[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                    GRADUALLY RAISING THE MINIMUM
                     WAGE TO $15: GOOD FOR WORKERS,
                     GOOD FOR BUSINESSES, AND GOOD
                            FOR THE ECONOMY

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

                                HEARING

                               BEFORE THE

                         COMMITTEE ON EDUCATION
                               AND LABOR
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

            HEARING HELD IN WASHINGTON, DC, FEBRUARY 7, 2019

                               ----------                              

                            Serial No. 116-2

                               ----------                              

      Printed for the use of the Committee on Education and Labor
      
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           Available via the World Wide Web: www.govinfo.gov
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                    COMMITTEE ON EDUCATION AND LABOR

             ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman

Susan A. Davis, California           Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona            Ranking Member
Joe Courtney, Connecticut            David P. Roe, Tennessee
Marcia L. Fudge, Ohio                Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan,      Tim Walberg, Michigan
  Northern Mariana Islands           Brett Guthrie, Kentucky
Frederica S. Wilson, Florida         Bradley Byrne, Alabama
Suzanne Bonamici, Oregon             Glenn Grothman, Wisconsin
Mark Takano, California              Elise M. Stefanik, New York
Alma S. Adams, North Carolina        Rick W. Allen, Georgia
Mark DeSaulnier, California          Francis Rooney, Florida
Donald Norcross, New Jersey          Lloyd Smucker, Pennsylvania
Pramila Jayapal, Washington          Jim Banks, Indiana
Joseph D. Morelle, New York          Mark Walker, North Carolina
Susan Wild, Pennsylvania             James Comer, Kentucky
Josh Harder, California              Ben Cline, Virginia
Lucy McBath, Georgia                 Russ Fulcher, Idaho
Kim Schrier, Washington              Van Taylor, Texas
Lauren Underwood, Illinois           Steve Watkins, Kansas
Jahana Hayes, Connecticut            Ron Wright, Texas
Donna E. Shalala, Florida            Daniel Meuser, Pennsylvania
Andy Levin, Michigan*                William R. Timmons, IV, South 
Ilhan Omar, Minnesota                    Carolina
David J. Trone, Maryland             Dusty Johnson, South Dakota
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair

                   Veronique Pluviose, Staff Director
                 Brandon Renz, Minority Staff Director
                                 
                                 
                               ------                                
                         
                         
                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Hearing held on February 7, 2019.................................     1

Statement of Members:
    Scott, Hon. Robert C. ``Bobby'', Chairman, Committee on 
      Education and Labor........................................     1
        Prepared statement of....................................     4
    Foxx, Hon. Virginia, Ranking Member, Committee on Education 
      and Labor..................................................     6
        Prepared statement of....................................     8

Statement of Witnesses:
    Barron, Ms. Simone, Seattle, WA..............................   148
        Prepared statement of....................................   150
    Brodeur, Dr. Paul A., ESQ., State Representative, 32nd 
      Middlesex District, Commonwealth of Massachusetts House of 
      Representatives............................................   202
        Prepared statement of....................................   204
    Gupta, Ms. Vanita, President and CEO, The Leadership 
      Conference on Civil and Human Rights.......................   135
        Prepared statement of....................................   138
    Eckhouse, Ms. Kathy, Owner, La Quercia, Norwalk, IA..........   153
        Prepared statement of....................................   155
    Holtz-Eakin, Dr. Douglas, President, American Action Forum, 
      Washington, DC.............................................    36
        Prepared statement of....................................    38
    Reich, Dr. Michael, PH.D., Professor, University of 
      California, Berkley, CA....................................   169
        Prepared statement of....................................   172
    Spriggs, Dr. William E., Professor, Department of Economics, 
      and Chief Economist, Howard University and AFL-CIO, 
      Washington, DC.............................................     9
        Prepared statement of....................................    12
    Strain, Dr. Michael R., PH.D. Director of Economic Policy 
      Studies,, and Resident John G. Searle Scholar, American 
      Enterprise Institute, Washington, DC.......................   158
        Prepared statement of....................................   160
    Wise, Mr. Terrence, Shift Manager, McDonald's, Independence, 
      MO.........................................................    31
        Prepared statement of....................................    33
    Zipperer, Dr. Ben, Economist Policy Institute, Washington, DC    48
        Prepared statement of....................................    50

Additional Submissions:
    Adams, Hon. Alma S., a Representative in Congress from the 
      State of North Carolina:
        Letter dated February 5, 2019 from the Economic Policy 
          Institute..............................................   210
        Letter dated February 6, 2019 from the Economic Policy 
          Institute..............................................   211
        Article: House Health Bill Would Lead to Less Coverage, 
          Higher Patient Costs...................................   263
        Statement from Rowe-Finkbeiner, Kristin, Executive 
          Director and CEO of MomsRising.org.....................   265
        Statement from the National Disability Rights Network 
          Opposes American Health Care Act.......................   267
    Bonamici, Hon. Suzanne, a Representative in Congress from the 
      State of Oregon:
        Letter dated February 5, 2019 from the Women's Coalition.    81
    Courtney, Hon. Joe, a Representative in Congress from the 
      State of Connecticut:
        Letter dated February 1, 2019 from OXFAM.................    72
        Article: Hartford HealthCare to Raise Minimum Wage to $15 
          Across Health Network..................................   269
    Davis, Hon. Susan A., a Representative in Congress from the 
      State of California:
        Letter dated February 6, 2019 from AAUW..................   273
    Mrs. Foxx:
        Article: Seattle Small Businesswoman.....................   276
        Letter dated February 5, 2019 from the National 
          Restaurant Association.................................   278
        Letter dated February 5, 2019 from NFIB..................   280
        Replacing Employer-Sponsored Health Insurance with 
          Government-Financed Coverage...........................   282
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona:
        Report: Minimum Wages and the Distribution of Family 
          Incomes in the United States...........................    60
    Jayapal, Hon. Pramila, a Representative in Congress from the 
      State of Washington:
        Prepared statement from Asian and Pacific Islander 
          American Health Forum (APIAHF).........................   318
    Lee, Hon. Susie, a Representative in Congress from the State 
      of Nevada:
        Letter date January 28, 2019 from First Focus Campaign 
          for Children...........................................   114
    Levin, Hon. Andy, a Representative in Congress from the State 
      of Michigan:
        Letter date January 31, 2019 from AFL-CIO................   102
        Letter date January 15, 2019 from Disability Groups......   223
    Morelle, Hon. Joseph D., a Representative in Congress from 
      the State of New York:
        Link: National Council on Disability.....................   229
    Norcross, Hon. Donald, a Representative in Congress from the 
      State of New Jersey:
        Letter dated February 6, 2019 for Communications Workers 
          of America.............................................   323
    Chairman Scott:
        Fact Sheet: National Employment Law Project..............   132
        Business For A Fair Minimum Wage.........................   250
        Link: (Economic Policy Institute)........................   249
        Letter from The Episcopal Church.........................   324
        Undersigned Organizations................................   325
        Tipped Wage Effects on Earnings and Employment in Full-
          Service Restaurants....................................   339
        Faith-based Organizations Support The Raise the Wage Act 
          of 2019................................................   365
        Letter dated January 15, 2019, from the National 
          Disability Rights Network..............................   367
        Letter dated February 4, 2019 from the National Urban 
          League.................................................   369
        Article: Leaked Documents Show Strong Business Support 
          for Raising the Minimum Wage...........................   371
        Link: Center on Wage and Employment Dynamics (CWED)......   373
        Link: NBER Working Paper Series..........................   373
    Takano, Hon. Mark, a Representative in Congress from the 
      State of California:
        Statement from the Center for American Progress..........    88
    Underwood, Hon. Lauren, a Representative in Congress from the 
      State of Illinois:
        Letter dated February 7, 2019 from Advocate Aurora Health   245
    Questions submitted for the record by:
        Davis, Hon. Susan A., a Representative in Congress from 
          the State of California................................   379
        Fudge, Hon. Marcia L., a Representative in Congress from 
          the State of Ohio 



        Hayes, Hon. Jahana, a Representative in Congress from the 
          State of Connecticut...................................   379
        Lee, Hon. Susie, a Representative in Congress from the 
          State of Nevada........................................   383
        Chairman Scott 




        Trahan, Hon. Lori, a Representative in Congress from the 
          State of Massachusetts.................................   375
    Responses to questions submitted for the record:
        .........................................................
        Mr. Brodeur..............................................   384
        Ms. Eckhouse.............................................   386
        Dr. Reich................................................   387
        Mr. Spriggs..............................................   393
        Dr. Zipperer.............................................   396

 
                   GRADUALLY RAISING THE MINIMUM WAGE
                   TO $15: GOOD FOR WORKERS, GOOD FOR
                  BUSINESSES, AND GOOD FOR THE ECONOMY

                              ----------                              


                       Thursday, February 7, 2019

                       House of Representatives,

                   Committee on Education and Labor,

                            Washington, DC.

                              ----------                              

    The committee met, pursuant to notice, at 10:17 a.m., in 
room 2175, Rayburn House Office Building, Hon. Robert C. 
``Bobby'' Scott (chairman of the committee) presiding.
    Present: Representatives Scott, Davis, Grijalva, Courtney, 
Fudge, Sablan, Bonamici, Takano, Adams, DeSaulnier, Norcross, 
Jayapal, Morelle, Wild, Harder, McBath, Schrier, Underwood, 
Hayes, Shalala, Levin, Omar, Trone, Stevens, Lee, Trahan, 
Castro, Foxx, Roe, Thompson, Walberg, Guthrie, Grothman, 
Stefanik, Allen, Smucker, Banks, Walker, Comer, Cline, Fulcher, 
Taylor, Watkins, Wright, Meuser, Timmons, and Johnson.
    Staff present: Tylease Alli, Chief Clerk; Nekea Brown, 
Deputy Clerk; Ilana Brunner, General Counsel; David Dailey, 
Senior Counsel; Emma Eatman, Press Aide; Mishawn Freeman, Staff 
Assistant; Carrie Hughes, Director of Health and Human 
Services; Eli Hovland, Staff Assistant; Eunice Ikene, Labor 
Policy Advisor; Ariel Jona, Staff Assistant; Kimberly 
Knackstedt, Disability and Education Policy Advisor; Stephanie 
Lalle, Deputy Communications Director; Bertram Lee, Policy 
Counsel; Andre Lindsay, Staff Assistant; Richard Miller, 
Director of Labor Policy; Max Moore, Office Aide; Udochi 
Onwubiko, Labor Policy Counsel; Veronique Pluviose, Staff 
Director; Carolyn Ronis, Civil Rights Counsel; Dianna 
Ruskowsky, Finance and Personnel Advisor; Banyon Vassar, Deputy 
Director of Information Technology; Cyrus Artz, Minority 
Parliamentarian; Marty Boughton, Minority Press Secretary; 
Courtney Butcher, Minority Coalitions and Members Services 
Coordinator; Akash Chougule, Minority Professional Staff 
Member; Rob Green, Minority Director of Workforce Policy; John 
Martin, Minority Workforce Policy Counsel; Sarah Martin, 
Minority Professional Staff Member; Hannah Matesic, Minority 
Legislative Operations Manager; Kelley McNabb, Minority 
Communications Director; Alexis Murray, Minority Professional 
Staff Member; Brandon Renz, Minority Staff Director; Ben 
Ridder, Minority Legislative Assistant; Meredith Schellin, 
Minority Deputy Press Secretary and Digital Advisor; Heather 
Wadyka, Minority Staff Assistant; and Lauren Williams, Minority 
Professional Staff Member.
    Chairman Scott. The Committee on Education and Labor will 
come to order. I want to welcome everyone today and note that a 
quorum is present. The committee meeting today is a legislative 
hearing on testimony on ``Gradually Raising the Minimum Wage to 
$15: Good for Workers, Good for Businesses, and Good for the 
Economy.''
    Pursuant to committee rule 7(c), opening statements are 
limited to the chair and ranking member. This allows us more 
time to hear from our witnesses and provides members more time 
to ask questions. I recognize myself now for the purpose of 
making an opening statement.
    Today we are here for a legislative hearing on the Raise 
the Wage Act, H.R. 582, a proposal to gradually raise the 
minimum wage to $15 an hour. I want to welcome and thank our 
distinguished witnesses for being with us today and for 
agreeing to testify.
    Raising the minimum wage is one of the most hotly contested 
and intensely studied of all labor practices. All the time and 
research dedicated to this topic has produced a clear 
consensus: Gradually raising the minimum wage is good for 
workers, who experience a better standard of living; good for 
businesses, which benefit from having more customers and less 
turnover; and good for the economy, which is strongest when we 
lift working people out of poverty and build a thriving middle 
class.
    Before we discuss where we are going, it is important to 
reflect on where we are today. After 10 years of no increase in 
the Federal minimum wage, minimum wage workers have suffered a 
17 percent pay cut due to inflation. Today's minimum wage 
workers making $7.25 an hour have less buying power than the 
minimum wage worker had in the 1960's.
    The result is that the Federal minimum wage is no longer 
serving its purpose. According to a recent study, there is no 
place in America where a full-time worker who is paid the 
current Federal minimum wage can afford a modest two-bedroom 
apartment. One in nine American workers are paid wages that 
leave them in poverty even if they worked full time year-round. 
An individual earning the current minimum wage working full 
time earns only about $15,080 a year, less than the Federal 
poverty level for a family of two.
    Do we have a chart?
    This shows the poverty level and it shows the median wage 
and where the minimum wage has been.
    My Republican colleagues are eager to warn the so-called 
consequences of raising the minimum wage to $15, but they 
ignore the consequences of inaction over the last 10 years.
    If Congress fails to raise the minimum wage by mid-June it 
will be longest period of time without an increase since the 
Federal minimum wage was created 80 years ago. During that 
time, millions of workers working full time have been forced to 
live in poverty. The only radical thing about the bill is it is 
so long overdue.
    By several standards, the proposal is a reasonable approach 
in restoring the value of the minimum wage. First, the erosion 
of the minimum wage after adjustments for inflation has meant 
that over the last five decades workers at the low end of the 
scale have drifted further away from the middle class.
    As the chart on the screen indicates, in 1968--back to the 
same chart--the inflation-adjusted minimum wage used to be a 
little over 50 percent of the median hourly worker's wages for 
an individual working full time. Now, at $7.25 an hour, it is 
just a third of the median wage.
    Had the 1968 minimum wage simply grown with the rate of 
increases in average wages, it would be $12 and 6 million fewer 
people would be living in poverty.
    Second, the minimum wage has not kept up with increases in 
productivity. Between 1973 and 2017, workers' productivity grew 
by 77 percent while their wages grew by 12 percent. The 
widening gap in how much workers produce and how much they are 
paid is one major factor contributing to the historic income 
inequality we experience today.
    If the minimum wage had kept up with worker productivity, 
it would be about $20 an hour today. Workers do not just 
deserve higher pay, they have earned that higher pay.
    Finally, by the time the minimum wage reaches $15 an hour 
in 2024, an individual working full time with a family, 
including two children, will finally be able to earn enough to 
exceed the poverty threshold for a family of four.
    We now have an opportunity--and a responsibility--to 
restore the value of the minimum wage, lifting millions of 
hardworking people out of poverty, and grow the economy in Main 
Street America.
    The Raise the Wage Act does three things. First, it 
gradually increases the minimum wage in six steps to $15 by 
2024. Second, it ensures every worker covered by the law is 
paid at least the full minimum wage by creating one fair wage 
for all workers. Third, by tying future increases to median 
wages, the bill ensures that future increases in the Federal 
minimum wage are determined by economics and not politics.
    A report published this week by the Economic Policy 
Institute details the sweeping benefits this bill will have for 
workers across the country. For example, if we pass the Raise 
the Wage Act, close to 40 million workers will receive a raise, 
including two-thirds of America's working poor and parents of 
over 14 million children.
    This bill will stimulate the local economy across the 
country. Whereas the Republican tax bill gave the largest 
benefits to those who needed it the least, this puts money 
directly in the hands of those who are most likely to spend it 
in their communities. Over the 6-year phase-in period, the 
increase in the minimum wage should generate about $120 billion 
in additional wages, which will flow back into local 
businesses.
    Every time we propose raising the minimum wage, 
unfortunately, opponents repeat a similar set of talking points 
that have been repeated and contradicted by evidence and 
research.
    Today, I am confident that we will hear dire predictions 
about job losses that will result from gradually raising the 
minimum wage, but the overwhelming majority of research from 
both left-and right-leaning labor economists find few, if any, 
job loss when we gradually raise the minimum wage.
    For example, a widely acclaimed study published by the 
National Bureau of Economic Research and coauthored by one of 
our witnesses examined 138 minimum wage increases between 1979 
and 2016. This study found that the overall number of low wage 
jobs remained essentially unchanged over 5 years following the 
increase, and there was no evidence of disemployment when 
considering higher levels of minimum wage.
    The evidence clearly demonstrates that the Raise the Wage 
Act is a reasonable proposal and will lift millions of workers 
out of poverty.
    We now hear calls for a regional minimum wage, but, 
unfortunately, the reality is, by 2024, $15 an hour is the 
least a person would need to afford the basic essentials 
anyplace in America. According to the MIT Living Wage 
Calculator, single working parents today, even in the poorest 
counties in the country, need at least $20 an hour to cover 
basic costs.
    Workers should not be forced to work at poverty level wages 
regardless of where they live. A low-cost region should not be 
forced to continue to lag behind the rest of our economy.
    H.R. 582 will begin to restore the original intent of the 
Fair Labor Standards Act, to ensure that all workers have a 
minimum living standard. And as President Roosevelt stated: 
``Our Nation, so richly endowed with natural resources and with 
a capable and industrious population, should be able to devise 
ways and means of ensuring to all of our working men and women 
a fair day's pay for a fair day's work.''
    Today's hearing is an opportunity to examine facts and 
evidence. Raising the minimum wage to $15 an hour by 2024 in 
all regions is good for workers, good for businesses, and good 
for the economy. This hearing is a first step toward passing a 
bill that reflects our shared belief that no one working full 
time should be living in poverty.
    And I thank you.
    And does the Ranking Member want to speak now or in a 
minute? I can introduce the witnesses.
    [The statement of Chairman Scott follows:]

    Prepared Statement of Hon. Robert C. ``Bobby'' Scott, Chairman, 
                    Committee on Education and Labor

    Today, we are here for a legislative hearing on the Raise the Wage 
Act, H.R. 582, a proposal to gradually raise the minimum wage to $15. I 
want to welcome and thank our distinguished witnesses for agreeing to 
testify here today.
    Raising the minimum wage is one of the most hotly debated and 
intensely studied labor policies. All the time and research dedicated 
to this topic has produced a clear consensus: Gradually raising the 
minimum wage is good for workers who experience a better standard of 
living; good for businesses which benefit from having more customers 
and less turnover, and good for the economy which is strongest when we 
lift working people out of poverty and build a thriving middle class.
    But before we discuss where we are going, it's important to reflect 
on where we are today. After 10 years with no increase in the Federal 
minimum wage, minimum wage workers have suffered a 17 percent pay cut 
due to inflation. Today's minimum wage worker making $7.25 an hour has 
less buying power than a minimum wage worker had in the 1960's.
    The result is that the Federal minimum wage is no longer serving 
its purpose. There is no place in America where a full-time worker who 
is paid the current Federal minimum wage can afford the basic 
essentials. One in nine American workers are paid wages that leave them 
in poverty, even if they worked full-time and year-round. An individual 
earning the current Federal minimum wage of $7.25 an hour and working 
full-time earns only $15,080 annually, less than the Federal poverty 
level for a family of two.
    My Republican colleagues are eager to warn of the so-called 
consequences of gradually raising the minimum wage to $15, but they 
ignore the consequences of inaction over the last 10 years. If Congress 
fails to raise the Federal minimum wage by mid-June, it will be the 
longest period of time without an increase since the Federal minimum 
wage was created 80 years ago.
    During that time, millions of people working full-time have been 
forced to live in poverty. The only thing radical about this bill is 
that it is so long overdue.
    By several standards, this proposal is a reasonable approach to 
restoring the value of the minimum wage.
    First, the erosion of the value of the minimum wage after 
adjustments for inflation has meant that, over the last five decades, 
workers at the low-end of the wage scale have drifted farther away from 
the middle class.
    As the chart on the screen illustrates, in 1968, the inflation-
adjusted minimum wage was a little over 50 percent of the median hourly 
workers' wages for an individual working full time. Today, at $7.25 per 
hour it is just a third of the median hourly wage of $22.36. Had the 
1968 minimum wage simply grown with the rate of increases in average 
wages, it would be nearly $12 today and 6 million fewer Americans would 
be living in poverty.
    Second, the minimum wage has not kept up with increases in 
productivity. Between 1973 to 2017, workers' productivity grew by 77 
percent, while their hourly wages grew by just 12 percent. The widening 
gap between how much workers produce and how much they are paid is one 
major factor contributing to the historic income inequality we 
experience today. If the minimum wage had kept up with worker 
productivity, it would be about $20 an hour today. Workers do not just 
deserve higher pay, they have earned higher pay.
    Finally, by the time the minimum wage reaches $15 in 2024, an 
individual working full time with a family and two children will 
finally be able to earn enough to exceed the poverty threshold for a 
family of four.
    We now have an opportunity and a responsibility to restore the 
value of the minimum wage, lift millions of hardworking people out of 
poverty and grow the economy in Main Street America.
    The Raise the Wage Act achieve three key goals:
    First, it gradually increases the minimum wage in six steps to $15 
by 2024.
    Second, it ensures that every worker covered under the law is paid 
at least the full Federal minimum wage by creating one fair wage for 
all workers.
    And third, by tying future increases to median wages, this bill 
ensures that future increases to the Federal minimum wage are 
determined by economics, and not politics.
    A report published this week by the Economic Policy Institute 
details the sweeping benefits this bill would have for workers across 
the country.
    If we pass the Raise the Age Act, close to 40 million workers would 
receive a raise. This includes:
    * Twenty-three million women,
    * Thirty-eight percent of Black workers and 33 percent of Hispanic 
workers,
    * Two-thirds of America's working poor, and
    * The parents of over 14 million children.
    This bill will also stimulate local economies across the country. 
Whereas the Republican tax bill gave the largest benefits to those who 
needed it the least, this bill puts money directly into the hands of 
those who are most likely to spend it in their communities. Over the 6-
year phase in period, the increase in the minimum wage would generate 
$120 billion in additional wages, which will flow back into local 
businesses.
    Every time we propose raising the minimum wage, opponents repeat a 
familiar set of taking points that have been repeatedly contradicted by 
evidence and research.
    Today, I am confident we will hear dire projections about job 
losses that would result from gradually raising the minimum. But the 
overwhelming majority of research from both left-and right-leaning 
labor economists find few, if any jobs are lost when gradually raising 
the minimum wage. For example, a widely acclaimed study published by 
the National Bureau of Economic Research, and co-authored by one of our 
witnesses, examined 138 minimum wage increases since 1979 and 2016. 
This study found that the overall number of low-wage jobs remained 
essentially unchanged over 5 years following the increase, and there 
was no evidence of disemployment when considering higher levels of 
minimum wages.
    The evidence clearly demonstrates the Raise the Wage Act is a 
reasonable proposal that would lift millions of workers out of poverty.
    We will also hear calls today for a regional minimum wage.
    But unfortunately, the reality is that by 2024 $15 an hour is the 
least a person would need to afford the basic essentials in anyplace in 
the country. According to the MIT living wage calculator, single 
working parents today, even in the poorest counties in the country, 
need at least $20 an hour to cover basic costs. Workers should not be 
forced to work for poverty-level wages, regardless of where they live. 
And lower-cost regions should not be forced to continue to lag behind 
the rest of our economy.''
    H.R. 582 will begin to restore the original intent of the Fair 
Labor Standards Act: to ensure all workers have a minimum living 
standard. As President Roosevelt Stated, ``Our nation so richly endowed 
with natural resources and with a capable and industrious population 
should be able to devise ways and means of insuring to all our working 
men and women a fair day's pay for a fair day's work''
    Today's hearing is an opportunity to examine the facts and 
evidence. Raising the minimum wage to $15 by 2024 in all regions is 
good for workers, good for businesses, and good for the economy. This 
hearing is the first step toward passing a bill that reflects our 
shared belief that no one working full-time should be living in 
poverty.
    Thank you and I now yield to the Ranking Member, Dr. Foxx.
                                 ______
                                 
    Ms. Foxx. That would be wonderful, Mr. Chairman. Thank you.
    Chairman Scott. Thank you.
    I will recognize the Ranking Member in just a second, but 
first I will introduce our witnesses for the first panel.
    The Honorable Dr. William Spriggs serves as chief economist 
for the AFL-CIO and is a professor in and formerly chair of the 
Department of Economics at Howard University. Formerly, he 
served as Assistant Secretary for the Office of Policy at the 
U.S. Department of Labor.
    Mr. Terrence Wise is a father of three who works for 
McDonald's. He has been fighting for $15 and a union for over 3 
years and has become a voice for the movement, an inspiration 
for other low-wage workers. Mr. Wise has worked in the fast 
food industry since he was 16 years old and he hails from 
Kansas City, Missouri.
    Mr. Douglas Holtz-Eakin is the president of American Action 
Forum. From 2003 to 2005, he was the sixth Director of the 
Congressional Budget Office. He has conducted extensive 
research in areas of applied economic policy, econometric 
methods, and entrepreneurship.
    Dr. Ben Zipperer is an economist with the nonpartisan 
Economic Policy Institute. His areas of expertise include the 
minimum wage, inequality, and low-wage labor markets. He has 
published research in widely respected publications, including 
the Industrial and Labor Relations Review and the National 
Bureau of Economic Research.
    I appreciate all of the witnesses for being here and look 
forward to your testimony. Let me remind the witnesses that we 
have read your testimony and they will appear in full in the 
record.
    Pursuant to committee rule 7(d) and the committee practice, 
each of you is asked to limit your oral presentation to 5 
minutes. Let me remind the witnesses that pursuant to Title 18 
of U.S. Code Section 1001, it is illegal to knowingly and 
willfully falsify any Statement, representation, writing, 
document, or material fact presented to Congress or otherwise 
conceal or cover up a material fact.
    Before you begin your testimony, please remember to press 
the button on your microphone in front of you so that the light 
will turn on and the members can hear you. As you speak, the 
light in front of you will turn green. After 4 minutes, it will 
turn yellow, indicating that you have 1 minute remaining. When 
it turns red, I would ask you to please wrap up your testimony.
    We will let the entire panel make presentations before we 
move to member questions. When answering a question, please 
remember, once again, to turn your microphone on.
    And before the witnesses, do you want to speak now?
    Ms. Foxx. Yes.
    Chairman Scott. Before the witnesses speak, I will 
recognize the distinguished Ranking Member, Dr. Foxx.
    Ms. Foxx. Thank you, Mr. Chairman. And I apologize for 
being a little late. Many of us went to the National Prayer 
Breakfast this morning, and it went a little longer than usual. 
So we were a little slow in getting back. And I apologize. I 
promise you, I would not be late for a less worthy cause.
    Over the last several years, the far left has begun to call 
for extreme social policies that were until recently considered 
too radical for the mainstream. But as the far left has become 
more frenetic, they have begun to demand headline-grabbing but 
unworkable policies, like free college, universal health care, 
and a more than doubling of the Federal minimum wage from $7.25 
an hour to $15 an hour.
    Liberal activists are trying to sell a radical minimum wage 
hike as a benefit to working-class Americans. They claim it 
will redistribute wealth and provide poor Americans with a, 
quote, ``living wage,'' end quote. This is an empty promise, 
the likes of which we have not heard since the famous health 
care sales job of 2009: If you like the plan you have, you can 
keep it.
    Raising the Federal minimum wage to $15 will not help 
anyone make ends meet. It will redistribute poverty, eliminate 
jobs, and deeply harm American workers, businesses, and the 
U.S. economy at large.
    When the comparatively less extreme proposal of a Federal 
minimum wage hike to $10.10 was on the table in 2014, the 
nonpartisan Congressional Budget Office estimated that the 
difference, $2.85, would cost 500,000 jobs and could have 
destroyed up to a million jobs.
    The CBO has yet to determine what the $7.75 hike under 
discussion today would do, but logic follows that the 
consequences for workers and small businesses would be even 
more severe.
    Economists, including those who have graciously given us so 
much of their time today, can provide the numbers and 
projections and graphs we all need to see to have an informed 
discussion.
    But we must keep in mind that we are talking about people. 
We are talking about the very people that Members of Congress 
on both sides of the aisle claim they want to serve. Workers in 
entry level jobs, workers without a GED or skill certificate, 
and tipped employees would bear the brunt of job losses caused 
by this mandate.
    A recent study by the National Federation of Independent 
Business found that raising the minimum wage to $15 would 
destroy 1.6 million jobs and 615,000 able-bodied individuals 
would be pushed out of the work force by the year 2029. This is 
not the future Americans want, and they deserve to know the 
truth behind the talking point.
    More than half of the private sector work force goes to 
work each day at a small business, and these are the workplaces 
that would struggle the most under this mandate. Many job 
creators would be forced to reduce workers' hours, let 
employees go, or close their doors for good. It would also lead 
to accelerated workplace automation, something many Democrats 
oppose.
    The NFIB study also found that raising the minimum wage to 
$15 an hour would result in a $2 trillion reduction in real 
economic output, a $980 billion reduction in real GDP, and a 
$103 billion reduction in personal disposable income.
    The title of this hearing aims to focus this discussion on 
the impact this mandate would have on workers, businesses, and 
the economy. It conveniently leaves out students--and with good 
reason. Eighty-three percent of economists agree that raising 
the minimum wage to $15 an hour would have a negative impact on 
youth employment.
    According to the Bureau of Labor Statistics, 2.3 percent of 
hourly workers are paid at or below minimum wage--2.3 percent 
of hourly workers are paid at or below minimum wage. Almost 
half of those workers are under the age of 25. These are 
individuals at the start of their careers or filling part-time 
or summer jobs.
    With the Democrats' proposal, we run the risk of seeing 
these types of jobs eliminated altogether. That means even 
fewer young Americans will leave educational institutions or 
join the work force with minimal work experience.
    Not every kid is lucky enough to have a parent who pays for 
his or her cell phone and other expenses. We need to give them 
a chance to build their skills, build a life, and hope that 
someday very soon they run for Congress.
    Since January 2017, the number of job opportunities 
available across the country has swelled from 5.6 million to 
more than 7 million. And thanks to the Republican Tax Cuts and 
Jobs Act, wages are up and experiencing sustainable, organic 
growth.
    We want that strong economic growth to continue. Mandating 
a $15 minimum wage would have serious negative consequences for 
students, workers, and small businesses.
    I yield back, Mr. Chairman, and thank you again for your 
patience.
    [The statement of Mrs. Foxx follows:]

Prepared Statement of Hon. Virginia Foxx, Ranking Member, Committee on 
                          Education and Labor

    Over the last several years, the far-left has begun to call for 
extreme social policies that were, until recently, considered too 
radical for the mainstream. But as the far-left has become more 
frenetic, they have begun to demand headline-grabbing but unworkable 
policies like free college, universal health care, and a more than 
doubling of the Federal minimum wage from $7.25 an hour to $15 an hour.
    Liberal activists are trying to sell a radical minimum wage hike as 
a benefit to working class Americans. They claim that it will 
redistribute wealth and provide poor Americans with a ``living wage.'' 
This is an empty promise the likes of which we have not heard since the 
famous healthcare sales job of 2009: ``if you like the plan you have, 
you can keep it.'' Raising the Federal minimum wage to $15 will not 
help anyone make ends meet. It will redistribute poverty, eliminate 
jobs, and deeply harm American workers, businesses, and the U.S. 
economy at large.
    When the comparatively less-extreme proposal of a Federal minimum 
wage hike to $10.10 was on the table in 2014, the nonpartisan 
Congressional Budget Office estimated that the difference--$2.85--would 
cost 500,000 jobs and could have destroyed up to 1 million jobs. The 
CBO has yet to determine what the $7.75 hike under discussion today 
would do, but logic follows that the consequences for workers and small 
businesses would be even more severe.
    Economists, including those who have graciously given us so much of 
their time today, can provide the numbers and projections and graphs we 
all need to see to have an informed discussion. But we must keep in 
mind that we're talking about people. We're talking about the very 
people that Members of Congress on both sides of the aisle claim they 
want to serve. Workers in entry-level jobs, workers without a GED or 
skills certificate, and tipped employees would bear the brunt of job 
losses caused by this mandate.
    A recent study by the National Federation of Independent Business 
found that raising the minimum wage to $15 would destroy 1.6 million 
jobs, and 615,000 able-bodied individuals would be pushed out of the 
work force by the year 2029. This is not the future Americans want, and 
they deserve to know the truth behind the talking point.
    More than half of the private sector work force goes to work each 
day at a small business, and these are the workplaces that would 
struggle the most under this mandate. Many job creators would be forced 
to reduce workers' hours, let employees go, or close their doors for 
good. It would also lead to accelerated workplace automation, something 
that many Democrats oppose.
    The NFIB study also found that raising the minimum wage to $15 an 
hour would result in a $2 trillion reduction in real economic output, a 
$980 billion reduction in real GDP, and a $103 billion reduction in 
personal disposable income.
    The title of this hearing aims to focus this discussion on the 
impact this mandate would have on workers, businesses, and the economy. 
It conveniently leaves out students, and with good reason. Eighty-three 
percent of economists agree that raising the minimum wage to $15 an 
hour would have a negative impact on youth employment.
    According to the Bureau of Labor Statistics, 2.3 percent of hourly 
workers are paid at or below minimum wage. Almost half of those workers 
are under the age of 25. These are individuals at the start of their 
careers or filling part-time or summer jobs. With the Democrats' 
proposal, we run the risk of seeing these types of jobs eliminated 
altogether. That means even fewer young Americans will leave 
educational institutions or join the work force with minimal work 
experience.
    Not every kid is lucky enough to have a parent who pays for his or 
her cell phone and other expenses. We need to give them the chance to 
build their skills, build a life, and hope that someday very soon, they 
run for Congress.
    Since January 2017, the number of job opportunities available 
across the country has swelled from 5.6 million to more than 7 million. 
And thanks to the Republican Tax Cuts and Jobs Act, wages are up and 
experiencing sustainable, organic growth.
    We want that strong economic growth to continue. Mandating a $15 
minimum wage would have serious negative consequences for students, 
workers, and small businesses.
                                 ______
                                 
    Chairman Scott. Thank you very much.
    We will now hear from Dr. Spriggs.

   STATEMENT OF THE HONORABLE WILLIAM E. SPRIGGS, PROFESSOR, 
DEPARTMENT OF ECONOMICS, AND CHIEF ECONOMIST, HOWARD UNIVERSITY 
                  AND AFL-CIO, WASHINGTON, DC


    Dr. Spriggs. Thank you, Chair and Ranking Member Foxx and 
members of the committee, for the opportunity to testify before 
the committee today on gradually raising the Federal minimum 
wage.
    I am pleased to offer this testimony on behalf of the AFL-
CIO, America's house of labor, representing the working people 
of the United States, and based on my expertise as a professor 
in Howard University's Department of Economics and as a former 
Assistant Secretary for Policy in the Department of Labor.
    I want to start by stating clearly that the AFL-CIO 
endorses this legislation.
    The response of American policymakers from the Great 
Depression was more than stopping the economic slide. The 
policy concern was that the Great Depression launched a 
downward spiral in wages and prices, a deflation that stunted 
economic recovery.
    Many of the policies that were put in place back then 
assured the Great Recession would not repeat the Great 
Depression. Unemployment insurance and Social Security proved 
essential stopgaps to the slide in household incomes in 2008 
and 2009.
    Today, despite record job growth over a record period, the 
response of wages has been stingy. Productivity continues to 
grow, but wages have struggled to stay ahead of very modest 
inflation. The result is labor's share of income continues to 
slide. America needs a raise.
    What Congress and President Roosevelt did in the face of 
the Great Depression was to reforge and perfect our Union, just 
as Abraham Lincoln and the Republican Party perfected the 
American Union by ending slavery. A New Deal was struck to 
ensure that a government of the people could be for the people. 
Going forward, a new American value would be enshrined: Work 
would have dignity and working hard would pay.
    It is a little over 9 years since Congress has raised the 
minimum wage, as the chair mentioned. It is time for a raise.
    Since 1938, Congress expanded coverage and improved 
standards of the original bill. It created a healthy and 
expanding economy. Those original components in the 1938 bill 
had exemptions that, however, were not benign. They have had 
long-lasting effects in creating substantial racial and gender 
inequalities.
    The reason for those initial exclusions of agricultural 
workers and domestics was so specific to the South in the 
1930's and 1940's because 57 percent of America's farm 
population lived in the South and 51 percent of its 
agricultural workers were African American.
    The reason the exclusion was so devastating to African 
Americans is that from 1930 to 1940, 40 percent of Southern 
Blacks were in agriculture. Because many Latino workers at the 
time in the Southwest were agricultural workers, this also hurt 
Latino workers.
    This same Southern exceptionalism argument was raised in 
the fight for the Fair Labor Standards Act, except in the guise 
of a regional wage variation.
    The Fair Labor Standards Act passed in 1938 under President 
Roosevelt established a minimum wage of $0.25 an hour effective 
October 24, 1938. The act called for minimum wage to increase 
to $0.40 an hour October 1945. Raises since then have required 
amendments to the act.
    Early votes on raising the minimum wage showed the national 
consensus on raising the wage and the importance of maintaining 
a decent floor of wages. That first increase, the biggest 
increase in the raise of the minimum wage of 87 percent, was 
approved by 90 percent--90 percent--of House Republicans.
    To fix the gap that was caused by excluding agricultural 
workers and domestic workers, in 1966 House Republicans voted 
60 percent to close that gap and raise the wage. That was the 
biggest raise when you look at the workers who have been 
excluded, agricultural workers who predominantly lived in the 
rural South.
    Congress' purpose was to prevent competition based on 
lowering wage cost. It was to ensure that we would do this 
based on competition, on rising productivity.
    You have a chance here to live up to the legacy of 
Congresswoman Mary Norton, the first Democrat woman in Congress 
who chaired this committee, the first woman to chair this 
committee, who forged ahead on this legislation, to make sure 
that all workers would rise, there would not be a regional 
differentiation.
    You have the chance to live up to the legacy of Adam 
Clayton Powell, the first African American to chair this 
committee, to extend the coverage to agricultural and domestic 
workers.
    You have the opportunity to live up to the legacy of 
Congresswoman Shirley Chisholm, the first African American 
woman to serve in Congress, who made sure that domestic workers 
would see coverage.
    You have a chance to return the minimum wage to a decent 
wage that enshrines American values that work will pay, that 
all workers will have dignity. This act gives you that 
opportunity to fulfill that legacy.
    [The statement of Dr. Spriggs follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Scott. Thank you.
    Mr. Wise.

