[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
PERSPECTIVES FROM MAIN STREET: RAISING THE
WAGE
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HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND REGULATIONS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
FEBRUARY 24, 2021
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 117-004
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
43-447 WASHINGTON : 2021
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
JARED GOLDEN, Maine
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
KWEISI MFUME, Maryland
DEAN PHILLIPS, Minnesota
MARIE NEWMAN, Illinois
CAROLYN BOURDEAUX, Georgia
JUDY CHU, California
DWIGHT EVANS, Pennsylvania
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANDY KIM, New Jersey
ANGIE CRAIG, Minnesota
BLAINE LUETKEMEYER, Missouri, Ranking Member
ROGER WILLIAMS, Texas
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
ANDREW GARBARINO, New York
YOUNG KIM, California
BETH VAN DUYNE, Texas
BYRON DONALDS, Florida
MARIA SALAZAR, Florida
SCOTT FITZGERALD, Wisconsin
Melissa Jung, Majority Staff Director
Ellen Harrington, Majority Deputy Staff Director
David Planning, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Dean Phillips............................................... 1
Hon. Beth Van Duyne.............................................. 3
WITNESSES
Dr. Heidi Shierholz, Senior Economist and Director of Policy,
Economic Policy Institute, Washington, DC...................... 7
Mr. John Puckett, Co-CEO, Punch Pizza, St. Paul, MN.............. 8
Ms. Rebecca Hamilton, Co-CEO, W.S. Badger Company, Gilsum, NH.... 10
Ms. Rachel Greszler, Research Fellow in Economics, Budget and
Entitlements, The Heritage Foundation, Washington, DC.......... 12
APPENDIX
Prepared Statements:
Dr. Heidi Shierholz, Senior Economist and Director of Policy,
Economic Policy Institute, Washington, DC.................. 40
Mr. John Puckett, Co-CEO, Punch Pizza, St. Paul, MN.......... 46
Ms. Rebecca Hamilton, Co-CEO, W.S. Badger Company, Gilsum, NH 48
Ms. Rachel Greszler, Research Fellow in Economics, Budget and
Entitlements, The Heritage Foundation, Washington, DC...... 52
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
A&P Master Images............................................ 72
ATR Coalition Letter......................................... 73
Boyer's Food Markets Inc..................................... 77
Casey Waits Testimony........................................ 79
Congressional Budget Office.................................. 80
Council for Citizens Against Government Waste (CCAGW)........ 97
Eureka Pizza Co.............................................. 99
FASTSIGNS.................................................... 100
Fleet & Farm Supply/Ace Hardware............................. 101
Florida Restaurant and Lodging Association................... 103
FreedomWorks................................................. 104
Gary Siebert Testimony....................................... 107
International Franchise Association (IFA).................... 108
Mad Hatter Restaurant & Bakery............................... 110
Maddens Resort............................................... 111
Mark Klinger Testimony....................................... 112
Marshall Street Bar & Grill and The Union Tavern............. 113
Missouri Farm Bureau Federation.............................. 114
National Restaurant Association.............................. 115
NFIB Research Center Study................................... 117
NFIB Letter.................................................. 164
Raise the Wage Act of 2021 Coalition Opposition Letter....... 166
Rangaire Manufacturing Company, LP........................... 169
Rick Knoebels Testimony...................................... 171
Rohrbach Brewing Co.......................................... 173
Rosario Longo Testimony...................................... 174
Rosebud Tractor.............................................. 175
Sal and Jerrys Bakery........................................ 177
SBE Council Letter........................................... 178
Sergio's Family Restaurants.................................. 180
Stephanie Figueroa Testimony................................. 181
54th Street Grill & Bar...................................... 182
Urban Air Adventure Park..................................... 183
U.S. Chamber of Commerce Small Business...................... 185
Zanz Mexican Restaurant...................................... 190
PERSPECTIVES FROM MAIN STREET: RAISING THE WAGE
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WEDNESDAY, FEBRUARY 24, 2021
House of Representatives,
Committee on Small Business,
Subcommittee on Oversight,
Investigations, and Regulations,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 2360, Rayburn House Office Building, Hon. Dean Phillips
[chairman of the Subcommittee] presiding.
Present: Representatives Phillips, Craig, Chu, Evans,
Davids, Van Duyne, Hagedorn, Meuser, Donalds, and Fitzgerald.
Also Present: Representatives Velazquez, Tenney,
Luetkemeyer, Bourdeaux, and Young Kim.
Chairman PHILLIPS. Good morning, everybody. I want to call
the meeting to order and thank everybody for joining us today.
I also want to thank our witnesses in particular for taking
time out of their busy schedules to be with us.
First, I want to go over some important requirements, most
of which you already know. But beginning by saying that the
standing House and Committee Rules and Practices will continue
to apply during hybrid proceedings.
All members are reminded that they are expected to adhere
to these standing rules, including decorum. House regulations
require members to be visible through a video connection
throughout the proceeding, so please keep your cameras on.
Also, please remember to remain muted until you are recognized
so that we can minimize background noise. If you have to
participate in another meeting, please exit this one and log in
later.
In the event that a member encounters technical issues that
prevent them from being recognized for their questioning, I
will simply move to the next available member of the same party
and I will recognize that member at the next appropriate time
slot provided that they have returned to the proceeding.
For those members physically present in the Committee room
today, we will also be following the health and safety
guidelines issued by the attending physician. That includes
social distancing and especially the use of masks. Members and
staff are expected to wear masks at all times while in the
hearing room, and I thank you in advance for your commitment to
a safe environment to all here today.
It is an honor to Chair this Subcommittee and to provide a
platform for listening to and supporting small businesses
across America. Though our members may disagree on occasion on
matters of policy, I want to make it clear that we work for
you, the small business owners present today, and the small
business owners across the country pursuing the American Dream.
I look forward to conducting this hearing and this year's
work in a productive and bipartisan manner with Ranking Member
Van Duyne.
Since the implementation of the New Deal in the 1930s,
Congress has been tasked with determining from our collective
belief of what is fair and what is right, a standard of living
under which no working American citizen should fall. An
essential part of this floor is the minimum wage, which was
intended to ensure that the least advantaged workers in America
can provide for themselves, let alone for their families. But
over the past decades, this floor has significantly eroded in
value despite a modest increase to $7.25 per hour in 2009.
Meanwhile, Washington is caught in partisan gridlock and
unable to provide the leadership so desperately needed to
resolve the issue despite overwhelming public support for
addressing it. It is my core belief that all working Americans
who live on the wages that they earn be paid one on which they
can survive. It is not just good for humanity, it is good for
our economy because consumption is the engine of our economy
and money in people's pockets is its fuel.
Unfortunately, the current minimum wage falls well below
the poverty line for a family of two or more. I cannot imagine
that anybody in this room or participating today would say that
it is fair and just for any American relying on a full-time
wage to survive to earn only $15,000 per year. That cannot make
rent. That cannot pay for food. It cannot pay for healthcare.
It cannot pay for childcare, and it surely cannot pay for
education in any region of our country.
But, as I said during our markup just 2 weeks ago, I am
troubled that the Raise the Wage Act was included in this COVID
relief package without more opportunities for small business
voices to be heard and thoughtful members of Congress on both
sides of the aisle to offer constructive feedback and
amendments.
