[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                       PERSPECTIVES FROM MAIN STREET: RAISING THE 
                                    WAGE

=======================================================================

                                 HEARING

                               BEFORE THE

       SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND REGULATIONS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 24, 2021

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 117-004
            
             Available via the GPO Website: www.govinfo.gov
             
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-447                       WASHINGTON : 2021                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Dean Phillips...............................................     1
Hon. Beth Van Duyne..............................................     3

                               WITNESSES

Dr. Heidi Shierholz, Senior Economist and Director of Policy, 
  Economic Policy Institute, Washington, DC......................     7
Mr. John Puckett, Co-CEO, Punch Pizza, St. Paul, MN..............     8
Ms. Rebecca Hamilton, Co-CEO, W.S. Badger Company, Gilsum, NH....    10
Ms. Rachel Greszler, Research Fellow in Economics, Budget and 
  Entitlements, The Heritage Foundation, Washington, DC..........    12

                                APPENDIX

Prepared Statements:
    Dr. Heidi Shierholz, Senior Economist and Director of Policy, 
      Economic Policy Institute, Washington, DC..................    40
    Mr. John Puckett, Co-CEO, Punch Pizza, St. Paul, MN..........    46
    Ms. Rebecca Hamilton, Co-CEO, W.S. Badger Company, Gilsum, NH    48
    Ms. Rachel Greszler, Research Fellow in Economics, Budget and 
      Entitlements, The Heritage Foundation, Washington, DC......    52
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    A&P Master Images............................................    72
    ATR Coalition Letter.........................................    73
    Boyer's Food Markets Inc.....................................    77
    Casey Waits Testimony........................................    79
    Congressional Budget Office..................................    80
    Council for Citizens Against Government Waste (CCAGW)........    97
    Eureka Pizza Co..............................................    99
    FASTSIGNS....................................................   100
    Fleet & Farm Supply/Ace Hardware.............................   101
    Florida Restaurant and Lodging Association...................   103
    FreedomWorks.................................................   104
    Gary Siebert Testimony.......................................   107
    International Franchise Association (IFA)....................   108
    Mad Hatter Restaurant & Bakery...............................   110
    Maddens Resort...............................................   111
    Mark Klinger Testimony.......................................   112
    Marshall Street Bar & Grill and The Union Tavern.............   113
    Missouri Farm Bureau Federation..............................   114
    National Restaurant Association..............................   115
    NFIB Research Center Study...................................   117
    NFIB Letter..................................................   164
    Raise the Wage Act of 2021 Coalition Opposition Letter.......   166
    Rangaire Manufacturing Company, LP...........................   169
    Rick Knoebels Testimony......................................   171
    Rohrbach Brewing Co..........................................   173
    Rosario Longo Testimony......................................   174
    Rosebud Tractor..............................................   175
    Sal and Jerrys Bakery........................................   177
    SBE Council Letter...........................................   178
    Sergio's Family Restaurants..................................   180
    Stephanie Figueroa Testimony.................................   181
    54th Street Grill & Bar......................................   182
    Urban Air Adventure Park.....................................   183
    U.S. Chamber of Commerce Small Business......................   185
    Zanz Mexican Restaurant......................................   190

 
            PERSPECTIVES FROM MAIN STREET: RAISING THE WAGE

                              ----------                              


                      WEDNESDAY, FEBRUARY 24, 2021

                  House of Representatives,
               Committee on Small Business,
                         Subcommittee on Oversight,
                           Investigations, and Regulations,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:01 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Dean Phillips 
[chairman of the Subcommittee] presiding.
    Present: Representatives Phillips, Craig, Chu, Evans, 
Davids, Van Duyne, Hagedorn, Meuser, Donalds, and Fitzgerald.
    Also Present: Representatives Velazquez, Tenney, 
Luetkemeyer, Bourdeaux, and Young Kim.
    Chairman PHILLIPS. Good morning, everybody. I want to call 
the meeting to order and thank everybody for joining us today. 
I also want to thank our witnesses in particular for taking 
time out of their busy schedules to be with us.
    First, I want to go over some important requirements, most 
of which you already know. But beginning by saying that the 
standing House and Committee Rules and Practices will continue 
to apply during hybrid proceedings.
    All members are reminded that they are expected to adhere 
to these standing rules, including decorum. House regulations 
require members to be visible through a video connection 
throughout the proceeding, so please keep your cameras on. 
Also, please remember to remain muted until you are recognized 
so that we can minimize background noise. If you have to 
participate in another meeting, please exit this one and log in 
later.
    In the event that a member encounters technical issues that 
prevent them from being recognized for their questioning, I 
will simply move to the next available member of the same party 
and I will recognize that member at the next appropriate time 
slot provided that they have returned to the proceeding.
    For those members physically present in the Committee room 
today, we will also be following the health and safety 
guidelines issued by the attending physician. That includes 
social distancing and especially the use of masks. Members and 
staff are expected to wear masks at all times while in the 
hearing room, and I thank you in advance for your commitment to 
a safe environment to all here today.
    It is an honor to Chair this Subcommittee and to provide a 
platform for listening to and supporting small businesses 
across America. Though our members may disagree on occasion on 
matters of policy, I want to make it clear that we work for 
you, the small business owners present today, and the small 
business owners across the country pursuing the American Dream.
    I look forward to conducting this hearing and this year's 
work in a productive and bipartisan manner with Ranking Member 
Van Duyne.
    Since the implementation of the New Deal in the 1930s, 
Congress has been tasked with determining from our collective 
belief of what is fair and what is right, a standard of living 
under which no working American citizen should fall. An 
essential part of this floor is the minimum wage, which was 
intended to ensure that the least advantaged workers in America 
can provide for themselves, let alone for their families. But 
over the past decades, this floor has significantly eroded in 
value despite a modest increase to $7.25 per hour in 2009.
    Meanwhile, Washington is caught in partisan gridlock and 
unable to provide the leadership so desperately needed to 
resolve the issue despite overwhelming public support for 
addressing it. It is my core belief that all working Americans 
who live on the wages that they earn be paid one on which they 
can survive. It is not just good for humanity, it is good for 
our economy because consumption is the engine of our economy 
and money in people's pockets is its fuel.
    Unfortunately, the current minimum wage falls well below 
the poverty line for a family of two or more. I cannot imagine 
that anybody in this room or participating today would say that 
it is fair and just for any American relying on a full-time 
wage to survive to earn only $15,000 per year. That cannot make 
rent. That cannot pay for food. It cannot pay for healthcare. 
It cannot pay for childcare, and it surely cannot pay for 
education in any region of our country.
    But, as I said during our markup just 2 weeks ago, I am 
troubled that the Raise the Wage Act was included in this COVID 
relief package without more opportunities for small business 
voices to be heard and thoughtful members of Congress on both 
sides of the aisle to offer constructive feedback and 
amendments.
    And that is why we were here today, my friends. I am 
certain that all of us in this room have heard from small 
businesses and hard-working people in our districts about the 
impacts, both the positive impacts and the negative impacts 
that this policy change would have.
    In my office, we heard from Ken, the owner of the original 
Pancake House in Plymouth, Minnesota, one of my favorite 
joints. Like so many businesses which rely on public gathering 
to succeed, he is barely hanging on. His restaurant, like all 
restaurants, runs on thin margins during even the best of times 
and Ken is deeply concerned that a $15 minimum wage will mean 
that he has to cut jobs if he hopes to stay open.
    I take these concerns seriously, and they are guiding how 
we will conduct this hearing today. However, we cannot ignore 
the benefits that our economy would reap from raising the 
minimum wage. We often hear from small firms how hard it is to 
attract and retain skilled workers, and experts say that this 
policy could help. Studies also suggest it can make workers 
more productive and boost morale.
    According to the CBO, the policy at it is written would 
likely raise wages for 27 million Americans, raise almost 1 
million out of poverty, and increase the aggregate wages for 
low wage workers in American by over $300 billion over the next 
decade. These newly empowered workers will live in turn to 
support local businesses and our entire economy.
    It is also essential that we address this through a racial 
and gender equity lens. Women and minorities would 
disproportionately benefit from a $15 minimum wage, which would 
close pay gaps based on both race and gender.
    Unfortunately, the same CBO study also projects that this 
policy as it is written could cost up to 1.4 million American 
jobs, and intuition tell us it would also result in the loss of 
a number of small businesses, both of which are consequences 
which I find as unacceptable as they are preventable.
    It is our duty on this Committee to listen to the voices of 
small businesses and support them accordingly. And while we may 
disagree on whether to increase the minimum wage or by how much 
or in what manner, I hope and I expect that we will come 
together for a cordial, productive, and even provocative 
hearing that will serve the best interests of small businesses, 
their employees, and our communities.
    Lastly, and most importantly, I ask that we use our time 
today to identify ways in which we can mitigate the negative 
impacts of such a policy while maximizing the positive impacts 
of raising wages for millions of Americans. As I said 2 weeks 
ago and I will say it again right now, livable wages, thriving 
businesses, and job growth are not mutually exclusive options. 
So let's work together to achieve that trifecta beginning with 
today's hearing.
    And with that, I will yield to the Ranking Member, Ms. Van 
Duyne for her opening statement.
    Ms. VAN DUYNE. Thank you so much, Mr. Chairman.
    Before I begin, I would like to thank Ranking Member 
Luetkemeyer and my colleagues on the Subcommittee for the 
opportunity to serve as Ranking Member on the Subcommittee of 
Oversight, Investigations, and Regulations, and I look forward 
to working with each and every one of you in this capacity.
    Small businesses shuttered, American families struggling to 
pay their rent, livelihoods destroyed. These are the 
devastating consequences we witnessed as a result of this 
pandemic and along with it forced lockdowns all across the 
country. Fortunately, in my state of Texas, we were able to 
open back up quickly, giving millions of small business owners 
the opportunity to keep their doors open and to fight to 
protect the businesses that they have invested their lives in.
    But what we are here to discuss today, a Federal, 
nationwide mandate to raise the minimum wage to $15 an hour 
will put us right back to where we were months ago--American 
jobs destroyed, small businesses forced to close their doors, 
and life savings gone to waste. I cannot think of anything more 
devastating in a time when our small businesses are barely 
getting back on their feet.
    And Mr. Chairman, I want to thank you for your comments on 
wanting to take this slower, getting as much input from small 
businesses that will affect as possible, I really appreciate 
that. And you had actually quoted from the Congressional Budget 
Office, the nonpartisan Congressional Budget Office that 
estimated that an increase in the minimum wage to $15 an hour 
would lead to a loss of 1.4 million jobs by 2025. And of those 
1.4 million workers displaced, the CBO estimated that 700,000, 
half of those workers, would fall out of the labor force 
entirely.
    And make no mistake, this top down, ``one size fits all'' 
mandate will impact our small businesses the most. These ``mom 
and pop'' shops already operate on thin margins. The local Main 
Street restaurants, hardware stores, hair salons, and florists 
are the heartbeat of our communities, and they simply cannot 
absorb this mandated increase by any way.
    And not to mention a wage mandate takes away any variation 
in discretion that an entrepreneur has to scale his or her 
business to the area in which it operates. Whether that is in 
my home state of Texas or the Chairman's home state of 
Minnesota, why should a waitress at a busy restaurant in the 
heart of New York City where the average rent for a one-bedroom 
apartment is $2,475 a month be forced to make the exact same 
amount as a waitress in Billings, Montana, where the average 
rent for a one-bedroom apartment is $678 a month?
    The Federal government does not and cannot know what is 
best for each town across America, and this ``one size fits 
all'' mandate fails to recognize the diversity and uniqueness 
of our townships, towns, cities, and metropolitan communities.
    What I cannot seem to wrap my head around is the American 
workers who will be impacted the most by this reckless policy. 
My colleagues who support this proposal claim this will help 
our lower to middle class, our single moms. And as a single 
mother myself who was a waitress back in the day, I sit here 
wondering what these single moms will do when the local 
restaurant or hair salon where they work is forced to close 
their doors because they simply cannot pay their employees $15 
an hour. Or when businesses have to choose between shutting 
down or replacing their workers with automation.
    As one of my colleagues across the aisle said over the 
weekend, we do not want those businesses. That is his message 
to our ``mom and pop'' shops struggling to keep their doors 
open right now--if you cannot afford to $15 an hour, we do not 
want you. Let that sink in for a minute.
    After being selected to serve on this Committee, I was 
eager to sit down with local business owners across North Texas 
to hear firsthand what is working and what is not working. 
Where they need government to get out of the way. And they were 
all crystal clear. Increasing the minimum wage will have a 
disastrous impact on their business. In fact, many were 
confident they would have to close their doors immediately.
    And what does that mean for American workers? From young 
workers to single moms, our working families will be hit 
hardest by this policy.
    And do not just take my word for it. Over the last few 
weeks, our Committee has received testimony from small business 
owners all across the country explaining how this Federal 
mandate would decimate their businesses and their livelihoods 
along with it.
    And I would like to ask for unanimous consent to be able to 
enter these statements into the congressional record.
    Chairman PHILLIPS. Without objection.
    Ms. VAN DUYNE. Thank you.
    I would also like to take a moment to share testimony we 
received from Ian MacLean, president and owner of Highland 
Landscaping in my district of Southlake, Texas, and the Chair 
of the U.S. Chamber of Commerce's Small Business Council. Here 
is what he had to say about how legislation that would increase 
the Federal minimum wage from $7.25 an hour to $15 per hour 
would affect his business. Before we started hearing about 
Congress's plan to raise the Federal minimum wage, we had begun 
exploring solutions to growing wages in our industry such as 
robotic mowing systems and purchasing more machinery to do more 
of the labor work on the construction side. In order to 
mitigate the effects of a minimum wage hike, we would fast-
track those solutions and eliminate most of our entry-level and 
less-skilled labor positions. Unfortunately, this would 
eliminate our ability to provide youth jobs, entry-level jobs, 
and summer jobs. And as a small business owner, I take great 
pride in creating and sustaining jobs for people who can then 
provide for their families. I believe most small business 
owners do as well. During the pandemic, I was able to create 
new jobs. With news of a potential wage hike, I am now making 
preparations to move in the opposite direction. Small business 
is the biggest job creator in the United States and the driving 
force of our economy. A wage hike to $15 per hour would cause 
small business owners like me to not only stop creating jobs 
but to eliminate jobs.''
    Mr. Chairman, I truly believe each and every one of us 
here, from our colleagues to our witnesses to our small 
business owners, want the same thing. We want to see our small 
businesses make it out of this pandemic. We want to see working 
families lifted up. And we want to advance policies that will 
give every American a shot at living their American Dream. I 
look forward to finding ways to work across the aisle to 
accomplish these goals, but a ``one size fits all'' minimum 
wage mandate is not the answer.
    I thank all of the witnesses for joining us today, and I 
yield back.
    Chairman PHILLIPS. Thank you, Ms. Van Duyne.
    And I would like to take a moment before we begin to 
explain how this hearing will proceed. Each witness will have 5 
minutes to provide a statement, and each Committee member will 
have 5 minutes for questions. Please ensure that your 
microphone is on when you begin speaking and that you return to 
mute when you are finished.
    With that, I will begin by introducing our witnesses.
    Our first today is Dr. Heidi Shierholz, senior economist 
and director of Policy at the Economic Policy Institute. From 
2014 to 2017, she served the Obama administration as the chief 
economist at the Department of Labor where she and other 
department leaders worked to develop and execute initiatives to 
boost workers' rights, wages, and benefits. Her research and 
insights are routinely used to shape policy proposals and 
inform news coverage in many broadcasts, radio, print, and 
online news outlets. She received her M.A. and PhD in Economics 
from the University of Michigan, and her policy focuses include 
labor policy, wage inequality, unemployment insurance, minimum 
wage, and many others.
    So a heartfelt welcome to Dr. Shierholz, and we look 
forward to your testimony today.
    Our next witness is John Puckett, co-owner and CEO of Punch 
Neapolitan Pizza, an 11-store restaurant company headquartered 
in St. Paul, Minnesota that recently celebrated its 25th year 
in business. John has always been a fierce advocate for 
investing in his own employees and creating career path 
opportunities for everybody. In 2014, Punch was recognized by 
President Obama in the State of the Union Address for paying 
starting wages significantly above the industry average. Prior 
to Punch, John cofounded and grew Caribou Coffee into a 
significant retail brand across the country. He has an MBA from 
the Tuck School of Business and a BA from Dartmouth University.
    Thank you, John, for being here today, and I look forward 
to your testimony as well.
    Our third witness today is Ms. Rebecca Hamilton, a second 
generation owner and co-CEO at Badger, a natural and organic 
personal care manufacturer known for its unique company 
philosophy, pioneering family friendly benefits, and B Corp 
community engagement. In addition to her role as co-CEO, she 
has spoken at the White House, addressed the UN Convention on 
Biological Diversity, and testified before Congress on behalf 
of safer cosmetics. Recently, she was appointed to the National 
Women's Business Council, a nonpartisan Federal advisory 
Committee, and we thank you, too, Rebecca, for being here and 
look forward to your testimony.
    With that I will yield to the Ranking Member to introduce 
our fourth and final witness.
    Ms. VAN DUYNE. Thank you.
    Our next witness is Rachel Greszler. Ms. Greszler is a 
research fellow in Economics, Budget, and Entitlements at the 
Grover M. Hermann Center for the Federal Budget at the Heritage 
Foundation. Since joining the staff at the Heritage Foundation 
in 2013, Ms. Greszler has concentrated her research and 
findings on numerous areas of labor, Social Security, pension, 
and employment policies. Given her extensive knowledge and 
research, she has also been a frequent witness on Capitol Hill 
providing testimony on many of these topics. Her latest 
research focuses on the minimum wage and its impact on 
childcare costs. Prior to joining the Heritage Foundation, Ms. 
Greszler was on staff at the Joint Economic Committee.
    Ms. Greszler, welcome back to Capitol Hill. We appreciate 
you and the other witnesses for joining us today as we explore 
this critically important topic and we look forward to your 
testimony.
    Chairman PHILLIPS. Thank you, Ms. Van Duyne.
    And we will begin with Dr. Shierholz. You are recognized 
for 5 minutes for your opening statement.