  STATEMENT OF MR. TERRENCE WISE, SHIFT MANAGER, MCDONALD'S, 
                        INDEPENDENCE, MO

    Mr. Wise. Thank you, Chairman Scott and Ranking Member Foxx 
and members of the committee. Thank you for the opportunity to 
testify today.
    My name is Terrence Wise, and I am a 39-year-old second-
generation fast food worker from Kansas City, Missouri, and I 
am honored to speak with you today about the Raise the Wage 
Act.
    I began fighting for $15 an hour and a union 6 years ago, 
because I knew just asking my boss for a raise and benefits 
wouldn't do. I felt the struggle of raising a family on low 
wages my whole life.
    It began in South Carolina. I grew up in government housing 
with my two brothers and sister. My mother worked full time at 
Hardee's for 30 years, and my dad served as a cook in the 
military. My mom would wake me up at 4 a.m. early before she 
left for Hardee's, and it was my job to get my siblings up and 
ready to go to school. It was also my job to be home when the 
mailman arrived to sign for the food stamps.
    Even with two full-time incomes and food stamps, my family 
still had to skip meals. One winter, I didn't even have a coat 
until my guidance counselor at school gave me one from the lost 
and found. Hardworking people with two full-time incomes 
shouldn't live like this in the richest Nation on earth.
    I was a great student, and by the eighth grade I was in all 
advanced placement classes. My teachers were saying things 
like, ``Terrence, you are going to be great. You are going to 
do good things.'' I wanted to be a Gamecock at the University 
of South Carolina. I was going to be a writer. But I went to 
work at the age of 16 to try to help my family survive.
    One day I came home from school, there were no lights, no 
food in the fridge. So I got my first job at Taco Bell, making 
$4.25 an hour, but I knew my family needed the money 
desperately. My first paycheck was 150 bucks, and it all went 
on the light bill. One job wasn't enough, so I got a second job 
at Wendy's.
    I tried to balance both work and school. I had all A's in 
my classes. But I started falling asleep in classes. And now 
teachers were asking me, ``Terrence, what is wrong?'' I told 
them I was working two jobs, had to survive. I didn't need AP 
Calculus to run the numbers at home. It wasn't enough to 
survive. It wasn't even enough for basic necessities.
    I had left school and my dream of college, and at 17 I 
dropped out and became a full-time worker, and I have been 
working in fast food ever since.
    Now I have a family of my own. I have three daughters, ages 
17, 15, and 13, and my fiancee is a home healthcare provider. 
Neither one of us make enough money to make ends meet, and I 
have worked two jobs most of my life. I would leave for Burger 
King at 2 o'clock, then leave from there and arrive at 
McDonald's and work the overnight shift, 10 p.m. to 6 a.m. I 
couldn't get my jobs to line up with my off days, so sometimes 
I would work weeks without a day off.
    My family has been homeless, despite my two incomes and my 
fiancee's. We have endured cold winters in Kansas City, 
homeless in our purple minivan. I would see my daughters in the 
back tossing and turning.
    Try waking up in the morning and getting ready for school 
and work in the parking lot. That is a memory I can never take 
away from my children and something a parent should never have 
to go through. You should not have multiple jobs in the United 
States and nowhere to sleep.
    I work for McDonald's, the second largest employer in 
America, and I still rely on food stamps and Medicaid. Like 
other working people in America fighting for $15 and a union, I 
want to stand on my own. I want to provide my girls with three 
meals a day and give them the opportunities I didn't have.
    This movement has changed our entire country. Many people 
didn't believe $15 an hour was possible, but it has become a 
reality for 22 million workers across the country.
    Seventy-five percent of voters in Kansas City voted for a 
$15 minimum wage in 2017. Workers won that victory by taking 
big, bold action, like going on strike. We even slept on the 
steps of city hall for a week in our Fast for $15.
    It was a huge victory for us until the State legislature 
preempted the minimum wage, returning it to $7.65. Missouri 
voters increased the minimum wage in 2018, but we are still not 
achieving $15 an hour, the minimum we need to support our 
families. That is why we need Congress to take action to raise 
the Federal minimum wage.
    I often imagine what $15 an hour would mean for me and my 
family. It would mean I could keep food on the table, we 
wouldn't have to worry about doing homework in the dark, and I 
could get the girls school supplies whenever they needed them.
    But what would $15 an hour really mean? It means that my 
daughters could meet their grandmother for the first time. She 
lives in South Carolina and we just have never been able to 
afford to travel to meet her.
    Low-wage workers like me will continue to organize and 
fight for economic justice. My coworkers and I have lifted our 
voices from the steps of city hall in Kansas City, at the White 
House, and now here today on Capitol Hill.
    Everyone who works in this country deserves access to the 
promise that America made to each and every one of us--life, 
liberty, and the pursuit of happiness--and $15 an hour brings 
us closer to living out our values as a Nation. The Raise the 
Wage Act will do just that, and I urge members of this 
committee to raise the wage, you know. Act quickly to pass this 
bill.
    Thank you, and I look forward to answering any questions.
    [The statement of Mr. Wise follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Scott. Thank you.
    Dr. Holtz-Eakin, good to see you.

   STATEMENT OF DR. DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN 
                  ACTION FORUM, WASHINGTON, DC

    Mr. Holtz-Eakin. Good to see you, Chairman Scott, Ranking 
Member Foxx, members of the Committee. It is a privilege to be 
here today. I am going to make three very simple points and 
then I look forward to your questions.
    The first point is that the labor market is working very 
well right now, with increased work, especially for those with 
low skills and marginal attachment to the labor force, and 
rising real wages.
    The second is that increasing the minimum wage to $15 would 
damage these employment prospects, and the preponderance of the 
research evidence comes down on that side.
    Then the third point is that, for those who deservedly 
would like to help those in poverty while working, the minimum 
wage is very poorly targeted to solve that problem.
    Let me go through those.
    The U.S. labor market is working very well right now. There 
were 304,000 jobs created in January. There have been over 13 
million jobs created in the past 5 years. The unemployment rate 
is down to 4 percent and has been even lower recently. At the 
moment, there are more job openings, 6.9 million, than there 
are unemployed people, 6 million, and that has been true since 
March 2018.
    The U.S. labor market has been able to create that many 
jobs by the miracle of pulling into the labor market and into 
productive work people who had not been participating. The 
overall labor force participation rate has jumped from its low 
of 62.4 percent to 63.2. For prime age workers, it has 
rebounded by two full percentage points and is up to 82.6 
percent.
    I think most importantly, the number of discouraged 
workers, those who have just given up looking, has dropped in 
half over the past 5 years, from nearly 900,000 to 420,000.
    At the same time, we are seeing real wages grow. There is a 
flood of people into the labor market. Real wages are now 
growing at 3 percent a year. That is a very successful story 
and one that I think that members of the committee should be 
proud of.
    Going forward, if we are to raise the minimum wage to $15, 
the preponderance of the research evidence that I go through in 
my written testimony, and I will be happy to elaborate in the 
Q&A, it would indicate that it would hurt the employment 
prospects, especially of those people you care about the most, 
those with little skills, little experience, least attachment 
to the labor market. This is often not taking the form of the 
caricature of throwing someone out of their job, but simply 
denying the employment growth that would give people an 
opportunity in the future.
    I think it is important to note that the nonpartisan 
Congressional Budget Office reaches the conclusion that raising 
the minimum wage hurts employment prospects. It is their job to 
present to you, as the Members of Congress, the consensus of 
the research literature, and that is exactly the consensus that 
they find.
    I think it is important as well to note that more than 
doubling the minimum wage is an enormous change, and previous 
research will probably give us little guidance as to the 
magnitude of the impact. That is outside of the range of 
historical experience. Its damage is likely to be much, much 
greater than previous studies have shown.
    And the combination of the large increase and then indexing 
the minimum wage to the median wage sends a strong signal to 
employers that these jobs, the ones for those with low skills, 
marginal attachment to the labor force, little education, are 
jobs that they are going to be unable to have going forward. 
They are going to replace them with automation and other means. 
So, the employment prospects are probably even more damaging 
than previous indications.
    The last point is that, if you care about those in poverty 
who are working, as you should, the minimum wage is a poor 
instrument to address that problem. Eighty percent of minimum 
wage workers are not in poverty, and one-third of the young who 
earn the minimum wage are living with their parents and are in 
households that make more than $100,000.
    Knowing the wage a person makes does not tell you about the 
characteristics of their household, and as a result, only 6.7 
percent of the benefits of a $15 minimum wage would go to those 
who are in poverty. This is not a good instrument for solving 
that problem.
    And the key economic fact that it is important for the 
Committee to remember when they discuss this is that passing a 
law to make the minimum wage $15 doesn't mean there is any more 
money. You have to go get that money from somebody else.
    So, to get the money for someone who has a job, you are 
going to have to deny someone else a job and effectively take 
money from people who are looking for work and give it to 
people who have work. That seems like an incredibly perverse 
redistribution, one I would encourage the Committee not to 
take.
    Thank you.
    [The statement of Mr. Holtz-Eakin follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Scott. Thank you.
    Dr. Zipperer.

