that technology has been going down over time. And low-
+skilled workers, minimum wage workers have to compete more
+fiercely in order to have those jobs. A potential risk of
+raising the minimum wage at all, much less to $15 an hour, is
+that just tips the cost-benefit calculus in favor of those
+kiosks and that technology and away from hiring a human worker.
+ But there is even a more important point than that. Low-
+skilled workers, even if they are no longer going to be
+employed as cashiers as technology continues to get better and
+cheaper, do constitute a pool of available resources for
+businesses. And businesses are smart, and they are going to try
+and figure out a way to use those workers.
+ So a $15-an-hour minimum wage not only makes it harder for
+businesses to employ those workers today, it makes it much
+harder for businesses to figure out how to employ those workers
+in the future doing new kinds of jobs that don't currently
+exist yet.
+ Mr. Thompson. Dr. Strain, you note in your testimony that
+worker productivity is primarily a factor in wage levels. How
+do education and skills development, the skills-based education
+factor into productivity?
+ Mr. Strain. Well, they increase it. So if you are thinking
+about productivity is roughly how much revenue can you generate
+every hour you work for your firm? How much additional revenue
+can you generate for the firm? The more skills you have, the
+harder you work, the more education you have, which is a
+primary way we transmit skills, the more revenue you are going
+to generate, the more valuable you are going to be, the more
+firms are going to compete over you and the more your wage is
+going to go up in the market.
+ Mr. Thompson. And we have a skills gap today. And I would
+just love, encourage folks to, you know, to check with the work
+force investment boards, the different great agencies that are
+out there, our community colleges, just the great places where
+you can access this type of education.
+ The Federal Government is supporting that in a way more
+than what we ever have in the past with this piece of
+legislation that we enacted last year. And I really do think
+that is the pathway to greater opportunity.
+ Thank you, Chairman.
+ Chairman Scott. Thank you. The gentleman from New York, Mr.
+Morelle, is recognized for 5 minutes.
+ Mr. Morelle. Thank you, Mr. Chair. I will pay particular
+attention to the shot clock. I apologize for exceeding my time
+earlier today.
+ Thank you to the panelists for being here. Over the years
+in the New York Assembly, I met regularly with the Center for
+Disability Rights, a not-for-profit community-based advocacy
+and service organization for people with all types of
+disabilities. And during my many conversations with the CDR, a
+recurring topic was the question of phasing out the subminimum
+wage for individuals with disabilities and working toward a
+Federal law, to allow those workers to earn the same wage and
+not face discrimination on the basis of the discrimination.
+ Ms. Gupta, if I might ask you, section 14(c), the Fair
+Labor Standards Act, allows for individuals with disabilities
+to be paid a subminimum wage. It was written at a time when
+individuals with disabilities were predominantly housed in
+institutions, something that, gratefully, is no longer the case
+in many places. There was no statutory requirement, as I
+understand it, to support individuals with disabilities in the
+workplace, and the individuals did not even have legal
+protections from discrimination.
+ I am just curious, can you describe how our legal framework
+has changed regarding those protections and supports for
+individuals in all aspects of society and how this does impact
+and necessitates the phasing out of 14(c)?
+ Ms. Gupta. Yes. As you said, Congressman, section 14(c) of
+the FLSA was written at a very particular period of our
+Nation's history when there really was no legal framework for
+understanding discrimination against people with disabilities.
+And then when Congress passed the Americans with Disabilities
+Act in 1990, it really ushered in a very broad new wave of
+protections, kind of a new era for people with disabilities in
+our country.
+ And then the Supreme Court kind of further elucidated the
+protections in 1999 in a case called Olmstead versus L.C. and
+recognizing I think what was a crucial tenet of the ADA, the
+community integration mandate. And it was there in that case
+that the court said that the ADA bars unjustified institutional
+isolation of persons with disabilities.
+ And when I was in the Justice Department, although my
+predecessor started this, there was a real effort to ensure
+that mandate had real meaning in the lives of people with
+disabilities and to seek to make sure that where there were
+sheltered workshops that were segregated facilities that really
+excluded or primarily just focused on employment for people
+with disabilities who had little to no contact with people who
+did not have disabilities, there was a real effort to ensure
+that people with disabilities could work alongside peers and
+have equal opportunity to employment.
+ And that is why we have seen a number of states actually
+now, both through litigation but happily through legislative
+action, take the charge to end 14(c) and to have a phased-in
+opportunity to raise the minimum wage for people with
+disabilities.
+ Mr. Morelle. Thank you for your answer. And actually, you
+answered my next question, which related to the conflict with
+the 14(c) and the ADA, so I appreciate your comment on that.
+ Let me just in closing, six states, as you mentioned, have
+completed or are in the process of phasing out 14(c). I think
+Vermont and New Hampshire have completely phased out. Maryland,
+Alaska, Oregon and Rhode Island are in the process of it, and I
+understand Hawaii and Kentucky are at least considering it.
+ Can you just talk about the other benefits individuals with
+disabilities experience other than financial benefits from the
+phasing out of 14(c) and moving into a competitive integrated
+employment setting?
+ Ms. Gupta. Yes. I mean, so much of what we are talking
+about today is really about the dignity of work and people with
+disabilities feeling the dignity of being human beings entitled
+to the same protections as any other people in this country and
+being able to participate in the mainstream economy with people
+without disabilities, to have the opportunity, to have equal
+opportunity for jobs and housing and the like.
+ And that this move from the ADA to Olmstead and beyond is
+really about ensuring that people with disabilities have equal
+opportunity and are not kind of considered, you know, folks to
+be segregated out of the mainstream economy.
+ Mr. Morelle. Very good. Thank you again to all the
+panelists for your great work.
+ Thank you, Mr. Chair. And with that, I ask unanimous
+consent to submit into the record a 2018 report from the
+National Council on Disability that renews its recommendations
+for the phaseout of section 14(c) of the Fair Labor Standards
+Act.
+ Chairman Scott. Without objection.
+ [The information follows:]Mr. Morelle
+ National Council On Disability: https://www.govinfo.gov/
+content/pkg/CPRT-115HPRT36713/pdf/CPRT-115HPRT36713.pdf
+ Mr. Morelle. Thank you, sir.
+ Chairman Scott. Thank you. Thank you.
+ The gentleman from Pennsylvania, Mr. Smucker.
+ Mr. Smucker. Thank you, Mr. Chairman.
+ One of the opportunities I think we have here is to
+implement policies that continue to lift more people out of
+poverty. I know one of the goals of mine is to try to find ways
+that we can give people the opportunity to connect with a good-
+paying job and to provide that dignity that Ms. Gupta was just
+referring to.
+ Dr. Strain, I would like to talk about the doubling of the
+Federal minimum wage in that context. Some people believe that
+doubling the minimum wage is an effective antipoverty policy.