    STATEMENTS OF DR. HEIDI SHIERHOLZ, SENIOR ECONOMIST AND 
 DIRECTOR OF POLICY, ECONOMIC POLICY INSTITUTE; JOHN PUCKETT, 
  CO-CEO, PUNCH PIZZA; REBECCA HAMILTON, CO-CEO, W.S. BADGER 
COMPANY; RACHEL GRESZLER, RESEARCH FELLOW IN ECONOMICS, BUDGET 
           AND ENTITLEMENTS, THE HERITAGE FOUNDATION

                  STATEMENT OF HEIDI SHIERHOLZ

    Ms. SHIERHOLZ. Thank you. Chairman Phillips, Ranking Member 
Van Duyne, and members of the Subcommittee, thank you for the 
opportunity to testify on the importance of increasing the 
minimum wage to $15 an hour by 2025.
    I want to start by talking about the well-documented, 
enormous benefits of a $15 minimum wage. My colleagues at EPI 
have estimated that increasing the minimum wage to $15 in 2025 
will generate $107 billion in higher wages for low-wage 
workers. And CBO's recent analysis shows that $15 in 2025 will 
make low-income people as a group unambiguously better off. The 
total income of low-income people would rise, income inequality 
would shrink, and nearly a million people will be pulled out of 
poverty. And from a prior CBO analysis, we know that roughly 
half of those pulled out of poverty by a $15 minimum wage will 
be children.
    Research also shows that by providing families with higher 
incomes, minimum wage increases have improved infant health, 
they have reduced child abuse, and they have reduced teen 
pregnancy.
    And then particularly important in this moment, essential 
and frontline workers make up the majority of those who would 
benefit from a $15 minimum wage. More than a third of those 
working in residential or nursing care facilities would see 
their pay increase. Forty-two percent of workers in grocery 
stores would see a raise. More than four in 10 janitors and 
housekeeping cleaners would benefit. Ten million workers in 
healthcare, education, construction, and manufacturing would 
see a raise.
    And $15 in 2025 would not just reduce overall income 
inequality; it will reduce inequality by race and gender as 
well. So due to things like occupational segregation, 
discrimination, and other impacts of structural racism and 
sexism, women and Black and Hispanic men are more concentrated 
in low-wage jobs and would see disproportionate gains from this 
increase.
    Raising the minimum wage is long overdue. Workers today who 
are paid the current Federal minimum wage are paid more than 30 
percent less in inflation-adjusted terms than their 
counterparts were paid 53 years ago. And this is despite the 
fact that the economy's capacity to deliver higher wages, which 
is measured by labor productivity, that capacity more than 
doubled over that period. Had the minimum wage kept pace with 
productivity growth since 1968, it would be over $23 in 2025. 
So a $15 minimum wage in 2025 simply means that low-wage 
workers are able to share in a small portion of the country's 
growth over the last half century.
    Another key thing to note is that we can raise the minimum 
wage to $15 in 2025 with little to no job loss. Minimum wages 
are one of the most well-studied topis in economics, and 
although there sometimes appears to be a great deal of 
controversy about the size of employment effects on the minimum 
wage, the weight of the evidence clearly shows that minimum 
wage increases have worked exactly as intended by raising wages 
without big, negative consequences. So comprehensive reviews of 
the academic literature on the employment effects of minimum 
wage increases have found that the typical academic study of 
the employment effect of minimum wage increases finds little to 
no impact on employment. And relevant, for the increase that we 
are talking about now, research also shows that the highest 
Federal minimum wages the U.S. has ever experienced, the 
minimum wages of the late 1960s, they also significantly raised 
wages without reducing the employment of low-wage workers.
    So that brings up the question, how is this possible? How 
can minimum wages be raised without causing employers to have 
to lay off workers? And I will list a couple of reasons here.
    For one, businesses find that raising wages increases 
productivity. It improves morale and reduces turnover. Workers 
with more income have less chaos in their lives. They are more 
likely to have access to reliable transportation to work, to 
steady childcare, and to healthcare, and all of those things. 
Reduce absenteeism and turnover. Turnover is hugely expensive 
for firms. Research finds that a typical cost of turnover is 20 
percent of the position's annual salary. So a reduction in 
turnover and an increase in productivity help businesses recoup 
some of the increased costs of the higher wages.
    And another key thing is that businesses also see an 
increase in demand for their goods and services when the 
minimum wage goes up. Low-wage workers are those who are the 
most spending constrained. They cannot buy all the things they 
need. So when you raise the minimum wage, you are getting money 
into the hands of people who are the most likely to have no 
choice but to spend it, and that increases demand which is very 
good for business.
    And I will leave it there for now and just end by saying 
that the failure to adequately raise the minimum wage has 
denied workers significant improvements in their standard of 
living. It has increased poverty and inequality. By raising the 
Federal minimum wage to $15 by 2025, we will finally deliver a 
much-needed boost to this country's lowest paid workers.
    And I look very forward to answering any questions that you 
may have.
    Chairman PHILLIPS. Thank you, Dr. Shierholz.
    Mr. Puckett, you are now recognized for 5 minutes for your 
opening statement.

                   STATEMENT OF JOHN PUCKETT

    Mr. PUCKETT. Thank you, Chairman Phillips. And good morning 
from sunny and warm Minneapolis, Minnesota this morning. We 
appreciate the chance to talk about what our company has 
learned from paying our employees more.
    I am John Puckett. I am the co-owner of Punch. We are a 25-
year-old business located in the Twin Cities in Minnesota. We 
employ almost 300 people at our company and we operate 11 
pizzerias. Prior to joining Punch and helping grow that 
company, my wife and I started Caribou Coffee, which is today 
the second largest coffee retailer in the country, and I think 
of significance, we started Caribou Coffee with an SBA loan 30 
years ago. So thank you 30 years later for the support of 
Congress to help small businesses.
    Everybody knows how competitive the pizza industry is. It 
may be the most competitive part of the restaurant business. 
And everybody thinks that is going to survive that their pizza 
is the best. Our pizza is made in a 1,000 degree wood-burning 
ovens. Our toppings melt in the oven--fresh mozzarella, crushed 
tomatoes, olive oil, sea salt. We think our pizza cannot be 
beat.
    But our secret ingredient is our people, our fantastic 
employees. And when we ask our customers why they come back to 
Punch, they tell us two things. They say it is the quality of 
your food, but very closely or tied with that answer is it is 
our engaged employees, our friendly employees. And we think 
when you walk into a Punch store versus our competition, you 
can tell our employees like what they are doing and they feel a 
part of something that they are proud of.
    Part of our strategy with people is to pay our employees 
more. As you mentioned, we were featured in the State of the 
Union Address in 2014 for paying our employees more, and today 
our average starting wage is $13 an hour and our average 
employee earns $15 an hour, and this excludes management, and 
earns an additional $5 an hour in tips. And we are really in 
the fast food, quick service industry. So that is a remarkable 
number when you add those two together. Our average hourly 
employee earns over $20 an hour at Punch Pizza. And we think it 
is one of the largest, if not the largest in the quick service 
industry.
    Another key part of our people strategy, it is not just 
what they earn when they start. If we could, we would have 
everyone move on beyond starting wages. We offer several 
different skill levels and increased pay and make training and 
development a priority of our business. In addition, we promote 
most of our managers from our hourly workforce, and these are 
jobs that start at over $50,000 a year and grow up to $100,000 
a year. And I think it is important to note that we have zero 
educational or accreditation requirements for these manager 
positions.
    Our turnover is significantly better than the industry 
average and pay is a part of it, but it is not all part of it. 
Advancement opportunities are important. Employees need to 
believe in the leadership of their store and of the company and 
of the mission of the company, and we find that providing the 
best quality tools to do the job and having excellent work 
processes lead to higher retention as well as pay.
    This strategy does come at a cost. We earn less money than 
the companies that we study that are publicly traded, that we 
can track their labor expense. So we are giving up profit 
margin in the short and near term, we think for our longer term 
strategy of having our business both survive and thrive in the 
future from having better employees and having more engaged 
employees.
    To close, I just want to talk about the biggest challenge 
that small businesses like Punch face. We reconfigured our 
operations to have socially distanced and keep our employees 
safe. And we are very proud that we have had zero workplace 
infections. But that has come at a cost to sales. We lost over 
$1 million last year and we are losing tens of thousands of 
dollars a month this winter. And we expect to lose that until 
we are able to safely reopen our dining rooms. We are hopeful 
given the increased rate of vaccinations that the restaurant 
business and Punch will return to more normalcy later this 
spring and summer, but it has been a challenge like no business 
has ever faced in the restaurant industry in our lifetime.
    To close, I would like to thank you all for the incredible 
lifeline Congress gave small businesses like Punch with the 
Paycheck Protection Program. There is not a doubt in my mind 
that Punch, nor most small, independent restaurants could have 
survived without that lifeline. So all of our employees greatly 
appreciate that.
    And I look forward to answering any questions you have 
later in the meeting.
    Chairman PHILLIPS. Thank you, Mr. Puckett.
    And now, Ms. Hamilton, you are recognized for 5 minutes for 
your opening statement.