   STATEMENT OF DR. BEN ZIPPERER, ECONOMIST, ECONOMIC POLICY 
                   INSTITUTE, WASHINGTON, DC

    Mr. Zipperer. Chairman Scott, Ranking Member Foxx, and 
members of the committee, thank you for the opportunity to 
testify on the importance and necessity of increasing the 
minimum wage to $15 per hour.
    Raising the national minimum wage is well overdue. Workers 
paid today's Federal minimum wage are, after adjusting for 
inflation, paid 29 percent less than their counterparts 50 
years ago. This is despite the fact that, as the figure on the 
monitor shows, the Nation's productivity has doubled over that 
time period. Had the minimum wage kept pace with labor 
productivity over that time period, the minimum wage today 
would be worth more than $20 per hour instead of the $7.25 it 
is today.
    Gradually increasing the national minimum wage to $15 by 
2024, as proposed by the Raise the Wage Act of 2019, is an 
important corrective to our failure to raise the minimum wage. 
The proposal automatically indexes future minimum wage 
increases to median wage growth, so that low-wage workers will 
share a common trajectory of wage growth with a broader labor 
market.
    Finally, gradually phasing out the separate lower wage for 
tipped workers will help to eliminate disparities in labor 
protections between tipped workers and the rest of the labor 
force.
    My colleague David Cooper at the Economic Policy Institute 
has estimated that raising the minimum wage to $15 by 2024 
would lift the pay of about 40 million workers. Affected 
workers who work year-round would receive a raise on the order 
of about $3,000 per year. This is enough to make a tremendous 
difference in the life of a preschool teacher, a bank teller, a 
fast food worker, more than half of whom earn less than $15 per 
hour today.
    Minimum wages are one of the most well-studied topics in 
economics. Although there sometimes appears to be much 
controversy over the size of the employment effects of the 
minimum wage, the weight of recent evidence shows that minimum 
wages have worked exactly as intended, by raising wages without 
substantial negative consequences on employment.
    In a review of all research published in the 15 years since 
2001, the economists Paul Wolfson and Dale Belman found that 
the average estimated employment effect was very small.
    In addition, in research I coauthored with Sylvia 
Allegretto, Arindrajit Dube, and Michael Reich, we found that 
studies using the most high-quality, credible research designs 
also found small to no employment effects.
    These findings, taken together, suggest that both the 
average study, as well as the best research, show that there 
has been little downside to raising minimum wages.
    Current research also suggests that even the highest 
minimum wages our country has experienced have helped raise 
wages without reductions in employment. In new research on 138 
State-level minimum wage increases I coauthored with Doruk 
Cengiz, Arindrajit Dube, and Attila Lindner, we found that the 
highest minimum wages we studied did not adversely affect 
employment.
    Important new scholarship by Ellora Derenoncourt and Claire 
Montialoux also demonstrates that the highest national minimum 
wages the United States has experienced significantly raised 
wages without reducing the employment of low-wage workers.
    Because the evidence shows that there has been little 
downside to both minimum wages in general and also even to 
minimum wages at their highest points in U.S. history, larger 
increases in the minimum wage are economically justified.
    Larger increases are also necessary because workers in 
every region of the country will soon need at least $15 per 
hour in wage income in order to pay for basic necessities. My 
colleagues at the EPI have developed a concept of family 
budgets to delineate how much a family will need to earn every 
year in order to pay for basic necessities.
    By 2024, in all areas across the United States, even a 
single adult with no children will need to be earning more than 
$15 per hour in order to achieve a modest but adequate standard 
of living, according to their family budget.
    As a result, anything less than a $15 minimum wage by 2024 
will not adequately carry out this key purpose of the Fair 
Labor Standards Act, which is to, and I quote, ``to protect the 
Nation from the evils and dangers resulting from wages too low 
to buy the bare necessities of life.''
    Minimum wages have long been an effective tool for 
maintaining adequate pay, but the failure to adequately raise 
the Federal minimum wage has denied American workers 
significant improvements in their standard of living.
    By raising the Federal minimum wage to $15 by 2024, we will 
finally deliver a much-needed boost in wage income and increase 
the value of the minimum wage to a level that ensures the 
lowest wages we pay workers are not poverty wages.
    [The statement of Mr. Zipperer follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Scott. Thank you.
    We will now recognize members for questions, and they are 
subject to the 5-minute rule, beginning with the gentleman from 
Arizona, Mr. Grijalva.
    Mr. Grijalva. Thank you very much, Mr. Chairman.
    And if there is no objection, Mr. Chairman, I would like to 
enter this report into the committee record. And that is from 
the Washington Center for Equitable Growth, entitled ``Minimum 
Wages and the Distribution of Family Incomes in the United 
States.'' In essence, this report States that if the minimum 
wage had been $12 in 2016, over 6 million fewer people would be 
living in poverty today.
    If there is no objection, Mr. Chairman?
    Chairman Scott. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Grijalva. Thank you, sir.
    In strong support of the $15 minimum wage. And I do want to 
thank Mr. Wise and Dr. Spriggs for your testimony. It was 
excellent and kind of left me without too many questions, to be 
honest with you.
    And with the chair's indulgence, I think that it is way 
past time that we move forward to raise the minimum wage. And 
as we do that, Mr. Chairman, I think it is important that the 
members understand that it is important to tackle other 
inequities that are in our basic minimum wage protections.
    It is long past time for Congress to end discrimination 
against agricultural workers in the Fair Labor Standards Act, 
period. So today, I introduced the Fairness for Farm Workers 
Act; and in doing so, simultaneously, Senator Harris has 
introduced the identical piece of legislation in the Senate. 
And this act, basically, the Fairness for Farm Workers Act 
would extend overtime protections to farm workers and eliminate 
some remaining exclusions for farm workers from minimum wage 
protections.
    These protections were first enacted, as Dr. Spriggs so 
eloquently gave us the history of it, and surmised at the end, 
I believe very accurately, that those exceptions were made out 
of political expediency and racism, and that needs to be 
addressed.
    That inequity that exists, Mr. Chairman, as you well know, 
it is a discrimination issue. We have to end this 
discrimination against farm workers. The treatment of farm 
workers in this country has been and continues to be unjust, 
unreasonable, and unsustainable.
    My legislation, the Fairness for Farm Workers, would 
eliminate the minimum wage and overtime discrimination farm 
workers face in the act.
    So I know I will be working with you on that. Your 
leadership on this is not only welcome but, as you have offered 
your support, thank you very much, Mr. Chairman. I look forward 
to working this out. And I think it is important that we deal 
with raising the minimum wage, but also have an opportunity to 
reform the whole package as we move along.
    With that, Mr. Chairman, like I said to the two witnesses, 
you left me with no questions, and I yield back.
    Chairman Scott. Thank you.
    The gentlelady from New York, Ms. Stefanik.
    Ms. Stefanik. Thank you, Mr. Chairman.
    And thank you to our witnesses for being here today.
    We agree on this committee of the importance of economic 
opportunity for American workers and American families. We 
agree that we need to focus on real wage growth. We agree on 
the pathway out of poverty. What we don't agree with is how to 
get there. We have different solutions about how to achieve 
those goals.
    We are living in a dynamic, growing economy today, and we 
must start talking about the future of work. What do I mean by 
that? As we have seen over the last decade, the composition of 
our work force is rapidly changing, as is the type of work 
Americans, especially young Americans, are engaging in. We are 
increasingly seeing a rejection of traditional employee-
employer relationships for nontraditional, dynamic career 
paths, like the gig economy or side hustles or self-employment.
    In my district, I represent 40 percent of the geography of 
New York State. It is a very rural region, and we are very 
familiar with this discussion. Our economy in UpState New York 
is very distinct from the economy in Manhattan and DownState 
New York.
    My question to Mr. Holtz-Eakin is, on the future of work, 
how does this proposal not embrace opportunities in the gig 
economy in the 21st century? And how does this proposal also 
not take into account the differences between rural parts of 
this country and urban parts of this country, in terms of cost 
of living, other issues, challenges small businesses are 
facing?
    Mr. Holtz-Eakin. Congresswoman, you have heard a lot of 
discussion about the history, but the only real question facing 
the committee is, do you want to raise the minimum wage going 
forward, and to do it nationally and for all workers, tipped 
and nontipped?
    That is a very different proposal than even some of the 
things we have evidence from in the research. This would hit 
all labor markets, rural labor markets and urban identically. 
It would hit tight labor markets and loose labor markets.
    One of the striking characteristics of the recovery has 
been a very unevenness across the geography of the United 
States, and it would not recognize that. It would not recognize 
the need for businesses in those areas to have a cost structure 
they can afford. It would hurt the entrepreneurship in places 
that are struggling. It is a very blunt instrument, and, as I 
said, that blunt instrument does not land on those who need it 
the most, working poor.
    And so I think that is one of the things that jumps out of 
the literature. And I worry a lot about a proposal that is not 
tailored to the circumstances of the labor market and doesn't 
target those who need the help the most, especially at a time 
when the labor market is actually, on the whole, doing 
remarkably well.
    And I think the thing I would emphasize is we are seeing 
people entering work who we just did not think would come back. 
No one thought we could continue to create 200,000 jobs a year 
in 2018, and the economy has. That is a remarkable 
accomplishment. Those families will forever be better from 
having that opportunity.
    Ms. Stefanik. My next question is, one problematic aspect 
of this legislation, one of the many problematic aspects is the 
elimination of the tip wage and tip credit.
    I have a local assemblyman who is a Democrat who represents 
Plattsburgh, which is in my district, and he recently 
highlighted why this is problematic. He included a local 
restaurant employee on his website who would have been greatly 
harmed by the elimination of the wage tip credit.
    I quote: ``Generally has relied on tips to supplement her 
wages. She makes $7.50 an hour, but often with tips this salary 
is doubled or even tripled because of tipping. This not only 
provides her with money in her pocket each day, but it helps to 
stabilize and even augment her income to provide food, formula, 
and diapers for her children. Each of her fellow servers has 
different life situations, but what they all seem to agree on 
is that they definitely make more money as a server than if 
they had taken a more restrictive set wage position.''
    Can you talk about why the elimination of the wage tip 
credit is problematic and does not allow this dynamism that we 
are seeing in the current economy?
    Mr. Holtz-Eakin. Certainly. As you know, those who are 
tipped workers are guaranteed to get the minimum wage. If they 
don't receive tips that are sufficient to do that, the owner of 
their establishment will pay them the minimum wage.
    So forcing them to do that anyway raises the cost in the 
business, there is no way around it, and once again you have 
the problem, where does that money come from? As I said in my 
opening statement, they have to go take it from someone else, 
and that might be someone they choose not to hire.
    And that is the definition of lack of dynamism. I am not 
going to take advantage of opportunities to expand my 
employment base, offer new services, grow as a business. This 
has exactly that characteristic.
    And I would point out that in D.C., which we watched 
carefully, there was a ballot referendum that said we are going 
to raise this minimum wage for tipped workers. It was 
overturned by the D.C. Council because the tipped workers 
themselves said, no, this is bad for us.
    Ms. Stefanik. And that was a similar experience in New 
York. Tipped workers were vehemently opposed to this policy and 
organized very effectively.
    Thank you. I yield back.
    Chairman Scott. Thank you.
    The gentleman from Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    And, again, I applaud the fact that week No. 1 of this 
committee we are taking up an issue which, again, I think 
restores the legacy of this committee in the past, as Dr. 
Spriggs so powerfully described.
    You and I and a couple of us were around in 2007, the last 
time the Federal minimum wage was increased, from $5.15 to 
$7.25. Again, it was done gradually over a period of about 3 or 
4 years. I remember the Republican votes that reported that 
bill out of the committee, and I remember it was in May 2007, 
after the new Congress or the 110th Congress, that President 
Bush signed that into law.
    And, again, Dr. Spriggs, thank you again for sort of 
reminding us of the forensics of the minimum wage, that it 
really historically has been really a very strong bipartisan 
issue, and it is far too long that Congress has not revisited 
that standard.
    And, again, Mr. Wise, I want to thank you for your 
incredibly powerful testimony here today, bringing this down to 
real life and also talking about sort of the grassroots organic 
support that is out there, and we have seen that in 
referendums. And the $15 benchmark has really started to 
happen, again, without Congress necessarily doing it yet, but 
certainly showing that it is not going to wreck the U.S. 
economy for employers to do the right thing.
    I would like, Mr. Chairman, to just enter a statement that 
Hartford HealthCare, which is one of the largest employers in 
the State of Connecticut, just announced about a few weeks ago, 
that they are going to raise the minimum wage for their work 
force, which is about 2,500 strong, to $15 an hour this spring. 
They are not waiting until 2024. And, again, they have entry 
level staff folks that are there. That is a really important 
decision that the employer made to do that.
    And, again, I think it is because of the work that folks 
like Mr. Wise and some of the others out in the audience here 
with red shirts, tee shirts here today, have really raised this 
issue, so that it is making its way into the corporate 
boardrooms that this is something important to do.
    So, again, I would like to ask Dr. Zipperer just a question 
about what has been happening to wage rates since the Great 
Recession and the fact that, again, we finally are starting to 
see an uptick in terms of wage, but this is 10 years after the 
Great Recession. As you point out, this job market has been in 
a trajectory that certainly precedes this administration, 
although it is continuing to move forward, and I think we all, 
as Americans, support that.
    But, I mean, how would you explain, again, the fact that we 
have not seen the wage growth concurrent with the economic 
growth? And the recent uptick in wages, I mean, this is 
happening at the State level in terms of minimum wage 
increases. Is that a part of the story about why we are finally 
starting to see some wage growth?
    Mr. Zipperer. Thank you for the question.
    We are starting to see wage growth, as you noted and as Dr. 
Holtz-Eakin noted in his testimony, which, thankfully, is a 
good thing. At the same time, I think we are seeing that wage 
growth because the labor market is becoming tighter and 
employers are competing more for workers.
    At the same time, that wage growth is not actually 
sufficient or adequate enough for many workers, in the sense 
that the lowest wage workers in particular, what we are 
discussing at this hearing, need a much more substantial boost 
in wage income than they are going to see from tight labor 
markets alone.
    Mr. Courtney. Well, thank you.
    And to drive that point home, Mr. Chairman, I have 
correspondence from Oxfam America, which, again, shows an 
economic analysis that, again, we need that sort of push from 
the bottom, which a minimum wage increase has been bipartisanly 
supported in the past, and I would ask that be admitted into 
the record.
    Chairman Scott. Without objection.
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    Mr. Courtney. And I also just would like one last comment. 
You know some of us who serve on committees like Armed 
Services, as my friend from New York, you know we get a chance 
to interact with other countries, with codels and overseas. I 
am co-chairman of the Friends of Australia Caucus, which is a 
developed economy somewhat on par with the U.S. They have 
actually a minimum wage commission which raises the minimum 
wage outside of politics, on a yearly basis. It is $17.70, 
Australian dollars. If you convert that into U.S. dollars 
today, it is about $14.
    That is the one economy in the sort of developed world that 
actually did not take a hit during the Great Recession. Again, 
their banking system, frankly, was more regulated and I think 
withstood what was going on internationally there.
    But nonetheless, I mean, they are a growing economy. Their 
minimum wage, which has been automatically increased because of 
a nonpartisan commission, has shown that, in fact, it doesn't 
hurt economic growth. It actually stabilizes a family's income 
and increases their purchasing power.
    I yield back.
    Chairman Scott. Thank you very much.
    The gentleman from Kentucky, Mr. Comer.
    Mr. Comer. Thank you, Mr. Chairman.
    And I appreciate everyone being here.
    I think it is interesting that the panel will admit that we 
are finally having wage growth, which is something that I think 
both parties agree is needed in America. One reason, and the 
main reason we are having wage growth, is because there is a 
shortage of workers in America. It is basic supply and demand.
    In my district in Kentucky, I have Paducah, which is a 
headquarters for the regional office for U.S. Bank. They just 
recently raised their minimum wage to $15 per hour for all of 
their employees. They did that without legislation, without 
government intervention. Basically, it is the supply and demand 
as a result of having a strong economy.
    So my question is--and I want to make this Statement. While 
proponents of a $15 minimum wage foresee consumers absorbing 
the effects of this proposal through increased end cost, many 
smaller businesses in my district in Kentucky wouldn't be able 
to sustain charging such radically increased prices.
    Dr. Holtz-Eakin, do you agree that raising prices is not 
always an option for many businesses in rural or low-income 
areas? And can you elaborate on the effects of such a bloated 
minimum wage would have on these entrepreneurs who are the 
backbone of our economy?
    Mr. Holtz-Eakin. As I said, if you pass a legislated 
increase in the minimum wage, not a voluntary one as U.S. Bank 
had, there is no more money at the moment that becomes law. So 
you have to go figure out where you are going to find it.
    One possibility is charge your customers more to get the 
money. If you are unable to do that, and a lot of people are 
not going to be able to do that, another possibility is you 
take the thinner nonexistent profit margins of an 
entrepreneurial business, a startup, and squeeze it down even 
further. They will likely fail, and thus those jobs would go 
away. Or you can take it out of your labor cost somehow by not 
hiring additional workers when you otherwise might.
    And this is just like ``Casablanca'': You round up the 
usual suspects and figure out where you can do it, if at all.
    Mr. Comer. Dr. Holtz-Eakin, you make it clear that a 
minimum wage increase would not affect all areas the same. A 
recent study by the University of Kentucky suggests that for 
many families below the poverty line in Kentucky a lack of 
hours worked rather than a low wage or minimum wage is the 
primary challenge.
    Right now, the average worker in poor families in Kentucky 
are out of the work force more than 4 months out of the year. 
Won't a higher minimum wage set up additional barriers to 
employment and risk more workers being out of the work force 
for longer periods of time?
    Mr. Holtz-Eakin. It is certainly a concern that I have 
tried to emphasize in my testimony.
    We do have some, for example, recent evidence out of the 
Seattle increase in the minimum wage which shows 10,000 jobs 
lost, but also diminished hours worked by those affected by the 
increase. That is another channel by which you squeeze down 
your costs, but that means less income for those individuals.
    And, again, my concern is that is something Seattle did. 
That is very different than doing it to the entire United 
States, including your district in Kentucky.
    Mr. Comer. Absolutely.
    Let me ask one last question. You also stated that 5.1 
million jobs have been added over the past 2 years. How would 
this dramatic increase affect the progress created by recently 
enacted legislation, such as our tax reform bill of the last 
Congress? How would this impact that if we passed this proposed 
minimum wage increase?
    Mr. Holtz-Eakin. So, as I noted in my testimony, my 
colleague Ben Gitis and I used a published estimate of the 
impact of increases in the minimum wage on the growth in 
employment going forward, and it would more than offset those 
5.2 million jobs. So, we would set back the progress we have 
made, the dramatic progress in getting Americans back to work, 
including those who previously didn't work. I think that is a 
concern.
    Mr. Comer. I think we have seen last month, with record job 
growth, over 300,000 new jobs added to the economy, I believe 
as a direct result of, first of, the new administration and the 
last Congress focusing on reducing regulations; second, on 
reducing taxes. We have got the economy growing for the first 
time in a long time. We are starting to see wage growth.
    So I believe that we finally have America on the right 
track economically, and I think we need to think long and hard 
before we go back to a Congress of passing lots and lots of 
legislation, increasing regulations, more government, bigger 
government, because what we see now from an economic 
standpoint, in my opinion, is working.
    Thank you, Mr. Chairman. I yield back.
    Chairman Scott. Thank you.
    The gentleman from the Northern Mariana Islands, Mr. 
Sablan.
    Mr. Sablan. Thank you very much, Mr. Chairman, for having 
this hearing.
    Thank you, everyone, for coming and testifying.
    I wasn't going to speak, but, Mr. Wise, please keep telling 
your story. You are sharing your life story. And I am sure you 
have heard it before, but if you haven't, let me tell you, sir, 
that you are a good father.
    My only regret is that one of you sitting there as a 
witness probably couldn't hear what you were saying. And you 
are telling a real life story, and someone is saying, no, 
according to the literature on economics and all of these 
things.
    We are not creating big government here. We are trying to 
create increased wages for those like you, and I am very proud 
to do so.
    Mr. Chairman, I would like to yield my time to the 
gentleman from Virginia, Mr. Bobby Scott.
    Chairman Scott. Thank you, and I appreciate the time.
    Dr. Spriggs and Dr. Holtz-Eakin, I talked about the 
reasonableness of the tipped minimum wage because a tipped 
worker would be made whole if the tips don't amount to the 
minimum wage. That sounds reasonable, but how often is the 
deficiency actually in practice made up?
    Dr. Spriggs. My experience at the Department of Labor was 
this is one of the more troubling areas for us to figure out 
the proper regulation of what to do with tips, and for those 
who think that it is clear cut, that is because they haven't 
tried to solve this problem.
    We know this is the major portion of wage theft that takes 
place. It puts the women, and there are disproportionately 
women who rely on tip wages, at a huge disadvantage because 
they are, by necessity, having to deal with ugly customers, and 
they need the tip, and it opens up a huge window for misconduct 
and sexual harassment that is hard to close.
    If you set the minimum wage higher and you don't move the 
tip, then you create a bigger regulatory issue of how do we 
collect the information to know whether the workers got the tip 
money? Many restaurants want to pool the tips and then dole it 
out so that the workers sometimes don't even get the tips. It 
is all well and good if you are in a high, fancy restaurant, 
and it is mostly men who work there do well, but for the 
overwhelming majority of women who have this job, it is not the 
historical record. This is the biggest area of wage theft to 
try and get the owners of the restaurant to actually pay the 
tipped workers the gap. And as that gap gets bigger, the 
vulnerability of those workers is going to increase.
    Chairman Scott. Dr. Zipperer, do you know how often the 
tipped workers are actually made whole? Have you done studies 
on that?
    Mr. Zipperer. There is research about the preponderance of 
wage theft, and that especially falls on tipped workers 
because, like the other witness pointed out, regulation and 
oversight of this issue is really difficult. In addition, the 
Department of Labor, under a recent set of investigations, 
found that of the restaurants they investigated, about 84 
percent of investigations resulted in wage and hour violations, 
and a substantial fraction of those were due to failures in 
enforcing the tips standard that we are talking about. Workers 
in the food, and drink, and restaurant industry are much more 
likely to experience wage violations than in other industries.
    Chairman Scott. So although it may be reasonable in theory, 
the workers never get the deficiency made up. Is that right?
    Mr. Zipperer. I think it is very difficult to enforce in 
practice which is one reason why you see those kind of 
disparities. You also see that in states that have adopted a 
single minimum wage for tipped workers and non-tipped workers 
alike that wages inclusive of tips are about 14 percent higher 
in those states, and poverty rates for tipped workers are 
significantly lower in those States with a single minimum wage.
    Chairman Scott. Does the gentleman yield back? Do you yield 
back?
    Thank you. The gentleman from Kansas, Mr. Watkins.
    Mr. Watkins. Thank you, Mr. Chairman. Thank you all very 
much for being here. I especially want to say thank you to Mr. 
Wise. Your testimony was very moving. It is not easy putting 
yourself and your struggles out there, and doing so is very 
impactful, and it touches on why we do what we do to try and 
make the country a better place.
    Now, that being said, I am right down the road on I-70. I 
live in Topeka, and so if you need to join a support group for 
the Chiefs AFC championship loss, then hit me up.
    But sir, we disagree. I think this is a classic example of 
legislation that feels good but doesn't do good. It feels good 
when you pit up employer versus employee. But I have helped 
create hundreds of jobs, respectfully, before this, and I would 
move heaven and earth to find and keep good employees. And that 
comes at a cost, a cost I am more than willing to pay when I 
find good employees.
    So listen. The CBO published in a 2014 study that a 10 
percent or a $10 minimum wage would cost a half a million jobs. 
Harvard Business School said every dollar increase would result 
in a 4 to 10 percent increased likelihood of a restaurant 
closure. So my question is to you, Dr. Holtz-Eakin. So I 
represent a lot of poor communities throughout southeast 
Kansas. I am going to share with you some thoughts they shared 
with me. I just want you to reflect on them, and some of them 
will be things that were written up in your testimony, but bear 
with me.
    A $15 minimum wage will attract more qualified applicants, 
and I won't hire entry level people. Another entrepreneur said 
I would have to pay everybody more. If I have to pay the 
dishwasher $15 an hour, then I have got to pay the cooks more 
than that. I will just replace H.R. with automation. Prices for 
everything go up.
    So my question is simply to reflect on that so I know what 
to tell my constituents.
    Mr. Holtz-Eakin. I want to just echo your observation that 
the issue here is not about the depth of compassion for people 
who are working and poor. The issue is what are the outcomes of 
the proposed legislation. And my concern is that the outcomes 
include worsened conditions for exactly those people and the 
possibility of reduced employment for them, reduced hours if 
they are working, the loss of the establishments that have 
traditionally employed them, and all of those things you are 
seeing when you say well, I am going to have to pay other 
people, you are going to get wage compression. And that is 
going to say well, we will cutoff a certain category, whether 
they are teens or folks who never finished community college. 
We are just not going to look at those guys. We can get the 
other ones. We will do that because we are paying everybody 
more.
    And those are just people who are running the numbers and 
by necessity trying to keep their business going. It is not an 
act of anything other than necessity, and I worry about those 
acts being played out across the country.
    Mr. Watkins. Thank you, Doctor. Thank you all, and Mr. 
Chairman, I yield my time.
    Chairman Scott. Thank you. The gentlelady from Oregon, Ms. 
Bonamici.
    Ms. Bonamici. Thank you very much, Chairman Scott, and 
thank you for introducing the Raise the Wage Act which I am 
proudly cosponsoring because this is a long overdue 
conversation about gradually increasing the Federal minimum 
wage to $15 an hour. And as you pointed out, Mr. Chairman, in 
your opening remarks today, an individual working 40 hours a 
week and earning the Federal minimum wage earns $15,080 
annually. Annually. Putting a family of two below the Federal 
poverty level, and that is unacceptable that someone working 
full time is living below the Federal poverty level.
    And as Mr. Wise's testimony so poignantly showed, when 
workers are paid wages that leave them in poverty, they 
struggle. They struggle to pay for rent, essentials like food, 
transportation, skyrocketing child care costs. So the Federal 
minimum wage has been stagnant for too long. It has contributed 
to income inequality, and I am glad we are having this 
conversation today.
    So I am from Oregon, and I have to tell you that years ago, 
I was kind of surprised to learn that there was actually such a 
thing as the subminimum wage for tipped workers because we 
don't have that in Oregon. We have a thriving restaurant 
industry. People come to Oregon for restaurants. So I was 
really actually shocked to learn that people could be paid less 
than minimum wage. It was really surprising.
    In Oregon, more than 100 years ago, even before the Fair 
Labor Standards Act was enacted, Oregon became one of the first 
States to enact a minimum wage. It was intended to address 
gender disparities for workers, yet still today the majority of 
workers earning minimum wage are women and people of color, 
according to data from the Bureau of Labor Statistics.
    So Dr. Spriggs, in your testimony you talked about the 
history of the Fair Labor Standards Act and some of the 
compromises that were made to pass the bill, and I know 
Representative Grijalva mentioned this, but those compromises 
later exacerbated racial and gender wage gaps. So how have 
women and people of color been disproportionately affected by a 
low Federal minimum wage, and how will the Raise the Wage Act 
address these persistent wage gaps?
    Dr. Spriggs. Thank you very much, Congresswoman, for the 
question and thank you for your comments.
    Yes. I think we need to look back at 1966 when 60 percent 
of Republicans agreed to expand coverage and get rid of the 
exemption for agriculture and many service sector workers which 
included restaurant workers. Unfortunately, the restaurant 
workers were subject to this creation of a subminimum for tip. 
The tip wage itself has a very racist origin. It was originally 
because the servants happened to be black, and it was the habit 
not to think about you have to pay them, and the tip was meant 
in lieu of wages.
    When we closed the gap in 1966 in terms of coverage, we 
have to remember that many of those workers, because they were 
agriculture workers, lived in the south, in the rural south, 
and they lived in States that did not have State minimum wages. 
There was nothing below them. So the studies that have been 
cited by Ellora Derenoncourt and by Claire Montialoux highlight 
that when that was closed, first, these workers didn't get paid 
a dollar an hour, so the initial expansion of coverage to 
include these rural workers was to get them to $1 which was a 
34 percent raise. In other words, they were getting close to 
$0.80 an hour, and then because they were included, they went 
to $1.60. We doubled their wages.
    Ms. Bonamici. Thank you. And I want to get another question 
in.
    Dr. Spriggs. Yes. I want to tell you really quickly the 
punch line. The punch line is that black child poverty in this 
country went from nearly 70 percent to 40 percent in that 3 
years simply by covering 30 percent of African Americans who 
had been denied that coverage--
    Ms. Bonamici. Right.
    Dr. Spriggs [continuing]. and raising their wages. So that 
was the biggest effect we have ever had in lowering poverty 
from any program. It took us until 1990 to break that record, 
to get black child poverty back below 39 percent.
    Ms. Bonamici. Long past time to complete the work. I also 
wanted to talk about or also point out that when low wage 
workers--they spend their earnings. They go right back into the 
economy.
    In Washington County, Oregon, which is just west of 
Portland, the Portland metro region, the minimum wage there is 
$10.75 an hour currently. Someone making minimum wage would 
have to work 73 hours a week to afford a one-bedroom apartment, 
and that is what we are seeing in other areas as well. A full-
time worker should be able to afford basic needs like housing. 
And Dr. Zipperer, you mentioned a family budget calculator, and 
I liked your quote about protecting the Nation from the evils 
and dangers resulting from wages too low to buy the bare 
necessities of life. So who benefits from this gradual increase 
to $15 by 2024, and why is it important to establish that as a 
Federal floor rather than leaving the issue up to States?
    Mr. Zipperer. Thank you for your question. It is important 
to establish a Federal floor because many States don't actually 
increase their minimum wage or increase it adequately, and 
Federal action is the only way that we are going to actually 
achieve a national minimum wage that would provide a wage 
standard high enough so that all people in all areas of the 
country will be able to afford the basic necessities for their 
families.
    At the Economic Policy Institute, we have developed what we 
call family budgets to delineate how much a given family type 
in a given area of the country needs every year to pay for 
housing, food, transportation, child care, and other 
necessities. These are extremely conservative amounts. They 
don't allow for any saving whatsoever, no saving for 
retirement, no saving for buying a home, no saving for 
emergencies. And even with these conservative amounts, we find 
that in every city and in every county of the country, by 2024, 
workers will need $15 per hour working full time in order to 
meet their family budget. Two adults working 40 hours a week, 
52 hours--52 weeks a year at $15 per hour each, will earn less 
than their family budget in every area of the country.
    Ms. Bonamici. Thank you very much. And Mr. Chairman, I 
request unanimous consent to enter into the record a letter 
from the Women's Coalition outlining the importance of passing 
the Raise the Wage Act to help address wage gaps for women.
    Chairman Scott. Thank you without objection.
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    Ms. Bonamici. And I yield back.
    Chairman Scott. Thank you.
    The gentleman from Texas, Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here. Dr. Holtz-Eakin, just a question for 
you. I was going over your testimony last night, and something 
that really struck me was the study that you did in 2015, and 
in that study you determined--and I will just read your 
testimony back to you, but using the most recent academic 
literature, the study found that a $15 per hour Federal minimum 
wage resulted in the loss of 3.3 million to 16.8 million jobs 
with a middle estimate of 6.6 million jobs lost, and I just 
wanted to understand. So that is a range, and clearly it is all 
bad. I don't think anybody here wants to lose a job, right? We 
want to create jobs. I think everybody here agrees on that 
basic premise. But can you explain why there is a range in 
estimates and sort of--if you don't mind?
    Mr. Holtz-Eakin. So there is a range from analyzing the 
data, and the imprecision with which statistics delivers the 
truth, right, it doesn't say literally this is exactly what 
will happen.
    Mr. Taylor. Sure.
    Mr. Holtz-Eakin. It says, you know, given the variation in 
the data, it can go from here to here, and we want to 
acknowledge that you can't know with great certainty.
    Mr. Taylor. Ok.
    Mr. Holtz-Eakin. And I just want to emphasize that says if 
we look historically at changes in the minimum wage, we have 
limited ability to say precisely what will happen. That gives 
you a range. We have even less ability to say what will happen 
if we go forward in a fashion that is much more dramatic, more 
than doubling and then indexing permanently the minimum wage. 
This is an unprecedented experiment, and I think we know very 
little about what will actually happen.
    Mr. Taylor. And then just as a policymaker, where are these 
losses? I mean, are these happening in high-income areas? Are 
they happening in--you know, high cost of living areas like New 
York City? Are they happening in low-cost areas like, say, 
Kansas? Are they happening in suburban areas like where I 
represent in Plano, Texas? Are they happening in urban areas, 
rural areas? Where are we losing jobs? So you are estimating 
millions of jobs being lost. Where are they lost?
    Mr. Holtz-Eakin. So you can split the economy in a variety 
of ways. I would say the most important way to split it is to 
look in the labor force and say let's look at the whole labor 
force. It is hard to discern an impact. Let's look more closely 
at those people who have little education, little skill, little 
experience, say, a teenager. They are going to be priced out of 
the labor market. You are not going to find--I will speak from 
experience. I never found $30,000 worth of productivity in my 
kids. So they are just not going to get hired. And so, you 
know, that will show up right away.
    If you look further at the places they are most likely to 
be employed, that is going to be retail. That is going to be 
restaurants and bars, and that is where you are going to find 
the employment losses. And then across geography, you can just 
see places where you have concentration of low-wage workers as 
the labor force base, and that is where you are going to see 
the losses.
    Mr. Taylor. Ok. And then just shifting over to another 
piece of your testimony I was reading last night, and I will 
just read this sentence to you. Seattle's minimum wage law, so 
we are going to Seattle now, has caused low wage work hours to 
decline by 9.4 percent. Consequently, even among low-wage 
workers who were still employed and earned slightly higher 
wages, their average monthly earnings on net declined $125 per 
month.
    So in addition to Seattle losing 10,000 jobs which is what 
your testimony was, what your written testimony is, you watched 
the people that still managed to keep their jobs, their hours 
declined, and so their incomes also declined, right?
    Mr. Holtz-Eakin. Yes.
    Mr. Taylor. So you have lost jobs.
    Mr. Holtz-Eakin. Yes.
    Mr. Taylor. You have lost income. My question is what has 
happened to those workers? Are those workers leaving the labor 
force? Are they moving somewhere else where they can get a job? 
Are they going into the welfare system? What happens to these 
people that lose their jobs? What happens to the families that 
lose income as a result of the policy, the $15 policy that was 
implemented in Seattle?
    Mr. Holtz-Eakin. So Seattle is of interest because No. 1, 
it is the top line number, $15, that has focused a lot of 
attention. No. 2, it came along with the city deciding to have 
a policy violation built in and had the University of 
Washington study this closely using a research design that is 
the gold standard for those who think that minimum wage doesn't 
hurt workers. And so these findings are troubling for that 
reason.
    The thing it doesn't include is a followup for where 
everyone goes, but the logical conclusion is we have seen a 
little bit of them moving outside the city to get work. That is 
actual in the study. You can see people trying to work outside 
the municipal limits, but also you would expect people to 
simply leave Seattle. If there is not going to be a work 
opportunity, they are going to try elsewhere.
    Mr. Taylor. Ok. Thank you. Mr. Chairman. I yield back.
    Chairman Scott. Thank you.
    The gentleman from California, Mr. Takano.
    Mr. Takano. Mr. Chairman, thank you. I would like to begin 
my questioning by asking unanimous consent to submit a 
Statement into the record from the Center for American Progress 
dated January 16th, 2019 which praises the Raise the Wage Act.
    Chairman Scott. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Takano. Mr. Zipperer, Mr. Holtz-Eakin cites, you know, 
a Seattle study showing harm being done. I would like to know 
what the impacts of the minimum wage increases in places like 
Seattle, San Francisco, and New York have been?
    Mr. Zipperer. All right. Thank you for the question. 
Regarding Seattle and the study that Dr. Holtz-Eakin cited, 
that study is based on a completely flawed comparison of 
Seattle where wages are rising extremely fast during the study 
period with other areas of Washington State that do not look 
like Seattle or are not comparable to Seattle and not a good 
point of comparison. And so that is why I don't think that 
study coming from the University of Washington is informative 
in any way about the consequences of the Seattle minimum wage 
increase.
    At the same time, there are also studies that use a variety 
of case studies and not just focus on a single city but that 
focus on six cities including Seattle, also Chicago and a 
couple of cities in California like San Francisco, and they 
studied the effects of the minimum wage increases there on 
restaurant employment and workers' earnings in restaurants. 
That study conducted by Sylvia Allegreto, Anna Godoy, Carl 
Nadler, and Michael Reich and others at the University of 
California Berkeley found that those minimum wage increases in 
those cities, in all of those cities, raised the wages of 
restaurant workers without any negative consequences for 
employment.
    Mr. Takano. Thank you. I appreciate that.
    I appreciate my Republican colleagues inviting, you know, 
Mr. Holtz-Eakin to give us, you know, the conservative point of 
view. I imagine that my colleagues on the other side of the 
aisle respect your hard headed analysis of our economy. And we 
Democrats are advocating for the minimum wage at $2.15 or at 
$15 an hour. Of course, we are interested in trying to raise 
the incomes, and I am curious. I want to know, you know, in 
some of your past writings, especially on immigration reform. 
Do you still hold to your beliefs that immigration reform and 
welcoming immigrants into our economy ultimately will raise the 
wages of American workers?
    Mr. Holtz-Eakin. Absolutely.
    Mr. Takano. Can you expound on that a little bit more?
    Mr. Holtz-Eakin. Sure. If you look at the research on the 
impact of immigration on native born workers, you find that 
immigrants are, on average, complements to those native born 
workers meaning in economic terms when they arrive, they raise 
the wages of the native born workers. Immigrants are 
disproportionately entrepreneurial. They start businesses at a 
higher rate. They bring capital at a higher--workers at a rate 
above the native born. They work longer. They retire later. 
They are a source of enormous vitality to the U.S. economy, and 
no one should misunderstand that.
    Mr. Takano. So you would counsel, you know, my Republican 
colleagues to push for immigration reform and to welcome 
immigrants into our economy?
    Mr. Holtz-Eakin. I have for my entire career, and you have 
seen my success.
    Mr. Takano. And you maintain that immigrants do not depress 
wages, but they actually have either no effect on wages but 
actually ultimately increase those wages because our 
productivity goes up as an Nation.
    Mr. Holtz-Eakin. I am convinced that the blanket statement 
no one's wages ever go down is probably wrong. Blanket 
statements are always wrong in economics. But I think the vast 
amount of evidence is that they are beneficial to the wages of 
native born workers.
    Mr. Takano. Of course, I believe that we need a strong, you 
know, baseline of a minimum wage. We need immigration reform to 
reduce the effect of the shadow economy so that people, you 
know, are not being exploited by employers who are taking 
advantage of their undocumented status.
    I mean, we can argue about where that minimum wage should 
be set, but do you also believe that as well, that a shadow 
economy is not good for us?
    Mr. Holtz-Eakin. I think it is terrible if we have 
circumstances that permit people to be exploited by the 
workers, and that is a real issue, and it ought to be taken 
seriously by everyone in this committee. The place where we 
disagree is on the minimum wage, and what I would say to you is 
it is not that you don't want to try to do something. This is 
the wrong thing to do. We have a lot of evidence in the earned 
income tax credit that it promotes work and helps these people. 
Try the noncustodial tax credit. There are a variety of 
alternatives. This is just the single worst way to try to help 
these people.
    Mr. Takano. Fair enough. Fair enough. We simply disagree on 
the level of the minimum wage, but you know, we do agree on 
immigration reform and the value of immigrants in our economy. 
Thank you.
    Chairman Scott. Thank you.
    The gentleman from Georgia, Mr. Allen.
    Mr. Allen. Thank you, Mr. Chairman, and thank you for 
holding this hearing and talking about, you know, the creation 
of jobs and the opportunities available out there.
    I am from the State of Georgia. We have a little fast food 
company down there. Mr. Wise, your testimony was very 
impressive, but I can tell you. If you had gone to work for 
Chick-fil-A, you would probably own your own restaurant by now. 
It is an amazing story. You need to check them out, you know. 
Obviously you have a passion for that business, and you have 
remained in it, and in fact, they will actually put you through 
college. Amazing company.
    And in fact, we have had enormous job creation in Georgia. 
The wage situation is--I mean, for example, with truck drivers. 
I mean, they are making in excess of $80,000 a year, full 
benefits, full medical, and there are also companies working 
with the drivers to make sure they are not out of town more 
than maybe two nights a week. So we are trying to address this 
booming economy. Georgia has created over 800,000 jobs in the 
last four or 5 years, and frankly, everywhere I go, everybody 
needs workers.
    So Dr. Holtz-Eakin, how would increasing the minimum wage 
to $15--I guess I have two questions. One, how in the world do 
you live off $15 in Washington D.C.? I mean, I spend 36 weeks 
up here. This is the most expensive place to live I have ever 
lived in my life. I mean, you look at Georgia and the cost of 
living in Georgia. I mean, it is maybe a third of Washington, 
DC. based on my experience.
    So how can you just blanket the country with, say, you 
know, like in Washington, DC, maybe the minimum wage should be 
$30 an hour. Who knows? I mean, why stop at 15? I mean, if you 
are talking about a living wage based on, in my experience, the 
cost of living up here. So No. 1, what do you think it will do 
to a State like Georgia with an incredible economy, and No. 2, 
how do you, like, divide up the country and say Ok, this is the 
blanket policy? Can you answer those questions?
    Mr. Holtz-Eakin. Well, first of all, I am not an expert on 
Georgia, but I will say that your characterization matches the 
data for the U.S. as a whole where we do have more openings 
than unemployed as I mentioned in my opening Statement. That is 
the market's way of raising wages, and wages are rising. Our 
best measure of real wage growth is the employment cost index, 
kind of a nerdy thing you don't need to know. But if you look 
at that, it was growing about 1 and a half percent a couple 
years ago. It is now up to three. It is doubled.
    And so we are seeing real wage growth, wages above 
inflation start to move, and that is a valuable thing. That 
happens at different rates across the country because we have 
different economic labor markets. There are hundreds of local 
labor markets in the United States. Tailoring a policy to 
Washington, DC. will destroy the State of Georgia, and we 
shouldn't do it that way, and I think that is one of my biggest 
concerns about this is it is a dramatic increase, and it is 
nationwide.
    Mr. Allen. It is like, you want do level the playing field 
across the country and penalize a State like Georgia, you know, 
like I said. And like I said, there is no way you can live off 
$15 an hour, and my only experience is here in Washington. I 
don't know what it would be like, say, in other large cities, 
but--
    Mr. Holtz-Eakin. You do want to level the playing field in 
the sense of giving everyone the same opportunity.
    Mr. Allen. Right.
    Mr. Holtz-Eakin. The trouble is having the same minimum 
wage makes sure that is not level, and that is what I am 
concerned about.
    Mr. Allen. Well, I ran a small business for 35 years, and 
of course, right now we are looking for people. We have no one 
on our payroll that is making less than $15 an hour. And of 
course, we are recruiting the best and the brightest, and we 
don't mind paying more for the best and brightest because they 
are more productive and tend to be more passionate about their 
work and that sort of thing, so--
    Well, thank you again. You know, I don't think this one 
size government program fits all is the answer. I think we have 
got to look at it city by city, but again, we have got to keep 
the economy growing. Thank you very much, and I yield back.
    Chairman Scott. Thank you. The gentlelady from North 
Carolina, Dr. Adams.
    Ms. Adams. Thank you, Mr. Chairman, and to the Ranking 
Member as well. Let me thank all of the witnesses for your 
testimony today, and Mr. Wise, thank you for sharing your 
story.
    A couple of months ago we were scheduled to have a hearing 
on how terrible it would be to have a $15 minimum wage. I sort 
of agree with my colleague, Mr. Allen. I would go for the 30. 
It was fortunate--it was unfortunate, though, that hearing was 
canceled because we had hard-working folks from many of our 
service industries in Washington that day, all fighting for $15 
because they know that $15 is the bare minimum an individual 
must earn to raise a family today.
    And I was able to meet with many of them that day, and I 
met many of them throughout my legislative career, and these 
workers, as Mr. Wise has said, work two and three jobs to feed 
their families and still, it is not enough. Working hard is not 
enough if you don't make enough, and on 7.25, you can't 
survive.
    I remember in 2006 when I fought for the minimum wage to be 
raised from $5.15 to $6.15 in the North Carolina General 
Assembly. I fought 9 years to get that done, and it is pretty 
shameful today that 12 years later, the Federal minimum wage 
and the State minimum wage in North Carolina has only increased 
a mere $1.10.
    The question is not does it make sense to increase the 
minimum wage to $15. The question is who in their right mind 
would disagree? You know, Dr. Spriggs, I have a question for 
you. I am interested in why generally wage increases no longer 
seem to be tied to worker productivity, and if you can just 
briefly describe how the key labor market institutions are 
functioning today, I would appreciate that.
    Dr. Spriggs. Thank you very much, Congresswoman. We have 
tried this experiment over the last 40 years that you don't 
need a minimum wage, you don't need unions, you don't need any 
of the labor market safeguards and institutions we put in place 
at the time of the Great Depression where we learned that real 
wages can fall.
    The problem today is we are now 10 years into the--almost 
10 years into the recovery. It is been 9 years since the labor 
market started this string of consecutive job growth, and yet 
it is only now, only now that real wages are rising and really 
only because inflation was negative at the end of the quarter. 
So the lack of a floor affects workers because increasingly 
economists have come to understand that competitive firms don't 
really face a flat wage curve. The belief that employers can 
hire as many workers as they wish at a flat wage is not true. 
They face an upward sloping demand curve which means, and from 
an economist perspective, they act like a term that you might 
be familiar with, the monopsony which means that the market 
wage should be higher in order to be closer to what the 
clearing wage would be.
    And those firms are, in fact, hiring fewer workers than we 
would expect in a competitive environment. That is why when we 
do experiment after experiment and we analyze this, we simply 
don't see the negative wages. And workers who are unionized 
simply run into a stonewall because firms know that the respect 
is not there for bargaining for higher wages, and so we have 
not been able to see wages rise that much even in the 
bargaining sector.
    Ms. Adams. Can you speak briefly to the importance of 
indexing wage increases and elimination of subminimum wages in 
addressing weakened labor market institutions?
    Dr. Spriggs. In the past, when you look at the increases in 
the minimum wage, it was one of the charts that was put up 
before. You saw that even though Congress wasn't consciously 
doing it, it was raising the minimum wage in line with 
productivity and in line with the median wage and in line with 
the poverty level. When that consensus broke in 1969, you saw 
these things move in all sorts of different directions.
    And so the purpose of indexing is because it has become 
increasingly difficult now that everyone does not agree that 
work pays and all work is dignity. It has become such a 
political item that it is necessary to put in the indexing 
because before this was not partisan. Republicans overwhelming 
agreed with Democrats. The whole country agreed work has to 
have dignity, and work must pay. That is an American value.
    Ms. Adams. Absolutely. Dr. Zipperer, just quickly. If the 
wage had kept pace with how productive workers are on the 
whole, how much would it be today?
    Mr. Zipperer. If the wage had kept pace with labor 
productivity over the last 50 years? If the minimum wage had 
kept pace with labor productivity over the last 50 years, the 
minimum wage today would be closer to $20 an hour.
    Ms. Adams. Thank you, sir.
    I yield back, Mr. Chair.
    Chairman Scott. Thank you. The gentleman from Michigan, Mr. 
Walberg.
    Mr. Walberg. Thank you, Mr. Chairman, and thanks to the 
panel for being here.
    Recently my office received a letter from Daniel, a 
constituent in my Michigan district, who has worked in the 
restaurant industry as a bartender for over 20 years. He 
described how he has the potential to make well above the 
minimum wage with the tips and appreciates the freedom that the 
restaurant industry provides to move to different restaurants 
at significant increases and security that can best meet his 
personal needs.
    Dr. Holtz-Eakin, this Raise the Wage Act would eliminate 
tip credit, as I read it, requiring all employers such as these 
restaurants where Daniel works to pay cash wages equal to that 
of the full minimum wage. What effect do you believe this 
policy will have on the take-home wages of Americans like 
Daniel who work in the restaurant industry?
    Mr. Holtz-Eakin. So it is a good question. I think there 
are two possibilities that jump out. The first would be by 
forcing the equalized the minimum wage. You are raising the 
cost of labor for that establishment, and the worst-case 
scenario is that Daniel no longer gets to tend bar, and if he 
can't find another job, that his take home pay is undeniably 
diminished. He might have to take another job somewhere else 
and hopefully be Ok. But that is one channel.
    The second is that the tip--you know, if it becomes known 
that he is being paid, people stop tipping, and to the extent 
that happens, he may not come out ahead. He may come out 
behind, but those are the two channels that would be in play.
    Mr. Walberg. It takes away that flexibility and security to 
a great degree of being able to know that if I go to another 
restaurant that has a larger clientele or whatever else, it 
could impact me at the tip credit as well.
    Mr. Holtz-Eakin. It is in a small way a little labor market 
where, you know, there is a return to his skills, his service, 
his productivity, and the better he is, the more tips he will 
get, and this breaks that link as well.
    Mr. Walberg. In looking at what has happened to restaurants 
and other businesses in cities that have eliminated the tip 
credit, what has been the outcome?
    Mr. Holtz-Eakin. I will have to get back to you on the tip 
credit, per se. I don't have that at my fingertips. I will just 
note that I think the restaurant industry is the one that jumps 
out as a concern in the Raise the Wage Act. You know, in my 
testimony I showed some of the historical evidence from 2014 
and 2015 where we looked at what happened to restaurant 
employment in those municipalities that raised their minimum 
wages versus those that did not, and it is right in the data.
    The employment growth just slows down, and this is at a 
time when we are starting to see the economy finally ramp up. 
But I am afraid this act would repeat that in a much bigger way 
for the Nation as a whole.
    Mr. Walberg. Does any data show that the tip credit really 
allows workers to earn less than the minimum wage?
    Mr. Holtz-Eakin. The law says they can't earn less than the 
minimum wage. I am sympathetic to Dr. Spriggs' observation that 
compliance is an issue. I am not a compliance expert, but I 
would take those comments seriously and make sure that we have 
things that are--effective laws that can be monitored and 
enforced.
    Mr. Walberg. Ok. Thank you. I yield back.
    Chairman Scott. Thank you. The gentleman from New Jersey, 
Mr. Norcross.
    Mr. Norcross. Thank you, Chairman, Ranking Member, and I am 
here proud to cosponsor along with the chairman the Raise the 
Wage Act, but I want to start out by thanking the witnesses, 
but particularly those behind you who are the real faces of 
minimum wage, and certainly that is the reality.
    So let's talk about myth versus reality. 1950. Minimum wage 
was increased by 88 percent. Unemployment decreased. The stock 
market went up. Thirty years ago the CEO made 30 times the 
average worker. Today, the CEO makes 347 times. That is the 
reality of what is going on.
    Mr. Chairman, this is America. You work hard, you play by 
the rules, you are supposed to be able to make it. Right now, 
that is not the case. It has been 11 years since we voted, 10 
years since that raise went to the minimum wage. We do need to 
raise the wage, and I reach across the aisle because what 
happened last time, 348 votes in the house, that was 
Republicans and Democrats.
    Eighty votes in the Senate to raise the minimum wage. We 
can do this because you know it is the right thing to do. It is 
predictability. It is not $15 an hour tomorrow. This is over 
years that this comes in. I worked for minimum wage. I was a 
single dad trying to raise my kid. I know it was tough. Today, 
it is impossible, but I will tell you that if the minimum wage 
kept up with inflation and productivity, it would be $18 an 
hour. That is the path that we follow that if you work hard, 
you play by the rules, that the boss doesn't keep everything, 
and that is what we have seen happen. But the real surprise is 
not that you can't make it, but you don't even come close, do 
you, Mr. Wise? You don't even come close.
    But the remarkable thing, to my colleagues, raising the 
minimum wage to $12 would reduce government spending on 
entitlement programs by $17 billion. People want to work. They 
want to be able to provide their family. They want the dignity 
of going to work each day, but they need to be able to make it 
in this country. I am so proud to say my Governor signed in the 
$15 an hour wage predictability over the next 6 years. It is 
not happening overnight. Let's think about it. If it has been 
10 years and it is going to take us another 6 years, that is 16 
years to raise the wage to $15 an hour. It is not this 
overnight crisis that they are trying to build.
    My friends here in Washington, please. It is time to wake 
up. We took care of the CEOs for you who voted for that tax, 
1.3 trillion to that top 1 percent. It is time to help these 
people, the ones that vote in your districts, the ones who need 
it.
    Mr. Wise, why are you here today advocating on behalf of 
the minimum wage? Why is this important to you?
    Mr. Wise. Well, you know, it is like you said, and that is 
what my mom told me. She told me work hard, be a good citizen, 
and everything will be Ok. That is what Mom told me, and I 
thought that would be the case. I worked hard, doubly hard, two 
jobs to try to provide for my three girls. When I had to start 
skipping meals, you know, substituting sanitary products for my 
daughters, making them use tissue, just doing anything to 
survive and get by even though I was doing everything right, 
everything Mom said, but it was obviously something terribly 
wrong.
    And I know that my fight doesn't end today here in this 
building. I have got to continue to fight in my city and all 
across the country until every worker is earning a living wage, 
and not only that, until we can work to get legislation to 
create an easier environment for us to have a union and be able 
to have collective bargaining, a seat at the table. So this 
fight is something that I have been waiting on my whole life. 
This is a way we have got to change this country. There is no 
individual solution to social, economic, and political 
problems.
    So I have been able to come together with my coworkers from 
not only Kansas City but across the country to change the 
narrative in this country. Before we organized 6 years ago, no 
one talked about wage inequality. Nobody talked about unions. I 
wasn't taught this in school, but I have been able to learn 
through the movement that this is what it is going to take, me 
and my coworkers behind me continuing to stand together and 
tell our stories because it is real, and this is how we live 
every day.
    Mr. Norcross. Thank you, Mr. Wise.
    Please. Let's work together. Let's take care of all 
Americans. Let's give them a chance to have the dignity of the 
American dream, of being able to make it because you are doing 
the right thing. I yield back.
    Chairman Scott. Thank you. The gentleman from Texas, Mr. 
Wright.
    Mr. Wright. Thank you, Mr. Chairman, and thank all four of 
you gentlemen for being here today. Dr. Holtz-Eakin, you made a 
point earlier that is worth repeating, and that is that this is 
not about compassion, and, indeed, it is not. In fact, what is 
before us today is a very poor measure of compassion because we 
have to be concerned about the unintended consequences of this 
bill just like we should be with every bill that we discuss and 
vote on.
    Raising the minimum wage is great for people who get to 
keep their jobs, and of course, that is the concern is the 
effect it will have on jobs because we are not talking about 
merely raising the minimum wage. We are talking about doubling 
it. That is a shock to the system of any small business, any 
small business owner, and they have to make that calculation. 
They have to balance whether they can keep all the jobs they 
have or eliminate jobs in order to accommodate a sudden, what, 
100 percent spike in their wages they have to pay.
    So we have to be concerned what effect this is going to 
have, and we have already discussed--I had some questions about 
rural versus urban, and you have already discussed that because 
I have both in my district. What I am concerned about, though, 
and is the studies that show, what impact doubling the minimum 
wage would have in terms of business closings, not just 
employee reduction. Do you have any information on that?
    Mr. Holtz-Eakin. I don't have a specific estimate of that. 
I think again, one of the concerns is that this is an 
experiment that has never been run. We have never doubled the 
Federal minimum wage. We are trying to learn from other things 
that were far more modest. They happened in a locality or a 
State, smaller at the national level, so but there is no 
question that one of things you would expect to happen is for 
those firms with thin profit margins, that they in the end may 
just not be able to make it, you know, and they will close 
their doors. And I don't--I have little question about the 
direction. I don't know the magnitude.
    I think the other thing to think about with that this is 
different and important is that yes, it is over a number of 
years, and it is laid out in the act. That means that right 
now, those firms know, they can look forward with complete 
certainty that these low-skill, low-experience workers are 
really expensive, and they will stay expensive forever because 
it will be indexed at the end, and they will find ways to stop 
having counter service and automate things in ways that we have 
seen in other parts of the economy. It will just accelerate 
that. And so the jobs won't just be lost for a moment. They 
will be gone.
    Mr. Wright. Right. Well, I want to repeat what has been 
said before, and that is that all of us up here share the same 
goal in terms of wanting to increase the livelihood of 
Americans, expand economic opportunity and progress for 
Americans, but I don't believe doubling the minimum wage is the 
right way to go.
    Thank you, Mr. Chairman, and thank you, Dr. Holtz-Eakin.
    Chairman Scott. Thank you. Thank you. Did you want to 
respond to that? Ok. Thank you.
    The gentlelady from Pennsylvania, Ms. Wild.
    Ms. Wild. Thank you, Mr. Chairman. Thank you all for being 
here, and thank you to all of you who are here as witnesses to 
this.
    It is such an important issue, and it is one that I, as a 
freshman legislator, campaigned on, to raise the minimum wage, 
and I feel very deeply that we should. I am from Pennsylvania, 
one of the 22 States that still has a minimum wage of $7.25 an 
hour. So as I understand it, Mr. Wise, you are a little bit 
ahead of us in Missouri. I guess you just raised it up to $8.60 
an hour, is that correct, from $7.85 an hour last year? So 
Missouri was still ahead of Pennsylvania with our $7.25 an hour 
minimum wage.
    Mr. Wise. That is correct.
    Ms. Wild. Well, Mr. Wise, let me just say this, and I am 
going to talk kind of quickly because I have a lot of things I 
want to say or to ask and only a limited amount of time. I 
really appreciate your courage and your willingness to be here 
today and to talk so candidly about your own experience and 
your family's experience. It is not an easy thing to do, and I 
recognize that. I also admire your fortitude and your 
commitment to your family. And I admire that you are engaging 
your daughters in activism and helping them to understand what 
it means to fight for social justice, so thank you for all of 
that.
    We just talked a minute ago about the minimum wage in 
Missouri which I understand is $8.60 an hour now, and if I may, 
how much are you now earning at McDonald's?
    Mr. Wise. Well, after 20 years in the industry, I do make 
$11 an hour at McDonald's.
    Ms. Wild. Ok. Twenty years in the industry. And you know, 
my colleague, Mr. Allen, made a reference to your passion for 
the fast food industry. Would I be correct in assuming that it 
is not so much a passion for the fast food industry as it is 
the only job that you could get when you had to drop out of 
school to help support your family?
    Mr. Wise. Well, that was the opportunity I had at the 
chance, you know. All labor has dignity. My mom worked for the 
company Hardee's for 30 years. She enjoyed her work. I enjoy my 
work.
    Ms. Wild. Good. I am glad to hear that. Now, there was also 
a reference made to tractor-trailer operators making $80,000 a 
year and so forth. Have you ever explored other opportunities 
such as driving a truck?
    Mr. Wise. Well, you know, when I worked--and many Americans 
work doubly hard. For example, I worked Monday 4 p.m. to 11 
p.m. and had to be right back up Tuesday morning at 4 a.m. to 
return to work, so there is no flexibility in scheduling. I 
work very hard, and there is really not time, you know, to go 
back to school, to search that extra education. And the last I 
checked, it is really not free in this country.
    Ms. Wild. Well, and that is where I was going with that 
line of questioning, and it is as much a Statement as it is a 
question. For you to pursue something like a tractor-trailer 
position, aside from the fact that it would take you away from 
your family, it would require additional training and time that 
you don't have, correct?
    I ask these questions not in any way intended to embarrass 
you. Do you and your family rely on any form of public 
assistance?
    Mr. Wise. Well, currently, Medicaid. My daughters have and 
my fiancee did while she was pregnant with my last child, but 
she doesn't any more. And we were receiving stamps up until a 
few years ago, but they said that we were making too much, and 
those got cut. But we still do rely on Medicaid, food pantries, 
any way to get by.
    Ms. Wild. And how many hours a week are you working?
    Mr. Wise. Me, right now, I work just at McDonald's but I 
work over 50 hours a week, you know.
    Ms. Wild. And what about your fiancee? How many hours a 
week does she work?
    Mr. Wise. Well, she is a home healthcare, and she works 
four 12s, so 48 a week.
    Ms. Wild. Ok. And you told us when was the last time you 
got a raise?
    Mr. Wise. Oh. Oh. Well, it has been a while.
    Ms. Wild. Ok. You have told us you have been in the 
business for 20 years. When is the last time you--ballpark it. 
When is the last time you got a raise?
    Mr. Wise. About 3 years ago.
    Ms. Wild. And you are at $11 an hour now. Ok. So I am going 
to turn the my attention to Dr. Holtz-Eakin in my last 30 
seconds here. Dr. Holtz-Eakin, what would you propose to Mr. 
Wise as to what he should do to lift his family out of 
generational poverty?
    Mr. Holtz-Eakin. I don't have specific career advice for an 
individual. The decision in front of the committee is whether 
to do the Raise the Wage Act, and I would simply argue that it 
is more likely to damage his prospects and people like him than 
to help on average, and that seems unwise. This is a compelling 
story. It can be played out in even greater numbers if the 
wrong policies are put in place. That seems unwise to me.
    There are other things that we have done, earned income tax 
credit that I mentioned, that have both promoted work and 
targeted effectively on those in poverty who are working, 
clearly the case with Mr. Wise, and thus allowed people to 
work, allowed them to be above the poverty line that were very 
successful. Those would be the subject of attention, I would 
think, not this.
    Ms. Wild. But you would agree that Mr. Wise's story is just 
one of hundreds of thousands across the country of people who 
are working more than full-time hours and are living in 
poverty?
    Mr. Holtz-Eakin. Mr. Wise's story is one of millions of 
labor market stories, and I guess it comes as a perception that 
somehow I don't care about those stories when you look at the 
data. The data give voice to all those stories simultaneously. 
They tell us on average how things will work out. They will be 
worse, not better. I don't want that.
    Ms. Wild. I am sure Mr. Wise will advise his children about 
that data.
    I yield back.
    Chairman Scott. The chair recognizes the gentleman from 
North Carolina, Mr. Walker.
    Mr. Walker. Thank you, Mr. Chairman.
    Mr. Wise, I first want to say how much I respect the 
willingness to be vulnerable like this in a National forum. I 
also admire the fact of how intricately involved you are in 
your daughter's life. The line that jumped out at me, I believe 
that you said earlier, was all work has dignity, and I 
certainly agree with that, and thank you for your courage and 
being here today.
    Mr. Holtz-Eakin, I have a couple questions for you if I 
could get to that. I believe our colleagues have proposed--I 
think the number comes down to about a 107 percent increase in 
the minimum wage. What percentage was the minimum wage 
increased by the last time in 2007? Would you have those 
numbers?
    Mr. Holtz-Eakin. I don't have them in front of me, but it 
is much, much lower. I mean, it was about a $2 increase.
    Mr. Walker. Ok. So percentage wise, it is about 40, 45 
percent, somewhere in that range. Would you say there were some 
disruptions in the labor market immediately following the 
minimum wage increase, and could you take just a few seconds or 
a minute to describe those for us?
    Mr. Holtz-Eakin. So that minimum wage increase was 
implemented during the depths of the Great Recession and the 
early parts of the recovery. If you look in the data, teen 
unemployment is markedly higher there. I think there is little 
reason to doubt that is, in part, attributed to the minimum 
wage increase, a weak economy, very, very few skills in that 
population. They didn't get hired.
    Mr. Walker. Back in my home area of Greensboro, I think of 
my friend who has a yogurt shop there in Northern Greensboro. 
It is not his primary source of income because they just kind 
of break even, but he has about six to eight individuals who 
make around $8 to $10 an hour. It is basically an after-school 
for some younger people to be able to have some time. I think 
he even has some of his family members just to cover some 
shifts there. I know this , and I have talked with him about 
this, if they were to go to $15 an hour, he would be defunct. 
The place would no longer be in business. If we were to move 
forward on such standards that are suggested, do you think that 
there would be a drastic change to specifically the labor 
market if this was to be adopted?
    Mr. Holtz-Eakin. This is, I think, a recipe for very few 
opportunities for the younger, less skilled, less experienced 
workers, and that first step on the job market ladder of 
success is an incredibly important one, and I think that is 
something to be deeply concerned about. As I mentioned in my 
opening, I think it has been underappreciated what went on in 
2018. The fact that the economy, having already reached low 
levels of unemployment, could pull so many people into the 
labor market and into employment, over 200,000 jobs a month, 
means that we were taking people who had given up, who had no 
attachment to work, and now they have one. Anything that does 
that has great long-running success. This might do the reverse.
    Mr. Walker. Well let's speak, then, on the younger people. 
I remember my first job there in my small town in Milton, 
Florida. I worked at the Piggly Wiggly grocery store for $3.35 
an hour. I did get wise to who might tip me $0.50 for carrying 
their bags out back when you could do that. To add or pad that 
a little bit.
    What kind of benefit is it to some of our younger people to 
be able to develop these entry-level skilled positions or even 
those skilled positions? Can you speak to the generalization of 
that? I know that is not a hard data point, but do you have any 
evidence supporting that?
    Mr. Holtz-Eakin. We know that work is good for people. 
People want to work. They feel better when they work. There is 
an enormous amount of on-the-job skills that are learned, 
especially early, and those skills are general skills that 
transfer from job to job. So getting people in, acquiring those 
skills is a very important part of the labor market dynamics.
    Mr. Walker. And one potential effect of more than doubling 
the Federal minimum wage is that small businesses will simply 
close the doors as I have mentioned. This is extremely 
concerning to me as we have over 890 small businesses in North 
Carolina alone employing about 1.6 million workers.
    Any evidence showing that increasing the minimum wage to 
$15 could possibly lead to some of these businesses closing 
like the one that I mentioned. Do you have other evidence to 
support that?
    Mr. Holtz-Eakin. I would be happy to get it back to you 
with as to estimates. That is an important dynamic. I think it 
is especially important right now. One of the characteristics 
of the U.S. economy is that we have seen fewer business 
startups than historically. Indeed, a couple years back, 
business startups fell for the first time below business 
closings. That lack of dynamism I think is troubling. We don't 
want to get in the way of that.
    Mr. Walker. And I think we all should be sensitive to some 
of the families and with Mr. Wise's situation, people that 
there is a gap that cut through here, and our heart goes to out 
to them. The financial crisis, as a former pastor I can tell 
you I have witnessed it firsthand. But I worry about this one-
size-fits-all where even some of these proposed minimum wages 
are even standard of living in places like New York and Boston 
and other places.
    And with that, I will yield back to you and I will close 
out. Yield back to the chairman.
    Mr. Holtz-Eakin. I guess the one thing I would note for 
this committee, especially this Committee on Education and 
Labor, the troubling data point in my mind is the fact that if 
we look at our National Assessment of Education Progress, the 
NAPE scores, we have got somewhere between a quarter and a 
third of fourth and eighth graders who aren't reading at grade. 
They are seriously deficient, and they can't do math at grade. 
They are seriously deficient. If you want to have a recipe for 
a big problem going future, let that continue. That is a 
problem.
    Chairman Scott. The gentleman from Michigan, Mr. Levin.
    Mr. Levin. Thank you, Mr. Chairman.
    Dr. Holtz-Eakin, I am glad to hear you are in favor of a 
massive investment in public education. That would be great to 
raise those scores.
    Mr. Chairman, if it is all right, I would like to submit 
for the record a letter from the AFL-CIO legislative director, 
Bill Samuel, about our hearing topic today.
    Thank you.
    Chairman Scott. Without objection.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T5268.089
    