+Is that the right way to view it?
+ Mr. Reich. It is certainly not the way I view it. The
+benefits of increasing the minimum wage are that workers'
+earnings go up. But if you look at who those earnings accrue
+to, they are to households that are not below the poverty line,
+on the whole. So it is certainly the case that the minimum wage
+is a very poorly targeted antipoverty tool. In addition, the
+costs of the minimum wage are borne by workers without a lot of
+skills, workers without a lot of experience. Those workers are
+much lower income, on average.
+ And so you have this policy where the benefits go to people
+who are further up the income distribution. The costs are borne
+by the least-skilled, least-experienced, most vulnerable
+workers in society. If your goal is to help out, you know,
+middle class households, maybe that is a reasonable tradeoff.
+If your goal is to help the working poor, then it is certainly
+not, in my view.
+ Mr. Smucker. Ms. Barron, just to followup to that,
+according to the U.S. Census Bureau, about 60 percent of
+working age Americans who live in poverty do not work at all
+and, therefore, would potentially not benefit from a minimum
+wage increase. But, that said, I firmly believe that the vast
+majority of Americans desire the dignity of earning that
+success and would work for a living if the opportunities
+existed.
+ Based on your experience, do you think that more than
+doubling the Federal minimum wage will make it easier or harder
+for unemployed Americans to find work and begin to make a
+living?
+ Ms. Barron. In my opinion, I would think it makes it
+harder. I mean, we have seen support staff jobs, which are
+typically jobs that people who are right out of school take or
+people, you know, low-income workers I guess you could say or
+just people starting out would take, and those jobs are going
+away.
+ In Seattle, we have a chain called Red Robin, and they
+employ a lot of people across the State and across the country,
+I believe. And due to the $15-an-hour minimum wage increase,
+they went ahead and wiped out all of their support staff. Now,
+that is bussers and hosts and food runners and things of that
+nature. And these are, again, jobs that, you know, when you are
+first starting out of school, I started that way. I started as
+a busser. And, you know, you work your way up through that
+industry.
+ So, you know, I think people that are unemployed looking
+for jobs to start out in any sort of industry probably are
+going to have trouble, if something like Red Robin is an
+indicator.
+ Mr. Smucker. There has been some discussion about teens,
+teens entering the work force.
+ Ms. Barron. Yes.
+ Mr. Smucker. And my son is 16 years old, has several
+different jobs, is, by the way, thrilled with that one job was
+$9.50 per hour. But I was part of a presentation recently--I
+would just like to get your reaction to this--measuring the
+success of people who enter the work force.
+ And in the view of this presenter, he was showing
+statistics that where he believed that having a job during high
+school was one of the best indicators of whether someone would
+be successful after that. Do you agree with that?
+ Ms. Barron. I do agree with that. And my son is going to be
+turning 16 next week. And, you know, I have raised him since at
+a very young age to start to work. You know, whether that is
+doing dishes at home or now he currently has a job walking
+dogs.
+ Mr. Smucker. I was speaking to an owner of a restaurant in
+my area, a mixed bar and grill, saying that, you know, people
+who have been there for some time were earning well over
+$40,000 per year and more. And his view, as an owner of a
+business who enjoyed providing jobs for teens, said that would
+be much more difficult to do if they had to start at $15 an
+hour. Do you see that as well?
+ Ms. Barron. Yes. At the restaurant where I work, we are
+trying to hire people now that, you know, have way more
+experience. So, again, we don't have those support staff jobs.
+So now we have to hire--you know, if we are hiring bartenders
+and such like that, we are looking at people that have had a
+lot of, lot of experience. And, again, those are hard to find,
+because now we are going to a service charge. And so people
+with a lot of experience have actually moved out of the city.
+So we are seeing people leaving the city, because the minimum
+wage increase is impacting how they make their money.
+ I honestly--I mean, for young kids, I think of myself when
+I was 17 coming out of high school. And my mom worked in a
+restaurant. She got me a job bussing tables. And I think about
+how I worked my way up through the industry, and it has allowed
+me to survive and do some of the things that I wanted to do in
+my life. And I think about myself at 17, 16 years old, and
+wonder about the kids nowadays. Like my son, like I don't know
+what he is going to be doing, you know, if he starts in the
+restaurant industry. I am trying to tell him don't do that,
+but--
+ Mr. Smucker. Thank you.
+ Chairman Scott. The gentlelady from Michigan, Ms. Stevens.
+ Ms. Stevens. Thank you, Mr. Chairman, and thank you for
+this wonderful day of hearings on a very important topic. And
+thank you to our incredible panelists for being here today.
+Your testimonies have mattered a great deal.
+ As someone who was managing a multimillion dollar federally
+funded portfolio focused on the future of work in the digital
+age of manufacturing in the age of automation before I was
+running for Congress and was now in Congress, it is obvious
+that the question around the future of work must be undergirded
+within our present reality, that the question of our economic
+orientation is, how do we choose to value human work and what
+are we handing over to automation versus what are we giving to
+people.
+ The question of has a hamburger--excuse me, has a machine
+ever been able to buy a hamburger? No, that machine never has,
+that we must live in a human-driven and oriented economy.
+ So I have got four quick questions for Dr. Strain, who I
+believe you are, you know, capable of answering these. Could
+you answer quickly, what is the yearly income of a person
+living in poverty?
+ Mr. Strain. The yearly income of a person living in
+poverty?
+ Ms. Stevens. Yes. What is our federally indexed rate for
+somebody--
+ Mr. Strain. It varies, depending on how many children you
+have in the household. Say $20,000 dollars.
+ Ms. Stevens. Ok. And what is the income of a person working
+full time at the minimum wage?
+ Mr. Strain. A person working full time at the minimum wage
+is $15,000, roughly.
+ Ms. Stevens. And do you know how much our Federal
+Government spends on SNAP benefits a year?
+ Mr. Strain. Not precisely, no.
+ Ms. Stevens. Ok. And so I take it you don't know how many
+are working full time who may happen to be utilizing SNAP
+benefits?
+ Mr. Strain. Who are working full time who are utilizing
+SNAP benefits? Not--
+ Ms. Stevens. Yes, the percentage of our work force. Ok.
+Well, we can do that as a question for the record after the
+hearing.
+ So, Ms. Gupta, quickly for me, can you describe for us what
+this means to work full time in the U.S. at the poverty rate?
+How does this impact a person's access to healthcare, to equal
+opportunities? What does this mean for women, and particularly
+what does this mean for women of color?
+ Ms. Gupta. Yes. I mean, this means that women and women of
+color are harmed by--there is a pretty significant gender pay
+gap, and it targets in particular women of color because they
+can't access and won't have as much security around healthcare,
+and transportation, and additional money to support their
+families. And so there is a lot of--you want me to do this
+quickly, so I will just say that women of color in particular
+are deeply harmed by these kinds of policies and their ability
+to actually enter the mainstream economy.