                 STATEMENT OF REBECCA HAMILTON

    Ms. HAMILTON. Thank you, Chairman Phillips and 
distinguished members of the House Subcommittee on Oversight, 
Investigations, and Regulations for this opportunity to testify 
in support of raising the Federal minimum wage.
    My name is Rebecca Hamilton, and I am the co-CEO and family 
owner of the W.S. Badger Company, a small cosmetic and drug 
manufacturer located in rural New Hampshire. I also serve on 
the National Women's Business Council, a nonpartisan Federal 
advisory committee advocating for women-owned businesses.
    Badger was founded in 1995 in our family kitchen by my 
carpenter father who created a simple balm to soothe his 
cracked hands. Today, my sister and I lead the company 
alongside our mother, where we employ 90 people and manufacture 
over 100 body care products and sunscreens which are sold 
throughout the United States and in 26 countries worldwide.
    Badger has been recognized by Forbes as a leading small 
company and as the New Hampshire Business of the Year.
    Throughout our 25-year history, fair pay has helped our 
business to succeed and grow. Our lowest starting wage is $15 
per hour. We also provide a range of benefits from day one, and 
I think that our fair pay business model has helped us to 
attract and retain excellent staff, while supporting the health 
of our community and keeping us successful into second 
generation family ownership, even as many other businesses in 
our region have struggled.
    New Hampshire is unique, and that is one of the only states 
in New England still following the current Federal minimum wage 
of $7.25 per hour. For businesses, this low wage floor makes it 
harder to hire and retain employees, build our customer base, 
and grow. Furthermore, it undermines regional economic 
development.
    We participated in a working group in New Hampshire of a 
number of businesses and healthcare providers examining the 
relationship between our region's low wage floor and poor 
health outcomes. We found that an hourly age below $15 was 
inadequate to maintain a safe and decent standard of living in 
our region, and that is in a rural region, and that it could 
not sufficiently meet a person's food, housing, transportation, 
and healthcare needs.
    New Hampshire has struggled to attract and retain a young 
workforce. A 2018 survey found that younger workers see New 
Hampshire as lacking in job career opportunities. Several years 
ago we also participated in a series of workforce development 
meetings where business owners, educators, researchers, and 
local government officials examined a further concern with 
attracting a more qualified and talented workforce. And what we 
found was interesting. This is something that stood out to me 
is that Badger stood apart from many of these other businesses 
in our region because we did not struggle with developing our 
workforce. Our approach to paying a base wage of $15 an hour, 
combined with compelling benefits set us in a much stronger 
economic position. This approach has enabled us to spend 
virtually zero dollars on recruitment while retaining an 
engaged and committed workforce for the past 25 years.
    Recruiting and training a new employee involves thousands 
of dollars and dozens of hours in nonproductive costs. It has 
been estimated that turnover costs are about 20 percent of an 
annual salary or higher. By retaining experienced staff, we see 
increased productivity, less waste, and fewer errors, which is 
very important in a manufacturing facility. This further saves 
us considerable money and time. The more we can retain already 
trained staff, the more money we save, the more reliable our 
staff, the better our productivity. The success of our business 
is directly tied to the dedication of our staff.
    Good pay and benefits also boost morale. When we treat our 
employees well, they care more about our business success. In a 
recent employee engagement survey conducted by the Employee 
Engagement Group, 100 percent of employees surveyed at Badger 
felt that their managers respected their work-life balance and 
82 percent reported feeling highly engaged. What we have seen 
is that having engaged in motivated staff has helped us to 
innovate for success in the long run.
    Our experience in New Hampshire is an excellent case study 
for how low wages do not help small businesses in regions 
compete. Rather, low wages hold back businesses and economic 
growth and hamper employee and community health and well-being. 
Raising the minimum wage is vital to help us recover from the 
pandemic and build a stronger economy.
    In our consumer-driven economy, businesses like mine depend 
on customers who can afford our products and services. Raising 
the minimum wage will put more money in the hands of working 
people who will spend it at businesses in New Hampshire and 
across the country. Raising the minimum wage to $15 an hour by 
2025 will provide a more solid-level playing field for small 
and large companies. It will help small businesses succeed, and 
it is an investment in our Nation's workforce that will pay in 
great dividends now and in the future.
    Thank you for your time.
    Chairman PHILLIPS. Thank you, Ms. Hamilton.
    And Ms. Greszler, you are now recognized for 5 minutes for 
your opening statement.