And that is why we were here today, my friends. I am
certain that all of us in this room have heard from small
businesses and hard-working people in our districts about the
impacts, both the positive impacts and the negative impacts
that this policy change would have.
In my office, we heard from Ken, the owner of the original
Pancake House in Plymouth, Minnesota, one of my favorite
joints. Like so many businesses which rely on public gathering
to succeed, he is barely hanging on. His restaurant, like all
restaurants, runs on thin margins during even the best of times
and Ken is deeply concerned that a $15 minimum wage will mean
that he has to cut jobs if he hopes to stay open.
I take these concerns seriously, and they are guiding how
we will conduct this hearing today. However, we cannot ignore
the benefits that our economy would reap from raising the
minimum wage. We often hear from small firms how hard it is to
attract and retain skilled workers, and experts say that this
policy could help. Studies also suggest it can make workers
more productive and boost morale.
According to the CBO, the policy at it is written would
likely raise wages for 27 million Americans, raise almost 1
million out of poverty, and increase the aggregate wages for
low wage workers in American by over $300 billion over the next
decade. These newly empowered workers will live in turn to
support local businesses and our entire economy.
It is also essential that we address this through a racial
and gender equity lens. Women and minorities would
disproportionately benefit from a $15 minimum wage, which would
close pay gaps based on both race and gender.
Unfortunately, the same CBO study also projects that this
policy as it is written could cost up to 1.4 million American
jobs, and intuition tell us it would also result in the loss of
a number of small businesses, both of which are consequences
which I find as unacceptable as they are preventable.
It is our duty on this Committee to listen to the voices of
small businesses and support them accordingly. And while we may
disagree on whether to increase the minimum wage or by how much
or in what manner, I hope and I expect that we will come
together for a cordial, productive, and even provocative
hearing that will serve the best interests of small businesses,
their employees, and our communities.
Lastly, and most importantly, I ask that we use our time
today to identify ways in which we can mitigate the negative
impacts of such a policy while maximizing the positive impacts
of raising wages for millions of Americans. As I said 2 weeks
ago and I will say it again right now, livable wages, thriving
businesses, and job growth are not mutually exclusive options.
So let's work together to achieve that trifecta beginning with
today's hearing.
And with that, I will yield to the Ranking Member, Ms. Van
Duyne for her opening statement.
Ms. VAN DUYNE. Thank you so much, Mr. Chairman.
Before I begin, I would like to thank Ranking Member
Luetkemeyer and my colleagues on the Subcommittee for the
opportunity to serve as Ranking Member on the Subcommittee of
Oversight, Investigations, and Regulations, and I look forward
to working with each and every one of you in this capacity.
Small businesses shuttered, American families struggling to
pay their rent, livelihoods destroyed. These are the
devastating consequences we witnessed as a result of this
pandemic and along with it forced lockdowns all across the
country. Fortunately, in my state of Texas, we were able to
open back up quickly, giving millions of small business owners
the opportunity to keep their doors open and to fight to
protect the businesses that they have invested their lives in.
But what we are here to discuss today, a Federal,
nationwide mandate to raise the minimum wage to $15 an hour
will put us right back to where we were months ago--American
jobs destroyed, small businesses forced to close their doors,
and life savings gone to waste. I cannot think of anything more
devastating in a time when our small businesses are barely
getting back on their feet.
And Mr. Chairman, I want to thank you for your comments on
wanting to take this slower, getting as much input from small
businesses that will affect as possible, I really appreciate
that. And you had actually quoted from the Congressional Budget
Office, the nonpartisan Congressional Budget Office that
estimated that an increase in the minimum wage to $15 an hour
would lead to a loss of 1.4 million jobs by 2025. And of those
1.4 million workers displaced, the CBO estimated that 700,000,
half of those workers, would fall out of the labor force
entirely.
And make no mistake, this top down, ``one size fits all''
mandate will impact our small businesses the most. These ``mom
and pop'' shops already operate on thin margins. The local Main
Street restaurants, hardware stores, hair salons, and florists
are the heartbeat of our communities, and they simply cannot
absorb this mandated increase by any way.
And not to mention a wage mandate takes away any variation
in discretion that an entrepreneur has to scale his or her
business to the area in which it operates. Whether that is in
my home state of Texas or the Chairman's home state of
Minnesota, why should a waitress at a busy restaurant in the
heart of New York City where the average rent for a one-bedroom
apartment is $2,475 a month be forced to make the exact same
amount as a waitress in Billings, Montana, where the average
rent for a one-bedroom apartment is $678 a month?
The Federal government does not and cannot know what is
best for each town across America, and this ``one size fits
all'' mandate fails to recognize the diversity and uniqueness
of our townships, towns, cities, and metropolitan communities.
What I cannot seem to wrap my head around is the American
workers who will be impacted the most by this reckless policy.
My colleagues who support this proposal claim this will help
our lower to middle class, our single moms. And as a single
mother myself who was a waitress back in the day, I sit here
wondering what these single moms will do when the local
restaurant or hair salon where they work is forced to close
their doors because they simply cannot pay their employees $15
an hour. Or when businesses have to choose between shutting
down or replacing their workers with automation.
As one of my colleagues across the aisle said over the
weekend, we do not want those businesses. That is his message
to our ``mom and pop'' shops struggling to keep their doors
open right now--if you cannot afford to $15 an hour, we do not
want you. Let that sink in for a minute.
After being selected to serve on this Committee, I was
eager to sit down with local business owners across North Texas
to hear firsthand what is working and what is not working.
Where they need government to get out of the way. And they were
all crystal clear. Increasing the minimum wage will have a
disastrous impact on their business. In fact, many were
confident they would have to close their doors immediately.
And what does that mean for American workers? From young
workers to single moms, our working families will be hit
hardest by this policy.
And do not just take my word for it. Over the last few
weeks, our Committee has received testimony from small business
owners all across the country explaining how this Federal
mandate would decimate their businesses and their livelihoods
along with it.
And I would like to ask for unanimous consent to be able to
enter these statements into the congressional record.
Chairman PHILLIPS. Without objection.
Ms. VAN DUYNE. Thank you.
I would also like to take a moment to share testimony we
received from Ian MacLean, president and owner of Highland
Landscaping in my district of Southlake, Texas, and the Chair
of the U.S. Chamber of Commerce's Small Business Council. Here
is what he had to say about how legislation that would increase
the Federal minimum wage from $7.25 an hour to $15 per hour
would affect his business. Before we started hearing about
Congress's plan to raise the Federal minimum wage, we had begun
exploring solutions to growing wages in our industry such as
robotic mowing systems and purchasing more machinery to do more
of the labor work on the construction side. In order to
mitigate the effects of a minimum wage hike, we would fast-
track those solutions and eliminate most of our entry-level and
less-skilled labor positions. Unfortunately, this would
eliminate our ability to provide youth jobs, entry-level jobs,
and summer jobs. And as a small business owner, I take great
pride in creating and sustaining jobs for people who can then
provide for their families. I believe most small business
owners do as well. During the pandemic, I was able to create
new jobs. With news of a potential wage hike, I am now making
preparations to move in the opposite direction. Small business
is the biggest job creator in the United States and the driving
force of our economy. A wage hike to $15 per hour would cause
small business owners like me to not only stop creating jobs
but to eliminate jobs.''