+ Ms. Stevens. Well, there is lots of narratives to share
+around this important topic, and I appreciate your deep and
+thorough testimony that covers this, and thank you for being
+here with us today.
+ Mr. Brodeur, you gave a great testimony, and I come from
+the great State of Michigan where increasing the minimum wage
+is overwhelmingly popular in my home state. And as I talked
+about the future of work in the digital age of everything, it
+certainly means a great deal to you, someone who is
+representing the largest robust automotive supply chain in the
+country. But I would love for you to share a little bit more
+about your experience and your work, particularly how did you
+see increasing the minimum wage as stimulating or revitalizing
+cities or towns across your state? What impacts did that on
+your local economies?
+ Mr. Brodeur. You know, thank you for the question because
+Massachusetts, I think, has had a little bit of a different
+perspective because we have done what you all started to talk
+about doing here in terms of gradually raising the minimum
+wage. Starting in 2015, we did a round dollar year minimum wage
+increases. We took a year off, and then with the most recent
+legislation, over the next 5 years we will go up to $15.
+ So we do not have the problem that I think is built into
+the system you currently have where if you don't raise it, then
+it becomes harder to raise it, and then there is an
+argumentative that is a shock to the system, so we better not
+raise it, so folks get left behind.
+ What I think is really important for you people to
+understand about Massachusetts and why I appreciate the
+question is particularly from the morning session. I heard
+Boston talked about maybe two or three or four times as, you
+know, a wonderful place but a very high wage, high expense
+place, and therefore, all of Massachusetts must be the same.
+That is not at all the case. We have rural areas, particularly
+in Western Mass, that struggle with some of the issues that I
+have heard about here today.
+ In some places, median income is less than half of what is
+in Boston. We also have gateway cities. My friend from Greater
+Lowell can tell you about Lowell and Lawrence and some of those
+surrounding communities that essentially were--were really
+industrial dynamos but have struggled a little bit to make the
+transition that Boston and Cambridge already have into the
+digital economy, the service economy.
+ So when we thought about how to approach the minimum wage
+and how to target things, we viewed it as an opportunity to
+raise folks up, to put money into people's pockets so that
+those parts of the economy that aren't entirely Boston-driven
+will have an opportunity to participate in that success. And
+that was part of--you know, we kind of did a lot, quite
+frankly, in the last legislative session around raising people
+up.
+ This was an important part of it, but again, we approved
+that we needed to give folks the opportunity to invest in
+themselves, and really, get off the ground floor, to get
+education, to get into some of the middle skilled jobs that we
+are desperate to fill in Massachusetts.
+ Ms. Stevens. Well, thank you for doing that work, and I
+yield back the remainder of my time.
+ Chairman Scott. My distinguished colleague from Virginia,
+Mr. Cline.
+ Mr. Cline. Thank you, Mr. Chairman. I appreciate everyone's
+time today, and I noted with interest the comments of my
+colleague from Michigan talking about the industries that are
+there. And it is a different economy than the economy of my
+State, the Commonwealth of Virginia, and different than
+Representative Brodeur's Commonwealth of Massachusetts, another
+commonwealth. But we do share similarities in that there are
+rural parts and suburban parts that have more robust economies,
+more diversified economies.
+ And so I wanted to start by asking Dr. Strain. The effect
+of an increase in the minimum wage on unemployment is fairly
+straightforward. You have noted that in your testimony. Is
+there an indirect inflationary pressure on the cost of goods
+and services in an area, say, rent or other types of products
+that an increase in the minimum wage may influence?
+ Mr. Strain. Yes. So when a business faces an increase in
+the minimum wage, they have to absorb that cost somehow. One
+way to absorb that cost is by having fewer workers work there.
+Another way to absorb that cost is by raising prices. And you
+see that when the minimum wage goes up, the prices that
+businesses that employ minimum wage workers charges also go up.
+ This is, you know, kind of a double-edged sword for those
+minimum wage workers in that sense because a lot of the
+customers of businesses who employ minimum wage workers are low
+wage workers themselves. So you give a worker a raise with your
+right hand, and then you take it back or some of it back at the
+cash register with your left hand.
+ Mr. Cline. And so those States that are pushing for a
+higher minimum wage are adjusting to the cost of living in
+their respective States, and I think what you are seeing are
+different States facing different pressures.
+ Representative Brodeur, you may be able to answer this. In
+Massachusetts, with regard to a Federal minimum wage, there is
+a support for a floor in the wage versus a set dollar amount,
+all States shall pay a minimum wage of X. But would there be
+any kind of support for an increase in the minimum wage beyond
+an adjusted amount that reflected the cost of living? I mean,
+would you want to increase the minimum wage if the cost of
+living mandated an increase to $15, and you all were given a
+choice to increase it to $20? Would that be something that you
+all would entertain in Massachusetts, or would you want to
+target it more toward the cost of living?
+ Mr. Brodeur. We just got to the 15 thing, and that was a
+big lift, so we would like to take a little bit of time off, I
+think.
+ One thing we did not do is indexing, and I know that is
+part of the chairman's bill. And I think one reasons it is part
+of the chairman's bill is because what historically was a
+bipartisan, well supported kind of regular process where the
+minimum wage would go up has become something of a political
+football. Quite frankly, that hasn't happened in Massachusetts.
+ One thing that is interesting about the commonwealth and
+our legislature is any bill that is filed gets a hearing, and
+every session folks file bills around minimum wage in many
+flavors, quite frankly. So it is kind of always on our mind. It
+is always a topic of discussion. It is not something we do and
+then hope it goes away--
+ Mr. Cline. If in a state like Virginia or a state that is
+more rural where you may not have the inflationary pressures or
+the pressures on cost of living to increase to a full $15
+minimum wage, should a state be able to adjust it to something
+less where it maybe more accurately reflects the cost of living
+for that state?
+ Mr. Brodeur. I don't think so, respectively. When I think
+back to the original setting of the minimum wage toward the end
+of the Great Depression, there was a national floor, and what
+we have heard from people that are way smarter than me, both in
+this panel and the panel before, is if we kept up with
+inflation and productivity, where would that be on the national
+level? It would be somewhere between 12 and 18 to 22, it
+sounded like.
+ Mr. Cline. As a former fellow State Representative, I would
+rather leave that to the states to make that decision as it
+specifically applies to each state's cost of living.
+ But I appreciate it, and I yield back, Mr. Chairman.
+ Chairman Scott. Thank you. The gentlelady from
+Massachusetts, Mrs. Trahan.