                  STATEMENT OF RACHEL GRESZLER

    Ms. GRESZLER. Thank you. Good morning, and thank you for 
the opportunity to testify today.
    As someone who started out my career earning the minimum 
wage washing dishes and making pizzas and then the sub-minimum 
wage waiting tables, I can attest to the value, especially for 
young workers, of minimum wage jobs. Minimum wage jobs are 
steppingstones, not careers, and that is why young workers fill 
most minimum wage jobs. $7.25 an hour is not sufficient to 
support a family, but fortunately, single parents earning the 
minimum wage make up only 0.1 percent of all workers, and in 
that case, the Earned Income Tax Credit brings the true minimum 
to about $10 per hour.
    I think everyone here agrees that rising incomes are a 
great thing, especially for low-income workers. But lawmakers 
cannot create higher income; they can only redistribute it. And 
despite pretty clear evidence and basic laws of economics, 
there has been debate over whether a $15 minimum wage would 
cost jobs or have negative impacts. Those economic studies can 
be complicated, but for anyone who doubts that doubling the 
minimum wage will cause substantial disruption and harm, 
consider what would happen if your mortgage payment or rent 
were to double. That would likely require a lot of changes, and 
sometimes those changes end up hurting the people they are 
aiming to help.
    For example, Mae Martinez's husband got a $4 per hour raise 
but then her family lost $2,200 per month in childcare 
subsidies, forcing Ms. Martinez to stop her daytime college 
classes and stay at home with her kids.
    Families without subsidies would also be hurt. I estimate 
that a $15 per hour minimum wage would increase the cost of 
childcare by 21 percent on average across the U.S., with 30 
percent or greater increases in 10 states. This can make 
childcare unaffordable for millions of families, especially 
those in low-cost areas.
    And this is one example of why a ``one size fits all'' 
national minimum wage is unjust. It is one thing if high-cost 
areas like D.C. or Seattle want to hike their minimum wages. At 
least then workers can go outside the city as some have had to 
do. But what works in D.C. is unlikely to work in D'Iberville, 
Mississippi. In fact, $15 in Mississippi would be like a nearly 
$36 minimum wage in D.C.
    I would like to now share some of the voice of Main Street 
employers who have aptly explained the unintended consequences 
of a $15 minimum wage. Bryn Hornsby is an Air Force veteran who 
owns two nursing homes in rural Mississippi. For him, a $15 
minimum wage would require substantial, but unlikely increases 
in Medicare and Medicaid reimbursements. And even so, then 
their private customers cannot afford to pay any higher rates. 
As Mr. Hornsby said, ``COVID has already brought us to our 
knees financially. Any increase in the minimum wage would be a 
death knell for us and many other small nursing home 
operators.''
    Gary Armstrong co-owns seven frozen yogurt shops across 
three states and he enjoys providing entry-level jobs for 
teenagers. He says, ``We see ourselves as mentors in basic 
business operations and customer service skills.'' But Mr. 
Armstrong said that any significant minimum wage increase would 
cause them to eliminate many of those jobs and raise prices in 
an attempt to keep their doors open.
    Susannah Koteen owns Lido Harlem and Bixi Harlem 
restaurants in New York City. Ms. Koteen explains, ``The 
hospitality industry is one of the few careers left that one 
can make a good living and move up quickly without a college 
education.'' Think of the millions of jobs that are involved in 
this business from front of the house, in the kitchen, to 
farms, delivery drivers, sanitation companies, food and 
beverage distributors. Ms. Koteen has already had to cut hours 
and jobs because of New York's hike in the tipped minimum wage 
to $10 per hour, and she said that a $15 per hour minimum would 
force many small and independently-owned businesses to close 
their doors or completely change the way they do business.
    Betsy LeRoy owns Pizza by Elizabeths in Delaware, and she 
served and staunchly supports President Biden. She explains, 
``It would be difficult to absorb any increase in labor costs 
right now, much less the steep increase Mr. Biden has proposed. 
Even in good times, our profit margins were low. Today, our 
profit margins are nonexistent, as is our ability to increase 
prices.'' She said a $15 minimum wage would be a death knell to 
her industry and she asked President Biden to ``save my 
restaurant from the good intentions of progressive 
policymakers.''
    These examples show that policymakers cannot mandate higher 
wages into existence without hurting many of the people they 
want to help. But there are better ways to help workers achieve 
higher incomes without hurting others, such as expanding 
alternative education opportunities, like apprenticeships, 
reforming occupational licensing laws so that it is easier and 
less costly for workers to use their talents to earn an income, 
and by protecting workers' rights to contract and earn income 
through flexible and independent jobs. Thank you.
    Chairman PHILLIPS. Thank you, Ms. Greszler. And thank you 
to all our witnesses. We appreciate everything you have shared 
with us and look forward to a thoughtful and productive 
hearing.
    I will begin by recognizing myself for 5 minutes.
    Dr. Shierholz, I will start with you. A report published by 
your colleagues at the Economic Policy Institute in January of 
last year, 2020, argued that policy discussions often treat the 
Earned Income Tax Credit (EITC) expansion and minimum wage 
increases as alternatives of which we should simply choose just 
one. But in reality, of course, the paper argues also that 
``the two policies are complementary and may be more effective 
in combination than either is on its own.''
    So before I move on, I would like to ask for unanimous 
consent to insert this report from EPI into the Committee 
record.
    Without objection, the letter will be inserted.
    So my question, Dr. Shierholz is, please speak to how tax 
provisions like the EITC and the Payroll Tax Credit can, and 
perhaps should be used to balance the burden placed on small 
businesses that would result from higher wages.
    Ms. SHIERHOLZ. So this is a really important topic. For 
example, the EITC and strong minimum wages are often presented 
as being in opposition but they are absolutely companion 
pieces. The EITC in particular is just an incredibly important 
program, but one fundamental issue with it is that because 
workers get the EITC, they will actually accept lower based 
wages from employers. And this means employers actually capture 
a meaningful chunk of expenditures on the EITC. So a strong 
minimum wage is hugely important in this context because it 
limits the amount of EITC expenditures that employers can 
capture. So it is just these two pieces go hand in hand. At 
this point it is definitely a both/and. We should both increase 
the EITC and increase minimum wages to $15 in 2025.
    Chairman PHILLIPS. Okay, thank you.
    I also want to follow up with Ms. Greszler. In your written 
testimony, you discuss how the EITC essentially ensures that 
parents do not earn a true minimum wage and that gains from the 
EITC would phase out as workers earn more. So could you expand 
a little bit on how those two notions, the two policies would 
interact and what conditions in the labor market would need to 
be present to maximize the EITC's usefulness and describe how 
it might be modified to boost the economic security of low wage 
workers?
    Ms. GRESZLER. Yeah, I think this is an example where we 
have these good policy aims but then there are consequences to 
them as well. And so the consequence with the Earned Income Tax 
Credit is, of course, that it has to phase out eventually over 
time. And when you are phasing out, that is a lower rate that 
individuals are earning. And when you talk about increasing the 
minimum wage, that is going to impact a fair number of single 
parents who are earning lower wages. Even if it is above the 
$7.25, this could potentially push them into the phaseout zone 
of the Earned Income Tax Credit. And whereas they might have 
been getting a 35 or 40 percent subsidy on their wages 
previously, now they would be getting 21 percent lower than 
their actual stated wage because of that phaseout. And so it is 
tricky here to find the right balance between those things. But 
I think that the point is that we do have a program that is 
specifically aimed at working parents, and that is different 
than the minimum wage which affects everybody, including 
teenagers and the people who need to get their foot into the 
door. And that is kind of the basis here is that the minimum 
wage needs to be the bottom rungs on the career ladder so that 
people can step in and they can climb their way up. And we do 
not want to cut those off for tens of millions of Americans.
    Chairman PHILLIPS. Okay, thank you.
    I have got about a minute left. Mr. Puckett, one area that 
I think we have failed to investigate and consider much is how 
a policy like this will surely help millions, tens of millions 
of Americans at the lowest wage scale. But how would it affect 
an entity like Punch Pizza with 300 people, I think you 
mentioned seven tiers of pay. How would this increase 
ultimately affect the entire wage inflation issue, if you will, 
at a company like Punch?
    Mr. PUCKETT. Thank you, Chairman Phillips. That is a good 
question. And we are really experiencing that today. As you 
probably know, about half our stores are in Minneapolis-St. 
Paul markets and both of those markets will be going to $15 an 
hour in the next 18 to 30 months. And we do offer a significant 
boost to wage above our starting wage. And thus far, we have 
handled that and encouraged that increase in our employee 
skills. But it is a significant inflation. Our total labor cost 
is about 40 percent of sales.
    The flip side is we think advancement and giving our 
employees a chance to build a career. The alternative to that 
is not very good. A job with no career or no advancement. So we 
are trying to figure it out. And we look forward to having 
customers in our dining rooms and business restored so we can 
get back to more normalcy. But it is definitely a challenge. 
And as anything at Punch, we have a saying on our wall, 
``Figure it out.'' We are going to figure it out.
    Chairman PHILLIPS. Here, here. Thank you, Mr. Puckett.
    My time has expired, so now I will turn it to the Ranking 
Member, Ms. Van Duyne for 5 minutes.
    Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
    Ms. Greszler, can you talk to us a little bit about the 
second and third layer effects of price increases due to an 
increase in the minimum wage?
    Ms. GRESZLER. Certainly. So when employers have choices of 
how to respond to these higher wage increases, one of the most 
natural ones is to raise prices. And so there are some 
industries where they will be able to raise their prices--
grocery stores, restaurants. The Heritage Foundation estimated 
that a $15 per hour minimum wage would increase prices at fast 
food restaurants by 38 percent. But then there are also other 
industries that cannot raise their prices. Childcare is one of 
those. It is highly regulated. There are very strict child-to-
teacher ratios, square footage-to-child ratios. And there is 
really no room to reduce costs through labor, so they would 
have to strictly increase their prices. But we already know 
that childcare is extremely costly, even unaffordable to 
millions of families, and I have estimated that just raising 
the minimum wage to $15 per hour would increase the cost of 
childcare by 21 percent across the U.S. And as I said, 10 
states would have 30 percent or larger increases. So we are 
talking about in some states families would face an extra 
$6,000 per year for two children to attend childcare. And of 
course, this leads to them having to make family decisions. One 
worker might need to stay home. Somebody might need to make 
more so that they can pay for childcare and then they are 
spending less time with their children. So all of these things 
just kind of spiral out of control.
    And I think one other second order is that we are looking 
at the immediate job losses and thinking of them. You know, 1.4 
million, 2.7 million, whatever it is, but you are talking about 
a lot of young workers who do not have an opportunity to get 
their foot in the door. And studies have shown that teens who 
are exposed to higher minimum wages have lower earnings in the 
future. And those who actually work and are employed in minimum 
wage jobs have higher earnings because there is so much value 
to that experience. And for some of them, it is the only way 
they get their foo tin the door.
    As you pointed out, the CBO said that half of the people 
who lose their jobs are going to give up looking for work in a 
few years from now, and that is not what we want for society. I 
mean, the American Dream is not to come here and to live on 
government welfare benefits and to just be sedentary. People 
want to work and to produce things of value.
    Ms. VAN DUYNE. I appreciate that.
    The cost of a dollar in Middle America is different than 
the cost of a dollar on the Coasts. So how does creating a 
``one size fits all'' minimum wage impact states differently?
    Ms. GRESZLER. That is a great point is that the minimum 
wage really should be a local wage. Not even a state wage. I 
grew up in a very small town in Western New York State, 5 
minutes from Pennsylvania where you can still buy a good home 
for $60,000. And so the cost of living just varies so much 
across the United States. And as I was talking to some business 
owners, you know, about their employees that are working there, 
some of them are very content earning the $10-$15 minimum wage 
range because that is a decent living in some places, 
especially if you are in a two-income household. And I just do 
not think that it is the role of lawmakers in D.C. to say that 
we picked this one size that fits everybody. You know, we saw 
in Seattle, they are already a high-cost area and they are 
better able to absorb these higher minimum wages, but even 
there, when they raised their minimum wage from $11 to $13 per 
hour, the studies showed that, yes, the employment effects were 
not huge. They were slightly negative. But the biggest thing 
was there was a shift. And so the lower experienced workers had 
to go outside the city to find their jobs, whereas the 
companies just started hiring and keeping the more experienced 
workers and it made it harder for entry level workers to get 
their foot in the door.
    Ms. VAN DUYNE. One of the most popular case studies on 
minimum wage came out of Seattle, Washington. Can you just 
describe the impact that the minimum wage had on those Seattle 
workers?
    Ms. GRESZLER. Yes. So it did slightly benefit the wages of 
the workers who kept their jobs, and those were the more 
experienced workers. But then there were less experienced 
workers who were pushed outside of their jobs or who maybe had 
their hours cut and had to go outside of Seattle to find more 
income and more job availability. And I think that that is an 
important thing to look at because when we are talking about on 
a national scale, that leaves nowhere else for these workers 
and these businesses to go. And we can look at websites like 
the Faces of 15 who document hundreds of small businesses who 
have been affected by rising wage increases, and a lot of them 
who have struggled to keep their doors open have sometimes 
moved somewhere else. And we are cutting off that opportunity 
by saying that $15 works across the entire U.S. And actually, 
we are advantaging those places who have already gotten to $15 
per hour because they have already been there and they have 
higher costs of living, whereas, it is going to be the lower 
cost of living areas who would be most devastated by this.
    Ms. VAN DUYNE. Great. Thank you very much, Ms. Greszler.
    I yield back.
    Chairman PHILLIPS. Now I would like to recognize the 
gentlelady from New York, Chairwoman Nydia Velazquez, 
Chairwoman of the Small Business Committee, for 5 minutes.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you for 
holding this important meeting, and the Ranking Member.
    Dr. Shierholz, the last time we raised the minimum wage was 
in 2007 and it was only by a mere 65 cents. Can you walk us 
through how the minimum wage has changed in value over time and 
what effect this has had on workers and the economy?
    Chairman PHILLIPS. You have to unmute, please.
    Ms. SHIERHOLZ. I am so sorry. I am that person in every 
room. I guess hearings are just no exception.
    Chairman PHILLIPS. We have all been there.
    Ms. SHIERHOLZ. I will just say, okay, I will go quickly. I 
know I am wasting time.
    Workers today who earn $7.25 an hour are paid 30 percent 
less in real terms than their counterparts were paid 53 years 
ago. We have seen a dramatic erosion of the real value of the 
minimum wage. At the same time, productivity growth has kept 
marching on. Labor productivity has more than doubled over this 
period. And I think I mentioned this in my original comments, 
but if minimum wage increases just kept pace with productivity 
they would be over $23 in 2025. So what we are seeing is that 
low-wage workers have not shared in any of the country's growth 
over the last half century, meaning they have experienced much 
lower living standards and higher poverty rates than our 
economy could have afforded them. And a $15 minimum wage in 