Mr. Chairman, I truly believe each and every one of us
here, from our colleagues to our witnesses to our small
business owners, want the same thing. We want to see our small
businesses make it out of this pandemic. We want to see working
families lifted up. And we want to advance policies that will
give every American a shot at living their American Dream. I
look forward to finding ways to work across the aisle to
accomplish these goals, but a ``one size fits all'' minimum
wage mandate is not the answer.
I thank all of the witnesses for joining us today, and I
yield back.
Chairman PHILLIPS. Thank you, Ms. Van Duyne.
And I would like to take a moment before we begin to
explain how this hearing will proceed. Each witness will have 5
minutes to provide a statement, and each Committee member will
have 5 minutes for questions. Please ensure that your
microphone is on when you begin speaking and that you return to
mute when you are finished.
With that, I will begin by introducing our witnesses.
Our first today is Dr. Heidi Shierholz, senior economist
and director of Policy at the Economic Policy Institute. From
2014 to 2017, she served the Obama administration as the chief
economist at the Department of Labor where she and other
department leaders worked to develop and execute initiatives to
boost workers' rights, wages, and benefits. Her research and
insights are routinely used to shape policy proposals and
inform news coverage in many broadcasts, radio, print, and
online news outlets. She received her M.A. and PhD in Economics
from the University of Michigan, and her policy focuses include
labor policy, wage inequality, unemployment insurance, minimum
wage, and many others.
So a heartfelt welcome to Dr. Shierholz, and we look
forward to your testimony today.
Our next witness is John Puckett, co-owner and CEO of Punch
Neapolitan Pizza, an 11-store restaurant company headquartered
in St. Paul, Minnesota that recently celebrated its 25th year
in business. John has always been a fierce advocate for
investing in his own employees and creating career path
opportunities for everybody. In 2014, Punch was recognized by
President Obama in the State of the Union Address for paying
starting wages significantly above the industry average. Prior
to Punch, John cofounded and grew Caribou Coffee into a
significant retail brand across the country. He has an MBA from
the Tuck School of Business and a BA from Dartmouth University.
Thank you, John, for being here today, and I look forward
to your testimony as well.
Our third witness today is Ms. Rebecca Hamilton, a second
generation owner and co-CEO at Badger, a natural and organic
personal care manufacturer known for its unique company
philosophy, pioneering family friendly benefits, and B Corp
community engagement. In addition to her role as co-CEO, she
has spoken at the White House, addressed the UN Convention on
Biological Diversity, and testified before Congress on behalf
of safer cosmetics. Recently, she was appointed to the National
Women's Business Council, a nonpartisan Federal advisory
Committee, and we thank you, too, Rebecca, for being here and
look forward to your testimony.
With that I will yield to the Ranking Member to introduce
our fourth and final witness.
Ms. VAN DUYNE. Thank you.
Our next witness is Rachel Greszler. Ms. Greszler is a
research fellow in Economics, Budget, and Entitlements at the
Grover M. Hermann Center for the Federal Budget at the Heritage
Foundation. Since joining the staff at the Heritage Foundation
in 2013, Ms. Greszler has concentrated her research and
findings on numerous areas of labor, Social Security, pension,
and employment policies. Given her extensive knowledge and
research, she has also been a frequent witness on Capitol Hill
providing testimony on many of these topics. Her latest
research focuses on the minimum wage and its impact on
childcare costs. Prior to joining the Heritage Foundation, Ms.
Greszler was on staff at the Joint Economic Committee.
Ms. Greszler, welcome back to Capitol Hill. We appreciate
you and the other witnesses for joining us today as we explore
this critically important topic and we look forward to your
testimony.
Chairman PHILLIPS. Thank you, Ms. Van Duyne.
And we will begin with Dr. Shierholz. You are recognized
for 5 minutes for your opening statement.
STATEMENTS OF DR. HEIDI SHIERHOLZ, SENIOR ECONOMIST AND
DIRECTOR OF POLICY, ECONOMIC POLICY INSTITUTE; JOHN PUCKETT,
CO-CEO, PUNCH PIZZA; REBECCA HAMILTON, CO-CEO, W.S. BADGER
COMPANY; RACHEL GRESZLER, RESEARCH FELLOW IN ECONOMICS, BUDGET
AND ENTITLEMENTS, THE HERITAGE FOUNDATION
STATEMENT OF HEIDI SHIERHOLZ
Ms. SHIERHOLZ. Thank you. Chairman Phillips, Ranking Member
Van Duyne, and members of the Subcommittee, thank you for the
opportunity to testify on the importance of increasing the
minimum wage to $15 an hour by 2025.
I want to start by talking about the well-documented,
enormous benefits of a $15 minimum wage. My colleagues at EPI
have estimated that increasing the minimum wage to $15 in 2025
will generate $107 billion in higher wages for low-wage
workers. And CBO's recent analysis shows that $15 in 2025 will
make low-income people as a group unambiguously better off. The
total income of low-income people would rise, income inequality
would shrink, and nearly a million people will be pulled out of
poverty. And from a prior CBO analysis, we know that roughly
half of those pulled out of poverty by a $15 minimum wage will
be children.
Research also shows that by providing families with higher
incomes, minimum wage increases have improved infant health,
they have reduced child abuse, and they have reduced teen
pregnancy.
And then particularly important in this moment, essential
and frontline workers make up the majority of those who would
benefit from a $15 minimum wage. More than a third of those
working in residential or nursing care facilities would see
their pay increase. Forty-two percent of workers in grocery
stores would see a raise. More than four in 10 janitors and
housekeeping cleaners would benefit. Ten million workers in
healthcare, education, construction, and manufacturing would
see a raise.
And $15 in 2025 would not just reduce overall income
inequality; it will reduce inequality by race and gender as
well. So due to things like occupational segregation,
discrimination, and other impacts of structural racism and
sexism, women and Black and Hispanic men are more concentrated
in low-wage jobs and would see disproportionate gains from this
increase.
Raising the minimum wage is long overdue. Workers today who
are paid the current Federal minimum wage are paid more than 30
percent less in inflation-adjusted terms than their
counterparts were paid 53 years ago. And this is despite the
fact that the economy's capacity to deliver higher wages, which
is measured by labor productivity, that capacity more than
doubled over that period. Had the minimum wage kept pace with
productivity growth since 1968, it would be over $23 in 2025.
So a $15 minimum wage in 2025 simply means that low-wage
workers are able to share in a small portion of the country's
growth over the last half century.
Another key thing to note is that we can raise the minimum
wage to $15 in 2025 with little to no job loss. Minimum wages
are one of the most well-studied topis in economics, and
although there sometimes appears to be a great deal of
controversy about the size of employment effects on the minimum
wage, the weight of the evidence clearly shows that minimum
wage increases have worked exactly as intended by raising wages
without big, negative consequences. So comprehensive reviews of
the academic literature on the employment effects of minimum
wage increases have found that the typical academic study of
the employment effect of minimum wage increases finds little to
no impact on employment. And relevant, for the increase that we
are talking about now, research also shows that the highest
Federal minimum wages the U.S. has ever experienced, the
minimum wages of the late 1960s, they also significantly raised
wages without reducing the employment of low-wage workers.