+ Mrs. Trahan. Thank you, Mr. Chairman. Thanks again for
+bringing us together to hear this important panel. I am so
+proud that Massachusetts--well, I am so proud to be from
+Massachusetts for a number of reasons, and it is because of
+Senator Brodeur's work not just on this issue but on
+healthcare, education, on gun violence prevention. We are one
+of the states leading on raising the wage, and for that I am
+grateful.
+ There is no one more well suited to speak before us today
+than you, and in terms of what it took, the collaboration and
+thinking creatively to get this done. In your testimony, you
+talked about the importance of coalition this to pass the grand
+bargain that resulted in both paid leave and raising the wage.
+I love that your approach was inclusive and truly people
+powered, so my question. In your testimony, you mentioned that
+it was a strategic decision to invest in the working families
+of Massachusetts while also being a positive step forward for
+our business community. During that same period, Massachusetts
+businesses demonstrated relative stability and growth.
+ So I am wondering if you can talk about some of the
+specific positive feedback that you heard from Massachusetts
+businesses in terms of raising wages.
+ Mr. Brodeur. There was certainly not unanimity of opinion,
+and that is why it was a grand bargain. There was give and take
+across a range of issues, both within paid family medical leave
+which was a more complicated, quite frankly, and challenging
+piece to put together because there were so many moving parts
+and the minimum wage piece and some other issues.
+ And we heard from--you know, we talked to folks, you know,
+one or two-person operations, folks in my district to some of
+the biggest employers in Massachusetts. One thing that everyone
+recognized was that both programs were incredibly popular, that
+there was tremendous support across the spectrum for the
+general idea of both initiatives, maybe not particular details.
+ You know in terms of the minimum wage, Mass, Inc. which is
+an organization that you are familiar that others might not be,
+a nonpartisan kind of think tank and polling entity that tested
+the waters on how popular or how supportive the public would be
+of these things, and they were popular across the board.
+Republicans, Democrats, IUndependents all supported it.
+ So what I think we needed to do, and why it was such a long
+process, is we needed to start with paid family medical leave
+and some fact-finding and some exploration, and we all needed
+to kind of speak the same language and understand what kind of
+benefits we were trying to provide, what would actually help
+working families, what would be impediments.
+ And we tried to be respectful of that and listen to what
+the business community in certain segments already provided in
+terms of wages and benefits and made sure that we didn't
+reinvent the wheel, that we didn't take away something that was
+better than what might be complemented or implemented under any
+particular plan.
+ And I think that went a long way toward building trust, for
+lack of a better way to say it, and having constant
+communication, having some significant disagreements for sure
+along the way but recognizing that this was coming, and it is
+important to working families, it is important to the economy
+of Massachusetts, and you know, and then kind of putting the
+pieces together.
+ And it was a humbling process to be a part of because you
+don't see a lot of progress on big issues these days, and I
+think that is unfortunate, and I don't think that needs to be
+the case.
+ Mrs. Trahan. Yes, thank you. It was a testament not just to
+your leadership but I know that the grand bargain was in
+concert with our Republican Governor Baker as well as the many
+groups that you mentioned. Can you just discuss the
+implementation and the timetable for Massachusetts to
+transition to the $15 minimum wage?
+ Mr. Brodeur. I can. So it will be over 5 years, and first--
+let me make sure I get this right. The first 3 years will be a
+dollar increase, and then the final 2 years will be $0.75
+increase, ultimately bringing it to 2023. On the tip wage, we
+did not eliminate the tip credit, but we did expand. Compared
+to some of our peers, we had a very low tip credit. Not as low
+as the Federal tip credit for sure, but that will grow over the
+same timeframe up to $6.75 when it is done in 2023.
+ Mrs. Trahan. Great. Thank you so much. Thanks so much for
+all of your time. I yield back.
+ Chairman Scott. Thank you. The gentleman from Georgia, Mr.
+Allen.
+ Mr. Allen. Thank you, Mr. Chairman, and I appreciate
+everyone being here today. I come from the State of Georgia who
+is the best state to locate your business 6 years in a row. I
+was a small business owner in that state, and in Georgia, we
+pay the wages according to our employee's skill set. It is a
+free market environment, a growing economy that grows job which
+grows opportunity which grows wages. We reward a good day's
+work. My Democrat colleagues don't want to believe that we can
+produce economic opportunity in concert with growing wages
+without the government interfering.
+ Signing the front of the paycheck and providing folks with
+a good job has been the greatest honor of my life. That is why
+I oppose the Raise the Wage Act. This one size fits all, top
+down government regulation will destroy millions of hard-earned
+jobs and turn our growing economy and wage growth into decline.
+Democrats have focused on economic growth and getting the
+American people back to work. Free market initiatives that we
+know grow wages and grow jobs.
+ Dr. Strain, millions of jobs were created by our strong
+economy thanks to lower taxes and deregulation. How would
+raising the minimum wage to $15 hurt all of these economic
+gains we have been able to achieve?
+ Mr. Strain. Well, I think it is certainly the case that we
+have seen the low wage labor market doing a lot better over the
+last few years. A hot economy really has benefited that group
+of workers. We have started to see wages grow at a more rapid
+pace, for example. We have been seeing vulnerable workers,
+workers with disabilities, workers who have been incarcerated
+getting jobs at higher rates, and this is all wonderful news.
+ I am very concerned that doubling the Federal minimum wage
+will put a halt to a lot of that progress and will really gum
+up the works of job creation for workers without a lot of
+skills and without a lot of experience.
+ Mr. Allen. Three hundred and four thousand jobs in January.
+ Mr. Strain. That is quite a few.
+ Mr. Allen. Yes. Do you agree that raising prices is not
+always an option for many businesses?
+ Mr. Strain. Raising prices is not always an option for many
+businesses, particularly businesses in more competitive product
+markets. And again, you know, you have to raise prices quite a
+bit to absorb a $15 an hour minimum wage. This is not a $9 an
+hour increase we are talking about. This is doubling the
+Federal minimum.
+ Mr. Allen. Right. So how would a business double its rate
+of pay and not raise its prices?
+ Mr. Strain. Well, I think it would be hard for a lot of
+them to do that.
+ Mr. Allen. Which then causes the cost of living to
+increase--
+ Mr. Strain. Some of those businesses might invest in
+technology instead of hiring workers.
+ Mr. Allen. Yes--
+ Mr. Strain. Some of those businesses will--
+ Mr. Allen. They are going to figure out a way. Yes.
+ Ms. Barron, how has the Seattle minimum wage hike affected
+your working career?
+ Ms. Barron. Well, I lose money on a daily basis. It is as
+easy as that.
+ Mr. Allen. Yes.
+ Ms. Barron. And it is due to my employer having to
+navigate--
+ Mr. Allen. Yes.