2025 would help reverse that.
    Ms. VELAZQUEZ. Thank you. And can you please expand on the 
positive impacts an increased minimum wage will have on small 
businesses?
    Ms. SHIERHOLZ. Yeah. So this is a really important 
question. I think one of the things that we see with small 
businesses is they are the folks, small businesses are people 
who are most likely to work side by side with their low-wage 
employees. They know them. They know their families. They know 
their children. They hired them themselves. They really want to 
be able to give them a raise. But when the Federal minimum wage 
is very low, when the overall minimum wage is low, they cannot 
raise the minimum wages independently because it puts them at a 
big disadvantage, a competitive disadvantage to larger 
employers who can pay less. And so raising the minimum wage 
actually allows them to pay their workers more, to attract and 
retain the workers that they need. And also as I mentioned 
before, it means they will face lower turnover and a more 
productive workforce, not face high turnover costs. And then a 
higher minimum wage means greater demand for their goods and 
services. When you put money in the pockets of low-wage 
workers, those are the workers who are very likely to have no 
other choice but to immediately have to spend it. And that 
means an increased demand for goods and services which is good 
for business.
    Ms. VELAZQUEZ. Thank you.
    Mr. Puckett, you mentioned that most of your management 
hires come from inhouse and you have a workforce development 
program for employees that show promise. How has this 
benefitted your business? And do you recommend that other 
businesses do similar, something similar?
    Mr. PUCKETT. I think it has been a vital part of our 
business because it gives people a chance to build a career. We 
would like to reward our top employees with a great job that 
they can, you know, buy a house, send their kids to school, and 
being able to offer that in the restaurant business where we do 
not even require a high school GED to succeed. We just require 
passion, enthusiasm, and reliability. So it is very important 
to our culture.
    I would not want to encourage my direct competition to do 
it. We think it is so important but I think obviously it is a 
great thing for businesses to offer a career from a starting 
hourly.
    Ms. VELAZQUEZ. Thank you. And many have suggested that an 
increase in the minimum wage is too much, too fast, but the 
Raise the Wage Act increased the wage gradually and over a 
period of 4 years. If the bill passes and the first raise is on 
June 1st to $9.50, will your business be impacted by this?
    Mr. PUCKETT. Punch Pizza's business will not. And really, 
we are almost operating today like, I believe, your scheduled 
wages would be in 2023 and 2024 given the very strong economy 
in Minnesota to pay more than our competitors pay. We are 
really starting at $13 an hour already.
    Ms. VELAZQUEZ. Thank you.
    Mr. Chairman, I yield back.
    Chairman PHILLIPS. Thank you, Madam Chair.
    And now I recognize the gentleman from Minnesota, my 
friend, Mr. Hagedorn, for 5 minutes.
    Mr. HAGEDORN. Mr. Chairman and the Ranking Member, thank 
you. I appreciate that.
    I just think this is the wrong approach. This ``one size 
fits all'' deal as a mandate from Washington is not good. It 
certainly is not good for a rural district like mine in 
southern Minnesota. And it seems like if we want to build up 
folks' wages and opportunities, we should just look at what we 
did in the last 4 years with President Trump and Republican 
policies that made sense and worked. Tax reform was excellent. 
Regulatory reform, less regulations, low-cost energy, trade 
deals like USMCA. We have the strongest economy in our Nation's 
history with the lowest recorded unemployment. And people who 
had ``been left behind'' in the past were doing better than 
ever. I mean, I would like to see us not have $15 minimum wage 
as our goal. Fifty thousand dollar jobs is the goal. And when 
you have like we did a year ago 1.2 million open jobs and not 
even the people to fill them, you can guess what happens. Wages 
go up. Businesses do everything they can to find good 
employees. And I think we just need to build the economy rather 
than mandate from Washington.
    But I think about how this works in my hometown. I go to 
the grocery store there. There are a lot of young kids working 
in that grocery store getting their start. I think you do a $15 
minimum wage in Blue Earth, Minnesota, you are going to be 
cutting some staff. You are going to be cutting some 
opportunities. And it is going to hurt that grocery store. It 
is going to put them in a position, they are probably 
struggling already, it is a small community. You know, they are 
not making the big bucks like some of the stores up in 
Minneapolis and St. Paul. And you close that grocery store in 
Blue Earth, Minnesota, you are going to destroy that city. You 
are going to really undermine the whole community. We cannot 
have that in our small communities. We need to defend them, not 
put them in a position where they can go out of business.
    Now, we talked to Bonnie Vetter, the Fleet and Farm and Ace 
Supply in Fairmont and St. James, she says that this is going 
to hurt them. They are going to have to drop employees. They 
are going to have to cut staff. I would like to put her letter 
in the record if I could, Mr. Chairman with your consent.
    Chairman PHILLIPS. Without objection.
    Mr. HAGEDORN. And then, you know, I talked to my friend Wes 
Otto who owns Zanz Restaurant up in Mankato. Small restaurant, 
good tacos and all that stuff. And he writes they would have to 
reduce, with this $15 minimum wage, reduce staff by 20 percent 
and raise food prices by 25 to 30 percent. And then he adds 
this, other costs will more likely go up for our business such 
as vendor prices, cleaning services, and window washers because 
those employees are going to be paid more and those prices, 
those costs are going to be passed along to this restaurant and 
that is going to put him in a position of cutting staff or 
maybe going out of business. It is not all good stuff.
    I would like to put Mr. Otto's letter in the record as 
well, Mr. Chairman.
    Chairman PHILLIPS. Without objection.
    Mr. HAGEDORN. So I would ask Ms. Greszler, what Mr. Otto 
says about driving up other costs, unintended consequences of 
this, it is not just the direct cost that he has for labor but 
maybe other costs for services. Does that square with you? Is 
that something you could see on the horizon for businesses?
    Ms. GRESZLER. I think absolutely this is going to drive up 
all types of costs and that is clear when CBO said that it is 
not just the 17 million impacted workers who would have higher 
wages but 10 million more above that. And it is the same thing 
that I heard when talking to employers is it just cycles 
upward. And so while some of the employers we have here today 
have a competitive advantage from paying higher wages, you lose 
that competitive advantage when everybody is paying that wage. 
And so therefore, they have to increase their wages even higher 
to maintain those workers because the reality is if everybody 
that is below 15 is brought up to that 15 and you have some 
very experienced workers who are making just as much as an 
entry level person, and they are not going to want to keep that 
job anymore if they could go take an easier one. And this 
really just cycles out of control.
    And to your point at the beginning of the differences here 
across the U.S., we are talking about an extremely high minimum 
wage for some areas. And I think that Puerto Rico is a good 
example of where we might be headed here. The $7.25 minimum 
wage for the U.S., which applies to Puerto Rico, is over 70 
percent of the median wage there. Fifteen dollars per hour is 
the median wage in Mississippi. And across the entire U.S., we 
are getting close to that percentage that it would be for 
Puerto Rico at 15. Well, Puerto Rico has a 40 percent labor 
force participation rate. That is abysmally low and it is 
nowhere near where we would want to be. That is 30 percent 
lower than the U.S. has right now. We do not want to push all 
these people out of jobs and then have to supplement it with 
something like a universal basic income and just all these 
costs that are simply unaffordable. The economy will not work 
that way.
    Mr. HAGEDORN. Thank you.
    I just think the better approach is to build up our 
economy. Do the pro-growth policies that work. Help people that 
way. And these arbitrary standards that we are going to impose 
across the Nation are going to destroy areas like rural 
southern Minnesota. And I do not think it is in the best 
interest of the people. Thank you.
    Chairman PHILLIPS. And now I recognize the gentlelady from 
Minnesota, another friend from Minnesota, Representative Angie 
Craig, for 5 minutes.
    Ms. CRAIG. Thank you so much, Chairman Phillips. And 
congratulations on your leadership here of the Subcommittee. I 
am looking forward to working even more closely with my fellow 
Minnesotan here to help our small businesses across the state.
    I am grateful for this hearing today and thank you for the 
witnesses for sharing your experiences and your expertise.
    The data today to me is clear. Raising the minimum wage 
gradually over the next several years would lift nearly a 
million people out of poverty and significantly improve the 
quality of life for millions more.
    As an advocate of small business, I do want to be sure we 
can increase the minimum wage in a sustainable way for our Main 
Street businesses, especially those that have been impacted by 
the COVID-19 pandemic, mainly restaurants. I am a proud 
cosponsor of the Restaurant Act and have pushed for the 
inclusion of a grant program for restaurants in the American 
Rescue Plan that we expect to vote on later this week. That 
bill would include $25 billion in grant money for a new SBA 
administered Restaurant Revitalization Fund.
    With that, I want to turn my question to a leader in the 
restaurant industry and another fellow Minnesotan. It feels 
like it is Minnesota Day on the Small Business Committee. Mr. 
Puckett, thank you so much for being here today. Your positive 
contributions to the state of Minnesota and this industry are 
indisputable and really evident in your testimony today. And to 
me and my staff as well, we are all big fans of Punch Pizza 
back in Minnesota, especially your location in Eagan.
    You talked in your testimony about the immense loss of 
revenue your business has experienced due to the pandemic, 
which we know is a trend across restaurants. Can you speak for 
just a minute on how restaurants receiving grant dollars 
through the SBA's Revitalization Fund would help assist the 
industry in recovering?
    Mr. PUCKETT. Thank you so much for that good question. We 
appreciate all you and your staff's business as well back home 
in Minnesota.
    The grant programs, similar to the Paycheck Protection 
Program, have enabled us to operate in this scary, frightening 
environment but keep our employees safe and withstand some just 
frightening losses. We never lost money. Punch even made money 
its first year of business. It was successful. So to just keep 
jobs, keep our employees, keep our stores operating, keep our 
landlords paid, operating at a loss until we get back to more 
normalcy, the comfort and the protection knowing that we are 
not going to go out of business because of the Paycheck 
Protection Program, and I hope that you are successful with the 
new restaurant program. That enables us to tolerate the losses 
in cashflow and make sure our vendors are being paid and our 
landlords and employees are being paid.
    Ms. CRAIG. Mr. Puckett, let me follow up back a little bit 
closer to the topic and subject of this hearing today. I know 
Minnesota has gradually raised the minimum wage in the last few 
years and I know in your testimony you talked about the impact 
on talent that you are able to recruit to your restaurants.
    Minnesota has done what we are attempting to do somewhat at 
the Federal level here already. Give us some sense of how you 
were impacted by Minnesota's minimum wage increase, and if so, 
what were some of the tactics you used to navigate those 
impacts?
    Mr. PUCKETT. Thank you for the question. Yes, as you know, 
Minneapolis and St. Paul I believe were in the $10-$12 range at 
present for minimum wage. And so it has forced us to stay above 
that. And what we have also done is offer higher wages for 
cooks than cashiers. So we have a range. So we are ranging from 
$12-$15 an hour. And in general, for Punch, our cashiers are 
more part-time students and our cooks are more people that are 
household heads or their family is primarily responsible. So 
one of the ways we have done it is also look for ways to grow 
sales. And expanding digital sales, figuring out the takeout 
business has been one of the maybe unintended benefits of 
COVID-19 is that we have been able to survive with 100 percent 
takeout, and we think that coming out of the pandemic that we 
will be able to retain more of that business and hopefully 
continue to stay ahead of the minimum wage.
    Ms. CRAIG. Mr. Puckett, thank you so much. Sadly, I am out 
of time. And so with that, Mr. Chairman, I yield back.
    Chairman PHILLIPS. Thank you.
    Now, I recognize the gentleman from Pennsylvania, my friend 
Dan Meuser for 5 minutes.
    Mr. MEUSER. Thank you very much, Mr. Chairman. And I thank 
the Ranking Member. Thank you to the witnesses here with us 
today as well.
    So we are hearing some theory, some data, and some from the 
real world. I think this issue, its intent is fine. The intent 
is to try to help. But the Federal government stepping in and 
saying I am here to help on a macro level for every business in 
town throughout the United States usually does not work out. 
The idea of helping employees by telling employers what to pay 
them, President Biden actually said that raising the minimum 
wage to $15 across the Nation, regardless of the economic 
situation of the area, somehow that is going to help businesses 
through this very difficult recovery.
    So lets look at a little bit of the data. According to the 
Bureau of Labor, 392,000, .48 percent of employees of workers 
in the workforce make the minimum wage. Another 1.2 million are 
in that category as well but they earn tips. So they make more, 
much more than the minimum wage. Two-thirds of those who make 
minimum wage within 9 months are out of the minimum wage 
category. Eighty percent that make minimum wage are part time, 
and it is estimated, and there are lots of reports on this, we 
have to agree upon that, that nearly 67 percent of the job 
losses that occur, if we move to $15, are between the ages of 
16 to 24. Sixteen years of age to 24. So that is when 
opportunity is being created. Right? So again, there are 
reports from the CBO. They say 1.4 million jobs. The NFIB 
states how damaging it will be. There was the Seattle report 
from a couple years back.
    And I think all of us, I was in business for 25 years. 
Small business, large business. If this would work, I think we 
would all sign on and say lets go if this would actually do the 
things that theoretically we are hearing from economists that 
will take place. But there is a real world out there and I live 
in it, and I still live in it.
    And Mr. Chairman, I have some testimony from the following 
small businesses: Boyer's Food, Knoebels Amusement Park in my 
district, Luigi's Brick Oven Pizza. Great pizza in Tamaqua. 
Klinger's Restaurants and Gary Seibert, who runs a Small 
Business Resource Association. And Boyer's Food has 374 full-
time employees, 709 part-time. Their average wage is about $13. 
Supermarkets run on 1 percent margins. Okay? So doing this will 
force them to raise prices and have a more difficult time than 
they have already had. Knoebels is an amusement park that 
largely provides for summer jobs during the season, seasonal. 
Every kid within 60 miles, young person, wants to work for 
Knoebels during the summer because they sit at a pool and watch 
people come down on log flumes. And if we were to do this they 
would have to enormously cut back. They are in Central 
Pennsylvania, not Austin, Texas or, you know, New York City. 
Klinger, a restaurant, same sort of situation. They believe 
they would have 40 percent less business. They would have to 
increase their prices and lose customers. And Luigi's says the 
same thing. He would have to increase his prices which equals 
in the real world less customers. Increase the price, people 
want less of it.
    So I will ask Ms. Greszler this. Since our restaurants have 
had the most difficult time during this pandemic and should be 
targeted in the upcoming so-called Relief Package, what will 
this do, Ms. Greszler, to restaurants applying this mandate on 
them?
    Ms. GRESZLER. This is in the worst possible time that we 
could put a new mandate on restaurants. They have already 
reduced their employment by 20 to 30 percent during the 
pandemic. Dozens of restaurants have gone out of business 
completely. Big name restaurants. I mean, hundreds, if not 
thousands across the United States have. And so when Congress 
is looking at ways to help these restaurants and other small 
businesses, this is not throwing them a lifeline. This is 
throwing them a load of bricks. These businesses are out there 
struggling to survive and they have the hope, especially as the 
vaccines are rolling out, that there is a future there and that 
they will be able to recover. But jobs that are lost to a $15 