So that brings up the question, how is this possible? How
can minimum wages be raised without causing employers to have
to lay off workers? And I will list a couple of reasons here.
For one, businesses find that raising wages increases
productivity. It improves morale and reduces turnover. Workers
with more income have less chaos in their lives. They are more
likely to have access to reliable transportation to work, to
steady childcare, and to healthcare, and all of those things.
Reduce absenteeism and turnover. Turnover is hugely expensive
for firms. Research finds that a typical cost of turnover is 20
percent of the position's annual salary. So a reduction in
turnover and an increase in productivity help businesses recoup
some of the increased costs of the higher wages.
And another key thing is that businesses also see an
increase in demand for their goods and services when the
minimum wage goes up. Low-wage workers are those who are the
most spending constrained. They cannot buy all the things they
need. So when you raise the minimum wage, you are getting money
into the hands of people who are the most likely to have no
choice but to spend it, and that increases demand which is very
good for business.
And I will leave it there for now and just end by saying
that the failure to adequately raise the minimum wage has
denied workers significant improvements in their standard of
living. It has increased poverty and inequality. By raising the
Federal minimum wage to $15 by 2025, we will finally deliver a
much-needed boost to this country's lowest paid workers.
And I look very forward to answering any questions that you
may have.
Chairman PHILLIPS. Thank you, Dr. Shierholz.
Mr. Puckett, you are now recognized for 5 minutes for your
opening statement.
STATEMENT OF JOHN PUCKETT
Mr. PUCKETT. Thank you, Chairman Phillips. And good morning
from sunny and warm Minneapolis, Minnesota this morning. We
appreciate the chance to talk about what our company has
learned from paying our employees more.
I am John Puckett. I am the co-owner of Punch. We are a 25-
year-old business located in the Twin Cities in Minnesota. We
employ almost 300 people at our company and we operate 11
pizzerias. Prior to joining Punch and helping grow that
company, my wife and I started Caribou Coffee, which is today
the second largest coffee retailer in the country, and I think
of significance, we started Caribou Coffee with an SBA loan 30
years ago. So thank you 30 years later for the support of
Congress to help small businesses.
Everybody knows how competitive the pizza industry is. It
may be the most competitive part of the restaurant business.
And everybody thinks that is going to survive that their pizza
is the best. Our pizza is made in a 1,000 degree wood-burning
ovens. Our toppings melt in the oven--fresh mozzarella, crushed
tomatoes, olive oil, sea salt. We think our pizza cannot be
beat.
But our secret ingredient is our people, our fantastic
employees. And when we ask our customers why they come back to
Punch, they tell us two things. They say it is the quality of
your food, but very closely or tied with that answer is it is
our engaged employees, our friendly employees. And we think
when you walk into a Punch store versus our competition, you
can tell our employees like what they are doing and they feel a
part of something that they are proud of.
Part of our strategy with people is to pay our employees
more. As you mentioned, we were featured in the State of the
Union Address in 2014 for paying our employees more, and today
our average starting wage is $13 an hour and our average
employee earns $15 an hour, and this excludes management, and
earns an additional $5 an hour in tips. And we are really in
the fast food, quick service industry. So that is a remarkable
number when you add those two together. Our average hourly
employee earns over $20 an hour at Punch Pizza. And we think it
is one of the largest, if not the largest in the quick service
industry.
Another key part of our people strategy, it is not just
what they earn when they start. If we could, we would have
everyone move on beyond starting wages. We offer several
different skill levels and increased pay and make training and
development a priority of our business. In addition, we promote
most of our managers from our hourly workforce, and these are
jobs that start at over $50,000 a year and grow up to $100,000
a year. And I think it is important to note that we have zero
educational or accreditation requirements for these manager
positions.
Our turnover is significantly better than the industry
average and pay is a part of it, but it is not all part of it.
Advancement opportunities are important. Employees need to
believe in the leadership of their store and of the company and
of the mission of the company, and we find that providing the
best quality tools to do the job and having excellent work
processes lead to higher retention as well as pay.
This strategy does come at a cost. We earn less money than
the companies that we study that are publicly traded, that we
can track their labor expense. So we are giving up profit
margin in the short and near term, we think for our longer term
strategy of having our business both survive and thrive in the
future from having better employees and having more engaged
employees.
To close, I just want to talk about the biggest challenge
that small businesses like Punch face. We reconfigured our
operations to have socially distanced and keep our employees
safe. And we are very proud that we have had zero workplace
infections. But that has come at a cost to sales. We lost over
$1 million last year and we are losing tens of thousands of
dollars a month this winter. And we expect to lose that until
we are able to safely reopen our dining rooms. We are hopeful
given the increased rate of vaccinations that the restaurant
business and Punch will return to more normalcy later this
spring and summer, but it has been a challenge like no business
has ever faced in the restaurant industry in our lifetime.
To close, I would like to thank you all for the incredible
lifeline Congress gave small businesses like Punch with the
Paycheck Protection Program. There is not a doubt in my mind
that Punch, nor most small, independent restaurants could have
survived without that lifeline. So all of our employees greatly
appreciate that.
And I look forward to answering any questions you have
later in the meeting.
Chairman PHILLIPS. Thank you, Mr. Puckett.
And now, Ms. Hamilton, you are recognized for 5 minutes for
your opening statement.
STATEMENT OF REBECCA HAMILTON
Ms. HAMILTON. Thank you, Chairman Phillips and
distinguished members of the House Subcommittee on Oversight,
Investigations, and Regulations for this opportunity to testify
in support of raising the Federal minimum wage.
My name is Rebecca Hamilton, and I am the co-CEO and family
owner of the W.S. Badger Company, a small cosmetic and drug
manufacturer located in rural New Hampshire. I also serve on
the National Women's Business Council, a nonpartisan Federal
advisory committee advocating for women-owned businesses.
Badger was founded in 1995 in our family kitchen by my
carpenter father who created a simple balm to soothe his
cracked hands. Today, my sister and I lead the company
alongside our mother, where we employ 90 people and manufacture
over 100 body care products and sunscreens which are sold
throughout the United States and in 26 countries worldwide.
Badger has been recognized by Forbes as a leading small
company and as the New Hampshire Business of the Year.
Throughout our 25-year history, fair pay has helped our
business to succeed and grow. Our lowest starting wage is $15
per hour. We also provide a range of benefits from day one, and
I think that our fair pay business model has helped us to
attract and retain excellent staff, while supporting the health
of our community and keeping us successful into second
generation family ownership, even as many other businesses in
our region have struggled.
New Hampshire is unique, and that is one of the only states
in New England still following the current Federal minimum wage
of $7.25 per hour. For businesses, this low wage floor makes it
harder to hire and retain employees, build our customer base,
and grow. Furthermore, it undermines regional economic
development.
We participated in a working group in New Hampshire of a
number of businesses and healthcare providers examining the
relationship between our region's low wage floor and poor
health outcomes. We found that an hourly age below $15 was
inadequate to maintain a safe and decent standard of living in
our region, and that is in a rural region, and that it could
not sufficiently meet a person's food, housing, transportation,
and healthcare needs.