    Mr. Levin. Thank you.
    So I appreciate all four of you coming. I have learned a 
lot listening to you.
    Dr. Holtz-Eakin, I wanted to ask you, you have been a 
professor and worked in government so many distinguished 
contributions, have you ever written in favor of raising the 
minimum wage at any level, written a paper, published a paper?
    Mr. Holtz-Eakin. No.
    Mr. Levin. You have never supported raising the minimum 
wage?
    Mr. Holtz-Eakin. I have never written a paper on that, no.
    Mr. Levin. Ok. What do you think the ideal minimum wage is, 
or should there be one at all? Perhaps--it is a perfectly 
legitimate position--just leave it to market forces, would that 
be your position?
    Mr. Holtz-Eakin. I would prefer to have subnational minimum 
wages which are tailored to the labor market conditions where 
people are actually working. So I have lots of reservations 
about any number for the Federal minimum wage. It doesn't match 
any labor market.
    Mr. Levin. Even $5 an hour, say, $2 an hour?
    Mr. Holtz-Eakin. We are already at 7, so 5 would be fine.
    Mr. Levin. Were you opposed to going to 7?
    Mr. Holtz-Eakin. I didn't have an opinion on that debate, 
to be honest.
    Mr. Levin. You didn't?
    Mr. Holtz-Eakin. I was not at this table and was not asked.
    Mr. Levin. I know you weren't at this table, but you are an 
important thinker on these. I am being, in all seriousness, I 
am just trying to understand.
    Mr. Holtz-Eakin. I know. I am being serious too. I am not a 
fan of minimum wage increases for the reasons I explained at 
the outset.
    Mr. Levin. Thank you. That is what I thought.
    Mr. Holtz-Eakin. And--no, it is this and this very 
particular thing: If you do it, the best possible outcome is no 
harm. The only debate we have is over how much harm. And the 
nature of that harm is to take money from people who don't have 
a job and give it to people who do have a job. I don't think 
that is right.
    Mr. Levin. I don't think the data support that, but I 
appreciate your point of view. In fact, in 1949, according to 
Dr. Spriggs' figures, we raised the minimum wage by 88 percent 
and 91.4 percent of Republicans voted in favor of that. So we 
have raised the minimum wage significantly before.
    In this case, we are talking about raising it over a 5-year 
period. So the notion that my friends, some of my friends on 
the other side of the aisle talking about a shock, this 
immediate thing of doubling the minimum wage, that is factually 
completely inaccurate. That is not what we are proposing.
    We are proposing raising it to get it back toward what it 
was, not toward what it was as a percentage of productivity, 
but at least toward what it was in dollar figures, close to 
what it was in earlier times.
    Mr. Wise, I really was interested in something you said a 
couple of times about you are not just here advocating for a 
living wage for your family, but also for the freedom to form a 
union. Could you explain that a little further?
    Mr. Wise. Well, yes. It is kind of like, you know, you get 
more done together than you can alone, and that was evidenced 
in my life. Like I said, I have asked the boss for a raise in 
the nicest ways for years, tell him I need benefits for years, 
and it just falls on deaf ears.
    And not only that, but when you look back at American 
history, when we join a movement we learn about history. We 
know that for women to get voting rights, they had to come 
together collectively. Any labor laws that we want or any 
advances in the labor movement, we had to do it together. To 
end slavery, it took a movement, civil rights movement, to 
improve the lives of people in this country.
    And that is what it is all about. And that is what I like 
to instill in my daughters as well, that we get more done 
together than we can alone, and we can go so much farther as 
long as we stand together. And a union, you know, going to work 
every day now is like going into a dictatorship, you know. I 
have no voice, no opinion.
    I can remember the first job at Taco Bell, we at least had 
a comment box. Now those have all but been eliminated from the 
workplace. So to be able to come together and have a seat at 
the table with my employer where we can negotiate healthcare 
and wages. That is the benefits of a union.
    Mr. Levin. Thank you so much for coming today and for 
speaking the truth for your leadership on this national stage. 
The truth of the matter is that we need to raise our wages for 
everybody to a basic level of dignity, but unless workers have 
the power and the freedom to form unions in this country, which 
they don't today, we are at 6 percent of the private sector 
being unionized, we will never raise the standard of living for 
the middle class in this country.
    And I just want to point out that people have this idea of 
a lot of workers in my area, auto workers, it is like, you 
know, they represent the sort of middle class of working class 
people getting a piece of the middle class. A hundred years 
ago, when auto workers were in the same fight you are now, my 
friend, they were poor workers in incredibly unsafe jobs, and 
it was only by coming together to form a union that they got 
their little piece of the middle class. So keep on speaking the 
truth, and thank you so much for your testimony.
    I yield back, Mr. Chairman.
    Chairman Scott. Thank you.
    The gentleman from Tennessee, Dr. Roe.
    Mr. Roe. Thank you, Mr. Chairman. And thank all the 
witnesses for being here, and I appreciate that.
    In our State of Tennessee, we recognize that we think the 
way out of poverty are skills. In our State, we provide free 
community college and free technical school. Anybody there. And 
if you have lost your job and you want to get educated, we have 
a Tennessee Reconnect, where you can go to community college or 
you can go to a technical school. We have 27 of them in the 
State for free.
    So that is one of the ways we are attacking this low wage. 
And what I have seen in my district is I think it is going 
away, the minimum wage issue and debate. Right now we have a 
lot more job openings than we do people filling those jobs even 
where we are. And there is a help wanted sign literally 
everywhere.
    And I just looked the other day for H2 workers around the 
country, H2A workers. The highest is $15.03. That is in 
Washington State. The national average is almost $13 an hour. 
And in my district, it is $11.74 an hour. That is now. Five 
years from now, it is going to be $15 an hour. There are fast 
food restaurants in my area that are paying $15 an hour today.
    I can get you a manufacturing job in my hometown today if 
you are willing to work and you can pass a drug test for $19 an 
hour. And the skills gap that Dr. Holtz-Eakin is talking about 
is where one of the biggest problems are, low-skill workers who 
don't have those skills.
    I looked up a couple things. I think the minimum wage $15 
an hour may be very appropriate. It could be even more if you 
lived in San Francisco. And I just did a few calculations while 
we are having this. The median price of a home in San Francisco 
is $1.4 million.
    Let me run down where I live. I live in the wealthiest 
county in my district, and the median price of a home is 
$148,000. Seattle, $725. I have got a town I represent where 
$90,000 is a median price of a home. Fifteen dollars an hour 
there is totally different than $15 an hour in New York City or 
San Francisco or in Bend, Oregon, where it is $433,000 for a 
home, or Portland where it is $449,000 for a home.
    So I just looked those numbers up just a moment ago. In 
Kansas City, it is $147,000, a little cheaper place to live 
than Washington or these other places.
    And if my colleagues on the other side of the aisle are 
willing to do this, I am more than willing to look at a minimum 
wage if you will look at the Medicare Wage Index, where the 
Federal Government says it is Ok to pay me and my hospital 
where I live 73 cents on the dollar and pay people in 
California $1.50 to do exactly the same thing.
    The government is already making a difference in what they 
pay, depending on where you live. So it makes sense to let 
local communities decide those things, based on the economic 
conditions in that community.
    I would like to yield to Dr. Holtz-Eakin, if he could 
comment on that.
    Mr. Holtz-Eakin. I would comment on two things: First, I 
commend you for your discussion about the community colleges. 
There is an enormous amount of evidence that is a relatively 
low-cost, very valuable way to go in getting workers new skills 
or skills to begin with. And I think that is something to think 
about more broadly for the U.S.
    And then I have said this many times today, I won't belabor 
it, there are hundreds of local labor markets that are very, 
very different, and to just jack up a national average to $15 
is going to dramatically impact some of them, because it is 
inappropriate.
    Mr. Roe. And I agree with that. And I think where we are, a 
wage, a minimum wage, there is no question, to hire qualified 
people, you have to pay more than $7.25 unless it is a high 
school student that is just entering the labor force.
    And I think the other thing that I took a little bit of 
offense at today is I have been an employer my entire life, and 
I didn't keep everything. I provided health benefits and 
retirement benefits because why? The most valuable person in my 
business were my employees. They were the most valuable person 
I had. I value them. Right here in this U.S. Congress where I 
hire people, the most valuable people are my employees who work 
with me every day.
    So I certainly know if you have got a good employee, that 
is the most valuable person in there and you are going to pay 
them what you can afford to pay them to keep them in your 
business. And with a growing labor market, they have more 
options, and that is a good thing when a person can go from one 
job to another and transport and make more money, and that is 
what we are seeing right now and it is about time for middle 
class working people--and I grew up in that kind of family, my 
dad was a factory worker and my mother was a bank teller--to 
see wages going up for middle class people.
    I yield back.
    The Chairman. Thank you. The gentlelady from Washington, 
Ms. Jayapal.
    Ms. Jayapal. Thank you, Mr. Chairman. And thank you all for 
being here.
    I am from Seattle. I proudly represent the district that 
passed the highest minimum wage in the country. I was on the 
committee that wrote the legislation. I have heard testimony 
for years similar to some of the testimony we have heard here. 
And I want to start by saying none of that would be possible 
without the work of people like Mr. Wise and all of the people 
that are in the room that have been on the streets, that have 
been in your employer's workplaces demanding a $15 minimum 
wage. That is where the energy has come from.
    I also want to say, Dr. Spriggs, that we are proud in 
Washington State to have one of the highest minimum wages in 
the country indexed to inflation, going all the way back to 
1998. And from 2001 onwards, we have indexed our minimum wage. 
And that was part of--that was really the product of a strong 
labor movement.
    So you articulated so beautifully why it is important to 
have collective bargaining, to have organizing, in order to 
really work with employers to make sure that workers who are 
driving profits--because let's be clear about where profits 
come from, they come from workers who drive those profits--are 
rewarded for that.
    So, Mr. Wise, I just wanted to give you a little bit more 
of a chance to talk also about your colleagues. You have spoken 
so beautifully about your own situation. Tell me if that 
experience reflects what your colleagues are also feeling at 
McDonald's?
    Mr. Wise. It has. And I can tell you even before this 
moment and before the movement, you know, I would work every 
day with my colleagues and we would share the same stories of 
how we struggle to pay bills, come to work depressed because 
the gas is up, you know, skipping meals, the same thing. 
Whether it was Suzy, my Hispanic coworker, Ellen, my white 
coworker, me myself, we all were going through the same trials 
and dilemmas. And we all did what? Woke up every day and went 
to work. It is not like we weren't working hard.
    And another thing I looked around, the myth of this being 
jobs for teenagers. These are McDonald's workers with me here 
today. We are hardworking adults raising families, you know 
what I am saying? So it was no way, no individual way to fix 
the problem by ourself. We would just soak in it and go to work 
and take it. But we figured out quickly that when you can 
organize, come together and amplify your voice, you know, act 
like a union even before we win our union, we were able to get 
things done. We were able to change the narrative in this 
country.
    Like I said, 6 years ago we started hearing about 15. That 
number 15, Amazon and everyone else you hear, it just didn't 
come out of thin air. These employers didn't wake up oneS day, 
you know what, let's go 15. That is because of what workers in 
this room and myself have been doing to change the narrative 
around the country.
    Ms. Jayapal. Thank you so much, Mr. Wise. And I would just 
say that the argument around youth employment has been proven 
false over and over again. When we have the debate in 
Washington State, the reality is the majority of minimum wage 
workers today are not teenagers, and I think it is exactly what 
you said.
    I wanted to just say to Dr. Holtz-Eakin that you quoted a 
study on Seattle and the effects of the minimum wage increase. 
Are you aware, Dr. Wise that study--I assume you are quoting 
the study from 2017. Are you aware that the exact same 
researchers put out a study a year later that countered 
everything that they said, almost every everything that they 
said in the 2017 study? And just a yes or no or is fine, 
because I want to go to Dr. Zipperer.
    Mr. Holtz-Eakin. I would disagree they countered 
everything. I know there is another study.
    Ms. Jayapal. Ok. So there was another study done by the 
same researchers that had substantially different results than 
that first study. So, Dr. Zipperer, can you speak to what the 
research shows around the effects of the Seattle increase in 
the minimum wage?
    Mr. Zipperer. I think there is a study that you are 
referring to or a set of studies by the researchers at the 
University of Washington. And, like I mentioned earlier, I find 
both sets of those studies to be completely uninformative about 
the consequences of the Seattle minimum wage. Those studies 
find that there are large negative consequences to employment 
of certain groups of workers and--
    Ms. Jayapal. You are talking about the 2017 study?
    Mr. Zipperer. About the 2017 study.
    Ms. Jayapal. But can you speak about the most recent 
research that actually counters that and shows that our minimum 
wage in Seattle has actually increased wages for people that 
were earning the minimum wage?
    Mr. Zipperer. The second study that you referred to put out 
by those researchers found that workers who had jobs prior to 
the minimum wage increase benefited tremendously from the 
minimum wage increase, and that they saw higher earnings 
overall and did not see increased chances of disemployment.
    Ms. Jayapal. Thank you. Let me just mention that we talked 
about the tip penalty. That is what I call it, the tip penalty, 
because part of what happens is that workers who are under a 
tip, as Dr. Spriggs said, are subject to all kinds of issues; 
but in addition to that, it is front-of-the-house workers 
versus back-of-the-house workers when you talk about tips.
    And so I think we are going to talk about this on the next 
panel, and I have many more questions and things to say, but I 
see that my time has expired, Mr. Chairman, so I will yield 
back.
    Chairman Scott. Thank you.
    Mr. Meuser from Pennsylvania.
    Mr. Meuser. Thank you, Mr. Chairman. Thank you, Dr. Foxx. 
Thank you all for testifying. We appreciate it.
    The former Governor of Indiana, Mitch Daniels, had a 
saying, and it was: My job is to grow the disposable income of 
Hoosiers. Governor Daniels had that quote put up actually on 
the door of each of his Cabinet Secretaries' offices. When I 
served as Revenue Secretary for the Commonwealth of 
Pennsylvania, I truly shared this vision, and spoke to my 
department and other Cabinet members about the importance of 
that role.
    Government does have a responsibility to help competitive 
businesses and their families flourish by creating an 
environment for opportunities for all Americans to achieve 
economic prosperity and help improve family sustaining wages. 
However, history shows and data that I review proves that when 
government takes an overreaching posture, there are, 
unfortunately, unintended consequences.
    So I will start with Mr. Eakin. A $15 minimum wage would 
have the largest impact on small businesses and on young people 
entering the job market, 2.6 percent of employees at small 
businesses earn the minimum wage. Large businesses, it is a 
little bit less, 1.5 percent.
    I represent a rural, hardworking district in Pennsylvania 
with thousands of small family businesses. I fear that these 
small businesses in my district would be negatively affected in 
the event that a $15 minimum wage was implemented.
    As someone who helped myself grow a small business into a 
large business that has, well, a minimum wage much higher than 
the minimum, I think as most companies do, an implementation of 
a $15 minimum wage would put tremendous pressure on small 
business owners. I would think that the business would first 
attempt to raise prices, which is very difficult to do in 
competitive markets, global markets.
    Next, the company would be forced to cut staff, letting go 
of workers who had done nothing wrong. And when that still 
wouldn't be enough, business owners would be forced to take 
away raises historically given to employees who had worked with 
the business for a longer period of time. And then after that, 
just be concerned with survival.
    Can you outline, Mr. Eakin, how historically small 
businesses have dealt with government-mandated minimum wage 
increases?
    Mr. Holtz-Eakin. You have walked through the logic. It is 
the same logic I discussed earlier. There aren't many places to 
go. You raise prices, lay people off, don't hire new people, 
don't give raises, squeeze your payrolls wherever you can 
because you must. And small businesses have the least 
capability to survive that, and so, you know, you worry about 
the impact on them.
    That is part of the cost of this policy. The emphasis has 
been on the benefits, but what I wanted to emphasize was if you 
have a job and you get this raise, that is the good news. The 
bad news is only under 7% of those benefits go to people in 
poverty.
    And so the notion that this is an effective way to provide 
the benefit of poverty alleviation is vastly overstated. It is 
a poor instrument for that, and it has significant costs to 
sectors of the economy like the small business and sectors of 
the labor force who are young and unskilled or least educated. 
And that is the unintended consequence that I think has to be 
focused on.
    Mr. Meuser. Regarding the Seattle study, and it is 
certainly quoted often, but not only were there job losses but 
even the workers who kept their jobs had their hours cut, 
reduced, which more than offset any pay increase.
    As a result, my information says the earnings went down 
$125 per month for those workers who kept their jobs. Are these 
the kind of tradeoffs Congress should keep in mind when 
considering an increase in the minimum wage?
    Mr. Holtz-Eakin. Yes, absolutely. I do want to say I admire 
Seattle because they decided to check on the success of their 
policy. I think they are to be lauded for that. And these are 
very carefully done series of studies. There are other studies 
which can test results. I mean, that is the way you learn. I 
applaud that entire effort.
    But there is a big difference between Seattle deciding to 
do that, praying that I am wrong, those impacts happen to 
Seattle and that is their decision. It is very different to do 
it at the national level, and that is what is being proposed.
    Mr. Meuser. And as well on a national level, the economies 
of scale clearly are different from one area to the cost of 
living in a city. So that in itself answers doing such a 
mandate nationally.
    Mr. Holtz-Eakin. I agree.
    Mr. Meuser. Thank you.
    I yield back my time, Mr. Chairman.
    Chairman Scott. Thank you.
    The gentlelady from Minnesota, Ms. Omar.
    Ms. Omar. Thank you, Chair, and thank you, Ranking Member, 
for this important conversation. Thank you to our expert 
panelists for having this really important conversation.
    As a union member, I fought to make sure that for dignified 
work there was dignified pay. And so I wanted to have a little 
conversation with you all about what that looks like here and 
the moral imperative that we have to make sure that happens.
    So, Mr. Wise, thank you so much for your brave testimony 
and thank you for sharing your story. I wanted to get on the 
record if you knew what the yearly pay for the CEO of 
McDonald's was?
    Mr. Wise. Yes. He makes over $30 million a year, the CEO.
    Ms. Omar. So the CEO of McDonald's gets paid $21.8 million. 
Can you share with us what someone in your position at 
McDonald's gets paid annually?
    Mr. Wise. Not that much. Not even a fraction of that. But I 
make $11 an hour at my job currently.
    Ms. Omar. So the median pay for a McDonald's worker was 
$7,000 in 2017. And that is the pay gap between the CEO that is 
making 21.8 to the 7,000 that a worker who has put in 40 hours 
a day gets paid. And to me, that just morally does not sit 
well.
    Dr. Spriggs, I wanted to see if we can talk a little bit 
about the type of work. I know my colleague earlier from New 
York said something about different types of work and why it 
wasn't valuable for everyone to be paid a minimum wage of $15.
    Can you walk us through the different kinds of jobs and if 
there have been places like Minnesota or Minneapolis, 
Minnesota, that has increased the minimum wage or places like 
Seattle, if there have been types of work that have shifted out 
of that city or that State because of the increase of that 
minimum wage.
    Dr. Spriggs. Thank you, Congresswoman. I mean, one of the 
interesting things about Seattle is that their wage 
distribution totally shifted up. And one of the surprises for 
the researchers was they anticipated that the way that the wage 
would move that nothing would appear above $20 an hour, and 
certainly those types of jobs mushroomed. And I think that is 
the point. When we raise wages from the bottom, we really 
change the way in which the labor market functions to really 
allocate workers more fairly.
    A large share of the minimum people who would be affected 
by this wage have associate's degrees. It is very hard to 
understand the pressures that keep those wages down. So this is 
an important change in the labor market.
    A lot of people have been saying that, well, you know, the 
cost of living is different. They are looking as if you make 
$174,000 a year and have health insurance. Yes, it is a 
different cost of living and maybe you might want to address 
someone like that. But if you are a low-wage worker in Alabama, 
you don't have Medicaid. If you are a low-wage worker in rural 
parts of Alabama, you have to have a means of transportation to 
get to a job. If you are in a city like Washington, DC, you 
have Medicaid and you have public transportation.
    So you can't really look at the differences in the cost of 
living in the way that people want to propose it here, because 
of the barriers that face workers in these low-wage 
communities. Their communities appear to be, quote/unquote, 
``low cost,'' but they are very high cost. They get low wages. 
And this was in the debate originally in 1937, where people 
from low-wage areas wanted to argue about low cost. They just 
haven't lived the life of a low-wage person.
    Ms. Omar. Yes. And, Doctor, thank you so much for 
mentioning that, because I want to draw attention to testimony 
that we have here in written. I don't think the owners of La 
Quercia are here from Norwalk, Iowa. They are in a city that 
has 8,000 people and they have decided to pay minimum wage and 
they are still able to operate.
    So when we are talking about paying people a minimum wage, 
we are talking about making sure that there is value in the 
work that they are doing, and that uplifts workers. It makes 
sure that they continue to do the hard work. It uplifts that 
community. It uplifts that city. It uplifts that State because, 
in return, you also get people who are paying more taxes and it 
creates an economy that is thriving. So it is not only morally 
just for us to raise the minimum wage; it is economically 
feasible and necessary.
    Thank you so much. I yield back my time.
    Chairman Scott. Thank you.
    The gentleman from Wisconsin, Mr. Grothman.
    Mr. Grothman. Thank you. Mr. Holtz or Dr. Holtz-Eakin, I am 
going to give you some questions. As I understand it, this 
bill, if you were going to increase the minimum wage from about 
7 and a half to $15 an hour the amount you are paying somebody 
for 1 week of full-time wages--and it is beyond just wages, 
right, because you have social security, employer's social 
security taxes and workers' comp. I get your increase, your 
cost goes up from about 325 to 650 bucks a week per employee. 
Is that true?
    Mr. Holtz-Eakin. That sounds right.
    Mr. Grothman. Ok. Over time--we have kind of covered this 
area before, but if your cost of anything in life goes up from 
325 to 650 bucks per week, do you try to make adjustments if 
you are writing that much bigger of a check?
    Mr. Holtz-Eakin. Certainly. You will try to use less of 
whatever is more expensive.
    Mr. Grothman. Anywhere in life?
    Mr. Holtz-Eakin. Yes.
    Mr. Grothman. Ok. I am looking at something that was found, 
a Brookings Institution study, Pathways to Higher Quality Jobs 
for Young Adults. It points out even later in life people have 
a tendency to make more money if they were working when they 
were 16 or 18 years old. Is that true?
    Mr. Holtz-Eakin. Yes.
    Mr. Grothman. Is it important, therefore, in life that we 
have young people get jobs?
    Mr. Holtz-Eakin. I believe so, yes.
    Mr. Grothman. Ok. And as you mentioned, if we increase the 
cost of hiring somebody or if we double the cost, somehow you 
are going to scramble to write less of those checks, whether 
you put in--I am told from McDonald's, my local McDonald's 
owners they can put in a lot of equipment that causes you to 
hire less people. Maybe you could cut hours, Ok. Maybe some 
marginal restaurants will close. Who is most likely to get laid 
off when those things happen?
    Mr. Holtz-Eakin. The people with the least skills, the 
least education, the least experience, the least ability to 
contribute to the enterprise.
    Mr. Grothman. I will even ask Dr. Zipperer, is there any 
doubt that if you double the check you are writing that you are 
going to somehow try to scramble to write all those checks? Do 
you believe that?
    Mr. Zipperer. I think that we have heard these kinds of 
scare stories about almost every--
    Mr. Grothman. If you owned a restaurant--I will put it this 
way: If you owned a restaurant, because we are talking about a 
restaurant worker here, and you were told--and I think right 
now the vast majority of people in our society, at least 
restaurants in my area, judging from the signs out front, are 
paying more than minimum wage.
    But let's say you had to jump how much you were paying 
somebody from $325 to $650 a week, you know, don't you think 
you would try to hire less people or it would affect the way 
you run the business? Just like anywhere else in life, if the 
cost of something doubles, you maybe want to use less of it, 
not use it at all. Do you think that is true?
    Mr. Zipperer. I think what the research shows on 
restaurants and their responses to minimum wage increases is 
that restaurants don't employ fewer workers after a minimum 
wage increase, but they do change how they operate. In 
particular, the two channels by which they adjust to a minimum 
wage increase are, one, it makes it easier for them to hire 
workers and so worker turnover falls. That is actually a large 
cost saving for low-wage businesses like restaurants and helps 
them absorb the minimum wage increase.
    Mr. Grothman. I will give you one more question, because 
they only give us 5 minutes.
    I will ask Mr. Wise a question, because I have only got a 
minute left. Have you told us here you have been working for 
your business or for where you work now for 20 years?
    Mr. Wise. I have been in the fast food industry for 20 
years and McDonald's for the last six.
    Mr. Grothman. For 6 years, Ok, and you are making 11 bucks 
an hour right now?
    Mr. Wise. Oh, yes.
    Mr. Grothman. Have you applied to work anywhere else?
    Mr. Wise. Well, when you look across my city and across 
many cities in the country, these are the fastest growing jobs, 
service-based jobs.
    Mr. Grothman. I know. I am just saying like in my area we 
got manufacturing. Sometimes people shift from that sort of 
thing to manufacturing. Maybe they look for fast food where you 
have a chance to move up and become a shift manager, or 
whatnot. I am just saying, have you done anything in the last 6 
years to try to look for a job that pays more than 11 bucks an 
hour?
    Mr. Wise. Well, I am a manager. I have been to management 
training classes. I have been to Safe Serve. I have been 
certified.
    Mr. Grothman. Have you looked for any other jobs anywhere 
else that pay more than 11 bucks an hour?
    Mr. Wise. Less than half of my city makes less than $15 an 
hour. There aren't jobs readily available.
    Mr. Grothman. Have you applied for any other jobs?
    Mr. Wise. Oh, definitely. I have looked for jobs in my 
city, you know. They are all low-wage jobs. They are paying 
poverty wages.
    Mr. Grothman. Somebody else talked about drive trucks. Have 
you ever tried to do that sort of thing?
    Mr. Wise. No, I never tried driving tractor-trailers or 
anything like that.
    Mr. Grothman. Not even tractor-trailer, just delivery 
truck, that sort of thing.
    Mr. Wise. No.
    Mr. Grothman. Ok, thanks.
    Chairman Scott. Thank you.
    The gentlelady from Nevada, Ms. Lee.
    Mrs. Lee. Thank you, Mr. Chairman.
    For much of my career, I have focused on helping young 
children graduate from high school, some of the most at risk 
students in Nevada. And poverty is the most significant barrier 
to educational success. And I would like to say that a story 
like Mr. Wise's is the exception, not the rule.
    But when you think about the stress that you as a young man 
and your family went under, having to work two and three jobs 
to make ends meet, then you having to pitch in and, thus, 
dropping out of high school, to me that depicts that not only 
are we talking about minimum wage, but we are talking about a 
lost opportunity cost.
    And the Congressman Grothman who asked you about did you 
apply for another job, well, a lot of jobs that are higher 
paying require additional training. And if I recall, you 
basically said there were weeks on end where you had days where 
you did not have a day off. Is that correct?
    Mr. Wise. Yes.
    Mrs. Lee. So I think we need to take note of the lost 
opportunity cost of not increasing a minimum wage here.
    So I want to thank you for the courage that you had in 
giving that testimony. I think it was incredibly important. 
And, again, I wish it were one that isn't as common as it is.
    And I now want to ask Dr. Zipperer a question with respect 
to that. Looking at these barriers in youth, I am hoping that 
you can inform us what the impact of increasing the minimum 
wage will have on children in our country.
    Mr. Zipperer. Thank you for the question. My colleague 
David Cooper at the Economic Policy Institute has recently 
conducted an analysis showing the benefits of raising the 
minimum wage to $15 by 2024. And in particular, raising the 
minimum wage to that level by 2024 would raise the wages of 
parents of nearly 14 million children. That is nearly one-fifth 
of all U.S. children would have a parent that experienced a 
minimum wage increase.
    Mrs. Lee. Thank you.
    Mr. Chairman, I request unanimous consent to offer this 
letter into the record from First Focus Campaign for Children, 
explaining the economic impact of increasing the minimum wage 
on children in our country.
    Chairman Scott. Without objection.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T5268.090
    