+ Ms. Barron [continuing]. the higher wage. So he went to
+taking away tip lines and going with a service charge. And
+under that service charge, I don't make as much as I could. And
+there is no way for me to maximize my income with my job, so it
+has changed my job quite a bit. It has pretty much stagnated
+what I could make.
+ Mr. Allen. So the government said we are going to raise
+wages, and your wages went down?
+ Ms. Barron. Yes.
+ Mr. Allen. Ok. Your testimony talks about your friend who
+started her own pizza place.
+ Ms. Barron. Uh-huh.
+ Mr. Allen. Tell us about that and what happened to your
+friend?
+ Ms. Barron. So my friend Retu, she has been in the service
+industry as long as I have. She decided she wanted to try her
+hand at being an owner, and she started a pizza place called--I
+think it is called Z pizza, And she employed I think about 10
+people, and then the minimum wage came. So she had her business
+for about 5 years, and she looked at the books and she said I
+can't make the numbers work. And she even went to our city
+council and said look. If you want to see, you know, try to
+make them work for me because I don't understand. I can't make
+it work, and so she just--instead of struggling, she just went
+ahead and closed it because she couldn't do it.
+ Mr. Allen. Ok. Well, thank you so much for your testimony,
+and I yield back, Mr. Chairman.
+ Chairman Scott. Thank you. The gentleman from Maryland, Mr.
+Trone.
+ Mr. Trone. First of all, I want to thank everybody for
+their long day today, but it is a really important subject that
+we are embarked on. Raising the minimum wage is, plain and
+simple, the right thing to do for hard-working Americans. We
+heard a lot today from many people that have never owned a
+business, never been an employer, that raising the wage is bad
+for business.
+ Well, I started a business 30 years ago as an entrepreneur.
+I was the first employee. Guess what? I figured out how to make
+it work, and now that business employs over 7,000 folks across
+America in every region, every area of the country. We also
+employ hundreds of returning citizens as they deserve a fair
+wage too. But paying a fair wage was not just the right thing
+to do. It is the key to our success. The key to our success was
+paying a fair wage.
+ Higher wages lead, we spoke about earlier, lower employee
+turnover, reduced recruiting and training costs. But at the end
+of the day, happier customers. Ms. Eckhouse, in your testimony
+you also connected, and Ms. Shalala was talking about it,
+higher wages with lower turnover so the growth of your
+business.
+ Could you talk a little bit about the piece that we don't
+touch on enough here, and that is all the productivity gains,
+the efficiency gains, the awesomeness of having team members
+that know a business and care about the customers, and those
+folks stay with you. They stay with you long times, long term,
+because they make a good wage, and they have good benefits. So
+could you talk about and give us some insights on how important
+that is?
+ Ms. Eckhouse. Well, thank you for your question. It is
+really critical to us to have people who work for us, whether
+they are working out in the fields selling what we make or
+whether they are working at home with us in the plant making
+what we sell who really understand what we are making, how it
+is sourced, how it is processed in our plant, how it is sent
+out in the world for people to consume.
+ And if they don't understand that, they cannot do a good
+job. And once they do a good job, they become invested in the
+process. They learn about it. They come up with ideas. If they
+have been with us for enough time, they can see improvements
+and suggest them to us. So we end up having a business that is
+not just a top-down business where we are telling people what
+to do. People are able to buildup from the bottom and because
+they fully understand the process, and they are invested in
+working for us because they can make an income that allows them
+to support their families.
+ Mr. Trone. I think you hit on what is such an important
+point that nobody really talks about, and that is a business
+isn't run from top down. A business is run on ideas, great
+ideas, and that is what makes it success. And when the team
+members are empowered, the team members feel like they are part
+of the team because they are paid appropriately. They are paid
+fairly. That is when they have those insights, those ideas to
+make the business more efficient, more productive.
+ So I commend you on running that type of business. That is
+just the right way to do things.
+ Ms. Eckhouse. Thank you. I really believe that the labor is
+worthy of his or her hire, and we have to honor that.
+ Mr. Trone. Without question. Dr. Reich, you mentioned in
+your testimony business can adjust to a minimal wage increase
+in several ways. They go from a low wage, high turnover model
+or what I chose, a higher wage, low turnover model. I shared
+some of my experiences. What does research tell us about how we
+quantify, quantify the actual cost of employee churn, employee
+turnover?
+ Mr. Reich. Thanks for that question. I happen to have
+published an article on that subject in the Journal of Labor
+Economics a few years ago, so--and actually, way back when I
+was a graduate student in the 1960's, I developed the idea of
+duly labor markets, that labor markets do differ. Some are high
+wage, low turnover, some are low wage, high turnover. And this
+paper I just published a few years ago actually showed that
+when the minimum wage went up that employee turnover went down
+quite a bit.
+ There are other studies that had already shown a
+correlation between the wage and turnover. This was really a
+study where we felt we had a causal identification. And as to
+the amount, well, it varies by industry depending on what the
+costs of training are and where the vacancies are.
+ In low wage industries like restaurants or in certainly big
+box retail, turnover each year is over 100 percent. These are
+firms that are constantly looking for work. They have very high
+vacancy rates. There is a cost of vacancy. This is even more
+true when the unemployment rate is very low. And those are big
+costs that we don't, you know, talk about in Econ 1, in the
+simple supply and demand model. But when we add those costs in,
+those are substantial. We think they don't totally--savings on
+recruitment and retention costs don't totally offset increases
+in the wage costs, but they might offset maybe 20, 25 percent
+of it on average, obviously more in some industries than the
+others.
+ We couldn't look at the kinds of points that you are making
+about productivity or customer satisfaction so that might
+possibly add to that effect as well.
+ Mr. Trone. Thank you very much. That is all, Mr. Chairman.
+ Chairman Scott. Thank you. The Ranking Member, Dr. Foxx.
+ Ms. Foxx. Thank you very much, Mr. Chairman. I want to add
+my thanks to all the witnesses who have been here today. We
+have been here practically all day, and we are going to be here
+a little while longer. We have heard a lot of the same
+arguments over and over again.
+ I do think some Democrats, and maybe one on this committee,
+understands the free market, how it really works and the
+opportunities it creates for Americans from every walk of life.
+You know, I grew up in a house with no electricity, no running
+water, and I have been working since I was 12 years old. And my
+husband and I did run a business, so I know what it is like to
+create jobs, to try to keep jobs going, and to meet a payroll.
+And I think almost every member of our committee on this side
+of the aisle understands that, so I know Mr. Trone isn't
+talking about our folks not knowing how to run a business and
+what it takes.
+ But it seems to me that there are people not always
+understanding the opportunities that the American way of life
+creates for Americans or maybe how smart business owners are in
+this country. After all, we have gotten to be a great country
+because of the capitalistic system.