New Hampshire has struggled to attract and retain a young
workforce. A 2018 survey found that younger workers see New
Hampshire as lacking in job career opportunities. Several years
ago we also participated in a series of workforce development
meetings where business owners, educators, researchers, and
local government officials examined a further concern with
attracting a more qualified and talented workforce. And what we
found was interesting. This is something that stood out to me
is that Badger stood apart from many of these other businesses
in our region because we did not struggle with developing our
workforce. Our approach to paying a base wage of $15 an hour,
combined with compelling benefits set us in a much stronger
economic position. This approach has enabled us to spend
virtually zero dollars on recruitment while retaining an
engaged and committed workforce for the past 25 years.
Recruiting and training a new employee involves thousands
of dollars and dozens of hours in nonproductive costs. It has
been estimated that turnover costs are about 20 percent of an
annual salary or higher. By retaining experienced staff, we see
increased productivity, less waste, and fewer errors, which is
very important in a manufacturing facility. This further saves
us considerable money and time. The more we can retain already
trained staff, the more money we save, the more reliable our
staff, the better our productivity. The success of our business
is directly tied to the dedication of our staff.
Good pay and benefits also boost morale. When we treat our
employees well, they care more about our business success. In a
recent employee engagement survey conducted by the Employee
Engagement Group, 100 percent of employees surveyed at Badger
felt that their managers respected their work-life balance and
82 percent reported feeling highly engaged. What we have seen
is that having engaged in motivated staff has helped us to
innovate for success in the long run.
Our experience in New Hampshire is an excellent case study
for how low wages do not help small businesses in regions
compete. Rather, low wages hold back businesses and economic
growth and hamper employee and community health and well-being.
Raising the minimum wage is vital to help us recover from the
pandemic and build a stronger economy.
In our consumer-driven economy, businesses like mine depend
on customers who can afford our products and services. Raising
the minimum wage will put more money in the hands of working
people who will spend it at businesses in New Hampshire and
across the country. Raising the minimum wage to $15 an hour by
2025 will provide a more solid-level playing field for small
and large companies. It will help small businesses succeed, and
it is an investment in our Nation's workforce that will pay in
great dividends now and in the future.
Thank you for your time.
Chairman PHILLIPS. Thank you, Ms. Hamilton.
And Ms. Greszler, you are now recognized for 5 minutes for
your opening statement.
STATEMENT OF RACHEL GRESZLER
Ms. GRESZLER. Thank you. Good morning, and thank you for
the opportunity to testify today.
As someone who started out my career earning the minimum
wage washing dishes and making pizzas and then the sub-minimum
wage waiting tables, I can attest to the value, especially for
young workers, of minimum wage jobs. Minimum wage jobs are
steppingstones, not careers, and that is why young workers fill
most minimum wage jobs. $7.25 an hour is not sufficient to
support a family, but fortunately, single parents earning the
minimum wage make up only 0.1 percent of all workers, and in
that case, the Earned Income Tax Credit brings the true minimum
to about $10 per hour.
I think everyone here agrees that rising incomes are a
great thing, especially for low-income workers. But lawmakers
cannot create higher income; they can only redistribute it. And
despite pretty clear evidence and basic laws of economics,
there has been debate over whether a $15 minimum wage would
cost jobs or have negative impacts. Those economic studies can
be complicated, but for anyone who doubts that doubling the
minimum wage will cause substantial disruption and harm,
consider what would happen if your mortgage payment or rent
were to double. That would likely require a lot of changes, and
sometimes those changes end up hurting the people they are
aiming to help.
For example, Mae Martinez's husband got a $4 per hour raise
but then her family lost $2,200 per month in childcare
subsidies, forcing Ms. Martinez to stop her daytime college
classes and stay at home with her kids.
Families without subsidies would also be hurt. I estimate
that a $15 per hour minimum wage would increase the cost of
childcare by 21 percent on average across the U.S., with 30
percent or greater increases in 10 states. This can make
childcare unaffordable for millions of families, especially
those in low-cost areas.
And this is one example of why a ``one size fits all''
national minimum wage is unjust. It is one thing if high-cost
areas like D.C. or Seattle want to hike their minimum wages. At
least then workers can go outside the city as some have had to
do. But what works in D.C. is unlikely to work in D'Iberville,
Mississippi. In fact, $15 in Mississippi would be like a nearly
$36 minimum wage in D.C.
I would like to now share some of the voice of Main Street
employers who have aptly explained the unintended consequences
of a $15 minimum wage. Bryn Hornsby is an Air Force veteran who
owns two nursing homes in rural Mississippi. For him, a $15
minimum wage would require substantial, but unlikely increases
in Medicare and Medicaid reimbursements. And even so, then
their private customers cannot afford to pay any higher rates.
As Mr. Hornsby said, ``COVID has already brought us to our
knees financially. Any increase in the minimum wage would be a
death knell for us and many other small nursing home
operators.''
Gary Armstrong co-owns seven frozen yogurt shops across
three states and he enjoys providing entry-level jobs for
teenagers. He says, ``We see ourselves as mentors in basic
business operations and customer service skills.'' But Mr.
Armstrong said that any significant minimum wage increase would
cause them to eliminate many of those jobs and raise prices in
an attempt to keep their doors open.
Susannah Koteen owns Lido Harlem and Bixi Harlem
restaurants in New York City. Ms. Koteen explains, ``The
hospitality industry is one of the few careers left that one
can make a good living and move up quickly without a college
education.'' Think of the millions of jobs that are involved in
this business from front of the house, in the kitchen, to
farms, delivery drivers, sanitation companies, food and
beverage distributors. Ms. Koteen has already had to cut hours
and jobs because of New York's hike in the tipped minimum wage
to $10 per hour, and she said that a $15 per hour minimum would
force many small and independently-owned businesses to close
their doors or completely change the way they do business.
Betsy LeRoy owns Pizza by Elizabeths in Delaware, and she
served and staunchly supports President Biden. She explains,
``It would be difficult to absorb any increase in labor costs
right now, much less the steep increase Mr. Biden has proposed.
Even in good times, our profit margins were low. Today, our
profit margins are nonexistent, as is our ability to increase
prices.'' She said a $15 minimum wage would be a death knell to
her industry and she asked President Biden to ``save my
restaurant from the good intentions of progressive
policymakers.''
These examples show that policymakers cannot mandate higher
wages into existence without hurting many of the people they
want to help. But there are better ways to help workers achieve
higher incomes without hurting others, such as expanding
alternative education opportunities, like apprenticeships,
reforming occupational licensing laws so that it is easier and
less costly for workers to use their talents to earn an income,
and by protecting workers' rights to contract and earn income
through flexible and independent jobs. Thank you.
Chairman PHILLIPS. Thank you, Ms. Greszler. And thank you
to all our witnesses. We appreciate everything you have shared
with us and look forward to a thoughtful and productive
hearing.
I will begin by recognizing myself for 5 minutes.
Dr. Shierholz, I will start with you. A report published by
your colleagues at the Economic Policy Institute in January of
last year, 2020, argued that policy discussions often treat the
Earned Income Tax Credit (EITC) expansion and minimum wage
increases as alternatives of which we should simply choose just
one. But in reality, of course, the paper argues also that
``the two policies are complementary and may be more effective
in combination than either is on its own.''
So before I move on, I would like to ask for unanimous
consent to insert this report from EPI into the Committee
record.
Without objection, the letter will be inserted.