per hour minimum wage will not come back. Those are the types 
of jobs that big companies like Amazon will be able to, you 
know, automate out of existence, outsource to other companies. 
I mean, these jobs will not come back and that is the sad 
reality here is that we are talking about a completely 
different environment where there are not opportunities for 
tens of millions of Americans, especially young workers, to get 
their foot in the door.
    Mr. MEUSER. Thank you very much. I yield back, Mr. 
Chairman.
    Chairman PHILLIPS. We will see if we cannot do a second 
round of questioning, too, and come back, Mr. Meuser.
    Now I recognize the gentlelady from California, Ms. Chu, 
for 5 minutes.
    Ms. CHU. Thank you.
    Dr. Shierholz, your testimony discusses the importance of 
eliminating the subminimum wage for tipped workers. In my home 
state of California, tipped workers are paid the same minimum 
wage as nontipped workers, at least $14 an hour, arising to $15 
an hour by next year. I am so proud of my state for leading the 
country by raising the wage to $15 and for eliminating the 
harmful and discriminatory subminimum wage for tipped workers. 
So these steps have been a success.
    Now, before the pandemic, our restaurant industry was 
robust employing nearly 1.5 million people at over 75,000 
establishments. That includes an estimated 1,700 restaurants in 
my district alone. What is the problem with the subminimum wage 
and what advantages do tipped workers in states like California 
have over those in states that have a subminimum wage, tipped 
wage which can be as low as $2.13 an hour?
    Ms. SHIERHOLZ. The advantages in those seven states that do 
not have a subminimum wage for tipped workers is enormous. So 
one of the things we know is that tipped workers have much 
higher poverty rates than nontipped workers but that difference 
is substantially lower in those states that have phased out 
their subminimum wage for tipped workers. What that means is 
that the subminimum wage for tipped workers reduces living 
standards of tipped workers. It raises poverty of tipped 
workers and doing away with it could help reverse that.
    I think one of the things that happens is people think of, 
you know, people typically think of tipped workers as being 
servers in fine dining establishments who actually bring in a 
lot of tips and those people exist but they are a very small 
slice of tipped workers. And we need to actually keep the big 
picture in mind.
    Can I just make one little thing? There has been a lot of 
talk about teenagers in this hearing and I just think it is 
useful to bring some data to this. While people who would 
benefit from increasing the minimum wage are frequently 
characterized as teenagers, that stereotype is profoundly 
wrong. Only 1 in 10 people who would benefit from raising the 
minimum wage to $15 in 2025 is a teenager. I think teenagers 
should get decent wages but let's actually just be clear about 
who is really being impacted by this policy.
    Ms. CHU. And I want to thank you for saying that because 
there are those who are saying we do not have to raise the 
minimum wage because these are just teens trying to earn extra 
money. But as you said, that is not true; only 10 percent of 
them are teens. But they also should earn a decent living from 
their work.
    Ms. SHIERHOLZ. Yeah. More than half of the people who would 
see a raise are what are known as prime working age adults 
between the ages of 25 and 54 who provide a ton of the income 
that their family needs to make ends meet. These jobs matter 
for these people.
    Ms. CHU. Exactly.
    Dr. Shierholz, another thing that distresses me is the 
gender pay gap. And women earn just 81 percent of the median 
weekly pay earned by men. Women of color are even more 
disproportionately affected. Black women earn 61 cents for 
every dollar earned by men. Native American women, 58 cents. 
Latinas, 53 cents, and AAPI women, while they earn 85 cents. 
But the thing is that we can close this wage gap. In 
California, women own 89 percent of the median wage earned by 
men. And in fact, those states with the smallest gender pay gap 
all have minimum wages that are above the Federal minimum wage 
of $7.25.
    So can you explain to us why a $15 minimum wage will reduce 
the gender pay gap?
    Ms. SHIERHOLZ. Yeah. No, that is a really important 
question. We know like the CBO's report shows that raising the 
minimum wage to $15 in 2025 will reduce overall income 
inequality but it will also reduce other kinds of inequality 
like gender pay gaps. What we know is that due to the impacts 
of structural sexism, women are more likely to be in jobs that 
are affected by a minimum wage increase. So that just 
mechanically mean that raising the minimum wage is going to 
reduce gender wage gaps. It is a very important tool to create 
a more equal economy along gender lines than we have right now 
which is deeply unequal.
    Ms. CHU. Yes. And the states with the largest gender pay 
gap all follow the Federal minimum wage. I would point that 
out.
    Ms. SHIERHOLZ. I did not know that.
    Ms. CHU. And I yield back.
    Chairman PHILLIPS. The gentlelady from New York, Ms. 
Tenney, is recognized for 5 minutes.
    Ms. TENNEY. Thank you, Mr. Chairman. It is an honor to be 
on the Committee with you, and I hope to get to know you well.
    I just wanted to speak as a small business owner, someone 
who has lived through this minimum wage and the negative 
effects, though well intentioned, it has been my experience as 
a business owner that although I would love to pay all my 
employees the highest wage I could possibly pay, I also had to 
deal in a competitive industry where my cost as a New York 
State business competing across state lines was significantly 
difficult.
    And I wanted to put into the record, Mr. Chairman, some 
testimony and a letter from Amanda Potter, who runs a women-
owned business that she started with her husband. It is called 
AP Master Images in Utica, New York. Mr. Potter had a really 
tough lifestyle growing up in foster care and his wife Amanda 
led the charge to really put forth this wonderful business. And 
has expressed deep concern about raising the minimum wage and 
the effects it could have on their company. She cites a few 
specific things. If I could get that in the record I would 
greatly appreciate it.
    Chairman PHILLIPS. Without objection.
    Ms. TENNEY. Thank you so much.
    Among those, as I think many people do not realize, is that 
once the minimum wage is increased, that also increases a lot 
of the other expenses that go along with maintaining 
competitiveness and having employees, such as the taxes, the 
healthcare insurance, paid leave in New York State, and many 
other items. Ms. Potter indicated to me in her testimony, and I 
will just summarize that it costs them over $100,000 over the 
next 2 years just by the increase in minimum wage in New York 
State. This made them less competitive and unable to compete 
across state lines. But also, unable to compete for employees 
in some ways and also give advantages to employees who, for 
reasons, you know, are part-time and just looking for part-time 
work.
    And that is something I wanted to bring up and I wanted to 
ask Dr. Shierholz if she could answer a question for me.
    Ms. SHIERHOLZ. Yes, wait, sorry. What was the question?
    Ms. TENNEY. Yeah, I wanted to just ask you a question. You 
indicated in your testimony that the $15 is the ideal wage that 
we should move to now. And you also alluded to the fact that 
$23 per hour is what the wage should be. And based on your 
testimony, can you tell me why the wage should not go to $23 an 
hour instead of just $15? And what economic reasons would you 
argue that we do not need to go to $23 an hour today?
    Ms. SHIERHOLZ. That is a really good question. So one thing 
obviously that even the $15 does not go to $15 today. It goes 
in five steps by 2025. What that, $23, I am actually not 
suggesting that that is necessarily where the minimum wage 
should be. What it says to me is that there is a lot of wiggle 
room. Even above 15 where the economy could still afford to pay 
workers that little if it had just kept up with productivity 
growth----
    Ms. TENNEY. Just to reclaim my time for a minute. Can you 
tell me, yeah, just I want to get a more precise answer. Why 
are you not advocating for a $23 minimum wage, or even a $50 if 
it is such a benefit? And why would it not be good either way? 
I mean, $50 would be even better, $23 would be even better. 
Twenty-three or 50 would be even better than a 15. So why would 
you not advocate for those if it is going to be such a boon to 
the economy and it would make it even across the board?
    Ms. SHIERHOLZ. I do not think that it would. I think we 
have two key programs or two key things that deal with the 
issue of low wages in this country. It is the minimum wage in 
broad terms, the minimum wage and the EITC. Those things work 
together to make sure that low-wage workers actually have 
enough to make ends meet. And so a $15 minimum wage combined 
with a strong EITC is the program that I would go for instead 
of trying to make it all up with increasing the minimum wage.
    Ms. TENNEY. Okay. So thank you. So let me just summarize 
your answer is that government needs to come in and determine 
wages as opposed to the free market.
    I just wanted to suggest another issue in terms of issues 
with the minimum wage. There are also people who serve in a 
part-time capacity who now would lose their wages. One of the 
most compelling testimonies I received from people on this 
issue before was from a group of students who now would lose 
their summer jobs because of the increase in minimum wage and 
less of them would be able to work. So those were government-
paid jobs. And I just want to emphasize that we would love to 
all pay our employees more, but unfortunately, inflation and 
the economy have prevented us from being able to do that. But I 
want to thank the Chairman, and I look forward to further 
discussion on this issue. Thank you so much.
    Chairman PHILLIPS. Now I recognize the gentleman from 
Pennsylvania, Mr. Evans, for 5 minutes.
    Mr. EVANS. Thank you, Mr. Chairman. And I am going to have 
to visit Minnesota to get some of Mr. Puckett's pizza. I want 
to ask him a question.
    Do you think that retention rate would be 2.5 percent 
longer than the industry average if you did not pay your 
workers more than the minimum wage? And what are the benefits 
in terms of it on the turnover rate, since you are in the real 
world?
    Mr. PUCKETT. Thank you for our question, Representative 
Evans.
    I think pay is a key part of it. I think when you pay your 
people well, it makes them feel valued. And that is why the 
pressure is on Punch to figure out with the minimum wage 
increasing, can you pay more than the minimum wage? Because I 
think there is a very positive feedback loop of treating your 
people better than your competitors are treating them. But pay 
is not it. Pay is not everything. You need to have a company 
culture that they believe in. They need to like their boss of 
the store or their boss in the office, like myself. They need 
to believe in the product and think they are making something 
great versus something average. All those things I think 
contribute to people staying. But I think without a doubt, when 
people feel good about their employer and feel well taken care 
of, whether it is pay and benefits, retention increases.
    Mr. EVANS. Ms. Hamilton, can you explain how using the Fair 
Pay model has helped you retain employees and the fiscal 
benefit it has brought?
    Ms. HAMILTON. Absolutely. Well, we also, like Punch Pizza, 
have a good starting base salary, and that is the basis of how 
we structure our employment benefits here. And what we have 
found is that by treating our employees well, by paying 
everyone a living wage, people here are really engaged and we 
have an extremely high retention rate. We have a lot of 
employees who have been here between 10 and 20 years. Our 
average employee time here is 7-1/2 years. And what that allows 
us to have is to have a workforce who is experienced. We have 
low error rates. We do not have to invest money in recruitment. 
We have a productive workforce that helps us to be creative, 
innovative, and successful.
    Mr. EVANS. Thank you.
    This is my last question. Dr. Shierholz, can you describe 
how a large amount of income inequality might hurt the growth 
of the economy?
    Ms. SHIERHOLZ. Yeah, no, that is a very good question. So 
income inequality hurts the growth, overall economic growth 
because it means there is more money in the pockets of people 
who are not spending constrained. They already have everything 
they want. And so when you give them another dollar it does not 
actually boost the economy and lead to an increase in demand 
for business services. So if income inequality rises and you 
shift money from low-wage workers who do spend every extra 
dollar they have because they have no choice, if you shift that 
money, redistribute it through rising income inequality to 
highly-paid workers who are less likely to spend it, it holds 
back the economy.
    Mr. EVANS. Thank you.
    Mr. Chairman, I yield back. And we have to go have some 
pizza there in Minnesota.
    Chairman PHILLIPS. I do not think there would be any 
objection, Mr. Evans.
    And with that I recognize the Ranking Member of the Small 
Business Committee, Mr. Luetkemeyer from Missouri, for 5 
minutes.
    Mr. LUETKEMEYER. Thank you, Mr. Chairman. And it is great 
to be with everybody today. I think it is paramount we have 
this debate and actually listen to small businesses on the 
ground that they will be impacted by this type of mandate.
    I would like to insert two letters from my constituents who 
are small businesses themselves, the 54th Street Bar and Grill 
who have written to us, as well as Rosebud Tractor from 
Rosebud, Missouri, who is a tractor and implement dealer. They 
detail in their letters the disaster that this thing is going 
to be to their businesses which we will go into shortly.
    I would also like to put into the record the report from 
the Congressional Budget Office, which I think Congressman 
Meuser noted, but I think it is important we put it in the 
record because it gives the budgetary effect of the Raise the 
Wage Act, which is what we are talking about, as well as the 
latest study from the MFIB Research Center as of June 25th that 
talks about the effects of the Wage Act on small business.
    Chairman PHILLIPS. Without objection.
    Mr. LUETKEMEYER. Thank you.
    Ms. Greszler, in your testimony you describe that there has 
been a steep decline in workers earning a minimum wage. You 
mentioned that pro-growth policies assisted in this area. 
According to a vast amount of research, small businesses are 
projecting optimism and confidence prior to COVID-19. The 
unemployment rate was at historic low levels before we were hit 
with the pandemic. Can you describe in more detail how pro-
growth policies assist workers?
    Ms. GRESZLER. Yes, thank you. I think this is a good point. 
While the minimum wage has not risen for more than a decade, 
the proportion of people who are earning the minimum wage has 
dramatically declined, 65 to 80 percent because most people are 
earning above that. And it is this combination of reducing 
unnecessary regulations on businesses, allowing them to keep 
more of their hard-earned dollars. When they have those extra 
resources, they invest them in their workers. They can raise 
wages. They can provide additional training. They can provide 
additional benefits, things like paid family leave. And all of 
this is why we saw just over 3 years, between 2016 and 2019, 
the wages of the lowest income earners, the 10th percentile of 
people who are making about $10 per hour, their wages increased 
almost 15 percent over 3 years. And that was far more than the 
median, and it was more than the highest earners as well. And 
that is because when you have a positive environment that keeps 
opportunities open for people, that allows the businesses to 
run their businesses as they see best and not as policymakers 
in D.C. tell them they should do them, then you see these 
rising wage gains, especially at the bottom.
    Mr. LUETKEMEYER. Thank you for that.
    You know, the letters I have from my constituents really 
point out, I think, the problem with the minimum wage situation 
here in that the Rosebud Tractor folks, they have a tractor and 
implement store where they not only sell new tractors but fix 
them. Fifty-seven percent of their expenses are employee 
payroll, which points to the fact when you increase over half 
of your expenses significantly, it is going to amount to 
something. And for them it is going to amount to about $190,000 
more, even though they pay an average wage in their business of 
$18.56.
    With regards to the 54th Street Bar and Grill, they are 
going to wind up losing about $425,000 after they raise the 
wages to the minimum wage here which means they are going to 
have to raise everything on their menu or go out of business. 
And we have already stressed the restaurant business with the 
COVID problem enough. And in fact, here is an article out of 
Roll Call of all places back on January 26th which says the 
restaurant industry already wracked by COVID-19 now faces a 
minimum wage hike in which they talk about one more blow to our 
restaurants. One more blow to people who cannot afford one more 
blow. So why are we thinking about this?
    So I guess, Ms. Greszler, do you think this is a 
responsible thing to do to put another burden on businesses 