    Mrs. Lee. Mr. Zipperer or Dr. Zipperer, I have another 
question. There is this fear-mongering about the notion of 
workers losing their jobs because of an increase. Can you tell 
us how or why this notion of job loss is misleading, and is it 
possible that workers would be able to work fewer hours but 
still earn a stronger income, thus having the time to pursue, 
perhaps, education that would put them in a position to achieve 
a higher-paying job?
    Mr. Zipperer. Thank you for the question. Yes, I think 
there are three ways in which this phrase ``job loss'' is 
misleading when we are talking about the minimum wage. First is 
that the vast body of research published in the last 15 years 
or at least since 2001 establishes very clearly that the 
employment effects of the minimum wage are small to zero. That 
is the average study in that literature.
    And I would argue, in my judgment, the best studies also 
strengthen that conclusion, finding little negative employment 
effects of the minimum wage. So that is the first way in which 
job loss is misleadingly characterized as the consequences to 
the minimum wage.
    The second reason is that even studies that either find or 
assume that there is going to be job loss, typically the 
benefits to workers outweigh the job loss that those workers 
experience. So just looking at it from terms of cost and 
benefits, raising the minimum wage still has benefits that 
outweigh the cost.
    The third point and the reason why job loss is a misleading 
phrase applied to the minimum wage, is that, just as you 
indicated at the end of your question, if there is some 
reduction in the number of hours worked by workers, which I 
don't necessarily subscribe to, but if that is the case, 
workers can still earn more over the course of the year because 
they are earning a higher wage and, therefore, would be better 
off.
    Mrs. Lee. And perhaps spend time with their family as well.
    One final thing. Oh, I am sorry, I think I am going to run 
out of time, so I will yield the floor. Thanks.
    Chairman Scott. The gentleman from Pennsylvania, Mr. 
Thompson.
    Mr. Thompson. Thank you, Chairman. Thanks for hosting this 
hearing. It is a very important topic.
    You know, I don't want anyone who is a primary earner in 
their home, you know, responsible to provide for their family 
to earn just minimum wage. You know, and I don't care what that 
minimum wage level is, to tell you the truth. You know, it will 
always be the minimum wage.
    And some of the consequences that we have seen is that we 
will see that raising minimum wage, you know, raises the cost 
of many basic necessities. We also see that more times than not 
minimum wage increases results in the Federal income threshold 
for what qualifies as poverty to go up, sweeping more families 
technically into poverty. And if it is done technically, it is 
done for good reasons, because the value of that earned dollar 
lessens.
    But, again, I want to say I don't want to see anyone who is 
supporting a family who is the primary earner earn minimum 
wage. That is why I work so hard to support restoring ladders, 
rungs on a ladder of opportunity. And this committee did great 
work in that area with the Career and Technical Education bill 
President Trump signed. I believe it was on July 31st we were 
at the White House.
    We put an additional billion dollars on top of what we 
already invest in career and technical education training. And 
we know there are 7 million jobs that are out there today, and 
that number is climbing. It is compounded and getting larger 
because of the retirement of the baby boomers, but it is also 
growing because of the growth of the economy and the jobs that 
are being created.
    So I am not saying those opportunities are equal. I mean, 
sometimes communities and cities, places, for whatever, based 
on whatever is going on there, perhaps they don't have as many 
opportunities; but nationwide, that is the scenario that we are 
seeing. And that is why I, when it comes to better wages, 
especially for those who are primary providers for their 
families, I want them on those ladders of opportunity. And I 
think this committee did some really good work to restore that 
with resources and reforms to that program.
    I also get the point--and, unfortunately, she left. I 
appreciated the passion of the gentlelady from Seattle. You 
know, it is situational. It is geographical. And just to share 
a couple numbers. I am from Pennsylvania. In Pennsylvania, the 
average, the median home value in Pennsylvania is $172,000. In 
our largest city--I tried to pick a big city that compared to 
Seattle, you know--it is $158,500 right now, and that was after 
a 12.7 percent increase in value this past year. Washington 
State, it is $379,500. And in Seattle, the median home value is 
over $725,000. I get it. But that is a geographical issue. That 
is not a one-size-fits-all solution of a Federal minimum wage.
    And so I appreciate her passion and I appreciate her local 
leadership of serving the folks in Seattle who are incurring 
such a--I mean, it is just a--what a terrible situation for 
folks who are living paycheck to paycheck and struggling.
    And so, Dr. Holtz-Eakin, great to see you again. A real 
quick question here: Your testimony cites a 2014 study by 
Jeffrey Clemens and Michael Wither that shows a hike in the 
minimum wage is likely to increase the occurrence of unpaid 
internships.
    Would a 107 percent increase in the Federal minimum wage 
hurt students and young adults who are trying to enter into 
that work force and to get that basic experience, you know, to 
be able to launch successful careers that hopefully eventually 
will be with family sustaining wages?
    Mr. Holtz-Eakin. I have an intern program. I don't know if 
I would if you doubled the minimum wage. They are paid minimum 
wage. And that is an issue. And that is the starting rung, and 
everything I have said earlier today applies to the intern 
programs across this country as well as the full-time 
employees.
    Mr. Thompson. Thank you.
    I know we have another panel, so in the effort of 
efficiency I will yield back, Mr. Chairman.
    Chairman Scott. Thank you. Thank you.
    The gentlelady from Georgia, Mrs. McBath.
    Mrs. McBath. Thank you, Mr. Chairman. And I want to thank 
you for holding this hearing today. And I would like to thank 
the witnesses who are here to discuss the importance of raising 
the Federal minimum wage for Americans.
    It is time for us to raise the minimum wage and to have 
these very, very important conversations. Too many in our 
Nation are working hard, but are definitely not seeing their 
wages budge. The Federal minimum wage has been stuck at $7.25 
per hour since 2009. And in that time, costs have gone up 
significantly.
    In my home State of Georgia, the minimum wage workers make 
only $7.25, and even for those who work 40 hours per week, it 
is nearly impossible for them to make a living. Now, this 
translates into lost value and lost purchasing power for the 
American worker, not just for those that are earning the 
minimum wage, but also for those that make more that have not 
seen wage growth in a resurgent economy.
    We need to raise the minimum wage to help families make 
ends meet, but we also need to do it in a way that protects 
jobs and small businesses in our communities. Our country is 
made up of many different regional economies, but only one 
Federal minimum wage across the board.
    This is an old model that truly ignores the basic reality 
of cost of living differences. The cost of everything from rent 
to a carton of milk to a haircut is different from one part of 
the United States to another, and our minimum wage should 
account for those differences. $1 in Macon, Georgia, is 
different than $1 in Roswell, Georgia. And $1 in Roswell is 
different than a dollar in San Francisco and New York City. We 
need a Federal minimum wage policy that works for rural, 
suburban, as well as urban Americans. A $15 minimum wage might 
be right for San Francisco, but what about Birmingham? What 
about Cleveland? What about Houston and Raleigh?
    Jared Bernstein, who served as a member of President 
Obama's Economic team and he also held the post of Deputy Chief 
Economist at the U.S. Department of Labor between 1995 and 
1996, he discussed this very topic in an article that he wrote 
for the New York Times, when the Obama Administration proposed 
to raise the national minimum wage to $10.10. He wrote: When we 
adjust the national minimum wage of $10.10 for regional 
differences, these are the amounts you would need to have the 
same buying power: $11.94 in Washington, DC. and $11.40 in 
California, but only $8.90 in Alabama and $9.08 in Kansas.
    My goal is truly to make sure that folks in rural 
communities, communities of color, and distressed communities 
are not adversely affected by well-intentioned minimum wage 
policies that raise the minimum wage to a higher point or to a 
point that is higher than the local economies can handle.
    Now, we are all in agreement that the minimum wage needs to 
be raised to help Americans, but I would like to learn more 
about how this will be received in every part of the country.
    So, Mr. Zipperer, my question is for you, would the $15 
minimum wage under this bill be applied with any consideration 
for differences in local cost of living or is it just one flat 
rate across the country?
    Mr. Zipperer. The $15 minimum wage bill of the Raise the 
Wage Act of 2019 is $15 across the country, but States, cities 
if they can, and localities could raise their minimum wage 
above that if they desired.
    Mrs. McBath. So my followup question is, does the $15 
minimum wage have the same purchasing power in Washington, DC, 
that it does in rural parts of the country?
    Mr. Zipperer. No, it has different purchasing power in 
different parts of the country. But in all parts of the 
country, including the cities you mentioned, Houston, 
Cleveland, Raleigh, and in rural parts of the country, rural 
counties in every State of the United States, workers will need 
at least $15 an hour in order to purchase basic necessities 
that attain them a modest yet adequate standard of living.
    Mrs. McBath. And, Dr. Zipperer, have you heard of the term 
``regional price parity?''
    Mr. Zipperer. Yes, I have.
    Mrs. McBath. Can you explain its meaning and why it exists?
    Mr. Zipperer. Regional price parities are a tool that we 
can use to calculate the differences in the cost of living 
across different areas of the country.
    Mrs. McBath. Last word: I believe that workers in every 
part of the country, they deserve a raise, most definitely. So 
I thank you for answering my questions.
    And I thank you, Mr. Chairman, for holding this hearing. I 
hope this is the beginning of what I believe will be very 
thoughtful and inclusive discussions about how we can raise the 
minimum wage to a living wage for all communities. And I yield 
back my time.
    Chairman Scott. Thank you.
    The gentlelady from Massachusetts, Mrs. Trahan.
    Mrs. Trahan. Thank you, Mr. Chairman, and thank you for 
holding these hearings. Thank you for hanging in with us today. 
I know it is a long day to sit on this panel.
    I grew up in a family that needed two incomes. My mother, 
she juggled multiple part-time jobs while I was growing up, 
working more than 40 hours a week and managing to raise us 
children. So sometimes, you know, when you are removed from 
that, it is easy to forget that it doesn't leave a lot of time 
to look for another job. So, Mr. Wise, thank you. I appreciate 
your testimony.
    Dr. Zipperer, I want to talk about women and families and 
the impact that the minimum wage has. Women are nearly two-
thirds of workers paid the Federal minimum wage of $7.25 per 
hour. Women are also two-thirds of tipped workers for whom the 
Federal minimum cash wage is just $2.13 per hour.
    Throughout my career, I have seen the pay gap in action 
time and again. Women's overrepresentation in low-wage jobs is 
one factor driving the persistent wage gap. Women working full 
time year-round typically are paid just 80 cents for every 
dollar paid to their male counterparts, and this gap is even 
wider for women of color.
    Congress has raised the minimum wage only four times in the 
past 40 years and enacted the last increase a decade ago. A 
woman working full time at minimum wage earns just $14,500 
annually, nearly $5,000 below the poverty line for a mother 
with two children. You know all this.
    Dr. Zipperer, what do we know about how the minimum wage 
would impact the gender pay gap, and what is the evidence from 
States on how the minimum wage could impact the gender pay gap?
    Mr. Zipperer. That is a great question. It is true that the 
minimum wage disproportionately raises wages for women. It 
benefits women more than men, and that is because, as you 
outlined in your question, unfortunately, our country's economy 
pays women excessively low wages. If we were to raise the 
minimum wage to $15 by 2024, the majority of workers that would 
benefit from that are women. Close to about 58 percent of the 
workers who would benefit from a minimum wage increase of that 
kind would be women.
    The minimum wage has long been an important tool to reduce 
gender wage gaps. In particular, the minimum wage has the 
strongest effects on reducing inequality for women, in that it 
brings up women at the bottom of the pay scale toward the 
middle much more strongly for women than it does for men.
    Mrs. Trahan. Terrific. Thank you. I appreciate that.
    You know, I know my colleague from Michigan asked about 
unions and the impact that the minimum wage will have on 
unions, but if I could just ask one followup question on his 
terrific inquiry. I do believe that unions have built the 
middle class. And what should we consider here in Congress--and 
if this is a better question for you, Dr. Spriggs, feel free to 
jump in.
    What should we consider here in Congress to better support 
men and women in labor so that all workers see improved 
conditions beyond increasing the minimum wage?
    Dr. Spriggs. Just as we are having this discussion to 
modernize the minimum wage, we need to have discussions to 
modernize our labor laws to restore the ability of American 
workers to organize. Today, the penalties for violating labor 
law are de minimus. It is far cheaper for a firm to fire 
workers, to intimidate them, then it is for them to let them 
have a voice. It is unfair to have employers engaged in closed 
conversations with employees to intimidate them out of their 
democratic right to vote about whether they want to be in a 
union.
    There are a number of other changes we need to make to make 
sure that workers will be at the table so that as productivity 
continues to increase, workers get to say, where is my share of 
the productivity increase, which hasn't happened in the last 40 
years.
    Mrs. Trahan. Thank you. Thanks so much for all your 
testimony, and I yield back.
    Chairman Scott. Thank you. The gentleman from New York, Mr. 
Morelle.
    Mr. Morelle. Thank you, Mr. Chairman, for holding this 
valuable hearing to discuss gradually raising the minimum wage. 
And thank you to the panel and the witnesses for being here 
today to share their expertise.
    I do want to note, in my home State of New York we have one 
of the highest minimum wages in the nation. And I was proud to 
support gradually increasing the minimum wage to $15, which is 
what it is in the city of New York and other parts of New York. 
It is going to be $15 in just a few years, as we deal with some 
regional differences. And that happened, I had the privilege of 
being the majority leader in the assembly when we do that. And 
I look forward to hopefully achieving that here in the Nation's 
Capitol as well, to ensure that all Americans working full time 
can live safely and sustainably above the poverty line.
    If I might, Mr. Chair, I would like to ask Dr. Zipperer if 
you would just talk about the studies evaluating minimum wage 
increases. Is it your view that raising the minimum wage will 
result in negative economic consequences for low-wage workers, 
as some have suggested?
    Mr. Zipperer. No, it is not my view. I think that the best 
studies show that minimum wages have been very successful in 
raising the wages of low-wage workers without those negative 
employment effects, but you also don't have to take my word for 
it. You can just look at the studies published over the last 15 
years and that the average study and the typical study finds 
very small to no employment effects.
    Mr. Morelle. If I might just followup with you, Dr. 
Zipperer, obviously, people have testified it is important that 
the Raise the Wage Act have a gradual increase, the cost 
adjustment over time, which obviously benefits so that, from a 
public policy point of view, 10 years don't go by, 6 years go 
by without an increase and you are essentially having to jump 
up a considerable degree in a single year.
    Have you calculated what the $15 minimum wage, if it were 
enacted today, what it would translate to in 5 or 6 years, in 
terms of what the adjustment would bring us to?
    Mr. Zipperer. Right. So under the Raise the Wage Act of 
2019, a $15 minimum wage would be fully phased in by 2024. And 
if you account for projected increases in the cost of living 
over that time period, that is equivalent to about a $13 
minimum wage today.
    Mr. Morelle. Got you. So there obviously would be some 
erosion because of the impacts of inflation so $15, as we are 
thinking about it in 2024, isn't the same as $15 today. It is 
$13. Is that what I understand?
    Mr. Zipperer. That is correct.
    Mr. Morelle. Thank you. If I could just followup, relative 
to that in the purchasing power, I have given some thought to 
trying to understand what the historical high point was of the 
minimum wage relative to the median wage of the American worker 
and, in a sense, what is the $7.25 minimum wage compared now to 
that median or typical worker's wages. Do you understand that 
question? Could you comment on that?
    Mr. Zipperer. Yes. Thanks for the question. So, at the 
highest point, the minimum wage in 1968 was close to about 53 
percent of the full-time, full-year workers' median wage at 
that time period. Now, the national minimum wage of $7.25 is 
about a third or about 32, 33 percent of the full-time, full-
year median wage.
    Mr. Morelle. Which is obviously a dramatic, dramatic 
decline, more than half. In 1960--what year did you quote, the 
first--
    Mr. Zipperer. 1968 is the high point of the minimum wage. 
The minimum wage has fallen since 1968 over the last 50 years. 
It has fallen in real terms, terms adjusted for the increase of 
cost of living, by about 28, 29 percent.
    Mr. Morelle. Obviously, dramatic.
    If I might, Mr. Wise, and thank you for your testimony 
earlier today and for being a part of this. But could you just 
describe the challenges that your family would face in your 
situation during a family emergency when you had an unexpected 
expenditure of an essential? How do you and your family and 
others presumably in the same situation, how do you respond to 
that? How do you deal with that?
    Mr. Wise. Well, first and foremost, it is frightening, 
because we are truly one missed paycheck away from being 
homeless. So there is no such thing as being sick or having to 
call in or a family emergency. Refrigerator breaking down, car 
breaks, any of that going out is catastrophic, basically, for 
me and my family. So it is just--it is all pure luck, you know, 
hoping everything is Ok every day.
    Mr. Morelle. And if I could also, Dr. Spriggs, what are, in 
your view, the lasting impacts to wage and wealth levels to 
regions of the country from the minimum wage coverage 
exclusions in the Fair Labor Standards Act of 1938?
    And just as a followup, would a regional minimum wage in 
2019 lock in income and wealth disparities that were born of 
that racially motivated exclusions to the FLSA?
    Dr. Spriggs. Thank you for the question. The only example I 
can give you of a proposal to do, quote/unquote, ``parity pay'' 
is from the Third Way. And when you look at the chart of what 
they think are the areas that have these wonderful lives at low 
wages because of pay parity, it looks exactly like a 
distribution of the Black population.
    If you agree to those regional pay ideas, which Congress 
debated extensively in 1937 and rejected, extensively in 1966 
and rejected, you won't be accepting a new idea, you will be 
cementing an old idea that got rejected twice and you will 
create a racial pay disparity.
    It will be, once again, America understands the problem, we 
are going to pass a labor law that improves the lives of 
American workers, and Black workers will be told, the bus is 
full when it pulls out. If you do that, that is what you will 
be doing.
    Mr. Morelle. Thank you for the question.
    Just in closing, Mr. Chair and colleagues, I just do note 
that I represent a district in New York State, but many people 
when they hear the words ``New York'' assume it is metro New 
York and the city, where now the minimum wage is $15 an hour. 
Despite that, and I live in a community of about a million 
people in the Rochester, New York, metro area, Upstate New 
York, there were concerns about how the increase in the minimum 
wage would impact an economy that is the vestiges of a 
manufacturing economy and transitioning.
    And despite all the concerns that we heard from people 
about raising the minimum wage, it has really been something 
that has been greeted largely with support, certainly from the 
labor community and from people who are working very, very hard 
to make ends meet. And from what I can see, it has benefited 
our community greatly, and I certainly hope we pass this 
legislation in the Congress and make it the law of the land. So 
thank you.
    Thank you again, Mr. Chairman. I yield back my time.
    Chairman Scott. Thank you.
    And next is the gentlelady from Washington, Dr. Schrier.
    Ms. Schrier. Hi. Good afternoon. Thank you, Mr. Chairman.
    And I want to thank all of you. I have really enjoyed your 
testimony today.
    I really appreciate, first of all, Dr. Spriggs, your 
comments in particular about tipping, because I was unaware of 
that history, and I think that was very eye-opening.
    I also wanted to thank you all, but I also appreciate the 
clarification about Washington State. That is where I am from. 
We are gradually increasing to a $15 minimum wage, and it has 
worked well for the State.
    The one study out of the University of Washington got a lot 
of eyes when that first came out, but it has become clear that 
is an outlier study and that for the most part we have done 
very well with this. Businesses are thriving, and people are 
thriving.
    I would also, for people up here who think that $15 is too 
much, I would just note that although my district starts in the 
suburbs of Seattle, in Seattle proper you need to have a salary 
of at least $70,000 a year to afford a one-bedroom apartment.
    And so I want to just remind everybody that we are talking 
about a minimum, and that $15, as we have heard many times, is 
a minimum for the whole country, and there are parts, like 
where I live, where you would need far more.
    I did have a question to just drill down a little bit on 
tips, because I want to make sure that we are taking care of 
everybody.
    The way that I am wrapping my head around this is I think 
about all of the workers in a restaurant, for example, and that 
if we have, for example, a $15 minimum wage for the wait staff, 
and they get generous tips on top of that, but the chef in the 
kitchen is not getting that added bonus and maybe isn't getting 
tipped out enough from the wait staff or the host. And so I 
want to think through whether there might be unintended 
consequences in the social relationships at work.
    I also wanted to talk about the difference between when you 
have a subminimum wage, you know, $2 or whatever it is, and 
then workers are reliant on tips, which to me seems very 
tenuous, versus people who are guaranteed that if they don't 
make at least 15 an hour that they will have that as a floor 
and the tips would be over and the difference in poverty level 
between those two groups.
    Dr. Spriggs, maybe I will go to you.
    Dr. Spriggs. I would like to speak to that first. And thank 
you very much for the question because it gets to people who 
think this is easy to regulate.
    The way that many restaurants run, they either force 
pooling of the tips, so that the host who might get a bigger 
tip or the waiter who might get the bigger tip can then share 
it with busboys.
    Some restaurants violate the law because they consider some 
back workers who should get a minimum wage. They think they are 
supposed to get tipped. It is a nightmare. And when the wages 
are pooled, now, at some high-end restaurants, perhaps they let 
the staff control it, but many restaurants want to claim the 
pool tips are theirs, and then we dole them out to make sure we 
meet the minimum, it gets very complicated.
    And, yes, the social relations are complicated because time 
and again, unfortunately, there is a difference between the 
race and gender of these different jobs, and inevitably that 
causes a friction in and of itself in terms of who will get 
what.
    So it is going to be a more fraught problem if the real 
minimum goes up and the tip minimum stays down, because the gap 
that has to be made up is going to be bigger and bigger and 
bigger. There is no assurance that will happen.
    And people need to remember that it is not the fancy 
restaurants that people in this room go to. The bulk of these 
workers are at low wage restaurants. They don't work where the 
tip is going to be $25. They work where the tip is going to be 
$3.
    So it is far more complicated to regulate than people 
understand, and this is the true solution. It closes a gender 
inequality bigger than anything else we could do to close the 
gender inequality when it comes to wage theft sexual 
harassment.
    Ms. Schrier. Thank you.
    Chairman Scott. Thank you.
    The gentlelady from Ohio, Ms. Fudge.
    Ms. Fudge. Thank you very much, Mr. Chairman.
    And thank you all so much for being here. Forgive me. I 
have had three committee hearings today, so I have been in and 
out. So if I ask you something that has already been asked, 
please forgive me.
    Dr. Holtz-Eakin, when I was in earlier I heard you talking 
about ``these people.'' Who are ``these people'' that you--you 
have used the word ``these people'' at least three times while 
I was sitting in this room. Who would you describe as ``these 
people''?
    Mr. Holtz-Eakin. I am not sure what the context was, 
Congresswoman.
    Ms. Fudge. You were talking about that $15 wouldn't help 
``these people.'' So who are ``these people''?
    Mr. Holtz-Eakin. The workers that I am most concerned about 
are those with the least skills, education, and experience.
    Ms. Fudge. So are they poor? Are they Black? Are they 
White? Who are ``these people''? I am just saying that you 
shouldn't use it if you don't know what you are talking about.
    Mr. Holtz-Eakin. I know who I am worried about in the labor 
market, and those are the people.
    Ms. Fudge. I think it is very insensitive. But neither here 
nor there.
    Dr. Spriggs, corporations are making more money today than 
they have ever made. They are making even more money this year 
as they have benefited from the Republican tax scam giveaway to 
the richest people in this country. We have also reduced what 
they would pay in estate taxes. So we have basically said to 
them: Rich people, we want you to get richer.
    It is ridiculous to me, knowing that the wage gap is 
getting bigger, the wealth gap is getting bigger, that someone 
would say to me that because someone makes $15 an hour, there 
is no money to pay them. I just don't understand it.
    Dr. Holtz-Eakin, I am assuming you make more than $15. I 
don't want to make an assumption, but do you make more than $15 
an hour?
    Mr. Holtz-Eakin. I assume so. I am not paid by the hour.
    Ms. Fudge. If you give me your salary for last year, I will 
tell you how much you make an hour. I am sure it is more than 
$15. And the sky is not falling. The sky is not falling because 
you make more than $15 an hour, and it will not fall if these 
people sitting in this room make $15 an hour.
    It is just not believable to me that you could say that if 
we pay people $15 an hour, everything is going to collapse. You 
know what I mean? You have to stop crying wolf. It is not true. 
There is no evidence to prove it is true.
    What we are doing today is saying that we have the ability 
to pay people a decent wage, but we refuse. We have the 
ability, but we have not the will. So it is Ok for rich people 
to get richer and poor people to get poorer.
    I just think it is ludicrous to say that the richest nation 
in the world cannot pay people a decent wage. It is 
unconscionable, it is mean, and it is cruel.
    And with that, Mr. Chairman, if someone would like to claim 
the balance of my time. Does someone need my time?
    Chairman Scott. You can yield to the gentlelady from 
Connecticut.
    Ms. Fudge. I will.
    Mrs. Hayes. Good afternoon, everyone. I am sorry. I have 
been in and out as well, but I have been following the 
testimony on the TV screen. I had a couple committee hearings 
as well.
    First of all, thank you all for being here. Thank you all 
in the galley for coming out to support.
    Mr. Wise, I am particularly moved by your testimony. And I 
hope I can impress upon you that your work is not in vain, that 
your work has value.
    And what we hear people talk about is that minimum wage 
being attributed to people who have the least skill, the least 
education. But how about the least opportunity? One does not 
impact the other.
    I always excelled in school. I always did a good job. But 
then life happened. So if you don't have access to those same 
opportunities.
    I heard one of my colleagues say that he could not imagine 
living on $15 in a city like Washington where the cost of 
living is so high. How about the reality of living on $7? And I 
think that is the conversation that we should be having.
    And people are always quick to pick out someone who has 
done it as if this is the rule instead of the exception. And, 
again, it is just that life happens, and maybe somebody got, 
you know, a good opportunity or caught a break. But that is not 
the rule.
    And then the other thing. I am just listening to all of 
you: Well, what have you done? My colleagues are always asking: 
Well, what have you done to lift yourself out of poverty? What 
have you done? You can go be a truck driver. What if you don't 
want to be a truck driver?
    Shouldn't you have the right to live out your best life, to 
live the future that you want for yourself and not this by-
default position that you are placed in because you are 
attempting to survive?
    Has your housing cost increased over the last 10 years?
    Chairman Scott. The time of the gentlelady from Ohio has 
expired. You will be recognized for your full 5 minutes 
shortly.
    The gentlelady from North Carolina, the Ranking Member.
    Mrs. Hayes. Mr. Wise, I am still talking to you. Has your 
housing cost--
    Chairman Scott. You will be recognized after Dr. Foxx.
    Mrs. Hayes. Oh, I am sorry.
    Ms. Foxx. Thank you, Mr. Chairman.
    Dr. Holtz-Eakin, I am interested in the workers who would 
be affected by a 107 percent increase in the Federal minimum 
wage.
    Individuals under 25 years old make up only one-fifth of 
hourly workers, but they account for about half of hourly 
workers making the minimum wage. Only 7 percent of workers 
earning wages between $7.25 and $15 live in poor households.
    In your view, is increasing the minimum wage to $15 an 
anti-poverty policy?
    Mr. Holtz-Eakin. I don't think it is an effective anti-
poverty policy. As I mentioned at the outset, it is fairly 
poorly targeted on poverty. And in those cases where it 
actually does affect the poverty population, the impact may be 
negative.
    Ms. Foxx. Thank you very much.
    Let me follow this train of questioning with you. We had 
what many are calling a surge in job creation in January, 
304,000 new jobs, nearly doubling expectations. Over the last 
year, average hourly earnings rose by 3.2 percent, average 
weekly earnings rose by 3.5 percent. And with last month's job 
surge, the labor force participation rate ticked up to 63.2 
percent.
    There are more jobs than job openings, as you have said and 
we have said, more jobs at higher wages, and now people who 
have been the most discouraged and on the sidelines are 
reentering the work force.
    Based on your research and experience, are you concerned 
that more than doubling the Federal minimum wage would reverse 
these positive trends for workers and the economy?
    Mr. Holtz-Eakin. I am very concerned about that. The 
research would indicate that is exactly the part of the labor 
market that would be most deeply affected. And we are finally 
making some progress. It would be a shame to go back the wrong 
way.
    Ms. Foxx. Great.
    You know, I have always emphasized making sound policy 
decisions based on evidence. But my husband told me a long time 
ago that too many people in elective office make decisions 
based on emotions and not on evidence. But as I told him, I am 
going to start with evidence always. I can get emotional if I 
have to, but evidence is the best way to go.
    When it comes to the radical proposal before us to increase 
the Federal minimum wage by 107 percent, however, it is hard to 
find convincing evidence because the proposed policy change is 
so extreme.
    Would Congress be making a sound policy decision from an 
evidence-based perspective if legislation were enacted to more 
than double the Federal minimum wage, impacting businesses and 
workers around the country?
    Mr. Holtz-Eakin. In my judgment, that would be a very 
unwise thing for the Congress to do. It is not just the 107 
percent nationwide, which is unprecedented, and as a result, 
any of the research that we have that shows negative impacts 
doesn't even come close to capturing the impact of that kind of 
a change. You also do the indexing at the end of that to the 
median wage. That is unprecedented and leads to permanent 
incentives to restructure businesses away from having jobs for 
that particular part of the labor market.
    Ms. Foxx. In your testimony, you note the large job losses 
in California and New York due to the recent increases in their 
State minimum wages. These job losses may surprise some people 
because these areas have a relatively high cost of living and 
are high average income States.
    What do these States' experiments tell us about what would 
happen in other regions of the country if a mandate to impose a 
$15 minimum wage around the country was enacted?
    Mr. Holtz-Eakin. I think the lesson of these State-based 
minimum wage increases is that there are people who will be 
just fine. We do see that.
    But the people who are affected are the ones who are 
probably the least well-off in the labor market, for the 
reasons that I have outlined before; that not all of these 
changes come through the stereotype of someone getting kicked 
off their job. It is the raise you don't get, the hours you 
don't work, the person who doesn't get hired.
    And a lot of this is not, you know, the bear at the door. 
It is the termites in the woodwork taking out the vitality of 
the economy.
    Ms. Foxx. Thank you very much. I yield back.
    Mrs. Hayes. Thank you, Mr. Chair.
    Mr. Wise, back to you. Back to my previous question. Has 
the cost of your housing increased?
    Mr. Wise. Yes. Yes, it has.
    Mrs. Hayes. I heard you talk about purchasing school 
supplies for your daughter. Has the cost of those supplies 
increased?
    Mr. Wise. Yes, they have, over the years.
    Mrs. Hayes. Has the cost of food increased?
    Mr. Wise. Definitely.
    Mrs. Hayes. Have you had to get a prescription for yourself 
or your children?
    Mr. Wise. Yes.
    Mrs. Hayes. Have those costs increased?
    Mr. Wise. Yes, they have.
    Mrs. Hayes. Ok.
    So to Dr.--I am sorry, I can't read your whole name, I am 
so sorry, I don't mean to--when you talk about corporations and 
the effect that this will have on the economy, have 
corporations stalled their price increases to wait for people 
who are living in poverty under minimum wage to catch up? If 
everything else is increasing except for their wages, are 
corporations held to the same standard where they are stalling 
to wait for people's wages to catch up?
    Mr. Zipperer. If I understand the question correctly, I 
think it is the case that businesses in general in this 
country, unfortunately, have not paid low wage workers well 
without the help of a minimum wage increase.
    Mrs. Hayes. So if only 7 percent of minimum wage workers 
live in poverty, how could raising those workers to $15 have 
the catastrophic effects that we are hearing about? If it is 
such a small number, if it is such a small number in the 
overall economy and the overall number of workers, I just heard 
only 7 percent of minimum wage workers live in poverty, so how 
could that small number disproportionately impact the overall 
economy if that group is lifted up?
    Mr. Zipperer. I don't think that there will be disastrous 
effects of a $15 minimum wage. But you might be interested in 
hearing from Dr. Holtz-Eakin.
    Mrs. Hayes. Yes. I am interested to hear your response.
    Dr. Spriggs. I want to help out here. In 1966, when we 
expanded coverage for the minimum wage, suddenly 20 percent, 20 
percent of the American work force suddenly had coverage and 
protection, which means this is a bigger experiment than what 
you are talking about right now and when you think about what 
we did. Twenty percent of the entire American work force had 
not been protected. We raised their wages from $0.80, because 
on average that is what they made, to $1.60.
    Mrs. Hayes. I was here for that.
    Dr. Spriggs. We doubled it.
    Mrs. Hayes. Yep.
    Dr. Spriggs. And yet, employment did not fall. And in those 
states that had no State minimum wage employment did not fall 
because those States would have been the ones most impacted.
    So the evidence, the experience, the real experience, not 
some theoretical experience, the actual experience of the 
American people in the work force was when we doubled the 
minimum wage, which 61 percent of Republicans voted for, and 
gave 20 percent of these workers access to protection, poverty 
went down. Their employment did not go down. It was helpful. 
And it got the Black poverty rate for children down to 39 
percent, the lowest it was until 1994.
    Mrs. Hayes. Thank you. I guess, Dr. Spriggs, you would do 
well to answer the next question.
    When we talk about the improvement in the economy and the 
jobs numbers goes up, every month we hear about all of the 
people who have entered the work force, does this include 
minimum wage workers around the country?
    Dr. Spriggs. Yes, it does.
    Mrs. Hayes. So that number, although we are talking about 
more people are employed, does not accurately reflect an 
increase in living conditions, our communities improving, 
because although people are employed, it does not sound like 
they are at a livable wage.
    Dr. Spriggs. That is correct. And increasingly, it has been 
difficult for us to deliver lower poverty levels simply from 
higher levels of employment and from economic growth. When we 
disconnected the minimum wage from a living wage and you look 
at the poverty, this is why it took from 1969 to the 1990's to 
get Black child poverty back down below the level it was in 
1969.
    Mrs. Hayes. Thank you. Thank you so much.
    And I guess the last thing I would say is, with all due 
respect, the fact that you don't know how much you make or what 
that translates to over a specific amount of time is more 
telling than anything else you could ever say, because I bet 
you every single person in this galley knows exactly how much 
they make. They know exactly how much they will lose if they 
are late, if they don't show up, if they call out, if it is a 
holiday. They know exactly to the penny what that means for 
them and their family.
    I have been them. I know what that feels like, and that 
should be all you need to know.
    Mr. Chair, I yield back.
    Chairman Scott. Thank you.
    The gentleman from Indiana, Mr. Banks.
    Mr. Banks. Thank you, Mr. Chairman.
    There has been a lot of focus today on how this proposal 
will destroy jobs, and rightfully so. You have already heard a 
lot about the NFIB study, but another recent study using the 
methodology of the Congressional Budget Office found that this 
proposal would cost my home state, the State of Indiana, 64,130 
jobs in 2020 alone.
    This isn't just a number. That is nearly 65,000 Hoosiers 
losing the dignity that comes from having a job and being able 
to provide for themselves and their families. At a time when we 
have nearly 7 million jobs that cannot be filled, it is 
incredibly reckless to rob people of their livelihoods in order 
to live up to a campaign talking point.
    I have heard from local business owners in my district who 
believe this legislation would have a disastrous effect on 
their ability to grow and hire Hoosiers. One business owner who 
runs a number of local franchises conveyed to me that 
approximately 25 percent of his staff would need to be cut to 
account for this proposal. He would also be forced to raise 
prices in his restaurants by 2 to 4 percent just to stay in 
business.
    Another constituent of mine who owns a number of 
restaurants as well and employs nearly 250 people told me that 
the tipped wage provisions of this bill would force him to cut 
half of his staff just to stay afloat, along with across-the-
board menu prices as well. Think about that. Anywhere from one 
in four to one in two workers unemployed who are then forced to 
pay higher prices after losing their jobs.
    And as if that wasn't bad enough, there is evidence that 
this will actually reduce income for low wage workers. By 
making labor more expensive, fewer workers will be hired, and 
the ones that do keep their jobs will work fewer hours, which 
translates into lost income.
    And, in fact, that is exactly what we saw in Seattle. The 
city of Seattle recently, as you know, increased the minimum 
wage to $15 an hour. And a study from the University of 
Washington found that this reduced the number of hours worked 
in low wage jobs by nearly 7 percent and lower take home pay 
for low wage workers by $74 a month. That is right, the minimum 
wage increase actually resulted in lower overall wages.
    Now, I take personal offense to this conversation as well 
because in high school and college, my folks didn't have enough 
money to pay for my college degree. So I worked low-wage, 
minimum wage jobs to be able to save up for college and make 
ends meet. So this conversation reminds me of just how 
important jobs like these are to those Americans who are 
hopeful to 1 day pursue the same American dream that I have 
been able to live in my life.
    So, Dr. Holtz-Eakin, can you expand on the insights of 
these studies from the University of Washington, the NFIB 
study, the Congressional Budget Office statistics, specifically 
how minimum wage laws actually can reduce the income of low 
wage workers?
    Mr. Holtz-Eakin. I am happy to, Congressman.
    First, in the interest of clarity, none of these studies 
indicate that overall employment in the economy is at a 
decline. The economy will continue to grow. There will be fewer 
jobs created than otherwise would have been. That is the nature 
of the loss. Those jobs are going to be concentrated in a 
particular part of the labor market, which is the low wage, low 
skill, little experience part of the labor market that you 
started out in.
    And the adjustments that businesses of all sizes will be 
forced to make will be either to charge higher prices or cut 
their labor bill somehow, and that means cutting back on 
raises, cutting back on hiring, cutting back on hours of work. 
And if you are one of those people who is lucky enough to 
maintain their job, but is not getting a raise and getting 
their hours cut, you could end up with less income.
    Mr. Banks. Another study suggests that 2.3 percent of the 
American workers actually receive minimum wage or work in 
minimum wage jobs. And of those 2.3 percent, most of them are 
under the age of 25, which reflects upon the story that I have 
lived as well. They work those jobs to pursue something better, 
the proverbial American Dream.
    I am struck at the outset of this hearing, Dr. Zipperer 
admitted--he conceded over and over again, although not on 
the--we can debate the scale, but he conceded over and over 
again the negative impact that proposals like this would have 
on low-wage workers all over the United States of America.
    This conversation is concerning to me. It is concerning to 
not just business owners in my district but those who work in 
jobs like these. It would have a disastrous effect.
    And with that I yield back.
    Chairman Scott. Thank you.
    I yield to myself for 5 minutes.
    Dr. Spriggs, do you know if the poverty rate is connected 
to the minimum wage at all?
    Dr. Spriggs. It no longer is connected to the minimum wage, 
though when Congress formulated the minimum wage they clearly 
had the intent that workers would not have to say: ``I hope to 
1 day get to be poor. I hope that 1 day I will get a raise so I 
can get up to the poverty level.'' That is what Congress was 
trying to avoid. They wanted work to have dignity. And everyone 
agreed, Republican and Democrat, that should be an American 
principle. So no longer--
    Chairman Scott. So increasing the minimum wage will not 
affect the poverty rate?
    Dr. Spriggs. It would not affect the poverty rate because 
there is little evidence that it would create a sufficient 
inflationary force that the poverty level would go up. As the 
Congresswoman said, it is not enough workers, and it is not a 
big enough part of cost. And as the Congresswoman was 
suggesting, if CEO pay goes up and that doesn't affect cost, if 
profits go up and that doesn't affect price, as she was saying, 
prices went up without wages going up, so why should we think 
that if wages go up that would happen?
    Chairman Scott. I just wanted to correct that for the 
record, because there was a suggestion that if we increase the 
minimum wage, we would be affecting the poverty rate. We would 
just be affecting how many fewer people would actually be poor.
    You say on the uniform Federal minimum wage, why that is 
important. If you had a subminimum wage for some States that 
didn't apply or a region minimum wage that was lower, would 
some States be able to attract businesses by bragging about the 
fact that you could underpay your workers?
    Dr. Spriggs. There will be an attempt, I am sure, for some 
States to brag about it as they do brag that they are not 
union, that they do brag about other weak investments. So I am 
sure that some States may wish to brag that, yes, we pay our 
workers less.
    Chairman Scott. You had a chart that showed the support for 
increasing the minimum wage amongst Republicans. Are there any 
Republican States or States that are considered Republican 
States that have recently voted to increase its minimum wage by 
referendum?
    Dr. Spriggs. Yes. Several of the states are states headed 
by Republican Governors who through public referendum have 
shown that this is something that the American people agree 
with, and they think it is part of their standard.
    So whether it is the efforts in Arkansas or the efforts in 
some other States, Florida has raised its minimum wage, we have 
had a number of victories in red States because of the people 
you see with these red shirts and the efforts of organized 
labor and the efforts of Americans of all stripes who 
understand this is the right thing to do.
    Chairman Scott. Thank you.
    And, Dr. Zipperer, a lot has been said about job loss, and 
we found a couple of studies that have suggested that there 
would, in fact, be job loss. Overall, of all the studies done, 
what is the conclusion drawn?
    Mr. Zipperer. Overall, the recent set of scholarship over 
the last 15 years finds that on average the minimum wage does 
not have negative effects on employment but, in fact, raises 
wages for low wage workers.
    Chairman Scott. What is the importance of making the 
increase in the minimum wage gradual rather than all at once?
    Mr. Zipperer. It is important to allow employers time to 
adjust to the new higher wage standard. That is why past 
Federal increases and other State and city level increases 
include a gradual path to their ultimate minimum wage standard. 
So raising the minimum wage gradually to $15 by 2024 as time 
passes and the cost of living increases, that is equivalent to 
raising the minimum wage to roughly about $13 today.
    Chairman Scott. Thank you. And can you say a bit about the 
demographics of who minimum wage workers are and their 
likelihood of actually spending the increase?
    Mr. Zipperer. Yes. So low wage workers are actually an 
incredibly diverse population. They are mostly women. They are 
more likely to be people of color, more likely to be Black or 
Hispanic than White workers. They are likely to be low wage.
    If you were to raise the minimum wage to $15 by 2024, the 
average age of who would get a wage increase, the average age 
would be about 35 years old. Most low wage workers are not very 
young at all, primarily because so few teenagers work to begin 
with.
    Chairman Scott. Thank you.
    My time has expired. I would ask unanimous consent that a 
letter led by the National Employment Law Project and co-signed 
by 500 worker organizations be entered into the record. Without 
objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Scott. I remind my colleagues that pursuant to 
committee practice, materials for submission to the hearing 
must be submitted to the committee clerk within 14 days 
following the last day of the hearing, preferably in Microsoft 
Word format. Materials submitted must address the subject 
matter of the hearing. Only a member of the committee or an 
invited witness may submit materials for inclusion in the 
hearing record.
    Documents are limited to 50 pages each. Those longer than 
50 pages will be incorporated in the record by way of an 
internet link that you must provide to the committee clerk with 
the required timeframe, but please recognize that years from 
now that link may no longer work.
    I want to thank our witnesses for your participation today. 
What we have heard is very valuable. Members of the committee 
may have additional questions, and we ask the witnesses to 
please respond to those questions in writing. The hearing 
record will be held open for 14 days to receive those 
responses.
    I remind our colleagues that pursuant to committee 
practice, witness questions for the hearing must be submitted 
to the majority staff or the committee clerk within 7 days to 
allow ample time for witnesses to respond. Questions must 
address the subject matter of the hearing.
    Thank you.
    And that concludes the first panel. We will have a 15-
minute break before the next panel. We expect votes presently. 
And as soon as the votes are over, we will return for the 
second panel. Thank you. We are in recess.
    [Recess.]
    Chairman Scott. The committee will come back to order. We 
will now introduce the second panel.
    Ms. Vanita Gupta is president and CEO of the Leadership 
Conference on Civil and Human Rights, the Nation's oldest and 
largest civil rights organization. Ms. Gupta is an experienced 
leader and litigator who has devoted her entire career to civil 
rights work. Before joining The Leadership Conference, she 
served as Acting Assistant Attorney General and the head of the 
U.S. Department of Justice's Civil Rights Division.
    Ms. Simone Barron has been a full service restaurant 
employee for nearly 33 years. She has worked in several cities 
across the country, including Indianapolis and Chicago, and has 
lived and worked in Seattle for the past 17 years.
    Ms. Kathy Eckhouse is founder and co-owner of La Quercia, a 
producer of artisan cured meats made with nonconfinement, 
antibiotic-free, sustainable raised pork from family farmers in 
the Midwest. Based in Norwalk, Iowa, the company produces 
products that are sold throughout the U.S. and Canada.
    Michael Strain is the Director of Economic Policy studies 
at the American Enterprise Institute, AEI. He oversees the 
institute's work in economic policy, financial markets, poverty 
studies, technology policy, energy, economics, healthcare 
policy, and related areas.
    Professor Michael Reich is Professor of Economics at the 
University of California, Berkeley, where he is also the co-
chair of the Center on Wage and Employment Dynamics. The 
professor has published over a dozen books and over 120 papers 
and in the past decade has authored numerous policy and 
scholarly studies on living wages and minimum wages.
    Representative Paul Brodeur is serving his fifth 2-year 
term in the Massachusetts State House representing the 
residents of the 32d District in Middlesex, just north of 
Boston.
    He was the House Chairman of the Joint Committee on Labor 
and Workforce Development during the 2017-2018 legislative 
session. He was successful in convening negotiations between 
labor unions, religious organizations, community groups, 
business trade groups, and employer advocacy organizations to 
reach a landmark agreement which, among other provisions, 
raises the state's minimum wage to $15 an hour by 2023.
    We appreciate all of the witnesses for being here today and 
look forward to your testimony. Let me remind the witnesses 
that we have read your testimony and the testimony in full will 
appear in the hearing record. Pursuant to committee rule 7(d) 
and the committee practice, each of you is asked to limit your 
oral testimony to a 5-minute summary of your written Statement.
    Let me remind the witnesses that pursuant to Title 18 of 
the U.S. Code, Section 1001, it is illegal to knowingly and 
willfully falsify any Statement, representation, writing, 
document, or material fact presented to Congress, or otherwise 
conceal or cover up such a material fact.
    Before you begin your testimony, please remember to press 
the button on your microphone in front of you so it will turn 
on and members can hear you. As you begin to speak, the light 
in front of you will turn green. After 4 minutes, the light 
will turn yellow to signal that you have 1 minute remaining. 
When the light turns red, your 5 minutes have expired, and we 
ask you to wrap up.
    We will let the entire panel make their presentations 
before you move to member questions. When answering a question, 
please remember to once again turn on your microphone.
    We will start with Ms. Gupta.