So my question, Dr. Shierholz is, please speak to how tax
provisions like the EITC and the Payroll Tax Credit can, and
perhaps should be used to balance the burden placed on small
businesses that would result from higher wages.
Ms. SHIERHOLZ. So this is a really important topic. For
example, the EITC and strong minimum wages are often presented
as being in opposition but they are absolutely companion
pieces. The EITC in particular is just an incredibly important
program, but one fundamental issue with it is that because
workers get the EITC, they will actually accept lower based
wages from employers. And this means employers actually capture
a meaningful chunk of expenditures on the EITC. So a strong
minimum wage is hugely important in this context because it
limits the amount of EITC expenditures that employers can
capture. So it is just these two pieces go hand in hand. At
this point it is definitely a both/and. We should both increase
the EITC and increase minimum wages to $15 in 2025.
Chairman PHILLIPS. Okay, thank you.
I also want to follow up with Ms. Greszler. In your written
testimony, you discuss how the EITC essentially ensures that
parents do not earn a true minimum wage and that gains from the
EITC would phase out as workers earn more. So could you expand
a little bit on how those two notions, the two policies would
interact and what conditions in the labor market would need to
be present to maximize the EITC's usefulness and describe how
it might be modified to boost the economic security of low wage
workers?
Ms. GRESZLER. Yeah, I think this is an example where we
have these good policy aims but then there are consequences to
them as well. And so the consequence with the Earned Income Tax
Credit is, of course, that it has to phase out eventually over
time. And when you are phasing out, that is a lower rate that
individuals are earning. And when you talk about increasing the
minimum wage, that is going to impact a fair number of single
parents who are earning lower wages. Even if it is above the
$7.25, this could potentially push them into the phaseout zone
of the Earned Income Tax Credit. And whereas they might have
been getting a 35 or 40 percent subsidy on their wages
previously, now they would be getting 21 percent lower than
their actual stated wage because of that phaseout. And so it is
tricky here to find the right balance between those things. But
I think that the point is that we do have a program that is
specifically aimed at working parents, and that is different
than the minimum wage which affects everybody, including
teenagers and the people who need to get their foot into the
door. And that is kind of the basis here is that the minimum
wage needs to be the bottom rungs on the career ladder so that
people can step in and they can climb their way up. And we do
not want to cut those off for tens of millions of Americans.
Chairman PHILLIPS. Okay, thank you.
I have got about a minute left. Mr. Puckett, one area that
I think we have failed to investigate and consider much is how
a policy like this will surely help millions, tens of millions
of Americans at the lowest wage scale. But how would it affect
an entity like Punch Pizza with 300 people, I think you
mentioned seven tiers of pay. How would this increase
ultimately affect the entire wage inflation issue, if you will,
at a company like Punch?
Mr. PUCKETT. Thank you, Chairman Phillips. That is a good
question. And we are really experiencing that today. As you
probably know, about half our stores are in Minneapolis-St.
Paul markets and both of those markets will be going to $15 an
hour in the next 18 to 30 months. And we do offer a significant
boost to wage above our starting wage. And thus far, we have
handled that and encouraged that increase in our employee
skills. But it is a significant inflation. Our total labor cost
is about 40 percent of sales.
The flip side is we think advancement and giving our
employees a chance to build a career. The alternative to that
is not very good. A job with no career or no advancement. So we
are trying to figure it out. And we look forward to having
customers in our dining rooms and business restored so we can
get back to more normalcy. But it is definitely a challenge.
And as anything at Punch, we have a saying on our wall,
``Figure it out.'' We are going to figure it out.
Chairman PHILLIPS. Here, here. Thank you, Mr. Puckett.
My time has expired, so now I will turn it to the Ranking
Member, Ms. Van Duyne for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman.
Ms. Greszler, can you talk to us a little bit about the
second and third layer effects of price increases due to an
increase in the minimum wage?
Ms. GRESZLER. Certainly. So when employers have choices of
how to respond to these higher wage increases, one of the most
natural ones is to raise prices. And so there are some
industries where they will be able to raise their prices--
grocery stores, restaurants. The Heritage Foundation estimated
that a $15 per hour minimum wage would increase prices at fast
food restaurants by 38 percent. But then there are also other
industries that cannot raise their prices. Childcare is one of
those. It is highly regulated. There are very strict child-to-
teacher ratios, square footage-to-child ratios. And there is
really no room to reduce costs through labor, so they would
have to strictly increase their prices. But we already know
that childcare is extremely costly, even unaffordable to
millions of families, and I have estimated that just raising
the minimum wage to $15 per hour would increase the cost of
childcare by 21 percent across the U.S. And as I said, 10
states would have 30 percent or larger increases. So we are
talking about in some states families would face an extra
$6,000 per year for two children to attend childcare. And of
course, this leads to them having to make family decisions. One
worker might need to stay home. Somebody might need to make
more so that they can pay for childcare and then they are
spending less time with their children. So all of these things
just kind of spiral out of control.
And I think one other second order is that we are looking
at the immediate job losses and thinking of them. You know, 1.4
million, 2.7 million, whatever it is, but you are talking about
a lot of young workers who do not have an opportunity to get
their foot in the door. And studies have shown that teens who
are exposed to higher minimum wages have lower earnings in the
future. And those who actually work and are employed in minimum
wage jobs have higher earnings because there is so much value
to that experience. And for some of them, it is the only way
they get their foo tin the door.
As you pointed out, the CBO said that half of the people
who lose their jobs are going to give up looking for work in a
few years from now, and that is not what we want for society. I
mean, the American Dream is not to come here and to live on
government welfare benefits and to just be sedentary. People
want to work and to produce things of value.
Ms. VAN DUYNE. I appreciate that.
The cost of a dollar in Middle America is different than
the cost of a dollar on the Coasts. So how does creating a
``one size fits all'' minimum wage impact states differently?
Ms. GRESZLER. That is a great point is that the minimum
wage really should be a local wage. Not even a state wage. I
grew up in a very small town in Western New York State, 5
minutes from Pennsylvania where you can still buy a good home
for $60,000. And so the cost of living just varies so much
across the United States. And as I was talking to some business
owners, you know, about their employees that are working there,
some of them are very content earning the $10-$15 minimum wage
range because that is a decent living in some places,
especially if you are in a two-income household. And I just do
not think that it is the role of lawmakers in D.C. to say that
we picked this one size that fits everybody. You know, we saw
in Seattle, they are already a high-cost area and they are
better able to absorb these higher minimum wages, but even
there, when they raised their minimum wage from $11 to $13 per
hour, the studies showed that, yes, the employment effects were
not huge. They were slightly negative. But the biggest thing
was there was a shift. And so the lower experienced workers had
to go outside the city to find their jobs, whereas the
companies just started hiring and keeping the more experienced
workers and it made it harder for entry level workers to get
their foot in the door.
Ms. VAN DUYNE. One of the most popular case studies on
minimum wage came out of Seattle, Washington. Can you just
describe the impact that the minimum wage had on those Seattle
workers?