+ But I think the reason we have been here all day and we
+have been hearing these points made over and over and over
+again is perhaps some of our colleagues are trying to convince
+themselves and the rest of us that a socialist campaign talking
+point could actually be good policy, but I am not sure it
+worked.
+ So I want to thank our witnesses who have come here today.
+I especially want to thank Ms. Barron for giving voice to those
+Americans who aren't in lockstep with the labor interests
+driving this misguided campaign to eliminate jobs, particularly
+you, Ms. Barron, understanding you took time away from your
+workplace to be with us here today.
+ We want to see wages go up for every working American,
+every single one, and they do go up for Americans. We are
+seeing more wage growth than we have in decades because of the
+smart economic policy that has empowered workers. Pushing back
+on heavy-handed regulations and giving Americans real tax
+reform has opened up opportunity and wage growth that actually
+helps American families.
+ And we know, one of our witnesses has already said, that
+employers are already free to pay higher wages than minimum
+wage, and it works. And guess what? Other employers understand
+that too. The law already allows it. But why do our colleagues
+want to force the government to run everybody's life in this
+country? The growth we are experiencing right now makes a $15
+Federal mandate look like the political stunt it really is.
+Washington doesn't need to be making any more decisions for the
+people of this country.
+ The dysfunction we have all experienced and all commented
+upon the last couple of months is all the proof we need that
+decisions about worker paychecks certainly shouldn't be up to
+anybody in this city. We can spend our time trying to justify
+socialist ideas as mainstream, or we can spend our time looking
+for ways to put money in people's pockets by their earning that
+money and not taking it from one person's pocket and putting it
+in another one. We can sustain era of growth and opportunity.
+On our side for the sake of American workers, we are going to
+stay focused on the latter.
+ And with that, Mr. Chairman, I yield back.
+ Chairman Scott. Thank you. The gentlelady from Washington,
+Ms. Jayapal.
+ Ms. Jayapal. Thank you, Mr. Chairman, and thank you all for
+being here. I know it has been a long day, and we appreciate
+it.
+ I want to just correct the record on a couple of things. I
+was on the committee that raised the $15 minimum wage. I am
+glad to see one of my constituents here, and I appreciate your
+traveling here, although I imagine perhaps you don't support my
+position on this issue based on your testimony. I certainly
+appreciate hearing from you.
+ And I will tell you that we heard all of the arguments
+through months of testimony about what this was going to do to
+destroy the economy in Seattle, about all the restaurants that
+were going to close. And we went back through recently all of
+the restaurants that came to testify before us, and the
+majority of them had actually opened new restaurants, new
+restaurants.
+ And so I will just say that you just need to look at our
+booming economy in Seattle to understand that the minimum wage
+law has worked and, in fact, we even heard the same arguments
+when we indexed minimum wage to inflation back in 2001, that
+this was going to destroy our state's economy, that it was
+going to create problems. People were going to flee to other
+states. But people including, I think maybe Ms. Barron, moved
+to Washington State in part because we have a booming economy
+and jobs to take.
+ I also just want to respond to the comment about a
+socialist campaign talking point. Let me just tell you that on
+our committee was one of the wealthiest capitalists, proud
+capitalists in our state, Nick Hanauer, who consistently has
+said over and over again that when workers do better, companies
+do better. When companies do better, the economy does better.
+When the economy does better, workers do better. It is a cycle
+that actually works over and over again.
+ We also had a small business owner, a tremendous number of
+small business owners and restaurant owners who have been doing
+the right thing for a long time. That included my friend and
+local Seattle restaurant owner Makeney Howell. And she said it
+best when she went to the White House Summit on Working
+Families back in 2014, and she said the economy--this is her
+quote. The economy is built from the bottom up, not the top
+down. Every job should be an economy-boosting job.
+ Makeney for years, even before our law went into effect,
+would pool her tips and distribute them equitably to all the
+workers so that you take away that discrepancy between front of
+the house workers who may earn a lot in tips, and there were
+some workers who were earning a lot in tips who saw those tips
+go down, but it was because it was being shared with people in
+the back of the house.
+ And so these are really important--there has been a lot of
+talk about Seattle today, and I am thrilled that is the case,
+but let me tell you as somebody who actually helped craft that
+law, who was on the front lines of making sure we heard the
+testimony, that the testimony that we continue to hear is
+simply not accurate.
+ Does it mean that Ms. Barron is not correct in her wages?
+Of course I am not saying that, but I did want to ask you, Ms.
+Barron, about the organization that you are affiliated with. It
+is called the Full Service Workers Alliance of Seattle. Is that
+correct.
+ Ms. Barron. Correct.
+ Ms. Jayapal. And are you aware that the FWSA is part of a
+group called the Restaurant Workers of America?
+ Ms. Barron. It is not part of the Restaurant Workers of
+America. That is not correct.
+ Ms. Jayapal. Well, I have the research showing that it is
+part of a national network of server groups called the
+Restaurant Workers of America.
+ Ms. Barron. It is not part of the Restaurant Workers of
+America. The Full Service Workers alliance is a group that I
+cofounded with a friend of mine. We are a loose group of about
+1100 full service workers, and that includes front of the house
+and back of the house.
+ Ms. Jayapal. Thank you. Are you aware since you.
+ Founded the organization, I assume you are, that a former
+FSWA member so severely misrepresented his role in the group
+and the details of the Seattle Secure Scheduling Law in a King
+5 TV news interview that the station's news director was forced
+to pull it down.
+ Ms. Barron. That is incorrect. That is incorrect. If you
+watch--
+ Ms. Jayapal. Ok. Well, I would be happy to take that
+information from you so that we understand because this is what
+our research has shown and I wanted to make sure--
+ Ms. Barron. Well, your research is incorrect.
+ Ms. Jayapal [continuing]. that people know what the
+organization is. So let me turn to Miss Gupta. The Fair Labor
+Standards Act when it was passed excluded certain classes of
+workers in a compromise to appease Southern States. Those
+workers tended to be women and people of color, and the
+vestiges of those policies still impact those communities
+today.
+ Thank you for make the arguments in your opening Statements
+that this is actually a women's issue. Can you speak about how
+raising the minimum wage would help right some of those
+economic wrongs?
+ Ms. Gupta. Yes. Thank you, Congresswoman.
+ African American and Latino working women in particular are
+overrepresented in low pay jobs and women of color are more
+likely than any other group to be paid the lowest wages.
+Gradually raising the Federal minimum wage to $15 an hour by
+2024 and indexing it to median Federal wages and ensuring that
+working people are actually able to cover basic expenses like
+housing, food, and transportation would be a huge, huge win for
+working people.
+ Working mothers, especially, are likely to be paid low
+wages, and that is why for the leadership conference,
+representing a broad constituency of communities of color and
+women, this particular bill would go a long way to closing the
+gender pay gap but also addressing kind of structural
+disparities that are created through racial difference.