like this that are really struggling to add a minimum wage, 
another blow to them? How would you react to that?
    Ms. GRESZLER. No, I think this is reckless and tone deaf to 
the realities and the struggles that these small businesses are 
facing out there. And to potentially decimate entire industries 
by implementing a ``one size fits all'' $15 minimum wage does 
not make any sense. As some of the business owners here have 
attested to, a lot of individuals work for small employers and 
there is real value in that to having that relationship and 
feeling like you are a part of something. And a lot of the 
restaurants and industry people are working for smaller, 
independently-owned restaurants, and they have that upward 
mobility opportunity. But as I said before, if we implement a 
$15 minimum wage now, those jobs that are lost will not be 
coming back and you are completely just devastating that 
industry and those opportunities that are out there for people 
to get their foot in the door and potentially stay in that 
industry and be able to have a good career.
    Mr. LUETKEMEYER. Thank you for that. And I appreciate the 
extra time by the Chairman. And I also would like to welcome 
Congresswoman Tenney to the Committee. We are excited to have 
her back in Congress, have her back on this Committee to be a 
very valuable member, and I look forward to working with her 
over the next 2 years.
    Thank you, Mr. Chair, and I yield back.
    Chairman PHILLIPS. Thank you, Mr. Luetkemeyer.
    And now I recognize the gentlelady from Kansas, Ms. Davids, 
who is the Chairwoman of the Subcommittee on Economic Growth, 
Tax, and Capital Access, for 5 minutes.
    Ms. DAVIDS. Good morning. Thank you, Chairman.
    Well, I am glad we are holding this hearing today. I 
represent the 3rd Congressional District in Kansas, which is 
the Kansas City Metro area. And we have a pretty vibrant 
entrepreneurial ecosystem in our area. And that is part of the 
reason that during my time in Congress I have been committed to 
working on the Federal minimum wage issues that we are getting 
a chance to talk about today so that we can help our 
hardworking Kansans, their families, and also be mindful about 
our small business community.
    We have heard it multiple times it has been over a decade 
since we raised the minimum wage and the cost of living for 
folks has certainly increased over that time. I do continue to 
be concerned about the impact that our policy decisions that we 
make here in Congress related to the minimum wage, what those 
impacts will be on our small businesses who right now are 
facing an unprecedented economic crisis. And last Congress I 
pushed for a tax credit to be included to help our small 
businesses cover increased expenses. I was disappointed to see 
that it was excluded, but I was also proud to support an 
amendment that was included commissioning the study for what 
the impacts of the bill that we passed would have so that we 
can get a clear understanding and make decisions based on the 
evidence. So I am really glad that we are getting the chance to 
hear from experts and small business owners about an increased 
minimum wage today.
    I want to start off with Mr. Puckett and Ms. Hamilton. I am 
curious about your thoughts on the impacts that the tax credits 
we have been talking about would have on small businesses and, 
you know, how helpful that might be in transitioning as the 
minimum wage starts to go up.
    Mr. PUCKETT. Go ahead, Ms. Hamilton.
    Ms. HAMILTON. Thanks.
    Well, I want to start by saying that with or without the 
tax credit, I believe that raising the minimum wage would be 
beneficial for our business and for our community here in New 
Hampshire where we still follow the Federal minimum wage of 
$7.25. That said, if there is a tax credit that can support our 
business and businesses in our community in making that 
transition and it does not harm the community members and 
employees then I think that would be an all-around beneficial 
thing.
    Mr. PUCKETT. I second that. Anything that can be done to 
help small businesses weather this storm and make it through to 
the other side, because small businesses really did not have 
the capital structure that the big, big chain businesses did in 
our industry. So anything that helps small businesses like 
Punch would be really appreciated.
    Ms. DAVIDS. And then I heard both of you talked a little 
bit about the kind of longer term impacts, whether it is 
retention, training, these kinds of things. Could you talk a 
little bit more about just I guess how you envision, are these 
things that you talk to your employees about when they come on 
board? Because I imagine folks might even actually wonder why 
you are maybe paying the wages that you are paying at entry 
level jobs.
    Mr. PUCKETT. One of the things that we are just starting to 
use is the technology like we are using today to do job fairs. 
And we are doing internal job fairs to explain all the 
opportunities our employees have from opening, from starting to 
grow. And then we also do HR Week every 6 months and sit down 
with every employee and talk about how they can grow with the 
company.
    Ms. HAMILTON. Yeah, at Badger as well, when we onboard new 
employees we talk about our pay structure and how that is 
integral to the decisions we make in our company and that we 
are committed to treating our employees fairly and to creating 
a good work-life balance and supporting them to grow in our 
company.
    And then additionally what I would say is that I had 
mentioned earlier we have a really low attrition rate so that 
we have employees who stay here for a very long time and that 
has helped us to be successful. We are now a second generation 
owned family business. We have not ever had to take outside 
investing and that comes from being a successful business, and 
a lot of the success really comes back to the structure that we 
have created and how we treat our employees.
    Ms. DAVIDS. Thank you. I appreciate that. Just curious 
based on some of the relationship conversation that was 
happening earlier.
    Chairman, I appreciate the hearing today and I yield back.
    Chairman PHILLIPS. Thanks, Ms. Davids.
    And now I recognize the gentleman from Florida, Mr. 
Donalds, for 5 minutes.
    Mr. DONALDS. Thank you, Mr. Chairman.
    Really what I want to do here is read in a statement from a 
business owner in my district. Her name is Stephanie Figueroa. 
She owns three restaurants in Florida in my district called 
Fernandez the Bull. Fernandez the Bull is a family-owned 
restaurant since 1985 that features traditional Cuban cuisine 
with a unique flair. I go there often. It is amazing. I 
recommend it to anybody who comes down. The quality, the 
consistency and the customer care that has been at their 
establishment has made it one of Naples most popular 
restaurants. Fernandez the Bull is more than just a small 
business; it is the American Dream. It started in the 
restaurant industry basically out of love for Cuban food. The 
owner actually started as a server and she is now the proud 
owner of three restaurants. She employs 85 incredibly talented 
people throughout southwest Florida. Some of these career 
servers, some of them started as entry-level students and some 
of them are, yes, single parents. All of them are family.
    When she started her business, she had a pride of knowing 
many of the opportunities that the company had created. It has 
been the place where people have shared their griefs over 
meals, celebrated victories over drinks, and proposed to love 
their life and so much more. She loves to tell the story of one 
of her most treasured employees who started as a dishwasher and 
worked his way up to being a manager. She thinks that young 
people who have come there to work have learned customer 
service skills, problem-solving skills, or they have learned 
that they had a passion for management or the culinary arts.
    Members of the Committee may not be aware but in the last 
election cycle a constitutional amendment barely passed in the 
State of Florida that puts us on a trajectory similar to the 
proposal. The owner is a proud member of the Sunshine State and 
she is actually quite thankful that even during that election 
process that I opposed the minimum wage that was on our ballot 
even though it barely passed.
    And her concerns are very clear. A Federal mandate of a $15 
minimum wage is unreasonable and out of touch. It would 
actually shut down Main Street America. She believes that what 
it will actually do is that it will actually make some of her 
servers leave the industry because of what it will do to the 
tip environment. Many of her servers already make more than $15 
an hour. The mandate will intentionally cost many of her 
employees to lose income.
    In short, Mr. Chairman, her belief is not only will it 
cause her employees to lose this income, but it will also cause 
her to raise prices in her establishment. It will increase the 
costs from vendors in her establishment. And all that is going 
not be borne by the consumer.
    And I would like to enter in this letter from my 
constituent in the record, Mr. Chairman.
    Chairman PHILLIPS. Without objection.
    Mr. DONALDS. Thank you so much, Mr. Chairman.
    One of my questions I really had, and I was watching the 
testimony from my office before I made it down to the Committee 
room, but could any member, any one of the witnesses today, 
could they actually speak to the actual costs a business would 
have to bear with an artificial raising of the Federal minimum 
wage in such a drastic manner as being purported in the 
proposal? Is there a witness that can speak to that?
    Ms. GRESZLER. I would be happy to. When we were talking I 
think earlier there was a mention of the grocery store and 
their small profit margins and so I just quickly did a 
calculation there. If you have a 1 percent profit margin and 
you go from a $7.25 wage to a $15 per hour minimum wage, that 
employee, just paying them that extra amount of money each day, 
they have to sell over $6,000 more in food. Maybe if it is a 
smaller percentage margin or a larger percentage margin, we are 
still talking about thousands of dollars more. And as you 
pointed out, Mr. Donalds, the tipped industry, this is a 600 
percent increase in the tipped minimum wage. And make no 
mistake; there is no subminimum wage in the United States. If 
you are making the ``subminimum'' wage and you earn less than 
the actual minimum wage, your employer has to bring those wages 
up. But the reality is that those tipped workers have fought to 
overturn increase in the tipped minimum wage because it has 
actually reduced their incomes in those areas. And so this is 
just drastic assumptions that we are making that these 
employers can raise their prices or somehow pull this money out 
of who knows where. But to say that we are going to allow 
employers to pay their workers $15 per hour by mandating it, 
where is that money coming from? Where are the thousands of 
dollars per worker in new sales going to come from?
    Mr. DONALDS. Thank you so much.
    And with the last 15 seconds, Mr. Chairman, what I will say 
is one of my closest friends was in Seattle after they raised 
their minimum wage. A Subway sandwich that was $6.63 in Florida 
was $11.83 in the City of Seattle. So the prices will go up on 
all Americans.
    I yield back.
    Chairman PHILLIPS. Thank you, Mr. Donalds.
    Now I recognize the gentlelady from Georgia, Ms. Bourdeaux 
for 5 minutes.
    Ms. BOURDEAUX. Thank you so much, Chairman Phillips and 
Ranking Member Van Duyne for holding this hearing to examine 
the benefits and challenges to small businesses of raising the 
Federal minimum wage.
    I firmly believe that we do need to raise the minimum wage 
in this country to get it to a living wage. The current Federal 
minimum wage has not been raised since 2009 and at $7.25 an 
hour it amounts to just around $15,000 per year. I personally 
have worked for a minimum wage back in the 1980s when it was 
$3.25 an hour and I know how incredibly difficult it is to make 
ends meet when you are working for this kind of very low wage 
and work two jobs to try to just pay for rent and food and keep 
going. Luckily, I was single and young at the time and so it 
was not catastrophic, but if I had children this would be 
almost impossible to survive. And now, far too many hardworking 
Georgians are working two jobs, 60-plus hours a week, and 
really cannot make ends meet.
    That being said, I definitely understand that we are 
increasing this quickly and we need to think carefully about 
our small businesses and the ``mom and pop'' shops in 
particular throughout my district. More than doubling the 
current Federal minimum wage over the next 5 years, we are 
asking small businesses to really bear the entire burden of 
getting us to a living wage. So I am very, very interested in 
some of the proposals that are out there to try to soften the 
burden on small businesses for doing this. One of the proposals 
reported to be under consideration by some senators is to 
complement the Federal minimum wage increase with a package of 
small business tax cuts. I know we have some academic experts 
here on this and I wanted to just ask, Dr. Shierholz, in your 
opinion, are there policy proposals that we should be 
considering to complement the wage hike and soften the blow to 
small businesses? Are there any strategies in this respect that 
would be preferred one versus another?
    Ms. SHIERHOLZ. So there are certainly plenty of targeted 
investments for small businesses in the COVID relief 
legislation, so some of that is already totally on track. It 
has additional PPP funds, targeted relief through the Economic 
Injury Disaster Loan Program, targeted relief for restaurants, 
targeted relief for shuttered venues. So there is a lot already 
in there.
    But I will say that minimum wage increases have certainly 
been coupled with things like small business tax cuts in the 
past. I am assuming that is under consideration here, too, 
though it is actually worth nothing that we saw a lot of 
business tax cuts in the TCJA without a minimum wage increase.
    Ms. BOURDEAUX. So some of those have already happened.
    Just to follow up on that, the PPP and these Shuttered 
Venues operations grants, things like that, those are temporary 
mainstays, right, to get us through the COVID period. Are there 
longer term policies that we should be looking at, you know, as 
we go about increasing the minimum wage?
    Ms. SHIERHOLZ. That is a very fine question and I do not 
have a complete answer so if others do I am totally up for 
hearing about that. But I do think it is important to loop back 
around, that what we know the literature shows us is that 
increasing the minimum wage actually does not cause meaningful 
job loss. So keeping that as a backdrop, I think it does 
underscore that businesses in this country are able, the 
empirical evidence shows they are able to absorb these costs. 
So I love all the stuff that is in the COVID relief 
legislation. The efforts we talked about are a really good idea 
but I do not think that we have to really go too far down that 
road because what we know is that businesses are able to 
increase these wages, that is what the data show without 
negative consequences on that.
    Ms. BOURDEAUX. Okay, I have got a few more minutes. One 
quick question about that. Why is that? You would assume, 
right, if you are increasing wages in that way, but also, I 
think people need to realize this feeds back into the economy 
because people now have more money to spend and so they are 
buying new things. Right? And you have this kind of circular 
benefit to raising the wage. But do you have other insights on 
sort of why it is that this does not lead to those kinds of 
problems?
    Ms. SHIERHOLZ. Yes. I am glad you asked that. So we have 
talked about a couple of things. Like, it reduces turnover and 
turnover is very expensive. So some of it is recouped that way. 
What you just said, it boosts demand for goods and services. So 
that is good for business. It increases revenues.
    Another thing that is clear, and I think there has been a 
lot of confusion about this in this hearing, is it is true that 
some of the impact of minimum wage increases are passed along 
in the form of higher prices. So that is another way that 
businesses help absorb the impact of the higher labor costs.
    But I just want to put that in context a little bit. 
Increasing the minimum wage to $15 in 2025 will increase the 
total wages going to low-wage workers by $107 billion. That is 
a lot, but total personal consumption expenditures annually in 
this country are over $14 trillion. So that $107 billion is 
well under 1 percent of total personal consumption 
expenditures. So even if the entire amount were passed on in 
the form of higher prices which will not happen, it would still 
have a barely perceptible effect on the overall price level as 
it was phased in. And then after the phase-in happened when we 
just had regular indexing, it would have zero effect on the 
overall price level. So it is one way that businesses can 
absorb some of the minimum wage costs but it is not at all a 
larger macro problem.
    Ms. BOURDEAUX. Thanks so much for your insights.
    And I yield back the balance of my time.
    Chairman PHILLIPS. And now the gentleman from Wisconsin, 
Mr. Fitzgerald is recognized for 5 minutes.
    Mr. FITZGERALD. Thank you, Mr. Chair.
    First of all, thank you to Mr. Puckett and Ms. Hamilton. 
You are running much different types of businesses, are you 
not? One involved obviously in pizza and the other one in hand 