Ms. GRESZLER. Yes. So it did slightly benefit the wages of
the workers who kept their jobs, and those were the more
experienced workers. But then there were less experienced
workers who were pushed outside of their jobs or who maybe had
their hours cut and had to go outside of Seattle to find more
income and more job availability. And I think that that is an
important thing to look at because when we are talking about on
a national scale, that leaves nowhere else for these workers
and these businesses to go. And we can look at websites like
the Faces of 15 who document hundreds of small businesses who
have been affected by rising wage increases, and a lot of them
who have struggled to keep their doors open have sometimes
moved somewhere else. And we are cutting off that opportunity
by saying that $15 works across the entire U.S. And actually,
we are advantaging those places who have already gotten to $15
per hour because they have already been there and they have
higher costs of living, whereas, it is going to be the lower
cost of living areas who would be most devastated by this.
Ms. VAN DUYNE. Great. Thank you very much, Ms. Greszler.
I yield back.
Chairman PHILLIPS. Now I would like to recognize the
gentlelady from New York, Chairwoman Nydia Velazquez,
Chairwoman of the Small Business Committee, for 5 minutes.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you for
holding this important meeting, and the Ranking Member.
Dr. Shierholz, the last time we raised the minimum wage was
in 2007 and it was only by a mere 65 cents. Can you walk us
through how the minimum wage has changed in value over time and
what effect this has had on workers and the economy?
Chairman PHILLIPS. You have to unmute, please.
Ms. SHIERHOLZ. I am so sorry. I am that person in every
room. I guess hearings are just no exception.
Chairman PHILLIPS. We have all been there.
Ms. SHIERHOLZ. I will just say, okay, I will go quickly. I
know I am wasting time.
Workers today who earn $7.25 an hour are paid 30 percent
less in real terms than their counterparts were paid 53 years
ago. We have seen a dramatic erosion of the real value of the
minimum wage. At the same time, productivity growth has kept
marching on. Labor productivity has more than doubled over this
period. And I think I mentioned this in my original comments,
but if minimum wage increases just kept pace with productivity
they would be over $23 in 2025. So what we are seeing is that
low-wage workers have not shared in any of the country's growth
over the last half century, meaning they have experienced much
lower living standards and higher poverty rates than our
economy could have afforded them. And a $15 minimum wage in
2025 would help reverse that.
Ms. VELAZQUEZ. Thank you. And can you please expand on the
positive impacts an increased minimum wage will have on small
businesses?
Ms. SHIERHOLZ. Yeah. So this is a really important
question. I think one of the things that we see with small
businesses is they are the folks, small businesses are people
who are most likely to work side by side with their low-wage
employees. They know them. They know their families. They know
their children. They hired them themselves. They really want to
be able to give them a raise. But when the Federal minimum wage
is very low, when the overall minimum wage is low, they cannot
raise the minimum wages independently because it puts them at a
big disadvantage, a competitive disadvantage to larger
employers who can pay less. And so raising the minimum wage
actually allows them to pay their workers more, to attract and
retain the workers that they need. And also as I mentioned
before, it means they will face lower turnover and a more
productive workforce, not face high turnover costs. And then a
higher minimum wage means greater demand for their goods and
services. When you put money in the pockets of low-wage
workers, those are the workers who are very likely to have no
other choice but to immediately have to spend it. And that
means an increased demand for goods and services which is good
for business.
Ms. VELAZQUEZ. Thank you.
Mr. Puckett, you mentioned that most of your management
hires come from inhouse and you have a workforce development
program for employees that show promise. How has this
benefitted your business? And do you recommend that other
businesses do similar, something similar?
Mr. PUCKETT. I think it has been a vital part of our
business because it gives people a chance to build a career. We
would like to reward our top employees with a great job that
they can, you know, buy a house, send their kids to school, and
being able to offer that in the restaurant business where we do
not even require a high school GED to succeed. We just require
passion, enthusiasm, and reliability. So it is very important
to our culture.
I would not want to encourage my direct competition to do
it. We think it is so important but I think obviously it is a
great thing for businesses to offer a career from a starting
hourly.
Ms. VELAZQUEZ. Thank you. And many have suggested that an
increase in the minimum wage is too much, too fast, but the
Raise the Wage Act increased the wage gradually and over a
period of 4 years. If the bill passes and the first raise is on
June 1st to $9.50, will your business be impacted by this?
Mr. PUCKETT. Punch Pizza's business will not. And really,
we are almost operating today like, I believe, your scheduled
wages would be in 2023 and 2024 given the very strong economy
in Minnesota to pay more than our competitors pay. We are
really starting at $13 an hour already.
Ms. VELAZQUEZ. Thank you.
Mr. Chairman, I yield back.
Chairman PHILLIPS. Thank you, Madam Chair.
And now I recognize the gentleman from Minnesota, my
friend, Mr. Hagedorn, for 5 minutes.
Mr. HAGEDORN. Mr. Chairman and the Ranking Member, thank
you. I appreciate that.
I just think this is the wrong approach. This ``one size
fits all'' deal as a mandate from Washington is not good. It
certainly is not good for a rural district like mine in
southern Minnesota. And it seems like if we want to build up
folks' wages and opportunities, we should just look at what we
did in the last 4 years with President Trump and Republican
policies that made sense and worked. Tax reform was excellent.
Regulatory reform, less regulations, low-cost energy, trade
deals like USMCA. We have the strongest economy in our Nation's
history with the lowest recorded unemployment. And people who
had ``been left behind'' in the past were doing better than
ever. I mean, I would like to see us not have $15 minimum wage
as our goal. Fifty thousand dollar jobs is the goal. And when
you have like we did a year ago 1.2 million open jobs and not
even the people to fill them, you can guess what happens. Wages
go up. Businesses do everything they can to find good
employees. And I think we just need to build the economy rather
than mandate from Washington.
But I think about how this works in my hometown. I go to
the grocery store there. There are a lot of young kids working
in that grocery store getting their start. I think you do a $15
minimum wage in Blue Earth, Minnesota, you are going to be
cutting some staff. You are going to be cutting some
opportunities. And it is going to hurt that grocery store. It
is going to put them in a position, they are probably
struggling already, it is a small community. You know, they are
not making the big bucks like some of the stores up in
Minneapolis and St. Paul. And you close that grocery store in
Blue Earth, Minnesota, you are going to destroy that city. You
are going to really undermine the whole community. We cannot
have that in our small communities. We need to defend them, not
put them in a position where they can go out of business.
Now, we talked to Bonnie Vetter, the Fleet and Farm and Ace
Supply in Fairmont and St. James, she says that this is going
to hurt them. They are going to have to drop employees. They
are going to have to cut staff. I would like to put her letter
in the record if I could, Mr. Chairman with your consent.
Chairman PHILLIPS. Without objection.
Mr. HAGEDORN. And then, you know, I talked to my friend Wes
Otto who owns Zanz Restaurant up in Mankato. Small restaurant,
good tacos and all that stuff. And he writes they would have to
reduce, with this $15 minimum wage, reduce staff by 20 percent
and raise food prices by 25 to 30 percent. And then he adds
this, other costs will more likely go up for our business such
as vendor prices, cleaning services, and window washers because
those employees are going to be paid more and those prices,
those costs are going to be passed along to this restaurant and
that is going to put him in a position of cutting staff or
maybe going out of business. It is not all good stuff.
I would like to put Mr. Otto's letter in the record as
well, Mr. Chairman.
Chairman PHILLIPS. Without objection.
Mr. HAGEDORN. So I would ask Ms. Greszler, what Mr. Otto
says about driving up other costs, unintended consequences of
this, it is not just the direct cost that he has for labor but
maybe other costs for services. Does that square with you? Is
that something you could see on the horizon for businesses?