     STATEMENT OF MS. VANITA GUPTA, PRESIDENT AND CEO, THE 
        LEADERSHIP CONFERENCE ON CIVIL AND HUMAN RIGHTS


    Ms. Gupta. Chairman Scott, Ranking Member Foxx, and members 
of the committee, my name is Vanita Gupta, and I am President 
and CEO of The Leadership Conference on Civil and Human Rights, 
a coalition of more than 200 national organizations working to 
build an America as good as its ideals. Thank you for the 
opportunity to testify here today about the minimum wage.
    The Leadership Conference strongly supports H.R. 582, the 
Raise the Wage Act of 2019. Gradually raising the Federal 
minimum wage to $15 an hour by 2024, indexing it to median 
Federal wages, and ensuring that all tipped workers, working 
people with disabilities, and young people get paid at least a 
full minimum wage is essential for working people to cover 
basic expenses like housing, food, transportation, childcare, 
healthcare, and other necessities.
    Congress has not raised the Federal minimum wage of $7.25 
hour since 2007, and the tipped minimum wage has been stuck at 
$2.13 an hour since 1991.
    First, the Raise the Wage Act of 2019 is a step in the 
right direction toward closing the gender pay gap. In a 2018 
report that we prepared with the Georgetown Center on Poverty, 
we found that nearly half of working people in our country are 
paid less than $15 per hour, 55 percent being women. The 
National Women's Law Center and the National Employment Law 
Project have noted that women of color are more likely than any 
other group to be paid the lowest wages.
    Second, on the tipped minimum wage, it is really important 
to note its history. Before the Civil War, tipping was largely 
frowned upon in the United States, but after the war the 
practice of tipping proliferated, and at that time the 
restaurant and hospitality industry hired newly freed slaves 
without paying them base wages. The effect was to create a 
permanent servant class for whom the responsibility of paying a 
wage was shifted from employers to customers, and having to 
depend on tipping put African-Americans in an economically and 
socially subordinate position.
    The Fair Labor Standards Act then established a bare 
minimum floor for tipped wages only in 1966, and it increased 
to $2.13 an hour in 1991, still leaving tipped workers earning 
far below their basic needs.
    Third, as with the tipped minimum wage, the subminimum wage 
under Section 14(c) of the FLSA that allows people with 
disabilities working in segregated settings to be paid less 
than the minimum wage leaves this already vulnerable community 
that much more vulnerable to poverty and exploitation.
    I previously served as head of the Justice Department's 
Civil Rights Division from 2014 to 2017, where I oversaw the 
Disability Rights Section. In 1999, in Olmstead v. L.C., the 
Supreme Court held that under the Americans with Disabilities 
Act unjustified institutional isolation of persons with 
disabilities constitutes discrimination. And, unfortunately, 20 
years after Olmstead and almost 30 years after the passage of 
the ADA, too many people with disabilities spend their time in 
segregated workshops or day programs with some paid just 
pennies per hour.
    While in theory segregated settings provide job training 
and experience to people with disabilities and help them find 
regular employment in their community, the reality is that too 
many remain stuck in segregated settings for years.
    Cases that the Department of Justice investigated to 
enforce Olmstead's community integration mandate illustrate the 
deep concerns with 14(c) employment, and one of those cases 
involved Oregonians with disabilities, people like Gabrielle 
who dreamed of saving up money to buy a home, who assembled 
nut-and-bolt kits and knee pads in a sheltered workshop for 
$100 to $150 per month. And after the settlement, she began 
working as a grooming assistant at a dog daycare earning more 
than $9 an hour. And as she told a local media outlet, ``I feel 
better about my life, and I ended up buying that house.''
    Some states and localities have taken action to raise the 
minimum wage, and while these States and localities should be 
applauded, Federal action is needed to establish a higher 
universal floor for wages. The Leadership Conference opposes 
prevention laws that allow states to prevent cities and 
counties from raising the minimum wage and proposals like a 
regional minimum wage that could be misused by employers and 
further calcify racial and gender inequities.
    At the 1963 March on Washington for Jobs and Freedom, one 
of the founders of The Leadership Conference, Black labor 
leader A. Philip Randolph, noted, ``Nor is the goal of our 
civil rights revolution merely the passage of civil rights 
legislation. Yes, we want accommodations open to all citizens, 
but those accommodations mean little to those who cannot afford 
them.''
    Working people should be allowed to live with dignity and 
have the dignity of a fair paycheck, and that is what the Raise 
the Wage Act of 2019 would do. And I want to thank you for the 
opportunity to testify at today's hearing.
    [The statement of Ms. Gupta follows:]
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    Chairman Scott. Thank you.
    Ms. Barron.

          STATEMENT OF MS. SIMONE BARRON, SEATTLE, WA


    Ms. Barron. Good afternoon and thank you, Chairman Scott 
and Ranking Member Foxx, for the opportunity to testify today.
    My name is Simone Barron. I am the mom of a smarty-pants 
teen boy. I am a semi-professional actor, and I have worked in 
the full-service restaurant industry for nearly 33 years. I 
have worked in several cities across the country, including 
Indianapolis and Chicago, but I am coming to you today from 
Seattle, Washington, where I have been a tipped worker there 
for the past 17 years.
    Today the minimum wage in Seattle is $15 an hour, and it is 
supposed to be a paradise for employees like myself. Instead, I 
am watching my income drop as the mandated wage rises. As I 
have learned that Chairman Scott has proposed to raise the 
Federal minimum wage to $15, I am here to tell you to, to warn 
you, and to share with you my experience as a full-service 
restaurant worker living in a city with a $15 an hour minimum 
wage.
    To understand my predicament, you first must need to 
understand my industry a bit. Control over my earnings is one 
of the biggest perks of working in the restaurant industry. The 
harder I work to show hospitality to my guests, the better my 
tip, and that is an average of 20 percent that I can garner on 
about every bill.
    The standard tipping model also has a cost of living 
increase built into it, too. As the cost of goods go up, menu 
prices go up, and so do my tips.
    Contrary to the rhetoric of my industry's critics, I am not 
forced to rely on tips. I have been able to thrive on tips. 
Historically, in short four-to 6-hour shifts, I can earn $25 to 
$50 an hour, and that is enough to make a life for myself and 
my son.
    In Seattle, the rapidly rising minimum wage has upset this 
beneficial arrangement. Without getting into the nitty-gritty 
details, you should know that Seattle is one of a handful of 
locales in the country that doesn't count my tips toward my 
hourly wage. What this means in practice is that the pressure 
other businesses are feeling under the 15 is magnified in full 
service restaurants.
    Things have started to change in Seattle in our industry in 
ways that have negatively affected workers like myself. At my 
restaurant, it was the loss of tipping. As 15 went into effect, 
some restaurants made the decision to change the tipping model 
either in favor of a flat stagnant wage or replaced with 
service charges to substitute for tipping.
    The math on that is pretty simple. If you are forced to 
give a raise to tipped employees who are already making 
hundreds of dollars a night in tips, where does the money to 
pay for it come from without a huge jump in prices. Well, my 
employer, who is a leader in our restaurant community, took 
away tip lines and went to a service charge model in order to 
keep his restaurants sustainable for as long as possible.
    Service charges are a mandatory charge to a guest that must 
be filtered through the employer and in which the employee 
receives a percentage instead of a customer tip. In my case, I 
receive only 14 percent of my sales from a 20 percent service 
charge on a bill. So from a $100 sale, I receive $14 on my 
paycheck as a salary commission instead of the $20 or more in 
cash tips that I could have received before. The other $6 is 
then retained by the house to be paid out to support other team 
employment costs and benefits like insurance and vacation.
    The few dollars an hour increase in my minimum wage doesn't 
cover the loss of income because of not receiving tips. Under a 
service charge model, it is less about how I use my knowledge 
and skills to maximize my income. I am no longer bothered to 
give excellent service to receive that tip but must instead 
sell you the most expensive item on the menu to make the sale. 
The minimum wage increase has literally changed my job from the 
art of service to a routine sales job.
    I used to work four shifts a week and made enough money to 
raise my son, pay my rent, go to school, and be part of a 
vibrant arts community. With the cost of living skyrocketing 
and the impact of the minimum wage increase on my income, I had 
to get a second job and work 6 days a week.
    I couldn't sustain that pace. Now I worry every month about 
paying my rent, and this is a worry that I never had until the 
minimum wage increase impacted my job. I have had to give up my 
passion for acting, I no longer can take trips with my kid in 
the summers, and my smaller income all goes to bills. All my 
time goes to picking up just one more shift.
    I have many friends who have lost their jobs because of the 
rise in the wage. And these are not people of privilege. These 
are working folks, people who have invested in their jobs, 
moved up ladders through experience and education, worked hard 
to grow their jobs, only to lose their jobs because of a policy 
forced on their employers.
    My friend, JW, is one of those. He worked his way up from a 
busser to a sommelier over years of experience but lost his job 
because the restaurant he worked closed in Seattle because of 
the minimum wage increase.
    My friend, Ritu was excited when she opened her pizza 
place. As an Indian female business owner, she was proud that 
all of her hard work and experience had led her to a place 
where she could be an owner. After the increase, she closed 
because she could not make the numbers work.
    And these are just two of several dozen stories.
    Now, I understand the typical arguments for legislating 
higher wage rates, and I especially understand that in Seattle, 
where the cost of living is incredibly high, but there is no 
free lunch here. Under our minimum wage increase, tipped 
workers are losing our incomes and moving backward to $15 an 
hour. And I would happily trade my gig in Seattle for the 
golden days in Indianapolis, a so-called low-wage market, where 
I wouldn't be working more for less and watching my financial 
stability whittle away as the minimum wage rises.
    Unfortunately, if Chairman Scott's one-size-fits-all bill 
is passed, I won't even have that option to consider.
    Thank you, and I would be happy to answer questions.
    [The statement of Ms. Barron follows:]
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    Chairman Scott. Thank you.
    Ms. Eckhouse.

STATEMENT OF MS. KATHY ECKHOUSE, OWNER, LA QUERCIA, NORWALK, IA


    Ms. Eckhouse. My name is Kathy Eckhouse. I am the co-owner 
with my husband of La Quercia in Norwalk, Iowa. We make award-
winning cured meats, like prosciutto and pancetta. We source 
exclusively from family farms in the United States, primarily 
in Iowa and Missouri. I strongly support raising the Federal 
minimum wage to $15 by 2024 as called for in H.R. 582 because 
it will be good for businesses, workers, and our economy.
    We founded our business in 2000 and by 2004 we were able to 
build our own production facility. We started with just 
ourselves and now have 60 employees. Our products are sold 
across the United States and Canada in large grocery chains 
like Hy-Vee and Whole Foods as well as independent shops.
    We have always paid a livable wage, and that is an 
important factor in our success. We are a meat processor, a 
generally low-paying sector of the economy. We have been 
committed from the start to true sustainability and livability 
in our work chain from the farmers to our employees.
    Our starting hourly wage for production staff is $12 to $14 
an hour, depending on experience. The cleanup crew, which works 
a later shift, gets a $2 an hour premium. Anyone with us for 2 
years or more is currently making at least $16 to $17 per hour 
plus a quarterly bonus equivalent to a week's wages. We also 
provide paid time off, paid maternity leave, and other 
benefits. All our employees work full-time year round.
    The Raise the Wage Act does not call for a quick jump to 
$15. It calls for gradually raising the minimum wage to $15 by 
2024 which will give businesses time to adjust and experience 
the benefits of higher wages.
    Reduced turnover is one benefit. High employee turnover is 
common in low wage industries. Turnover is costly for a 
business in terms of both money and time, requiring advertising 
open positions, screening applicants, training, and onboarding.
    Employees new to our operation or any operation are less 
productive. It takes at least 3 months for an employee to learn 
our particular processes and be efficient, even those who 
worked in meat processing plants before. It takes a year for 
true proficiency. We see more waste, more downtime, and more 
inefficiency on our production line with newer staff. That is 
costly.
    In addition, not spending time on a constant cycle of 
rehiring and training frees us to look beyond the day to day to 
innovate and grow our business. It encourages employees to be 
part of that process, too, as they develop new skills and 
techniques and familiarity with our work.
    A minimum wage that covers the basics like rent, groceries, 
and transportation reduces turnover, reduces employee stress, 
and allows them to be more focused and productive at work.
    It also has a broader societal impact. When businesses pay 
wages that are not enough to live on, the costs of necessities 
get partly shifted to the community at large, the taxpayer-
funded government assistance programs and food banks, for 
example. It also means that our business is subsidizing the 
profits of low pay competitors.
    This is not a fair or efficient way to run an economy. 
Workers in one business are the consumers for another. Minimum 
wage increases put money in the hands of people who will spend 
it. Increased wages mean increased consumer spending.
    My home, State of Iowa uses the Federal minimum wage floor 
of $7.25, as do 20 other States. In 2017, Iowa enacted a law 
that blocked cities or counties from setting higher minimum 
wages, and it is unlikely that Iowa will raise our state 
minimum wage ahead of the Federal. We need a Federal increase 
to ensure that wherever people live and work in Iowa or around 
the country and whoever they work for, they can at least meet 
their basic needs.
    For 80 years, the Federal minimum wage has set the national 
wage floor. I do not support a regional approach to the Federal 
minimum wage. Nobody should receive a geographical penalty on 
their wages.
    Raising the minimum wage is not a threat to business. 
Inadequate wages are, weakening the consumer demand that 
businesses depend on to survive and grow. The minimum wage is 
the floor in working people's lives and should enable a minimum 
standard of living that workers and businesses can build on, as 
we have.
    This is why I have joined with businesses across the 
country to call for raising the Federal minimum wage. It is 
time to get moving to $15 by 2024 to help businesses, workers, 
communities, and the economy to thrive.
    Thank you for having me today, and I am happy to answer 
questions.
    [The statement of Ms. Eckhouse follows:]
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    Chairman Scott. Thank you. Dr. Strain.

STATEMENT OF DR. MICHAEL R. STRAIN, PH.D, DIRECTOR OF ECONOMIC 
 POLICY STUDIES, AND RESIDENT JOHN G. SEARLE SCHOLAR, AMERICAN 
             ENTERPRISE INSTITUTE, WASHINGTON, D.C.

    Mr. Strain. Chairman Scott, Ranking Member Foxx, and 
members of the Committee, thank you for the opportunity to be 
here today to discuss raising the Federal minimum wage to $15 
per hour. It is an honor. Congress should not increase the 
minimum wage to $15 per hour. The benefits of doubling the 
minimum wage would accrue to middle class households while the 
cost would be borne by workers with relatively fewer skills and 
less experience.
    It is already difficult enough for workers without a 
college education, workers trying to get their start in the 
labor market, and more vulnerable workers, including the 
formerly incarcerated, to find jobs. Congress should not erect 
a barrier in their paths in order to legislate a raise for the 
middle class.
    Increasing the minimum wage to $15 per hour would very 
likely result in significant reductions in employment. For 
context, consider the Congressional Budget Office's analysis of 
President Obama's proposed $10.10 minimum wage. CBO found that 
would cost half a million jobs. Importantly, CBO also found 
that the extra earnings generated by a $10.10 minimum wage 
would accrue to households above the poverty line. Three 
dollars out of every $10 of extra earnings would go to 
households earning more than triple the property line, while 
only $2 in every $10 would go to the working poor. Fully $8 in 
$10 of extra earnings generated by the $10.10 minimum wage 
would go to families in the working and middle classes and not 
to the working poor.
    CBO's analysis then highlights several important tradeoffs 
for minimum wage increases. First, they reduce employment while 
raising earnings. Second, most of the benefits of increases go 
to families that aren't in poverty, while most of the costs are 
borne by the least-skilled and least-experienced workers in the 
labor market. These tradeoffs are only more severe for a $15 
minimum wage, because $15 is such a high-wage floor.
    It is hard to overstate how high this wage floor would be. 
Over half of all workers in Mississippi and Arkansas make less 
than $15 an hour. In 20 States, half of all workers earn less 
than $17 an hour. Nationally, around one-third of workers, one-
third earn less than $15 per hour.
    Given how many workers earn at or just above $15 per hour, 
a $15 wage floor would be extremely disruptive to the labor 
market and would likely cause significant employment reductions 
and other unintended consequences. It is hard to forecast with 
confidence how severe employment reductions would be, because a 
$15 minimum is so far outside our evidence base. But research I 
have done studying previous minimum wage increases finds that 
larger increases produce disproportionately larger employment 
reductions. In other words, if employment fell by X percent 
when we last increased the minimum wage, my expectation is that 
employment will fall by more than X percent as the minimum wage 
goes higher and higher.
    The productivity of workers, the additional revenue they 
are able to generate for their employer for each hour they 
work, is the primary determinant of their wages. Why would a 
firm pay a worker $15 per hour when that worker is only 
generating, say, $9 in revenue for every hour he or she works? 
If a firm paid this high minimum wage to that worker, it would 
be losing money every hour he or she worked. Businesses can 
absorb and have absorbed minimum wage increases through 
channels other than reducing employment, but they can only cut 
profit margins so much or raise the prices they charge for 
goods and services so much higher.
    Doubling the Federal minimum wage will leave many with no 
choice other than to cut jobs. This is particularly true if 
Congress indexes the minimum wage to median wage growth or to 
any other measure of price or wage inflation. Research I have 
done shows that preventing the value of the minimum wage from 
eroding over time through indexing leads businesses to reduce 
employment more than they otherwise would. My research finds 
the magnitude of employment reductions is three times more 
severe in the presence of indexing.
    Raising the minimum wage to $15 an hour sends us into 
unchartered waters. It is imprudent. It is a very risky gamble, 
with the employment opportunities and livelihoods of the least 
skilled, least experienced, and most vulnerable workers in the 
United States bearing the risk. There are better ways to help 
the working poor than a policy that risks putting so many of 
them out of work. Thank you.
    [The statement of Mr. Strain follows:]
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    Chairman Scott. Thank you. Dr. Reich.

STATEMENT OF DR. MICHAEL REICH, PH.D., PROFESSOR, UNIVERSITY OF 
                    CALIFORNIA, BERKLEY, CA

    Mr. Reich. Thank you, Chair Scott, Ranking Member Foxx, and 
the other members of the committee, for the opportunity to 
testify today about the Raise the Wage Act of 2019.
    I want to begin--and this is not planned--by talking about 
Amazon. Amazon announced last October it was going to raise its 
minimum wage for all its workers--temporary, seasonal regular, 
250,000 workers in the United States--to $15 an hour. It was a 
substantial increase, even in rural areas and in low-wage areas 
of the South. These are for the big warehouse centers that they 
maintain.
    This was a good business decision by Amazon. It has not 
disrupted those local labor markets, those rural labor markets. 
In fact, Amazon, the only disruption I guess is that Amazon got 
850,000 requests for a job at Amazon, quite a large number, 
reducing their recruitment and retention costs.
    I wanted to make five points or touch on five points. Well, 
rather than say what they are I will just go through them, 
because I don't have enough time to do the prelims. First of 
all, the increase from $7.25 to $15 is over 6 years, is 
surprisingly smaller than it might appear. First, $15 in 2024 
is about $13 or $13.33 in 2019 dollars, depending on which 
price series and forecast you use.
    Second, entry-level wages in unskilled jobs in our low-wage 
states, not just in high-wage states, in our low-wage states 
are already near or above $9. We heard some testimony, some 
comments earlier today to that effect in North Carolina. And 
those wages are going to go up anyway, 3 percent per year has 
been the forecast that was mentioned. That would bring you to 
$10.50 anyway by 2024.
    So an increase from $10.50 to $13 is about a 30, 35 percent 
increase, 5 percent per year. That is well within the range of 
previous experience. If you want to calculate it another way, 
you could say that the increase from $9, the entry-level pay 
today, to $13.33 is a 48 percent increase. That sounds high, 
but it is over 6 years, so it is about 8 percent per year. By 
comparison, most of the 140 or more State and Federal minimum 
wage increases of the past 35 years have averaged between 6 and 
9 percent. Some of the citywide minimum wage increases have 
been as high as 28 percent in a given year.
    Now, 5 years ago, many minimum wage experts, including 
myself, told officials in Seattle and Los Angeles that a $15 
minimum wage would be a bold experiment into unchartered 
territory. In 2019, however, we have the early results from 
many recent minimum wage experiments. These include States like 
California and Massachusetts that are $12 an hour, New York 
City that is at $15, San Francisco is at $15, Seattle is at $15 
and so forth. So the increase in real wages from H.R. 582 
actually does lie within our historical experience. That means 
that the studies that researchers have done does provide a good 
roadmap to what the likely effects are going to be.
    Now, I want to emphasize that the studies that minimum wage 
economists have done have really changed in their findings over 
the last 30 years, especially in the last 10 years and even in 
the last year. Increasingly, we find very small effects of 
minimum wages on employment. It is really important to be up to 
date when doing a review of this literature. And these new 
studies are of better quality, they have better data than the 
old ones, and they have been influential.
    In 2015, a panel of prominent economists put together by 
the University of Chicago Booth School of Business asked the 
panel what would be the likely effects of a $15 minimum wage? 
This was in 2015. An overwhelming majority did not think it 
would have a substantial negative effect on employment. Since 
then, we have had further improvements in our research methods 
and the datasets that we can use to study the effects of 
minimum wages.
    These newer studies really supersede the estimates from the 
old ones. It is just not Ok anymore to rely on these very old 
studies. We now, for example, have excellent estimates of the 
effects on all jobs. Our older studies used to look at teens 
and restaurant workers, and we would then try to guess how many 
workers would be affected throughout the labor force. CBO just 
took a guess at that in 2014.
    What do these studies tell us? Well, I review the 
literature in detail in my submitted testimony. In one 
sentence, I would say the new studies indicate that a $15 
minimum wage by 2024 will work as it was intended to, that is 
intended to, increase pay, will have minimal to no adverse 
effects on employment.
    I have to say, of course, that I have been a participant, 
an active participant in doing these studies. My most recent 
one looked at minimum wages in six cities that are the pioneers 
in going above $10 all the way. By 2016, they were $13, which 
is the equivalent of--well, it is higher than what $15 would be 
in 2024. And those included some low-wage cities or low-cost 
cities like Chicago as well as San Francisco and Seattle and so 
on. And we found, a very careful study, that it did not have 
any effect on restaurants' employment.
    Why does the minimum wage have such small effects? We are 
also making progress on that front. Labor demand might fall, 
that is true, but automation is really overrated. A lot of it 
has already happened. It is going to happen anyway, because 
technology costs are falling. Don't blame the minimum wage for 
the good effects of automation. Labor supply has not been 
mentioned very much, but labor supply of low educated workers 
is going to increase, especially those who have young children 
and high child--
    Chairman Scott. Summarize the rest of your testimony. You 
are about a minute and a half over.
    Mr. Reich. I am not following what you are saying. I still 
have a minute and a half, right?
    Chairman Scott. No, you are over a minute and a half.
    Mr. Reich. Oh, my God. Ok. I will bring it to a close. All 
right. I will bring it to a close.
    I will just say very briefly that there are price 
adjustments that will occur that are pretty small that could be 
handled by most industries. Individual businesses can't 
understand how much the prices are going to go up, because they 
are just an individual business. But these costs are changing 
for all businesses, and when you do the math, simple math, you 
find very small price increases. The latitude to increase 
prices is more limited in manufacturing, but we have already 
lost all or most of our low-wage manufacturing.
    And then we are going to have an economic stimulus, because 
there will be more consumption demand. The effects will be 
greater in the low-wage cities--low-wage states, I am sorry. 
And the low-wage States will have a more educated, more 
healthy, and a bigger work force. So I would say, contrary to 
the fears that some people have said that you have to look only 
at cost, in fact, the effects are going to be much better in 
the low-wage States.
    Thank you. And apologize for going over.
    [The statement of Mr. Reich follows:]
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    Chairman Scott. Representative Brodeur.

    STATEMENT OF THE HONORABLE PAUL A. BRODEUR, ESQ., STATE 
   REPRESENTATIVE, 32ND MIDDLESEX DISTRICT, COMMONWEALTH OF 
             MASSACHUSETTS HOUSE OF REPRESENTATIVES