+ Ms. Jayapal. Thank you very much. I see my time has
+expired. I yield back.
+ Chairman Scott. Thank you. The gentleman from Texas, Mr.
+Castro.
+ Mr. Castro. Thank you. Perfect timing. So I guess I ask
+this question. I just obviously came here from another meeting,
+but who has been opposed to a minimum wage increase over the
+last few years on the panel? Anybody else? And I guess what has
+been your main opposition?
+ Ms. Barron. I am losing money. I am losing income because
+of the $15 an hour minimum wage increase.
+ Mr. Castro. And do you think that it should be less? Do you
+think it should be, like, $11 or just no minimum wage or $6 an
+hour?
+ Ms. Barron. Well, I think I would leave that up to you
+folks to determine that, but all I know from my experience is
+that I am losing money because of loss of tips, because of the
+rise in the minimum wage, and I don't feel that workers' voices
+in the full service industry have been represented at all in
+this talk.
+ Mr. Castro. So I guess your point is that you are not
+against a minimum wage. You think that $15 is not the right
+amount?
+ Ms. Barron. As everything is proposed at this point in
+time, I am finding myself as days go on opposed to the rise in
+minimum wage altogether.
+ Mr. Castro. You would freeze it.
+ Ms. Barron. Yes. I would like to have a tip credit in
+Washington State, and we are not having that conversation. We
+are, I guess, not allowed to have that conversation in
+Washington State.
+ Mr. Castro. I guess let me ask you. The reason I ask is the
+U.S. Chamber of Commerce for years would not support increasing
+the minimum wage, even by a penny. I mean, at all. And I know
+that obviously you are in the service industry. Are you a
+waitress?
+ Ms. Barron. Yes.
+ Mr. Castro. That is different from somebody working at,
+say, Whataburger in Texas or somewhere else?
+ Ms. Barron. Right.
+ Mr. Castro. So you have been opposed for a while to a
+minimum wage increase, even one cent on minimum wage?
+ Mr. Strain. Yes. I would be opposed to raising the Federal
+minimum wage at all.
+ Mr. Castro. And I guess why is that? So you don't think it
+should ever be raised? I mean, 50 years from now it should
+never be raised?
+ Mr. Strain. In my view the primary focus should be on
+providing economic opportunity to the least skilled, least
+experienced, most vulnerable workers in our society. Those
+workers are the workers who will bear the cost of a minimum
+wage increase. If you raise the minimum wage by one penny, how
+many of them would be worse off? You know, I don't know. Not
+nearly as many as if you--
+ Mr. Castro. No, but you would agree also that their
+expenses go up, the cost of living goes up, people need a
+higher wage, right?
+ Mr. Strain. Another reason to be opposed, another reason
+why I am opposed is because there are better tools that
+Congress has to help those workers. Expanding Federal earning
+subsidies puts more money in the pockets of the working poor
+and actually increases employment rather than reduces
+employment.
+ So when thinking about how to help these workers, I think
+Congress should look at the full range of options and not only
+focus on the option that is going to put a lot of them out of
+work.
+ Mr. Castro. Sir, I guess I disagree with you on your first
+point about not increasing the minimum wage, but I mean, you
+understand that other people that are opposed to increasing the
+minimum wage are also opposed to the subsidies you are
+describing.
+ Mr. Strain. I am only speaking for myself, Congressman.
+ Mr. Castro. Ok. I think part of the reason that we have
+gotten here and part of the reason that there is such
+frustration with the income inequality in this country is
+because the U.S. Chamber of Commerce and major business
+organizations have not taken the lead even though some
+companies on their own, including members of the Chamber of
+Commerce, have actually raised their own minimum wage on their
+own. And it is interesting that is an instance where private
+industry has actually been ahead of the main industry group
+that is coming to Washington and in their name arguing against
+raising the minimum wage by even one penny. I think that--
+ Mr. Strain. I don't know--
+ Mr. Castro. I am in my comment part here. Thank you for
+your answers to my questions.
+ And I think that this could have been a very different
+conversation over the years if different groups and
+organizations had worked in earnest and in concert, not even
+necessarily with the Federal Congress but with the states and
+with their own workers in making an earnest attempt to raise
+the minimum wage.
+ But that has not happened now for decade, longer than a
+decade, that those conversations have happened. And so we find
+ourselves in a country where income inequality has grown, where
+workers have gotten very frustrated, where there is in American
+society now, I think, a real resentment at the fact that
+people--that you get more and more billionaires in our country,
+and you have a lot of people that may have a job but feel as
+though they have no future in their work. And that is where we
+find ourselves today.
+ I yield back. Thank you, Chairman.
+ Chairman Scott. Thank you. The gentlelady from Illinois,
+Ms. Underwood.
+ Ms. Underwood. Thank you, Mr. Chairman, for calling this
+hearing, and thank you to all the witnesses for appearing here
+today.
+ I am going home to Illinois 14th tomorrow to hear what our
+community has to say about this issue, and I am glad to have
+the opportunity to hear from experts like you today.
+ Mr. Chairman, I would also like to ask for unanimous
+consent to submit a letter from advocate Aurora Health in
+Illinois for the record.
+ Chairman Scott. Without objection.
+ [The information follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Ms. Underwood. Thank you. I think many people don't realize
+if you're working full time to support your family right now at
+the Federal minimum wage, you are making $15,080 a year. That
+is not a livable salary anywhere in America today, and so I
+would like to learn more about how gradually raising the
+minimum wage can help workers and small businesses.
+ Ms. Eckhouse, you have been paying a livable wage since you
+started your small business almost 20 years ago. In that time,
+have you seen the livable wages you pay contribute to lower
+levels of turnover, and would you say that this has been better
+for your bottom line?
+ Ms. Eckhouse. Thank you for your question. Yes. We have
+seen lower turnover than we might have as expected in our
+business, and that has benefited our company. It benefits us in
+a lot of ways. We have more knowledgeable employees, we have
+more committed employees, and we are all able to work together
+to improve what we make.
+ Ms. Underwood. That is great. And is it your experience
+that because you pay a livable wage and therefore have less
+turnover, you are able to dedicate more time to growing your
+business instead of a cycle of hiring and training new
+employees?
+ Ms. Eckhouse. Yes. That is correct. And our employees are
+also able to contribute to better management of our business
+because they have been there longer and are more familiar.
+ Ms. Underwood. And so you would say that paying a livable
+wage is an importantly part of your small business's success.
+Is that right?
+ Ms. Eckhouse. Yes, I would.
+ Ms. Underwood. I am really encouraged by research showing
+that gradually raising the minimum wage can help reduce wage
+inequality and have a positive effect on women's economic
+security, so I really appreciate Miss Gupta's comments. I would
+like to just pivot for a second.