balm and lotions. So my question would be, and I think it is 
really negligent of us not to continue to talk about this is a 
proposal that has come up in the middle of the pandemic. And I 
think a lot of the studies and any of the research that you 
have had, and I have seen many of these going back to my days 
in the state legislature, you know, have all been turned on 
their head as a result of COVID. So the idea that, you know, 
while small businesses are literally closing day by day that 
this would even come up at this point is kind of amazing to me. 
But here we are.
    I was just going to say, in Wisconsin, the big three for us 
are tourism, agriculture, and manufacturing. And for the most 
part, small manufacturing, all very susceptible to changes in 
wages. And I think that is not the case, obviously, in many 
other states. So it is another thing that we have to be aware 
of.
    The other industry I just say that could be directly 
affected, because there are always questions about trying to 
increase wages without losing employees is assisted living. It 
is something that we had worked on for many years in our state 
budgets, and it just feels like that is another, you know, it 
is a necessary industry, obviously, to take care of those 
individuals, but at the same time it is susceptible to the back 
and forth of a small business. And these are all things I think 
that need to be considered. And like I said, just underscore 
the idea, we are in the middle of a pandemic and businesses are 
completely in trouble right now. And the idea that we would be 
talking about an increase in the minimum wage is kind of 
ridiculous to me.
    So I yield back. Thank you.
    Chairman PHILLIPS. Now I recognize the gentlewoman from 
California, Ms. Kim, for 5 minutes.
    Ms. Kim?
    Ms. KIM. Yes. I just unmuted myself. Thank you. Thank you, 
Chairman Phillips and Ranking Member Van Duyne for hosting this 
important hearing today. I look forward to working with both of 
you and everyone else in the Committee to ensure our small 
businesses have the tools and resources to overcome this 
pandemic.
    This proposal to increase the minimum wage comes at a time 
when many small businesses in California's 39th District are 
struggling to keep their doors open due to our state's heavy-
handed lockdown.
    So Chairman, I have a statement from Steven and Patricia 
Bangos of Eureka Pizza. They are small business owners in my 
39th District and I had a chance to visit with them and speak 
with them. They are already running a razor think line with 
micro thin margins for profit. And COVID-19 has already had a 
major impact ranging from cost of goods to food costs. I would 
like to ask their full statement to be entered into the record.
    Chairman PHILLIPS. Without objection.
    Ms. KIM. Thank you.
    According to a study, approximately 62 percent of all small 
businesses think the worst of the pandemic is ahead of them, 
not behind them. Instead of increasing costs for small 
businesses, we should be looking to decrease costs and restore 
some of the economic certainty that was lost due to the 
pandemic.
    I would like to pose a question to Ms. Greszler. As a 
former business owner myself and mother of four, I was troubled 
by the findings in your study estimating that a $15 minimum 
wage would increase the cost of childcare by an extra $3,728 in 
costs for a family with two children. So can you please 
elaborate on how would an increase of the Federal minimum wage 
to $15 result in higher childcare costs?
    Ms. GRESZLER. Certainly. And so childcare is a little bit 
of a unique industry in that they cannot use other options of 
reducing the staff because of ratios and those things, and so 
they have to pass all of those higher wages onto the customers. 
As I said, 21 percent across the U.S. but as high as 43 percent 
increase in costs in Mississippi. And California, where you 
are, has actually already dealt with this to some degree, and 
California's Department of Education looked at this impact and 
they said, while we agree that $15 per hour, especially for 
childcare workers is morally the thing that we should be doing, 
nevertheless, this is going to be devastating for the childcare 
industry because childcare workers tend to make lower than $15 
per hour on average. And so you are in this catch-22. You 
increase the prices and then people can no longer afford 
childcare. And there has also been an experience in California 
whereas a result of getting a wage increase, a family earns 
more and now they lose hundreds, if not thousands of dollars in 
childcare subsidies, as well as you have had the impact on the 
childcare providers, those who accept subsidized clients will 
no longer accept those lower rates when they have even higher 
costs. And so this is an example where you are hurting the 
exact people that we want to be helping.
    Ms. KIM. Thank you for that.
    I have another question to Ms. Greszler. In one of your 
reports you mentioned that there are better ways to help 
workers achieve lasting income gains. From your point of view, 
are there ways to boost income without mandating an increase in 
the Federal minimum wage? And can you please elaborate on some 
of the ideas that you propose?
    Ms. GRESZLER. Yeah, and really the only way that you can 
boost someone's income permanently to have actual long-term 
gains is to help them become more productive, to create more 
things of value. And a $15 minimum wage creates an artificial 
wage gain by taking it away from somebody else, but we would 
rather just see these opportunities out there for people to 
have alternative education, things like the apprenticeship 
programs that you do not have to incur six figures of debt and 
get a 4-year college degree. But nonetheless, will have a great 
career ahead of you. Reducing the occupational licensing laws, 
things that say you have to pay hundreds of dollars and go 
through all this training to be able to arrange flowers or to 
braid hair. There is no reason that we should have those 
barriers out there.
    And then also, just keeping the opportunity out there for 
individuals of all income levels, all education levels to use 
their skills to go out and to be independent workers and to 
contract in whatever way they would like. And I know this is 
particularly relevant as well in California with AB5 shutting 
opportunities for a lot of workers.
    Ms. KIM. Thank you.
    One last question. We often talk about the 1.4 million jobs 
that could be lost----
    Chairman PHILLIPS. Ms. Kim----
    Ms. KIM.--but the CBO study.
    Chairman PHILLIPS.--your time is expired. We are going to 
go to a second round, so perhaps if you want to stick around, 
but our time is expired for right now.
    Ms. KIM. Sure. Thank you. I yield back.
    Chairman PHILLIPS. And with that, we are going to move to a 
second round of questioning. And I am going to begin by 
recognizing myself for 5 minutes.
    First, I have enjoyed this discussion, and it is exactly 
what I believe we needed. I also want to point out some facts. 
That of the OECD countries, the United States currently ranks 
14th of all the countries with a minimum wage of $7.25. We are 
just below Slovenia and just ahead of Poland. Our neighbors to 
the north, Canada, each province has a higher, significantly 
higher minimum wage than we do in the United States, including 
Ontario at $14.25 Canadian, which based on current exchange 
rates is about $11.40. They also make certain exceptions for 
students, for servers, and for those who work from home.
    My question is to Ms. Greszler. I am curious how research 
relative to how the minimum wage in Canada affects the Canadian 
economy vis-a-vis our very low wage here in the U.S.
    Ms. GRESZLER. I have not looked specifically at that but I 
would just point out that regardless of what the minimum wage 
is, what matters is what people are actually making. And we 
have seen in the United States that not only are people having 
higher incomes and earning more but that we have also had a 
lower unemployment rate. And so there are fewer people who are 
not able to find jobs.
    Chairman PHILLIPS. Do you have a sense of what the median 
wage is in the United States versus Canada?
    Ms. GRESZLER. I do not know Canada's.
    Chairman PHILLIPS. Okay.
    Ms. GRESZLER. I believe the U.S. is around $25 per hour.
    Chairman PHILLIPS. Okay. Perhaps the most important 
question is, my hope was that this hearing results in some 
ideas and ways to mitigate any potential policy effects. So if 
in fact, Ms. Greszler, that this policy were to be instituted 
as written, what would you argue would be the most important 
mitigating policies that could prevent job losses and ensure 
that small businesses do not close if this was enacted as 
written?
    Ms. GRESZLER. I think the most important thing would be to 
not implement a ``one size fits all.'' And so to have a 
provision in there, much like the Federal government does for 
the general schedule pay scale that has locality-based 
adjustments and to allow state and local governments to tie it 
to their median wage in that area so that you do not 
disproportionately impact those lower cost areas.
    Chairman PHILLIPS. But if it is enacted as written, which 
does not provide for any of those opportunities, what would you 
propose we consider to mitigate the effects?
    Ms. GRESZLER. I do not have any good proposal there because 
I think that the mitigation measures would be so large and 
consequential for the long-term economy that it is not 
something that we would want to do. We are talking about 
pitting small businesses against big businesses, lower cost 
areas of living against higher cost areas of living. This is 
just not simply something that would work well across the 
United States.
    Chairman PHILLIPS. Okay. I will close my questioning back 
to Mr. Puckett. Mr. Puckett, you are already paying essentially 
close to this minimum wage, and by the time this was fully in 
effect 5 years hence, you would probably be over it. But based 
on your experience in business, building Caribou, building 
Punch, what would you argue we should be looking at as we 
reflect on the potential consequences? I think we would all 
agree that there are some benefits and there will be some 
consequences. What would you like to see us consider as some 
potential mitigating policies if we were to enact this wage 
scale based on its current construct?
    Mr. PUCKETT. Thank you for the question. We are blessed to 
be operating in a great environment in the Twin Cities, very 
competitive. So it has made us adapt and stay ahead of that for 
our people strategy. I have sympathy for small businesses all 
across the country in areas that this would be potentially a 
much bigger jump than what Punch faces. So I do not have any 
specific policy recommendations but I think considering the 
different needs and rural versus urban, different parts of the 
country is certainly an idea. I was curious how Canada's system 
works. I do not know if it is possible to differentiate people 
that are household heads or this is their main source of living 
as a differentiation between someone that is doing that or a 
part-time student. But those are things that could be 
considered, I assume.
    Chairman PHILLIPS. Well, thanks, Mr. Puckett. And I agree. 
I think we should look to best practices as practice by some of 
our peers around the world.
    And with that, I will yield to Ms. Van Duyne, our Ranking 
Member, for 5 minutes.
    Ms. VAN DUYNE. Thank you so much, Mr. Chairman.
    I want to read just a quote from a letter that we had 
gotten from Casey Watts, who is a business owner from Loaf'n 
Dog and Burger Bar in Cleburne. He said, ``COVID-19 crushed us 
at the Loaf'n Dog. We were shuttered for most of the year until 
we could get deliveries going and curbside pickup, but this was 
not enough. I did receive a PPP loan which allowed me to keep 
my employees but only by the skin of our teeth. Now our 
business is facing a new ominous challenge, a call for the $15 
per hour minimum wage mandate. In order to keep the doors open 
with a wage increase like this I would have to raise many 
prices at least 100 percent across the board. Perhaps in Destin 
or Houston, or D.C. or New York, a local joint can charge $11 
for a chili cheese dog but that is not going to fly in 
Cleburne.''
    According to the most recent data from the Bureau of Labor 
Statistics, 392,000 workers made the prevailing minimum wage. 
So these workers represent .48 percent of the hourly paid 
workers. According to the U.S. Bureau of Labor Statistics, 17 
percent were teenagers, 26 percent were between the ages of 20 
and 24, so a total of 43 percent of those were under the age of 
24. I think even more enlightening is that single parents, 
single working parents, hardly any of them actually earn the 
minimum wage. According to a 2017 report by the GAO's office, 
only .15 percent of workers in the U.S. are single parents 
earning at or below the minimum wage. That is really important 
because I think a lot of the testimony that we have heard today 
talks about having a living wage, a living wage for families. 
But we have talked about increase. We have talked about 
increases in food costs, at restaurants, increase in 
healthcare. And I guess Ms. Greszler, with the impact of COVID-
19, the unstable school schedule over the last year, it just 
seems like America's single working parents, but more 
specifically single working moms, are facing some real 
challenges. With all of these different increases outside of 
just the minimum wage increase, how do you think that this 
increasing the minimum wage would impact working single moms?
    Ms. GRESZLER. I think that one of the biggest impacts is 
going to be on that childcare cost. For single mothers, it is 
not an option whether or not to work, and yet, when you would 
be facing thousands of dollars more in childcare costs per 
year, that is going to put these women in a bind, all these 
working parents out there. And it is just going to negate any 
of the potential benefits of having those higher wages. And it 
is not just childcare, but there are reasons that we have more 
targeted programs in the United States, whether it is through 
food stamp benefits, childcare subsidies, these things are 
aiming to help working parents who need them, and the minimum 
wage is not aiming at those working parents. And so the reality 
is that you just end up hurting the people that you are trying 
to hurt out there. And also, you were bringing up the small 
businesses out there who are being crushed. And I think it is 
important to point out that these smaller businesses, they are 
the same as households out there. And so if we were faced with 
twice the rent or the mortgage payment, we would have to make 
adjustments. The notion that these business owners can just dig 
deep in their pockets and pay all this additional money is 
ludicrous. And I have heard from small business owners they are 
taking out lines of credit because they care so much about 
their workers and they do not want to lay them off. They do not 
want to have that single mother unable to pay her bills each 
month. And they care about their workers. And these are not the 
businesses that we want to be shutting down with a $15 ``one 
size fits all'' Federal minimum wage.
    Ms. VAN DUYNE. Thank you so much.
    And Chairman, I yield back my time.
    Chairman PHILLIPS. Thank you, Ms. Van Duyne.
    Any other members wish to ask questions before we proceed 
to closing?
    Not seeing any, we will proceed.
    I want to thank everybody. I want to thank our witnesses 
for joining us today and my fellow members. This was the kind 
of discussion that we need more of. I think it is fair to say 
that we all agree we want to see Americans' wages go up. We 
want to see more jobs created, not fewer. And we want to see 
businesses thrive, especially small businesses that are the 
backbone of our economy and the backbone of our communities.
    And as many of you know, I have built businesses, some very 
successful larger ones and currently own a small business that 
does pay a $15 minimum wage. Not because the law requires it, 
not because it is easy; rather, it is a principle in which my 
partners and I believe. But I hear small businesses every 
single day. They are concerned about this policy and I 
understand their concerns. I know we all do. And I am grateful 
that we were able to give voice to some of those concerns in 
today's hearing.
    We have got to consider options for raising wages for the 
least advantaged in our country. I believe they have been 
denied that for far too long and we have a responsibility. So I 
am committed to working together with all of my colleagues, 
Democrats and Republicans in a bipartisan fashion to build a 
better economy for our small businesses and for the people that 
build them, employees and owners.
    I talk about the trifecta--higher wages, more jobs, and 
more businesses. So I ask that we focus on that, not just 
obstruct and not just demand that we not proceed; rather, come 
up with solutions on how we can achieve all three because I do 
not believe they are mutually exclusive. And I want to see 
American once again be at the forefront. I want to see us be 
the fastest growing economy and a country to which our peers 
look to for the best policy in the world.
    So with that I ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without any objection, so ordered.
    And if there is no further business before the Committee, 
we are now adjourned. Thanks, everybody.
    [Whereupon, at 12:08 p.m., the subcommittee was adjourned.]
                           
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