    Mr. Brodeur. Good afternoon, Mr. Chairman, Ranking Member 
Foxx, and members of the committee.
    My name is Paul Brodeur, and I have the honor of serving 
the residents of Melrose, Wakefield, and Malden in the 
Massachusetts State Legislature as their State Representative.
    I wish to share my perspective on the success we have had 
in the Commonwealth of Massachusetts confronting the problem of 
wage stagnation while creating a stronger economy by increasing 
our minimum wage to $15 an hour by 2023. Two years ago, under 
the leadership of our Speaker, Robert DeLeo, I was appointed to 
serve as the House chair of the Joint Committee on Labor and 
Workforce Development.
    The Commonwealth faced significant challenges. Despite 
historically low unemployment rates, income inequality was 
growing. New jobs were being created at a promising rate, but 
overall wage growth remained stagnant. Like you, our committee 
held extensive hearings and heard many hours of testimony. The 
statistics and expert testimony were compelling, but I was 
particularly struck by the stories we heard from Massachusetts 
workers and their families. We heard from single moms and dads 
that were working multiple jobs, teens who helped their 
families make ends meet, and families who have been working 
paycheck to paycheck for generations.
    We also heard from employers who care deeply about their 
workers, but were concerned about the impacts on their 
businesses. In particular, middle-skilled jobs went unfilled, 
which limited their business growth. And we heard from folks 
who want to get ahead, who want the training and skills to move 
out of low-wage jobs but cannot, because they do not have the 
time, energy, or money to seize those new opportunities.
    In response, our committee convened negotiations among a 
broad coalition of community organizations, religious groups, 
labor unions, and representatives of businesses, both large and 
small. Ultimately, we were successful in passing into law a 
bipartisan bill, which improved the financial stability of 
working families in the Commonwealth within a robust Statewide 
economy. Here is what shaped our efforts: We knew from our past 
experience that previous increases to our minimum wage had 
produced economic gains for workers while unemployment 
decreased and business confidence increased.
    Looking forward or projecting ahead, the Massachusetts 
Budget and Policy Center testified that nearly one-quarter of 
Massachusetts workers would benefit from an additional gradual 
increase in our minimum wage, and that this would include 
nearly one-fifth of all working parents in Massachusetts. We 
also knew that these working families will spend their 
additional income on our main streets and in our downtowns. 
These observations of our past experience, coupled with 
projections based on sound economic principle, led us to 
raising our minimum wage.
    During our deliberations, we considered a regional minimum 
wage, but rejected implementing one. We found it is very 
difficult to draw those lines, particularly when geography is 
not a clear indicator of cost of living. Locking certain 
regions of our State into lower wage status by using regional 
wage boundaries would detract from our hard work in investing 
in and revitalizing those cities, towns, and neighborhoods that 
needed help the most.
    Similarly, we rejected the creation of a training wage or 
teen minimum wage. Now, we all agree on the importance of 
getting that first job. It can be an incredible learning 
experience and can be a foundation for lifetime success. 
However, the testimony we heard and the statistics we reviewed 
told a more complicated story about teen employment.
    Teen workers are responsible in Massachusetts for nearly a 
fifth of household income amongst our poorest families. These 
teens are not merely working a summer job for extra spending 
money, but they are functioning as breadwinners for their 
families or earning money to further their education. Creating 
a complicated training wage system that few would use or a teen 
wage that would push other low-wage workers, including seniors, 
out of the job market was inconsistent with our goal of helping 
working families.
    So, contrary to what you may think, Massachusetts isn't 
populated exclusively with elitist, wealthy, Ivy Leaguers. We 
are a diverse state of financiers and family farmers, laborers 
and lawyers, researchers and entrepreneurs, blue bloods and 
blue-collars. We have a proud history of tackling hard problems 
by working together to solve them. Finding a balance between 
these diverse and often conflicting interests was at the 
forefront of our work in raising up the minimum wage.
    I appreciate the opportunity to address you today. I thank 
you for the opportunity, and I am available to answer any 
questions you might have.
    [The statement of Mr. Brodeur follows:]
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    Chairman Scott. Thank you. Thank you.
    We will now recognize members in the order of appearance 
this morning, and the first one is Representative Adams of 
North Carolina.
    Ms. Adams. Thank you, Mr. Chair, and thank you, Ranking 
Member. And thank you all for your testimony and for being here 
today to our second panel of witnesses.
    We have been here a while and we have had I think a lot of 
testimony and certainly testimony to the fact that poverty 
level wages don't instill dignity. That is the first thing I 
want to say. Equality makes dignity, and dignity demands a job 
and a paycheck that lasts throughout the week, and I am quoting 
Dr. Martin Luther King on that.
    I am glad that we split today's hearing into two parts, 
because I don't think enough is said about the positive impact 
that raising the minimum wage has on our economy as a whole. 
Too often we view economic progress as a zero-sum game where if 
workers win, employers lose. But our economy is built by 
consumers. The more money Americans have in their pockets, the 
more they can spend on the goods and services that American 
businesses produce. So don't take my word for it, a consensus 
of economists say the same thing.
    And with that, Mr. Chair, I want to enter into the record 
two letters, both from the Economic Policy Institute, one from 
Senior Economist and Director of Policy Heidi Shierholz, and 
the other signed by a collection of over 100 of our Nation's 
leading economists.
    Chairman Scott. Without objection.
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    Ms. Adams. All of these individuals are in support of the 
notion that a $15 minimum wage is beneficial to our economy and 
is long overdue.
    Ms. Eckhouse, you state in your testimony that when workers 
have more money in their pockets, they spend it. Why is it 
that--so why is it that it is so important for a business, 
including a business like yours that does not sell directly to 
consumers?
    Ms. Eckhouse. Thank you for your question, Congresswoman.
    One thing that is very important to us is, of course, what 
we make is sold to be eaten, and people need to be able to buy 
it so that they can enjoy it and we can continue as a business. 
So that is the first element. People have to have money in 
their pockets to buy food, and we make food. That is one thing 
that we do.
    The other thing that is important is that if people in our 
employ or in other companies' employ have more money, they can 
do things like purchase goods and services in their 
communities, and that is really important.
    Ms. Adams. Ok. Everybody has to eat, and we heard this 
morning from laborers, workers who are in the fast food 
business and other businesses who have a difficult time trying 
to make the ends meet for their family.
    Professor Reich, the research and the testimony of Ms. 
Eckhouse clearly makes a compelling case that increasing the 
minimum wage boosts consumer spending. What about savings?
    Mr. Reich. First, I think her argument is borne out by a 
number of studies from the Federal Reserve Bank of Boston that 
show that the bigger the wage increase, minimum wage increase, 
the more consumer spending goes up. I think people who are 
making the minimum wage, most of them aren't saving, and 
probably most of their income, most of their increased income 
goes to items like food, to buying a used car.
    The other effect that it has is on improving credit scores. 
And if you improve credit scores, you know, you have much lower 
interest rates and you can borrow. So ultimately, maybe it will 
get you to savings, but I don't think at $15 we are talking 
about a lot of savings.
    Ms. Adams. Ok. Can you make the argument that raising the 
minimum wage allows individuals and families to make 
investments that provide long-term sustainable returns?
    Mr. Reich. Well, first of all, I think people who are 
struggling to make ends meet every month--and that isn't just 
people who are below the poverty line, it is many people who 
are above the poverty line. The Federal Reserve just did a 
survey showing about one-third of Americans couldn't meet a 
sudden $400 financial requirement. One-third, that is a very 
large number.
    Anyway, people who are struggling on a day-to-day level 
like that aren't--you know, they are having a hard time being 
organized. They are having a hard time getting their kids to 
school, getting their cars to work, dealing with all the 
disruptions that everyday life has. And so I think if they want 
to, you know, be able to invest in training and education, it 
requires more income. Often it requires more time, you know, 
being able to work.
    Ms. Adams. Ok. Thank you very much.
    Mr. Chair, I yield back.
    Chairman Scott. Thank you. Ranking Member Foxx, do you want 
to be recognized?
    Ms. Foxx. Would you recognize Mr. Comer?
    Chairman Scott. Ok.
    The gentleman from Kentucky, Mr. Comer.
    Mr. Comer. Thank you, Mr. Chairman.
    And, Ms. Barron, I really appreciated your testimony. The 
minimum wage is often talked about as a policy to help low-wage 
or lesser skilled workers, but you didn't seem to fit in either 
of those categories. You are earning a good living--
    Ms. Barron. I do, yes.
    Mr. Comer [continuing]. in the restaurant business. But 
that was because of your skills and your work ethic--
    Ms. Barron. Yes.
    Mr. Comer [continuing]. and your experience. Seattle's $15 
minimum wage did not appear to help you. Would it have been 
better for the city of Seattle to just not do that and not try 
to help you?
    Ms. Barron. I didn't ask for the help. I was doing just 
fine. We don't have a tip credit in that city, and that is 
another reason why it just is not working out.
    Mr. Comer. That is my experience. I was a state legislator 
for 11 years in Kentucky, and I look back from a historical 
standpoint and there were a lot of bills that passed with good 
intentions but had unintended consequences. And I want to say 
it sounds like a policy that was supposed to help workers now 
appears to be doing the opposite in Seattle.
    As we are considering a legislative proposal to radically 
increase the Federal minimum wage and eliminate the tip credit, 
what would you want us to take into consideration, based on 
your experience?
    Ms. Barron. I would say take into consideration tip credit 
for sure. I mean, that is one of the reasons why tipped workers 
in Seattle are having a hard time now. The tip models are 
changing, and we are losing money. And, you know, I lose money 
on a daily basis under a service charge, which is something 
that is going citywide now.
    And so I would say you have to look at this whole 
situation. It is a one-size-fits-all deal, and it doesn't fit 
everything. So please, you know, look at it a little closer.
    Mr. Comer. And I couldn't agree more that one size does not 
fit all, because the economy in Washington State is 
significantly different than the economy in rural Kentucky, 
where I represent. So I appreciated that.
    Dr. Strain, as you noted in your testimony, there are large 
regional differences in cost of living and average income. 
Obviously, the cost of living in Seattle is significantly 
higher than it is in Monroe County, Kentucky, where I reside. 
Can you elaborate on how a $15 minimum wage may result in 
disproportionate job losses in regions that have lower cost of 
living and lower average incomes?
    Mr. Strain. Yes. In addition to those differences, there 
are also differences in the existing minimum wages. Some States 
follow the $7.25 Federal minimum. Other States have 
significantly higher minimum wages. And, you know, the 
important thing to consider is how big of a shock will this be 
to the employers of low-wage workers?
    There are many businesses who will see the cost of 
employing minimum wage workers double. There are some 
businesses who will see the cost of employing minimum wage 
workers not double, but go up by 50 percent or something like 
that. And it stands to reason, and the evidence bears out, that 
the larger that shock and the larger the increase, the harder 
it will be for businesses to deal with that without reducing 
employment.
    Mr. Comer. And I will say again what I said in the first 
segment of testimony this morning. I believe that we are in a 
position in America now where we are finally starting to see 
wage growth. I think it is a result of policies over the last 2 
years from a regulatory standpoint and from a lower taxation 
standpoint. Hopefully, we won't do anything to deter the job 
growth that is being created just from the market. There is a 
shortage of workers. It is basic supply and demand.
    So I appreciate you all's testimony. Thank you, Ranking 
Member Foxx, for letting me ask questions.
    And I yield back, Mr. Chairman.
    Chairman Scott. Thank you. The gentlelady from Oregon, Ms. 
Bonamici.
    Ms. Bonamici. Thank you, Chairman Scott.
    And to the witnesses, I apologize I was not here to hear 
you present your testimony, but I certainly have reviewed it. I 
think it is important to keep in mind as we have this 
conversation about the Raise the Wage Act, which I am proud to 
support, that the increase is phased in. It is not all of a 
sudden. And also, low-wage workers spend their additional 
earnings. They go right back into the local economies.
    Ms. Gupta, in your testimony, you talk about how over 31 
million children, two out of every five children live in 
households with at least one working person earning less than 
$15 an hour. Can you talk a little bit about how--because we 
talked a lot about the wage earners, but can you talk a little 
bit about the children and how these low incomes affect them, 
their health, their education as they are growing up?
    Ms. Gupta. Yes. Thank you, Congresswoman, for the question. 
Everyone should be paid fairly, including young people. And 
some young people working--some young working people I should 
say currently being paid the lower youth subminimum wage, they 
are also students. Some of them are the sole family wage 
earner. We heard from Mr. Wise this morning, who talked about 
his own experience being the main provider for his family and 
being unable to do so on the existing minimum wage.
    The National Employment Law Center notes that of the 18-and 
19-year-olds that are enrolled in college, 70 percent are 
working. And so that is why we have to be paying attention to 
the role that young people play in their families. For many of 
them, they really are, you know, mainstream supporters and 
earners for their families and have a lot of other obligations.
    Ms. Bonamici. So it is fair to say that the children who 
are being raised by parents making less than minimum wage are 
affected as well. It doesn't just affect the wage earner; it is 
affecting their families and their children as they are growing 
up, because they might not have the food and resources and 
healthcare they need.
    Ms. Gupta. Absolutely.
    Ms. Bonamici. And also, Ms. Gupta, I want to get a couple 
questions in. Oregon is one of those States that prohibits 
employers from paying tipped workers a subminimum wage. I said 
this morning I was surprised to find out that there were other 
states that allowed a subminimum wage. Research demonstrates 
that workers in the seven States that have eliminated 
subminimum tipped wage continue to receive tips from customers. 
Businesses have not suffered hardship.
    In your testimony, you discuss the origins of the tip 
minimum wage, which are intertwined with the history of slavery 
in this country. Why do some states still continue to allow it 
and who would benefit from gradually phasing it out, as 
proposed in the Raise the Wage Act?
    Ms. Gupta. Well, the civil rights history I think or the 
history of the tip minimum wage is crucial to understanding why 
States need to move away from it. The reality is that poverty 
rates for people who work for tips are more than twice as high 
as rates for working people overall. And the people most 
affected are women of color, low-wage earners. The median 
annual income for tipped workers of color is $14,300. For black 
working people, it is even lower at about $12,900 per year.
    And as we noted, tipped workers have not received a raise 
in 28 years, but the actual racial impact and the gender impact 
of the current policies in states that have frozen the tip 
minimum wage for so long really disproportionately impacts 
women of color in families.
    Ms. Bonamici. Thank you.
    And, Dr. Reich, thank you for your testimony. The most 
recent increase to the Federal minimum wage a dozen years ago 
did not address inflation rates, or in my State of Oregon, we 
indexed to inflation, based on the CPI.
    And I wonder if you could talk a little bit about how $15 
in 2024 does not equal $15 in today's dollars. When you adjust 
past increases to the Federal minimum wage for inflation, how 
does the Raise the Wage Act compare? Based on your research, 
can you address projected effects on employment?
    Mr. Reich. On employment? Well, first, the question on 
indexing, there are about ten states that index their minimum 
wages, and I couldn't find any difference on the employment 
effects in the states that do and the states that don't.
    The States that do index and have for a long time, like 
Washington and Oregon, are actually a very interesting research 
topic, because in the rest of the country the real minimum wage 
has fallen where there hasn't been indexing and it stayed at 
$7.25. So you see an increase in the minimum wage, but then in 
the subsequent years the real value decreases. So, you know, 
are we really observing an increase in the minimum wage when we 
look at those events? In the index states, we do see those 
events. So I think that is--and in those states, we don't see 
negative effects on employment from indexation.
    Indexation means that there is a planful, you know, 
approach to the minimum wage each year, which means a small 
couple of percent increase rather than the kind of sawtooth 
pattern that we have, we have big increases every 10 years or 
so followed by long periods where we don't.
    Ms. Bonamici. Thank you.
    And I yield back. Thank you, Mr. Chairman.
    Chairman Scott. Thank you.
    The gentleman from Kansas, Mr. Watkins.
    Mr. Watkins. Thank you, Mr. Chairman.
    Dr. Strain, you bring up the fact that there is a lack of 
international evidence regarding the effects of doubling 
minimum wage. In fact, you explained how States who increase 
their minimum wage are taking on a gamble. Now, I asked for 
international comps because I have lived outside the U.S. most 
of my career. I have been to about 75 countries, and I have 
never seen a country with more economic opportunity and more 
freedom and a chance to advance as the United States.
    So my question is, why is there a lack of international 
evidence that might compare to what this committee is 
considering today?
    Mr. Strain. Well, I think it serves to highlight how major, 
how big of a decision this would be for the Congress. There are 
not countries that have gone up to a level like $15, because 
$15 is a very high wage. There is a reason why in the United 
States only until very recently no states had gone up to $15, 
and there is a reason why the Federal minimum wage is less than 
half of $15.
    Mr. Watkins. Can you think of any other nations in 
particular that might have come close?
    Mr. Strain. I think Great Britain is around $12 or so.
    Mr. Watkins. All right. That is all I have.
    Thank you, and special thanks to Ms. Barron. I really 
appreciate your willingness to come and speak with us today. 
Your testimony was very moving and you are very selfless. Thank 
you.
    Ms. Barron. Thank you.
    Chairman Scott. The gentleman yields back.
    The gentlelady from Florida, Secretary Shalala.
    Ms. Shalala. Thank you very much, Mr. Chairman.
    Just to begin, Florida's minimum wage as of January 1st is 
$8.46. It does increase with the rate of inflation, but a 
living wage in Miami-Dade, in my district in particular, would 
have to be almost $13. So I very much support this gradual 
increase.
    If I could start with Mrs. Eckhouse, I am very excited to 
see you, because I get your meat through Murray's.
    Ms. Eckhouse. Wow, I am thrilled. Thank you.
    Ms. Shalala. I have to disclose that. So I am a big fan.
    Ms. Eckhouse. Wow, that is really exciting. Thank you so 
much.
    Ms. Shalala. I am interested because you are in the middle 
of Iowa, obviously in a small--it looks like a small town in 
Iowa. Tell us a little about the turnover rate, how long your 
employees have worked for you, because I have always been 
interested in when you raise wages what that actually does with 
turnover and retention. You obviously have done this over a 
long period of time.
    Ms. Eckhouse. So we opened our plant--we built our plant in 
2004 and we opened it in 2005, in February. Our longest term 
employees have been with us since then, just a few. And we have 
had periods of greater and lesser turnover, but we do have a 
lot of loyalty among our employees. They appreciate that we pay 
high wage to them, as high as we can manage, that we give them 
regular increases in their wage. And we have a lot of other 
elements that we offer to our employees in addition to their 
hourly wage or their salary.
    But we have--we really--given the industry that we are in, 
which is the meat processing industry, we have a relatively low 
rate of turnover among our employees; and that is, as I said in 
my testimony, really critical to us, because, like all 
businesses, what we do is unique, but ours is possibly more 
unique than others, which I realize is not a grammatically 
correct formulation. But really, what we do is unusual and we 
need to train people very carefully to do a good job. And it 
takes a long time to train them, and to have people walk out 
the door because they can get more money somewhere else, that 
is damaging to us as a business and discouraging to us as well.
    Ms. Shalala. Thank you very much.
    Dr. Reich, I have been very interested in your work for 
some time, and I am particularly interested in the discussion, 
and you are talking to us a little about the offset for minimum 
wage, the SNAP program, for example. And that is, by raising 
the minimum wage, I believe we would save money on the 
Supplemental Nutrition Assistance Program, because there would 
be less people using that program as the minimum wage went up.
    Mr. Reich. That is right. I looked at not just the rules, 
which say that there is a ceiling above which you are no longer 
eligible for the SNAP program, and that it is not really--or to 
mix my metaphors up, I guess, it is not a cliff. You don't fall 
off it all of a sudden. It is a gradual decline in the food 
stamps that you get. And when I compared that across states 
with different minimum wages and try to make everything else 
controlled so that it was a controlled experiment, we found 
that, indeed, higher minimum wages led to lower food stamp 
expenditures as well as food stamp enrollments.
    Ms. Shalala. I appreciate that.
    Mr. Chairman, just raising, increasing the minimum wage in 
my State of Florida to $10.10 per hour would decrease SNAP 
expenditures by $290 million. So when we talk about raising the 
minimum wage, we have to look at how it would offset certain 
Federal programs and actually create an offset that would be 
significant for the Federal Government.
    Thank you. I yield back.
    Chairman Scott. Thank you. The gentleman from Idaho, Mr. 
Fulcher.
    Mr. Fulcher. Thank you, Mr. Chairman.
    I think my question is best geared toward Dr. Strain. In 
our State of Idaho, approximately 65 percent of our commerce in 
the tax receipts come through what would be considered a small 
business or ag-based economy. And I just try to look at this, 
and I understand what my good colleague from Florida just 
mentioned about the potential offsets with Federal programs, 
but that is taxpayer money as well. If we take that minimum 
wage to $15 in our State, where does that money come from?
    Mr. Strain. Well, the money comes from smaller profit 
margins for businesses that can continue to employ workers. The 
money comes from employing fewer workers and finding more cost-
effective ways for businesses to conduct their operations 
without workers. So one obvious example of that is switching 
from human cashiers to automated kiosks and things of that 
nature.
    You know, there is no kind of magic source of money for 
these things. When Federal regulation says that you can't pay a 
worker less than $15 an hour, businesses take that as a given 
unless they break the law. And, of course, there is a 
nontrivial rate of subminimum wage payments. The higher the 
minimum wage goes, the more of a problem that will be.
    But businesses take that as a given and then decide whether 
or not it makes sense to hire the next worker. And the concern 
is that businesses will decide it does not make sense to hire 
the next worker.
    Mr. Fulcher. Thank you. So in our situation potentially as 
policymakers, we would need to go into this understanding that 
part of the calculus, part of the result, part of the impact of 
implementing this would be that we are knowingly redistributing 
that revenue from one party to another, because what I am 
hearing you say is that the prices would have to go up or they 
would have to figure out how to put cost down in some other 
area.
    Mr. Strain. Yes. One way to think about it in those terms 
is that you are taking money away from low-skilled, less 
experienced workers and giving it to workers who get to 
continue keeping their jobs, who will disproportionately be 
higher skilled workers with more experience. And, you know, I 
think the position that you are in is to decide whether that is 
a good tradeoff.
    Mr. Fulcher. Thank you, Dr. Strain.
    Thank you, Mr. Chairman. I yield back.
    Chairman Scott. Thank you. The gentleman from Michigan, Mr. 
Levin.
    Mr. Levin. Thank you, Mr. Chairman.
    With permission, I would like to submit for the record a 
letter from I think 10 or 12--I didn't count them--
organizations representing disability rights groups, just an 
incredible range of groups, the Autism Society of America, 
Disability Rights and Education Defense Fund, National Down 
Syndrome Congress, supporting the bill.
    Chairman Scott. Without objection.
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    Mr. Levin. And, Ms. Gupta, I would like to ask you a 
question about this very matter, their letter. The FLSA has a 
provision, section 14(c), as you know, that allows individuals 
with disabilities to be paid a subminimum wage. As your 
testimony States, some are paid as little as pennies an hour. 
Why is it important to phaseout 14(c) to ensure all people in 
this country are paid a fair wage, as these groups are 
requesting?
    Ms. Gupta. Thank you, Congressman. Section 14(c) of the 
FLSA was actually written at a time when individuals with 
disabilities were predominantly housed in institutions and 
endured long-term segregation. At that time, there were no 
statutory requirements that would support individuals with 
disabilities in the workplace, and individuals with 
disabilities didn't actually have legal protections from 
discrimination.
    And when Congress passed the ADA in 1990, it ushered in a 
new era, and then the Supreme Court issued their Olmstead vs. 
L.C. opinion. And the reality is that people with disabilities 
deserve to work alongside friends, peers, and neighbors without 
disabilities. They deserve to earn fair wages, to access equal 
opportunity for advancement. And the 14(c) of the FLSA has 
really locked classes of people with disabilities, particularly 
with intellectual and developmental disabilities, into really 
degrading subminimum wage and sheltered workshops.
    Mr. Levin. And I assume it almost assures their continued 
dependence on family or Federal dollars of other kinds to be 
able to live and have food and shelter and so forth.
    Ms. Gupta. That is right. It has created an increased long-
term dependency and, of course, this also can create deeply 
kind of humiliating and personal experiences that make people 
with disabilities feel like kind of subhuman.
    Mr. Levin. Yes. I have to say, Mr. Chairman, for 4 years I 
ran the work force system of the State of Michigan, and one of 
the most delightful parts of my job was handling all the areas 
that help people with disabilities live independently and gain 
employment. And it was probably the area I learned the most in, 
but also we really do a disservice to huge swathes of our 
population if we say that they don't deserve to earn a basic 
minimum wage. So thank you for that.
    Dr. Reich, I would like to ask you a question I don't think 
has come up that much. And I don't know if there is good 
research on this or not, but I feel like these discussions 
about the minimum wage lack imagination. And your profession is 
famous for lacking all imagination, so maybe it is an unfair 
question.
    There are profound, profound effects on the economy of 
having more money in working people's pockets. Is there 
research to show the economic impacts to the restaurant, to, 
you know, the local store, to the barber shop, to the auto 
dealer when people are making more money in the community, and 
what happens, where that money goes and what it does to Main 
Street?
    Mr. Reich. Thanks for the question. I know of two studies 
on spending effects of the minimum wage. One is done at the 
Federal Reserve Bank in Chicago, in the research department, 
and the other more recently the Federal Reserve Bank of Boston.
    Both found big spending effects, because people had more 
money in their pockets. And the Boston one actually looked most 
closely at food--restaurant spending, rather. And it found that 
while restaurant prices went up, restaurant sales also went up. 
So the prices did not deter people going to restaurants at all.
    Mr. Levin. You know, I think that is such a profound point. 
I know from my own experience that the restaurant industry is, 
you know, is a big opponent of this. And I just think that the 
experience in States and cities that have raised their minimum 
wage, and when you visit them they have unbelievably thriving 
restaurant scenes and high, high employment.
    So I really hope that we will pass this bill and we will 
allow workers to have more dignity and more self-sufficiency in 
our country, and it will actually help grow our economy and 
make it more fair. Thank you very much.
    I yield back, Mr. Chair.
    Chairman Scott. Thank you.
    The gentleman from Pennsylvania, Mr. Thompson.
    Mr. Thompson. Chairman, once again, thank you for this 
marathon hearing.
    Thanks to all of our panelists that are here. I appreciate 
that. I just want to make a comment, then I have got a couple 
questions. My comment is, I don't know how many of you have 
ever--I spent 28 years before I came to Congress serving 
individuals facing life-changing disease and disability. I have 
spent a lot of time in supported workshops, supported 
employment sites. I spent a career trying to help adapt 
equipment, help look at facilitating processes, you know, to be 
able to help people achieve a competitive level of work.
    And you can do all that, and there are still individuals 
with some very severe complex disabilities who you throw by the 
wayside by eliminating piecework or subminimum wage, you know, 
folks who are just so complex in their disability. But I 
challenge you if you have not, where these folks are still 
working--and, unfortunately, a lot of them have lost their jobs 
and are no longer able to have that sense of accomplishment, 
that thing that defines them, the pride that they take.
    The coolest place I have ever been is in one of those sites 
on payday. And those checks, some of those checks aren't very 
large, but you would think that the way they receive it was 
like for a million dollars. The self-esteem, the work.
    And so before you throw people with complex severe 
disabilities under the bus with some type of flawed policy that 
ignores the needs of the very, very disabled. We are not 
talking about--you know, I worked to help facilitate people 
back into life in a full and robust way. I encourage you to 
check that out.
    Dr. Strain, I want to just--the first question is about the 
future of a lot of minimum wage jobs. As I travel around, I am 
from a very rural district. You know, I go into grocery stores, 
self-checkout counters now. Restaurants, there is no wait 
staff, you order on electronically. Gas stations. I mean, all 
just kind of a lot of places where--not everywhere, but a lot 
of minimum wage jobs that I have heard referenced today, I 
mean, they are low-skilled jobs and so technology is 
eliminating a lot of those. It is not going to totally 
eliminate them, but--and that is really why I look to a ladder 
of opportunity. You want people to do better in life, help them 
connect with the work that this body has already done, in terms 
of career and technical education training, skills-based 
education.
    Dr. Strain, any thoughts on how the advancement of 
technology in some of these settings where we have low-wage 
jobs are impacting low-wage jobs?
    Mr. Strain. Yes. I think that is an excellent point. The 
cost of that technology has been going down over time. And low-
skilled workers, minimum wage workers have to compete more 
fiercely in order to have those jobs. A potential risk of 
raising the minimum wage at all, much less to $15 an hour, is 
that just tips the cost-benefit calculus in favor of those 
kiosks and that technology and away from hiring a human worker.
    But there is even a more important point than that. Low-
skilled workers, even if they are no longer going to be 
employed as cashiers as technology continues to get better and 
cheaper, do constitute a pool of available resources for 
businesses. And businesses are smart, and they are going to try 
and figure out a way to use those workers.
    So a $15-an-hour minimum wage not only makes it harder for 
businesses to employ those workers today, it makes it much 
harder for businesses to figure out how to employ those workers 
in the future doing new kinds of jobs that don't currently 
exist yet.
    Mr. Thompson. Dr. Strain, you note in your testimony that 
worker productivity is primarily a factor in wage levels. How 
do education and skills development, the skills-based education 
factor into productivity?
    Mr. Strain. Well, they increase it. So if you are thinking 
about productivity is roughly how much revenue can you generate 
every hour you work for your firm? How much additional revenue 
can you generate for the firm? The more skills you have, the 
harder you work, the more education you have, which is a 
primary way we transmit skills, the more revenue you are going 
to generate, the more valuable you are going to be, the more 
firms are going to compete over you and the more your wage is 
going to go up in the market.
    Mr. Thompson. And we have a skills gap today. And I would 
just love, encourage folks to, you know, to check with the work 
force investment boards, the different great agencies that are 
out there, our community colleges, just the great places where 
you can access this type of education.
    The Federal Government is supporting that in a way more 
than what we ever have in the past with this piece of 
legislation that we enacted last year. And I really do think 
that is the pathway to greater opportunity.
    Thank you, Chairman.
    Chairman Scott. Thank you. The gentleman from New York, Mr. 
Morelle, is recognized for 5 minutes.
    Mr. Morelle. Thank you, Mr. Chair. I will pay particular 
attention to the shot clock. I apologize for exceeding my time 
earlier today.
    Thank you to the panelists for being here. Over the years 
in the New York Assembly, I met regularly with the Center for 
Disability Rights, a not-for-profit community-based advocacy 
and service organization for people with all types of 
disabilities. And during my many conversations with the CDR, a 
recurring topic was the question of phasing out the subminimum 
wage for individuals with disabilities and working toward a 
Federal law, to allow those workers to earn the same wage and 
not face discrimination on the basis of the discrimination.
    Ms. Gupta, if I might ask you, section 14(c), the Fair 
Labor Standards Act, allows for individuals with disabilities 
to be paid a subminimum wage. It was written at a time when 
individuals with disabilities were predominantly housed in 
institutions, something that, gratefully, is no longer the case 
in many places. There was no statutory requirement, as I 
understand it, to support individuals with disabilities in the 
workplace, and the individuals did not even have legal 
protections from discrimination.
    I am just curious, can you describe how our legal framework 
has changed regarding those protections and supports for 
individuals in all aspects of society and how this does impact 
and necessitates the phasing out of 14(c)?
    Ms. Gupta. Yes. As you said, Congressman, section 14(c) of 
the FLSA was written at a very particular period of our 
Nation's history when there really was no legal framework for 
understanding discrimination against people with disabilities. 
And then when Congress passed the Americans with Disabilities 
Act in 1990, it really ushered in a very broad new wave of 
protections, kind of a new era for people with disabilities in 
our country.
    And then the Supreme Court kind of further elucidated the 
protections in 1999 in a case called Olmstead versus L.C. and 
recognizing I think what was a crucial tenet of the ADA, the 
community integration mandate. And it was there in that case 
that the court said that the ADA bars unjustified institutional 
isolation of persons with disabilities.
    And when I was in the Justice Department, although my 
predecessor started this, there was a real effort to ensure 
that mandate had real meaning in the lives of people with 
disabilities and to seek to make sure that where there were 
sheltered workshops that were segregated facilities that really 
excluded or primarily just focused on employment for people 
with disabilities who had little to no contact with people who 
did not have disabilities, there was a real effort to ensure 
that people with disabilities could work alongside peers and 
have equal opportunity to employment.
    And that is why we have seen a number of states actually 
now, both through litigation but happily through legislative 
action, take the charge to end 14(c) and to have a phased-in 
opportunity to raise the minimum wage for people with 
disabilities.
    Mr. Morelle. Thank you for your answer. And actually, you 
answered my next question, which related to the conflict with 
the 14(c) and the ADA, so I appreciate your comment on that.
    Let me just in closing, six states, as you mentioned, have 
completed or are in the process of phasing out 14(c). I think 
Vermont and New Hampshire have completely phased out. Maryland, 
Alaska, Oregon and Rhode Island are in the process of it, and I 
understand Hawaii and Kentucky are at least considering it.
    Can you just talk about the other benefits individuals with 
disabilities experience other than financial benefits from the 
phasing out of 14(c) and moving into a competitive integrated 
employment setting?
    Ms. Gupta. Yes. I mean, so much of what we are talking 
about today is really about the dignity of work and people with 
disabilities feeling the dignity of being human beings entitled 
to the same protections as any other people in this country and 
being able to participate in the mainstream economy with people 
without disabilities, to have the opportunity, to have equal 
opportunity for jobs and housing and the like.
    And that this move from the ADA to Olmstead and beyond is 
really about ensuring that people with disabilities have equal 
opportunity and are not kind of considered, you know, folks to 
be segregated out of the mainstream economy.
    Mr. Morelle. Very good. Thank you again to all the 
panelists for your great work.
    Thank you, Mr. Chair. And with that, I ask unanimous 
consent to submit into the record a 2018 report from the 
National Council on Disability that renews its recommendations 
for the phaseout of section 14(c) of the Fair Labor Standards 
Act.
    Chairman Scott. Without objection.
    [The information follows:]Mr. Morelle
    National Council On Disability: https://www.govinfo.gov/
content/pkg/CPRT-115HPRT36713/pdf/CPRT-115HPRT36713.pdf
    Mr. Morelle. Thank you, sir.
    Chairman Scott. Thank you. Thank you.
    The gentleman from Pennsylvania, Mr. Smucker.
    Mr. Smucker. Thank you, Mr. Chairman.
    One of the opportunities I think we have here is to 
implement policies that continue to lift more people out of 
poverty. I know one of the goals of mine is to try to find ways 
that we can give people the opportunity to connect with a good-
paying job and to provide that dignity that Ms. Gupta was just 
referring to.
    Dr. Strain, I would like to talk about the doubling of the 
Federal minimum wage in that context. Some people believe that 
doubling the minimum wage is an effective antipoverty policy. 
Is that the right way to view it?
    Mr. Reich. It is certainly not the way I view it. The 
benefits of increasing the minimum wage are that workers' 
earnings go up. But if you look at who those earnings accrue 
to, they are to households that are not below the poverty line, 
on the whole. So it is certainly the case that the minimum wage 
is a very poorly targeted antipoverty tool. In addition, the 
costs of the minimum wage are borne by workers without a lot of 
skills, workers without a lot of experience. Those workers are 
much lower income, on average.
    And so you have this policy where the benefits go to people 
who are further up the income distribution. The costs are borne 
by the least-skilled, least-experienced, most vulnerable 
workers in society. If your goal is to help out, you know, 
middle class households, maybe that is a reasonable tradeoff. 
If your goal is to help the working poor, then it is certainly 
not, in my view.
    Mr. Smucker. Ms. Barron, just to followup to that, 
according to the U.S. Census Bureau, about 60 percent of 
working age Americans who live in poverty do not work at all 
and, therefore, would potentially not benefit from a minimum 
wage increase. But, that said, I firmly believe that the vast 
majority of Americans desire the dignity of earning that 
success and would work for a living if the opportunities 
existed.
    Based on your experience, do you think that more than 
doubling the Federal minimum wage will make it easier or harder 
for unemployed Americans to find work and begin to make a 
living?
    Ms. Barron. In my opinion, I would think it makes it 
harder. I mean, we have seen support staff jobs, which are 
typically jobs that people who are right out of school take or 
people, you know, low-income workers I guess you could say or 
just people starting out would take, and those jobs are going 
away.
    In Seattle, we have a chain called Red Robin, and they 
employ a lot of people across the State and across the country, 
I believe. And due to the $15-an-hour minimum wage increase, 
they went ahead and wiped out all of their support staff. Now, 
that is bussers and hosts and food runners and things of that 
nature. And these are, again, jobs that, you know, when you are 
first starting out of school, I started that way. I started as 
a busser. And, you know, you work your way up through that 
industry.
    So, you know, I think people that are unemployed looking 
for jobs to start out in any sort of industry probably are 
going to have trouble, if something like Red Robin is an 
indicator.
    Mr. Smucker. There has been some discussion about teens, 
teens entering the work force.
    Ms. Barron. Yes.
    Mr. Smucker. And my son is 16 years old, has several 
different jobs, is, by the way, thrilled with that one job was 
$9.50 per hour. But I was part of a presentation recently--I 
would just like to get your reaction to this--measuring the 
success of people who enter the work force.
    And in the view of this presenter, he was showing 
statistics that where he believed that having a job during high 
school was one of the best indicators of whether someone would 
be successful after that. Do you agree with that?
    Ms. Barron. I do agree with that. And my son is going to be 
turning 16 next week. And, you know, I have raised him since at 
a very young age to start to work. You know, whether that is 
doing dishes at home or now he currently has a job walking 
dogs.
    Mr. Smucker. I was speaking to an owner of a restaurant in 
my area, a mixed bar and grill, saying that, you know, people 
who have been there for some time were earning well over 
$40,000 per year and more. And his view, as an owner of a 
business who enjoyed providing jobs for teens, said that would 
be much more difficult to do if they had to start at $15 an 
hour. Do you see that as well?
    Ms. Barron. Yes. At the restaurant where I work, we are 
trying to hire people now that, you know, have way more 
experience. So, again, we don't have those support staff jobs. 
So now we have to hire--you know, if we are hiring bartenders 
and such like that, we are looking at people that have had a 
lot of, lot of experience. And, again, those are hard to find, 
because now we are going to a service charge. And so people 
with a lot of experience have actually moved out of the city. 
So we are seeing people leaving the city, because the minimum 
wage increase is impacting how they make their money.
    I honestly--I mean, for young kids, I think of myself when 
I was 17 coming out of high school. And my mom worked in a 
restaurant. She got me a job bussing tables. And I think about 
how I worked my way up through the industry, and it has allowed 
me to survive and do some of the things that I wanted to do in 
my life. And I think about myself at 17, 16 years old, and 
wonder about the kids nowadays. Like my son, like I don't know 
what he is going to be doing, you know, if he starts in the 
restaurant industry. I am trying to tell him don't do that, 
but--
    Mr. Smucker. Thank you.
    Chairman Scott. The gentlelady from Michigan, Ms. Stevens.
    Ms. Stevens. Thank you, Mr. Chairman, and thank you for 
this wonderful day of hearings on a very important topic. And 
thank you to our incredible panelists for being here today. 
Your testimonies have mattered a great deal.
    As someone who was managing a multimillion dollar federally 
funded portfolio focused on the future of work in the digital 
age of manufacturing in the age of automation before I was 
running for Congress and was now in Congress, it is obvious 
that the question around the future of work must be undergirded 
within our present reality, that the question of our economic 
orientation is, how do we choose to value human work and what 
are we handing over to automation versus what are we giving to 
people.
    The question of has a hamburger--excuse me, has a machine 
ever been able to buy a hamburger? No, that machine never has, 
that we must live in a human-driven and oriented economy.
    So I have got four quick questions for Dr. Strain, who I 
believe you are, you know, capable of answering these. Could 
you answer quickly, what is the yearly income of a person 
living in poverty?
    Mr. Strain. The yearly income of a person living in 
poverty?
    Ms. Stevens. Yes. What is our federally indexed rate for 
somebody--
    Mr. Strain. It varies, depending on how many children you 
have in the household. Say $20,000 dollars.
    Ms. Stevens. Ok. And what is the income of a person working 
full time at the minimum wage?
    Mr. Strain. A person working full time at the minimum wage 