+ Professor Reich, what does the current research say about
+the impact on health outcomes? I am a nurse, and so often I
+like to ask about the health impact as a result of the increase
+in the minimum wage.
+ Mr. Reich. And thank you for that question. This is a very
+new area in my minimum wage research is to look at the health
+impacts, and there are about 20 studies, and they are not
+unanimous. No economists never are unanimous, so that is not a
+negative sign. But there are definitely good studies, high
+quality studies that show that higher minimum wages reduce
+smoking rates, they reduce obesity, they reduce prediabetic
+conditions.
+ In a study that I have done but I have not yet published,
+they reduce suicides. There would be, like, 700 fewer suicides
+a year with every 10 percent increase in the minimum wage.
+ Ms. Underwood. Wow, those really powerful findings. Thank
+you.
+ I appreciate your testimony this afternoon. I do also
+recognize it has been a long day and know how important this
+issue is for workers, for business owners, and for the future
+growth of our economy in this country, so thank you for your
+service, and I yield back my time.
+ Chairman Scott. Thank you. And I recognize myself for
+questions. And I would like to begin by responding to the idea
+that this is a socialist talking point. I would point out that
+Arkansas and Missouri recently by referendum passed increases
+in the minimum wage or a similar track to what we are doing in
+this bill by votes of well over 60 percent.
+ Representative Brodeur, who has been helped in
+Massachusetts by the minimum wage increase?
+ Mr. Brodeur. Working families certainly have been. Again,
+as I started in my opening remarks talking about we see teens
+that are about 20 percent of our teens supplying 20 percent of
+the household income, you know, for folks that are really at
+poverty level. That is huge, and it leads to, you know, some of
+the results that Dr. Reich was talking about in terms of those
+dollars leading to better outcomes for families over the long
+term.
+ It has also provided opportunities for folks to again to
+advance themselves. Education, we all agree, is the pathway to
+success both early ed and an environment where the family is
+more stable. Kids have more success, and those young adults
+that are trying to get higher ed or a certificate or whatever
+the case may be to improve their opportunities in the job
+market also benefit.
+ Chairman Scott. Thank you.
+ Dr. Strain, in your testimony, you indicated there are
+better ways to help the working poor. I think you mentioned the
+earned income tax credit. Is that what I understand you are
+referring to?
+ Mr. Strain. Yes, Mr. Chairman.
+ Chairman Scott. What are the other ways of helping the
+working poor?
+ Mr. Strain. Well, another way is through the child tax
+credit which has a refundable component that can go to support
+low-income Americans. Another way is to expand education and
+training programs. I think apprenticeships offer a particularly
+promising path forward to building worker skills which will
+allow them to be more productive and command higher wages.
+There are many, Mr. Chairman. There are many.
+ Chairman Scott. If you could supply those for the record
+after the hearing, I would appreciate it.
+ Mr. Strain. Of course.
+ Chairman Scott. Professor Reich, the 2014 Congressional
+Budget Office study showed a significant job loss. I understand
+there have been subsequent studies that come to different
+conclusions. Can you say what the overall body of research
+shows about whether or not low income workers are worse off as
+a result of an increase in the minimum wage?
+ Mr. Reich. The CBI doesn't do its own research on this
+topic. It just builds on and uses the research that other
+people have done, and they looked at the studies as of 2014
+some by me, some by other people, and they basically took an
+average between those two as the effect on teens. That is not a
+very good scientific method because some of the studies are
+better than others.
+ And they had to extrapolate from what the effect is on
+teens the effect on adults, and they arbitrarily came up with a
+number, a ratio of one-third because adults on the whole are
+better paid. That again is not a very good basis. More
+recently, we have studies that look at not only teens and
+restaurant workers but all workers, all jobs.
+ Dr. Zipperer, who was on the panel this morning, is the
+author of one of those studies, and it is a study--I think that
+it is stunning study. It has been described as the best minimum
+wage paper since the 1990's, and I agree. It is going to be the
+defining study. It is probably going to come out in the top
+economics journal in the world. It shows no negative effects.
+ Chairman Scott. Does the research show how restaurants
+react to an increase in the minimum wage as far as the way they
+treat their workers?
+ Mr. Reich. Yes. Well, first of all, you know, not
+everybody's paid at the minimum wage in a restaurant or any
+other industry, so the actual increase is usually about half.
+The actual increase in cost is usually about half. In labor
+costs, it is usually about half what the minimum wage increase.
+If the minimum wage goes up 10 percent and the labor cost
+increases about 5 percent, and labor is only about a third of
+operating costs.
+ So the actual increase in prices, full pass-through is
+maybe 1 to 2 percent, especially when you take into account
+turnover savings. So that is the main adjustment mechanism, not
+reductions in employment. And by the way, it does increase
+automation for those jobs that can be automated, but many jobs
+in restaurants cannot be automated.
+ Food prep is very, very difficult to automate. You cannot
+automate making a peanut butter and jelly sandwich, for
+example. It has been tried. And so you know, automation isn't
+just something that is free. It has to be actually--there has
+to be a technology for it.
+ Chairman Scott. Thank you very much. My time has expired,
+and I want to remind my colleagues of the process for
+submitting additional materials, and I want to thank our
+witnesses for their participation today. What we have heard has
+been very valuable.
+ Members of the committee may have additional questions and
+we ask the witnesses to please respond to those questions in
+writing. The hearing record will be held open for 14 days to
+receive those responses, and I would ask the colleagues to
+submit those questions within 7 days so that the witnesses have
+ample time to respond.
+ This hearing has demonstrated the benefits of increasing
+the Federal minimum wage to $15 by 2024, the benefits for
+workers, businesses, and the economy. No American working full
+time should be living in poverty, and by gradually increasing
+the minimum wage, you cannot only elevate the standard of
+living for nearly 40 million American workers but also put
+money back in their pockets to support local businesses.
+ And without objection, I ask that the letter and documents
+from the business for a fair minimum wage and the Economic
+Policy Institute be entered into the record and without
+objection, so ordered.
+ [The information follows:]Mr. Scott
+ Economic Policy Institute: https://www.govinfo.gov/content/
+pkg/CPRT-116HPRT36711/pdf/CPRT-116HPRT36711.pdf
+[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ Chairman Scott. We look forward to continuing the
+discussion as we advance the legislation.
+ Is there any other business to come before the committee?
+If not, the meeting is adjourned.
+ [Additional submissions by Ms. Adams follow:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ [Additional submission by Mr. Courtney follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ [Additional submission by Ms. Davis follows:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ [Additional submissions by Mrs. Foxx follow:]
+ [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
+
+ [Whereupon, at 5:36 p.m., the committee was adjourned.]
+
+ [all]
+