is $15,000, roughly.
    Ms. Stevens. And do you know how much our Federal 
Government spends on SNAP benefits a year?
    Mr. Strain. Not precisely, no.
    Ms. Stevens. Ok. And so I take it you don't know how many 
are working full time who may happen to be utilizing SNAP 
benefits?
    Mr. Strain. Who are working full time who are utilizing 
SNAP benefits? Not--
    Ms. Stevens. Yes, the percentage of our work force. Ok. 
Well, we can do that as a question for the record after the 
hearing.
    So, Ms. Gupta, quickly for me, can you describe for us what 
this means to work full time in the U.S. at the poverty rate? 
How does this impact a person's access to healthcare, to equal 
opportunities? What does this mean for women, and particularly 
what does this mean for women of color?
    Ms. Gupta. Yes. I mean, this means that women and women of 
color are harmed by--there is a pretty significant gender pay 
gap, and it targets in particular women of color because they 
can't access and won't have as much security around healthcare, 
and transportation, and additional money to support their 
families. And so there is a lot of--you want me to do this 
quickly, so I will just say that women of color in particular 
are deeply harmed by these kinds of policies and their ability 
to actually enter the mainstream economy.
    Ms. Stevens. Well, there is lots of narratives to share 
around this important topic, and I appreciate your deep and 
thorough testimony that covers this, and thank you for being 
here with us today.
    Mr. Brodeur, you gave a great testimony, and I come from 
the great State of Michigan where increasing the minimum wage 
is overwhelmingly popular in my home state. And as I talked 
about the future of work in the digital age of everything, it 
certainly means a great deal to you, someone who is 
representing the largest robust automotive supply chain in the 
country. But I would love for you to share a little bit more 
about your experience and your work, particularly how did you 
see increasing the minimum wage as stimulating or revitalizing 
cities or towns across your state? What impacts did that on 
your local economies?
    Mr. Brodeur. You know, thank you for the question because 
Massachusetts, I think, has had a little bit of a different 
perspective because we have done what you all started to talk 
about doing here in terms of gradually raising the minimum 
wage. Starting in 2015, we did a round dollar year minimum wage 
increases. We took a year off, and then with the most recent 
legislation, over the next 5 years we will go up to $15.
    So we do not have the problem that I think is built into 
the system you currently have where if you don't raise it, then 
it becomes harder to raise it, and then there is an 
argumentative that is a shock to the system, so we better not 
raise it, so folks get left behind.
    What I think is really important for you people to 
understand about Massachusetts and why I appreciate the 
question is particularly from the morning session. I heard 
Boston talked about maybe two or three or four times as, you 
know, a wonderful place but a very high wage, high expense 
place, and therefore, all of Massachusetts must be the same. 
That is not at all the case. We have rural areas, particularly 
in Western Mass, that struggle with some of the issues that I 
have heard about here today.
    In some places, median income is less than half of what is 
in Boston. We also have gateway cities. My friend from Greater 
Lowell can tell you about Lowell and Lawrence and some of those 
surrounding communities that essentially were--were really 
industrial dynamos but have struggled a little bit to make the 
transition that Boston and Cambridge already have into the 
digital economy, the service economy.
    So when we thought about how to approach the minimum wage 
and how to target things, we viewed it as an opportunity to 
raise folks up, to put money into people's pockets so that 
those parts of the economy that aren't entirely Boston-driven 
will have an opportunity to participate in that success. And 
that was part of--you know, we kind of did a lot, quite 
frankly, in the last legislative session around raising people 
up.
    This was an important part of it, but again, we approved 
that we needed to give folks the opportunity to invest in 
themselves, and really, get off the ground floor, to get 
education, to get into some of the middle skilled jobs that we 
are desperate to fill in Massachusetts.
    Ms. Stevens. Well, thank you for doing that work, and I 
yield back the remainder of my time.
    Chairman Scott. My distinguished colleague from Virginia, 
Mr. Cline.
    Mr. Cline. Thank you, Mr. Chairman. I appreciate everyone's 
time today, and I noted with interest the comments of my 
colleague from Michigan talking about the industries that are 
there. And it is a different economy than the economy of my 
State, the Commonwealth of Virginia, and different than 
Representative Brodeur's Commonwealth of Massachusetts, another 
commonwealth. But we do share similarities in that there are 
rural parts and suburban parts that have more robust economies, 
more diversified economies.
    And so I wanted to start by asking Dr. Strain. The effect 
of an increase in the minimum wage on unemployment is fairly 
straightforward. You have noted that in your testimony. Is 
there an indirect inflationary pressure on the cost of goods 
and services in an area, say, rent or other types of products 
that an increase in the minimum wage may influence?
    Mr. Strain. Yes. So when a business faces an increase in 
the minimum wage, they have to absorb that cost somehow. One 
way to absorb that cost is by having fewer workers work there. 
Another way to absorb that cost is by raising prices. And you 
see that when the minimum wage goes up, the prices that 
businesses that employ minimum wage workers charges also go up.
    This is, you know, kind of a double-edged sword for those 
minimum wage workers in that sense because a lot of the 
customers of businesses who employ minimum wage workers are low 
wage workers themselves. So you give a worker a raise with your 
right hand, and then you take it back or some of it back at the 
cash register with your left hand.
    Mr. Cline. And so those States that are pushing for a 
higher minimum wage are adjusting to the cost of living in 
their respective States, and I think what you are seeing are 
different States facing different pressures.
    Representative Brodeur, you may be able to answer this. In 
Massachusetts, with regard to a Federal minimum wage, there is 
a support for a floor in the wage versus a set dollar amount, 
all States shall pay a minimum wage of X. But would there be 
any kind of support for an increase in the minimum wage beyond 
an adjusted amount that reflected the cost of living? I mean, 
would you want to increase the minimum wage if the cost of 
living mandated an increase to $15, and you all were given a 
choice to increase it to $20? Would that be something that you 
all would entertain in Massachusetts, or would you want to 
target it more toward the cost of living?
    Mr. Brodeur. We just got to the 15 thing, and that was a 
big lift, so we would like to take a little bit of time off, I 
think.
    One thing we did not do is indexing, and I know that is 
part of the chairman's bill. And I think one reasons it is part 
of the chairman's bill is because what historically was a 
bipartisan, well supported kind of regular process where the 
minimum wage would go up has become something of a political 
football. Quite frankly, that hasn't happened in Massachusetts.
    One thing that is interesting about the commonwealth and 
our legislature is any bill that is filed gets a hearing, and 
every session folks file bills around minimum wage in many 
flavors, quite frankly. So it is kind of always on our mind. It 
is always a topic of discussion. It is not something we do and 
then hope it goes away--
    Mr. Cline. If in a state like Virginia or a state that is 
more rural where you may not have the inflationary pressures or 
the pressures on cost of living to increase to a full $15 
minimum wage, should a state be able to adjust it to something 
less where it maybe more accurately reflects the cost of living 
for that state?
    Mr. Brodeur. I don't think so, respectively. When I think 
back to the original setting of the minimum wage toward the end 
of the Great Depression, there was a national floor, and what 
we have heard from people that are way smarter than me, both in 
this panel and the panel before, is if we kept up with 
inflation and productivity, where would that be on the national 
level? It would be somewhere between 12 and 18 to 22, it 
sounded like.
    Mr. Cline. As a former fellow State Representative, I would 
rather leave that to the states to make that decision as it 
specifically applies to each state's cost of living.
    But I appreciate it, and I yield back, Mr. Chairman.
    Chairman Scott. Thank you. The gentlelady from 
Massachusetts, Mrs. Trahan.
    Mrs. Trahan. Thank you, Mr. Chairman. Thanks again for 
bringing us together to hear this important panel. I am so 
proud that Massachusetts--well, I am so proud to be from 
Massachusetts for a number of reasons, and it is because of 
Senator Brodeur's work not just on this issue but on 
healthcare, education, on gun violence prevention. We are one 
of the states leading on raising the wage, and for that I am 
grateful.
    There is no one more well suited to speak before us today 
than you, and in terms of what it took, the collaboration and 
thinking creatively to get this done. In your testimony, you 
talked about the importance of coalition this to pass the grand 
bargain that resulted in both paid leave and raising the wage. 
I love that your approach was inclusive and truly people 
powered, so my question. In your testimony, you mentioned that 
it was a strategic decision to invest in the working families 
of Massachusetts while also being a positive step forward for 
our business community. During that same period, Massachusetts 
businesses demonstrated relative stability and growth.
    So I am wondering if you can talk about some of the 
specific positive feedback that you heard from Massachusetts 
businesses in terms of raising wages.
    Mr. Brodeur. There was certainly not unanimity of opinion, 
and that is why it was a grand bargain. There was give and take 
across a range of issues, both within paid family medical leave 
which was a more complicated, quite frankly, and challenging 
piece to put together because there were so many moving parts 
and the minimum wage piece and some other issues.
    And we heard from--you know, we talked to folks, you know, 
one or two-person operations, folks in my district to some of 
the biggest employers in Massachusetts. One thing that everyone 
recognized was that both programs were incredibly popular, that 
there was tremendous support across the spectrum for the 
general idea of both initiatives, maybe not particular details.
    You know in terms of the minimum wage, Mass, Inc. which is 
an organization that you are familiar that others might not be, 
a nonpartisan kind of think tank and polling entity that tested 
the waters on how popular or how supportive the public would be 
of these things, and they were popular across the board. 
Republicans, Democrats, IUndependents all supported it.
    So what I think we needed to do, and why it was such a long 
process, is we needed to start with paid family medical leave 
and some fact-finding and some exploration, and we all needed 
to kind of speak the same language and understand what kind of 
benefits we were trying to provide, what would actually help 
working families, what would be impediments.
    And we tried to be respectful of that and listen to what 
the business community in certain segments already provided in 
terms of wages and benefits and made sure that we didn't 
reinvent the wheel, that we didn't take away something that was 
better than what might be complemented or implemented under any 
particular plan.
    And I think that went a long way toward building trust, for 
lack of a better way to say it, and having constant 
communication, having some significant disagreements for sure 
along the way but recognizing that this was coming, and it is 
important to working families, it is important to the economy 
of Massachusetts, and you know, and then kind of putting the 
pieces together.
    And it was a humbling process to be a part of because you 
don't see a lot of progress on big issues these days, and I 
think that is unfortunate, and I don't think that needs to be 
the case.
    Mrs. Trahan. Yes, thank you. It was a testament not just to 
your leadership but I know that the grand bargain was in 
concert with our Republican Governor Baker as well as the many 
groups that you mentioned. Can you just discuss the 
implementation and the timetable for Massachusetts to 
transition to the $15 minimum wage?
    Mr. Brodeur. I can. So it will be over 5 years, and first--
let me make sure I get this right. The first 3 years will be a 
dollar increase, and then the final 2 years will be $0.75 
increase, ultimately bringing it to 2023. On the tip wage, we 
did not eliminate the tip credit, but we did expand. Compared 
to some of our peers, we had a very low tip credit. Not as low 
as the Federal tip credit for sure, but that will grow over the 
same timeframe up to $6.75 when it is done in 2023.
    Mrs. Trahan. Great. Thank you so much. Thanks so much for 
all of your time. I yield back.
    Chairman Scott. Thank you. The gentleman from Georgia, Mr. 
Allen.
    Mr. Allen. Thank you, Mr. Chairman, and I appreciate 
everyone being here today. I come from the State of Georgia who 
is the best state to locate your business 6 years in a row. I 
was a small business owner in that state, and in Georgia, we 
pay the wages according to our employee's skill set. It is a 
free market environment, a growing economy that grows job which 
grows opportunity which grows wages. We reward a good day's 
work. My Democrat colleagues don't want to believe that we can 
produce economic opportunity in concert with growing wages 
without the government interfering.
    Signing the front of the paycheck and providing folks with 
a good job has been the greatest honor of my life. That is why 
I oppose the Raise the Wage Act. This one size fits all, top 
down government regulation will destroy millions of hard-earned 
jobs and turn our growing economy and wage growth into decline. 
Democrats have focused on economic growth and getting the 
American people back to work. Free market initiatives that we 
know grow wages and grow jobs.
    Dr. Strain, millions of jobs were created by our strong 
economy thanks to lower taxes and deregulation. How would 
raising the minimum wage to $15 hurt all of these economic 
gains we have been able to achieve?
    Mr. Strain. Well, I think it is certainly the case that we 
have seen the low wage labor market doing a lot better over the 
last few years. A hot economy really has benefited that group 
of workers. We have started to see wages grow at a more rapid 
pace, for example. We have been seeing vulnerable workers, 
workers with disabilities, workers who have been incarcerated 
getting jobs at higher rates, and this is all wonderful news.
    I am very concerned that doubling the Federal minimum wage 
will put a halt to a lot of that progress and will really gum 
up the works of job creation for workers without a lot of 
skills and without a lot of experience.
    Mr. Allen. Three hundred and four thousand jobs in January.
    Mr. Strain. That is quite a few.
    Mr. Allen. Yes. Do you agree that raising prices is not 
always an option for many businesses?
    Mr. Strain. Raising prices is not always an option for many 
businesses, particularly businesses in more competitive product 
markets. And again, you know, you have to raise prices quite a 
bit to absorb a $15 an hour minimum wage. This is not a $9 an 
hour increase we are talking about. This is doubling the 
Federal minimum.
    Mr. Allen. Right. So how would a business double its rate 
of pay and not raise its prices?
    Mr. Strain. Well, I think it would be hard for a lot of 
them to do that.
    Mr. Allen. Which then causes the cost of living to 
increase--
    Mr. Strain. Some of those businesses might invest in 
technology instead of hiring workers.
    Mr. Allen. Yes--
    Mr. Strain. Some of those businesses will--
    Mr. Allen. They are going to figure out a way. Yes.
    Ms. Barron, how has the Seattle minimum wage hike affected 
your working career?
    Ms. Barron. Well, I lose money on a daily basis. It is as 
easy as that.
    Mr. Allen. Yes.
    Ms. Barron. And it is due to my employer having to 
navigate--
    Mr. Allen. Yes.
    Ms. Barron [continuing]. the higher wage. So he went to 
taking away tip lines and going with a service charge. And 
under that service charge, I don't make as much as I could. And 
there is no way for me to maximize my income with my job, so it 
has changed my job quite a bit. It has pretty much stagnated 
what I could make.
    Mr. Allen. So the government said we are going to raise 
wages, and your wages went down?
    Ms. Barron. Yes.
    Mr. Allen. Ok. Your testimony talks about your friend who 
started her own pizza place.
    Ms. Barron. Uh-huh.
    Mr. Allen. Tell us about that and what happened to your 
friend?
    Ms. Barron. So my friend Retu, she has been in the service 
industry as long as I have. She decided she wanted to try her 
hand at being an owner, and she started a pizza place called--I 
think it is called Z pizza, And she employed I think about 10 
people, and then the minimum wage came. So she had her business 
for about 5 years, and she looked at the books and she said I 
can't make the numbers work. And she even went to our city 
council and said look. If you want to see, you know, try to 
make them work for me because I don't understand. I can't make 
it work, and so she just--instead of struggling, she just went 
ahead and closed it because she couldn't do it.
    Mr. Allen. Ok. Well, thank you so much for your testimony, 
and I yield back, Mr. Chairman.
    Chairman Scott. Thank you. The gentleman from Maryland, Mr. 
Trone.
    Mr. Trone. First of all, I want to thank everybody for 
their long day today, but it is a really important subject that 
we are embarked on. Raising the minimum wage is, plain and 
simple, the right thing to do for hard-working Americans. We 
heard a lot today from many people that have never owned a 
business, never been an employer, that raising the wage is bad 
for business.
    Well, I started a business 30 years ago as an entrepreneur. 
I was the first employee. Guess what? I figured out how to make 
it work, and now that business employs over 7,000 folks across 
America in every region, every area of the country. We also 
employ hundreds of returning citizens as they deserve a fair 
wage too. But paying a fair wage was not just the right thing 
to do. It is the key to our success. The key to our success was 
paying a fair wage.
    Higher wages lead, we spoke about earlier, lower employee 
turnover, reduced recruiting and training costs. But at the end 
of the day, happier customers. Ms. Eckhouse, in your testimony 
you also connected, and Ms. Shalala was talking about it, 
higher wages with lower turnover so the growth of your 
business.
    Could you talk a little bit about the piece that we don't 
touch on enough here, and that is all the productivity gains, 
the efficiency gains, the awesomeness of having team members 
that know a business and care about the customers, and those 
folks stay with you. They stay with you long times, long term, 
because they make a good wage, and they have good benefits. So 
could you talk about and give us some insights on how important 
that is?
    Ms. Eckhouse. Well, thank you for your question. It is 
really critical to us to have people who work for us, whether 
they are working out in the fields selling what we make or 
whether they are working at home with us in the plant making 
what we sell who really understand what we are making, how it 
is sourced, how it is processed in our plant, how it is sent 
out in the world for people to consume.
    And if they don't understand that, they cannot do a good 
job. And once they do a good job, they become invested in the 
process. They learn about it. They come up with ideas. If they 
have been with us for enough time, they can see improvements 
and suggest them to us. So we end up having a business that is 
not just a top-down business where we are telling people what 
to do. People are able to buildup from the bottom and because 
they fully understand the process, and they are invested in 
working for us because they can make an income that allows them 
to support their families.
    Mr. Trone. I think you hit on what is such an important 
point that nobody really talks about, and that is a business 
isn't run from top down. A business is run on ideas, great 
ideas, and that is what makes it success. And when the team 
members are empowered, the team members feel like they are part 
of the team because they are paid appropriately. They are paid 
fairly. That is when they have those insights, those ideas to 
make the business more efficient, more productive.
    So I commend you on running that type of business. That is 
just the right way to do things.
    Ms. Eckhouse. Thank you. I really believe that the labor is 
worthy of his or her hire, and we have to honor that.
    Mr. Trone. Without question. Dr. Reich, you mentioned in 
your testimony business can adjust to a minimal wage increase 
in several ways. They go from a low wage, high turnover model 
or what I chose, a higher wage, low turnover model. I shared 
some of my experiences. What does research tell us about how we 
quantify, quantify the actual cost of employee churn, employee 
turnover?
    Mr. Reich. Thanks for that question. I happen to have 
published an article on that subject in the Journal of Labor 
Economics a few years ago, so--and actually, way back when I 
was a graduate student in the 1960's, I developed the idea of 
duly labor markets, that labor markets do differ. Some are high 
wage, low turnover, some are low wage, high turnover. And this 
paper I just published a few years ago actually showed that 
when the minimum wage went up that employee turnover went down 
quite a bit.
    There are other studies that had already shown a 
correlation between the wage and turnover. This was really a 
study where we felt we had a causal identification. And as to 
the amount, well, it varies by industry depending on what the 
costs of training are and where the vacancies are.
    In low wage industries like restaurants or in certainly big 
box retail, turnover each year is over 100 percent. These are 
firms that are constantly looking for work. They have very high 
vacancy rates. There is a cost of vacancy. This is even more 
true when the unemployment rate is very low. And those are big 
costs that we don't, you know, talk about in Econ 1, in the 
simple supply and demand model. But when we add those costs in, 
those are substantial. We think they don't totally--savings on 
recruitment and retention costs don't totally offset increases 
in the wage costs, but they might offset maybe 20, 25 percent 
of it on average, obviously more in some industries than the 
others.
    We couldn't look at the kinds of points that you are making 
about productivity or customer satisfaction so that might 
possibly add to that effect as well.
    Mr. Trone. Thank you very much. That is all, Mr. Chairman.
    Chairman Scott. Thank you. The Ranking Member, Dr. Foxx.
    Ms. Foxx. Thank you very much, Mr. Chairman. I want to add 
my thanks to all the witnesses who have been here today. We 
have been here practically all day, and we are going to be here 
a little while longer. We have heard a lot of the same 
arguments over and over again.
    I do think some Democrats, and maybe one on this committee, 
understands the free market, how it really works and the 
opportunities it creates for Americans from every walk of life. 
You know, I grew up in a house with no electricity, no running 
water, and I have been working since I was 12 years old. And my 
husband and I did run a business, so I know what it is like to 
create jobs, to try to keep jobs going, and to meet a payroll. 
And I think almost every member of our committee on this side 
of the aisle understands that, so I know Mr. Trone isn't 
talking about our folks not knowing how to run a business and 
what it takes.
    But it seems to me that there are people not always 
understanding the opportunities that the American way of life 
creates for Americans or maybe how smart business owners are in 
this country. After all, we have gotten to be a great country 
because of the capitalistic system.
    But I think the reason we have been here all day and we 
have been hearing these points made over and over and over 
again is perhaps some of our colleagues are trying to convince 
themselves and the rest of us that a socialist campaign talking 
point could actually be good policy, but I am not sure it 
worked.
    So I want to thank our witnesses who have come here today. 
I especially want to thank Ms. Barron for giving voice to those 
Americans who aren't in lockstep with the labor interests 
driving this misguided campaign to eliminate jobs, particularly 
you, Ms. Barron, understanding you took time away from your 
workplace to be with us here today.
    We want to see wages go up for every working American, 
every single one, and they do go up for Americans. We are 
seeing more wage growth than we have in decades because of the 
smart economic policy that has empowered workers. Pushing back 
on heavy-handed regulations and giving Americans real tax 
reform has opened up opportunity and wage growth that actually 
helps American families.
    And we know, one of our witnesses has already said, that 
employers are already free to pay higher wages than minimum 
wage, and it works. And guess what? Other employers understand 
that too. The law already allows it. But why do our colleagues 
want to force the government to run everybody's life in this 
country? The growth we are experiencing right now makes a $15 
Federal mandate look like the political stunt it really is. 
Washington doesn't need to be making any more decisions for the 
people of this country.
    The dysfunction we have all experienced and all commented 
upon the last couple of months is all the proof we need that 
decisions about worker paychecks certainly shouldn't be up to 
anybody in this city. We can spend our time trying to justify 
socialist ideas as mainstream, or we can spend our time looking 
for ways to put money in people's pockets by their earning that 
money and not taking it from one person's pocket and putting it 
in another one. We can sustain era of growth and opportunity. 
On our side for the sake of American workers, we are going to 
stay focused on the latter.
    And with that, Mr. Chairman, I yield back.
    Chairman Scott. Thank you. The gentlelady from Washington, 
Ms. Jayapal.
    Ms. Jayapal. Thank you, Mr. Chairman, and thank you all for 
being here. I know it has been a long day, and we appreciate 
it.
    I want to just correct the record on a couple of things. I 
was on the committee that raised the $15 minimum wage. I am 
glad to see one of my constituents here, and I appreciate your 
traveling here, although I imagine perhaps you don't support my 
position on this issue based on your testimony. I certainly 
appreciate hearing from you.
    And I will tell you that we heard all of the arguments 
through months of testimony about what this was going to do to 
destroy the economy in Seattle, about all the restaurants that 
were going to close. And we went back through recently all of 
the restaurants that came to testify before us, and the 
majority of them had actually opened new restaurants, new 
restaurants.
    And so I will just say that you just need to look at our 
booming economy in Seattle to understand that the minimum wage 
law has worked and, in fact, we even heard the same arguments 
when we indexed minimum wage to inflation back in 2001, that 
this was going to destroy our state's economy, that it was 
going to create problems. People were going to flee to other 
states. But people including, I think maybe Ms. Barron, moved 
to Washington State in part because we have a booming economy 
and jobs to take.
    I also just want to respond to the comment about a 
socialist campaign talking point. Let me just tell you that on 
our committee was one of the wealthiest capitalists, proud 
capitalists in our state, Nick Hanauer, who consistently has 
said over and over again that when workers do better, companies 
do better. When companies do better, the economy does better. 
When the economy does better, workers do better. It is a cycle 
that actually works over and over again.
    We also had a small business owner, a tremendous number of 
small business owners and restaurant owners who have been doing 
the right thing for a long time. That included my friend and 
local Seattle restaurant owner Makeney Howell. And she said it 
best when she went to the White House Summit on Working 
Families back in 2014, and she said the economy--this is her 
quote. The economy is built from the bottom up, not the top 
down. Every job should be an economy-boosting job.
    Makeney for years, even before our law went into effect, 
would pool her tips and distribute them equitably to all the 
workers so that you take away that discrepancy between front of 
the house workers who may earn a lot in tips, and there were 
some workers who were earning a lot in tips who saw those tips 
go down, but it was because it was being shared with people in 
the back of the house.
    And so these are really important--there has been a lot of 
talk about Seattle today, and I am thrilled that is the case, 
but let me tell you as somebody who actually helped craft that 
law, who was on the front lines of making sure we heard the 
testimony, that the testimony that we continue to hear is 
simply not accurate.
    Does it mean that Ms. Barron is not correct in her wages? 
Of course I am not saying that, but I did want to ask you, Ms. 
Barron, about the organization that you are affiliated with. It 
is called the Full Service Workers Alliance of Seattle. Is that 
correct.
    Ms. Barron. Correct.
    Ms. Jayapal. And are you aware that the FWSA is part of a 
group called the Restaurant Workers of America?
    Ms. Barron. It is not part of the Restaurant Workers of 
America. That is not correct.
    Ms. Jayapal. Well, I have the research showing that it is 
part of a national network of server groups called the 
Restaurant Workers of America.
    Ms. Barron. It is not part of the Restaurant Workers of 
America. The Full Service Workers alliance is a group that I 
cofounded with a friend of mine. We are a loose group of about 
1100 full service workers, and that includes front of the house 
and back of the house.
    Ms. Jayapal. Thank you. Are you aware since you.
    Founded the organization, I assume you are, that a former 
FSWA member so severely misrepresented his role in the group 
and the details of the Seattle Secure Scheduling Law in a King 
5 TV news interview that the station's news director was forced 
to pull it down.
    Ms. Barron. That is incorrect. That is incorrect. If you 
watch--
    Ms. Jayapal. Ok. Well, I would be happy to take that 
information from you so that we understand because this is what 
our research has shown and I wanted to make sure--
    Ms. Barron. Well, your research is incorrect.
    Ms. Jayapal [continuing]. that people know what the 
organization is. So let me turn to Miss Gupta. The Fair Labor 
Standards Act when it was passed excluded certain classes of 
workers in a compromise to appease Southern States. Those 
workers tended to be women and people of color, and the 
vestiges of those policies still impact those communities 
today.
    Thank you for make the arguments in your opening Statements 
that this is actually a women's issue. Can you speak about how 
raising the minimum wage would help right some of those 
economic wrongs?
    Ms. Gupta. Yes. Thank you, Congresswoman.
    African American and Latino working women in particular are 
overrepresented in low pay jobs and women of color are more 
likely than any other group to be paid the lowest wages. 
Gradually raising the Federal minimum wage to $15 an hour by 
2024 and indexing it to median Federal wages and ensuring that 
working people are actually able to cover basic expenses like 
housing, food, and transportation would be a huge, huge win for 
working people.
    Working mothers, especially, are likely to be paid low 
wages, and that is why for the leadership conference, 
representing a broad constituency of communities of color and 
women, this particular bill would go a long way to closing the 
gender pay gap but also addressing kind of structural 
disparities that are created through racial difference.
    Ms. Jayapal. Thank you very much. I see my time has 
expired. I yield back.
    Chairman Scott. Thank you. The gentleman from Texas, Mr. 
Castro.
    Mr. Castro. Thank you. Perfect timing. So I guess I ask 
this question. I just obviously came here from another meeting, 
but who has been opposed to a minimum wage increase over the 
last few years on the panel? Anybody else? And I guess what has 
been your main opposition?
    Ms. Barron. I am losing money. I am losing income because 
of the $15 an hour minimum wage increase.
    Mr. Castro. And do you think that it should be less? Do you 
think it should be, like, $11 or just no minimum wage or $6 an 
hour?
    Ms. Barron. Well, I think I would leave that up to you 
folks to determine that, but all I know from my experience is 
that I am losing money because of loss of tips, because of the 
rise in the minimum wage, and I don't feel that workers' voices 
in the full service industry have been represented at all in 
this talk.
    Mr. Castro. So I guess your point is that you are not 
against a minimum wage. You think that $15 is not the right 
amount?
    Ms. Barron. As everything is proposed at this point in 
time, I am finding myself as days go on opposed to the rise in 
minimum wage altogether.
    Mr. Castro. You would freeze it.
    Ms. Barron. Yes. I would like to have a tip credit in 
Washington State, and we are not having that conversation. We 
are, I guess, not allowed to have that conversation in 
Washington State.
    Mr. Castro. I guess let me ask you. The reason I ask is the 
U.S. Chamber of Commerce for years would not support increasing 
the minimum wage, even by a penny. I mean, at all. And I know 
that obviously you are in the service industry. Are you a 
waitress?
    Ms. Barron. Yes.
    Mr. Castro. That is different from somebody working at, 
say, Whataburger in Texas or somewhere else?
    Ms. Barron. Right.
    Mr. Castro. So you have been opposed for a while to a 
minimum wage increase, even one cent on minimum wage?
    Mr. Strain. Yes. I would be opposed to raising the Federal 
minimum wage at all.
    Mr. Castro. And I guess why is that? So you don't think it 
should ever be raised? I mean, 50 years from now it should 
never be raised?
    Mr. Strain. In my view the primary focus should be on 
providing economic opportunity to the least skilled, least 
experienced, most vulnerable workers in our society. Those 
workers are the workers who will bear the cost of a minimum 
wage increase. If you raise the minimum wage by one penny, how 
many of them would be worse off? You know, I don't know. Not 
nearly as many as if you--
    Mr. Castro. No, but you would agree also that their 
expenses go up, the cost of living goes up, people need a 
higher wage, right?
    Mr. Strain. Another reason to be opposed, another reason 
why I am opposed is because there are better tools that 
Congress has to help those workers. Expanding Federal earning 
subsidies puts more money in the pockets of the working poor 
and actually increases employment rather than reduces 
employment.
    So when thinking about how to help these workers, I think 
Congress should look at the full range of options and not only 
focus on the option that is going to put a lot of them out of 
work.
    Mr. Castro. Sir, I guess I disagree with you on your first 
point about not increasing the minimum wage, but I mean, you 
understand that other people that are opposed to increasing the 
minimum wage are also opposed to the subsidies you are 
describing.
    Mr. Strain. I am only speaking for myself, Congressman.
    Mr. Castro. Ok. I think part of the reason that we have 
gotten here and part of the reason that there is such 
frustration with the income inequality in this country is 
because the U.S. Chamber of Commerce and major business 
organizations have not taken the lead even though some 
companies on their own, including members of the Chamber of 
Commerce, have actually raised their own minimum wage on their 
own. And it is interesting that is an instance where private 
industry has actually been ahead of the main industry group 
that is coming to Washington and in their name arguing against 
raising the minimum wage by even one penny. I think that--
    Mr. Strain. I don't know--
    Mr. Castro. I am in my comment part here. Thank you for 
your answers to my questions.
    And I think that this could have been a very different 
conversation over the years if different groups and 
organizations had worked in earnest and in concert, not even 
necessarily with the Federal Congress but with the states and 
with their own workers in making an earnest attempt to raise 
the minimum wage.
    But that has not happened now for decade, longer than a 
decade, that those conversations have happened. And so we find 
ourselves in a country where income inequality has grown, where 
workers have gotten very frustrated, where there is in American 
society now, I think, a real resentment at the fact that 
people--that you get more and more billionaires in our country, 
and you have a lot of people that may have a job but feel as 
though they have no future in their work. And that is where we 
find ourselves today.
    I yield back. Thank you, Chairman.
    Chairman Scott. Thank you. The gentlelady from Illinois, 
Ms. Underwood.
    Ms. Underwood. Thank you, Mr. Chairman, for calling this 
hearing, and thank you to all the witnesses for appearing here 
today.
    I am going home to Illinois 14th tomorrow to hear what our 
community has to say about this issue, and I am glad to have 
the opportunity to hear from experts like you today.
    Mr. Chairman, I would also like to ask for unanimous 
consent to submit a letter from advocate Aurora Health in 
Illinois for the record.
    Chairman Scott. Without objection.
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    Ms. Underwood. Thank you. I think many people don't realize 
if you're working full time to support your family right now at 
the Federal minimum wage, you are making $15,080 a year. That 
is not a livable salary anywhere in America today, and so I 
would like to learn more about how gradually raising the 
minimum wage can help workers and small businesses.
    Ms. Eckhouse, you have been paying a livable wage since you 
started your small business almost 20 years ago. In that time, 
have you seen the livable wages you pay contribute to lower 
levels of turnover, and would you say that this has been better 
for your bottom line?
    Ms. Eckhouse. Thank you for your question. Yes. We have 
seen lower turnover than we might have as expected in our 
business, and that has benefited our company. It benefits us in 
a lot of ways. We have more knowledgeable employees, we have 
more committed employees, and we are all able to work together 
to improve what we make.
    Ms. Underwood. That is great. And is it your experience 
that because you pay a livable wage and therefore have less 
turnover, you are able to dedicate more time to growing your 
business instead of a cycle of hiring and training new 
employees?
    Ms. Eckhouse. Yes. That is correct. And our employees are 
also able to contribute to better management of our business 
because they have been there longer and are more familiar.
    Ms. Underwood. And so you would say that paying a livable 
wage is an importantly part of your small business's success. 
Is that right?
    Ms. Eckhouse. Yes, I would.
    Ms. Underwood. I am really encouraged by research showing 
that gradually raising the minimum wage can help reduce wage 
inequality and have a positive effect on women's economic 
security, so I really appreciate Miss Gupta's comments. I would 
like to just pivot for a second.
    Professor Reich, what does the current research say about 
the impact on health outcomes? I am a nurse, and so often I 
like to ask about the health impact as a result of the increase 
in the minimum wage.
    Mr. Reich. And thank you for that question. This is a very 
new area in my minimum wage research is to look at the health 
impacts, and there are about 20 studies, and they are not 
unanimous. No economists never are unanimous, so that is not a 
negative sign. But there are definitely good studies, high 
quality studies that show that higher minimum wages reduce 
smoking rates, they reduce obesity, they reduce prediabetic 
conditions.
    In a study that I have done but I have not yet published, 
they reduce suicides. There would be, like, 700 fewer suicides 
a year with every 10 percent increase in the minimum wage.
    Ms. Underwood. Wow, those really powerful findings. Thank 
you.
    I appreciate your testimony this afternoon. I do also 
recognize it has been a long day and know how important this 
issue is for workers, for business owners, and for the future 
growth of our economy in this country, so thank you for your 
service, and I yield back my time.
    Chairman Scott. Thank you. And I recognize myself for 
questions. And I would like to begin by responding to the idea 
that this is a socialist talking point. I would point out that 
Arkansas and Missouri recently by referendum passed increases 
in the minimum wage or a similar track to what we are doing in 
this bill by votes of well over 60 percent.
    Representative Brodeur, who has been helped in 
Massachusetts by the minimum wage increase?
    Mr. Brodeur. Working families certainly have been. Again, 
as I started in my opening remarks talking about we see teens 
that are about 20 percent of our teens supplying 20 percent of 
the household income, you know, for folks that are really at 
poverty level. That is huge, and it leads to, you know, some of 
the results that Dr. Reich was talking about in terms of those 
dollars leading to better outcomes for families over the long 
term.
    It has also provided opportunities for folks to again to 
advance themselves. Education, we all agree, is the pathway to 
success both early ed and an environment where the family is 
more stable. Kids have more success, and those young adults 
that are trying to get higher ed or a certificate or whatever 
the case may be to improve their opportunities in the job 
market also benefit.
    Chairman Scott. Thank you.
    Dr. Strain, in your testimony, you indicated there are 
better ways to help the working poor. I think you mentioned the 
earned income tax credit. Is that what I understand you are 
referring to?
    Mr. Strain. Yes, Mr. Chairman.
    Chairman Scott. What are the other ways of helping the 
working poor?
    Mr. Strain. Well, another way is through the child tax 
credit which has a refundable component that can go to support 
low-income Americans. Another way is to expand education and 
training programs. I think apprenticeships offer a particularly 
promising path forward to building worker skills which will 
allow them to be more productive and command higher wages. 
There are many, Mr. Chairman. There are many.
    Chairman Scott. If you could supply those for the record 
after the hearing, I would appreciate it.
    Mr. Strain. Of course.
    Chairman Scott. Professor Reich, the 2014 Congressional 
Budget Office study showed a significant job loss. I understand 
there have been subsequent studies that come to different 
conclusions. Can you say what the overall body of research 
shows about whether or not low income workers are worse off as 
a result of an increase in the minimum wage?
    Mr. Reich. The CBI doesn't do its own research on this 
topic. It just builds on and uses the research that other 
people have done, and they looked at the studies as of 2014 
some by me, some by other people, and they basically took an 
average between those two as the effect on teens. That is not a 
very good scientific method because some of the studies are 
better than others.
    And they had to extrapolate from what the effect is on 
teens the effect on adults, and they arbitrarily came up with a 
number, a ratio of one-third because adults on the whole are 
better paid. That again is not a very good basis. More 
recently, we have studies that look at not only teens and 
restaurant workers but all workers, all jobs.
    Dr. Zipperer, who was on the panel this morning, is the 
author of one of those studies, and it is a study--I think that 
it is stunning study. It has been described as the best minimum 
wage paper since the 1990's, and I agree. It is going to be the 
defining study. It is probably going to come out in the top 
economics journal in the world. It shows no negative effects.
    Chairman Scott. Does the research show how restaurants 
react to an increase in the minimum wage as far as the way they 
treat their workers?
    Mr. Reich. Yes. Well, first of all, you know, not 
everybody's paid at the minimum wage in a restaurant or any 
other industry, so the actual increase is usually about half. 
The actual increase in cost is usually about half. In labor 
costs, it is usually about half what the minimum wage increase. 
If the minimum wage goes up 10 percent and the labor cost 
increases about 5 percent, and labor is only about a third of 
operating costs.
    So the actual increase in prices, full pass-through is 
maybe 1 to 2 percent, especially when you take into account 
turnover savings. So that is the main adjustment mechanism, not 
reductions in employment. And by the way, it does increase 
automation for those jobs that can be automated, but many jobs 
in restaurants cannot be automated.
    Food prep is very, very difficult to automate. You cannot 
automate making a peanut butter and jelly sandwich, for 
example. It has been tried. And so you know, automation isn't 
just something that is free. It has to be actually--there has 
to be a technology for it.
    Chairman Scott. Thank you very much. My time has expired, 
and I want to remind my colleagues of the process for 
submitting additional materials, and I want to thank our 
witnesses for their participation today. What we have heard has 
been very valuable.
    Members of the committee may have additional questions and 
we ask the witnesses to please respond to those questions in 
writing. The hearing record will be held open for 14 days to 
receive those responses, and I would ask the colleagues to 
submit those questions within 7 days so that the witnesses have 
ample time to respond.
    This hearing has demonstrated the benefits of increasing 
the Federal minimum wage to $15 by 2024, the benefits for 
workers, businesses, and the economy. No American working full 
time should be living in poverty, and by gradually increasing 
the minimum wage, you cannot only elevate the standard of 
living for nearly 40 million American workers but also put 
money back in their pockets to support local businesses.
    And without objection, I ask that the letter and documents 
from the business for a fair minimum wage and the Economic 
Policy Institute be entered into the record and without 
objection, so ordered.
    [The information follows:]Mr. Scott
    Economic Policy Institute: https://www.govinfo.gov/content/
pkg/CPRT-116HPRT36711/pdf/CPRT-116HPRT36711.pdf
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    Chairman Scott. We look forward to continuing the 
discussion as we advance the legislation.
    Is there any other business to come before the committee? 
If not, the meeting is adjourned.
    [Additional submissions by Ms. Adams follow:]
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    [Additional submission by Mr. Courtney follows:]
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    [Additional submission by Ms. Davis follows:]
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    [Additional submissions by Mrs. Foxx follow:]
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    [Whereupon, at 5:36 p.m., the committee was adjourned.]

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