Ms. GRESZLER. I think absolutely this is going to drive up
all types of costs and that is clear when CBO said that it is
not just the 17 million impacted workers who would have higher
wages but 10 million more above that. And it is the same thing
that I heard when talking to employers is it just cycles
upward. And so while some of the employers we have here today
have a competitive advantage from paying higher wages, you lose
that competitive advantage when everybody is paying that wage.
And so therefore, they have to increase their wages even higher
to maintain those workers because the reality is if everybody
that is below 15 is brought up to that 15 and you have some
very experienced workers who are making just as much as an
entry level person, and they are not going to want to keep that
job anymore if they could go take an easier one. And this
really just cycles out of control.
And to your point at the beginning of the differences here
across the U.S., we are talking about an extremely high minimum
wage for some areas. And I think that Puerto Rico is a good
example of where we might be headed here. The $7.25 minimum
wage for the U.S., which applies to Puerto Rico, is over 70
percent of the median wage there. Fifteen dollars per hour is
the median wage in Mississippi. And across the entire U.S., we
are getting close to that percentage that it would be for
Puerto Rico at 15. Well, Puerto Rico has a 40 percent labor
force participation rate. That is abysmally low and it is
nowhere near where we would want to be. That is 30 percent
lower than the U.S. has right now. We do not want to push all
these people out of jobs and then have to supplement it with
something like a universal basic income and just all these
costs that are simply unaffordable. The economy will not work
that way.
Mr. HAGEDORN. Thank you.
I just think the better approach is to build up our
economy. Do the pro-growth policies that work. Help people that
way. And these arbitrary standards that we are going to impose
across the Nation are going to destroy areas like rural
southern Minnesota. And I do not think it is in the best
interest of the people. Thank you.
Chairman PHILLIPS. And now I recognize the gentlelady from
Minnesota, another friend from Minnesota, Representative Angie
Craig, for 5 minutes.
Ms. CRAIG. Thank you so much, Chairman Phillips. And
congratulations on your leadership here of the Subcommittee. I
am looking forward to working even more closely with my fellow
Minnesotan here to help our small businesses across the state.
I am grateful for this hearing today and thank you for the
witnesses for sharing your experiences and your expertise.
The data today to me is clear. Raising the minimum wage
gradually over the next several years would lift nearly a
million people out of poverty and significantly improve the
quality of life for millions more.
As an advocate of small business, I do want to be sure we
can increase the minimum wage in a sustainable way for our Main
Street businesses, especially those that have been impacted by
the COVID-19 pandemic, mainly restaurants. I am a proud
cosponsor of the Restaurant Act and have pushed for the
inclusion of a grant program for restaurants in the American
Rescue Plan that we expect to vote on later this week. That
bill would include $25 billion in grant money for a new SBA
administered Restaurant Revitalization Fund.
With that, I want to turn my question to a leader in the
restaurant industry and another fellow Minnesotan. It feels
like it is Minnesota Day on the Small Business Committee. Mr.
Puckett, thank you so much for being here today. Your positive
contributions to the state of Minnesota and this industry are
indisputable and really evident in your testimony today. And to
me and my staff as well, we are all big fans of Punch Pizza
back in Minnesota, especially your location in Eagan.
You talked in your testimony about the immense loss of
revenue your business has experienced due to the pandemic,
which we know is a trend across restaurants. Can you speak for
just a minute on how restaurants receiving grant dollars
through the SBA's Revitalization Fund would help assist the
industry in recovering?
Mr. PUCKETT. Thank you so much for that good question. We
appreciate all you and your staff's business as well back home
in Minnesota.
The grant programs, similar to the Paycheck Protection
Program, have enabled us to operate in this scary, frightening
environment but keep our employees safe and withstand some just
frightening losses. We never lost money. Punch even made money
its first year of business. It was successful. So to just keep
jobs, keep our employees, keep our stores operating, keep our
landlords paid, operating at a loss until we get back to more
normalcy, the comfort and the protection knowing that we are
not going to go out of business because of the Paycheck
Protection Program, and I hope that you are successful with the
new restaurant program. That enables us to tolerate the losses
in cashflow and make sure our vendors are being paid and our
landlords and employees are being paid.
Ms. CRAIG. Mr. Puckett, let me follow up back a little bit
closer to the topic and subject of this hearing today. I know
Minnesota has gradually raised the minimum wage in the last few
years and I know in your testimony you talked about the impact
on talent that you are able to recruit to your restaurants.
Minnesota has done what we are attempting to do somewhat at
the Federal level here already. Give us some sense of how you
were impacted by Minnesota's minimum wage increase, and if so,
what were some of the tactics you used to navigate those
impacts?
Mr. PUCKETT. Thank you for the question. Yes, as you know,
Minneapolis and St. Paul I believe were in the $10-$12 range at
present for minimum wage. And so it has forced us to stay above
that. And what we have also done is offer higher wages for
cooks than cashiers. So we have a range. So we are ranging from
$12-$15 an hour. And in general, for Punch, our cashiers are
more part-time students and our cooks are more people that are
household heads or their family is primarily responsible. So
one of the ways we have done it is also look for ways to grow
sales. And expanding digital sales, figuring out the takeout
business has been one of the maybe unintended benefits of
COVID-19 is that we have been able to survive with 100 percent
takeout, and we think that coming out of the pandemic that we
will be able to retain more of that business and hopefully
continue to stay ahead of the minimum wage.
Ms. CRAIG. Mr. Puckett, thank you so much. Sadly, I am out
of time. And so with that, Mr. Chairman, I yield back.
Chairman PHILLIPS. Thank you.
Now, I recognize the gentleman from Pennsylvania, my friend
Dan Meuser for 5 minutes.
Mr. MEUSER. Thank you very much, Mr. Chairman. And I thank
the Ranking Member. Thank you to the witnesses here with us
today as well.
So we are hearing some theory, some data, and some from the
real world. I think this issue, its intent is fine. The intent
is to try to help. But the Federal government stepping in and
saying I am here to help on a macro level for every business in
town throughout the United States usually does not work out.
The idea of helping employees by telling employers what to pay
them, President Biden actually said that raising the minimum
wage to $15 across the Nation, regardless of the economic
situation of the area, somehow that is going to help businesses
through this very difficult recovery.
So lets look at a little bit of the data. According to the
Bureau of Labor, 392,000, .48 percent of employees of workers
in the workforce make the minimum wage. Another 1.2 million are
in that category as well but they earn tips. So they make more,
much more than the minimum wage. Two-thirds of those who make
minimum wage within 9 months are out of the minimum wage
category. Eighty percent that make minimum wage are part time,
and it is estimated, and there are lots of reports on this, we
have to agree upon that, that nearly 67 percent of the job
losses that occur, if we move to $15, are between the ages of
16 to 24. Sixteen years of age to 24. So that is when
opportunity is being created. Right? So again, there are
reports from the CBO. They say 1.4 million jobs. The NFIB
states how damaging it will be. There was the Seattle report
from a couple years back.
And I think all of us, I was in business for 25 years.
Small business, large business. If this would work, I think we
would all sign on and say lets go if this would actually do the
things that theoretically we are hearing from economists that
will take place. But there is a real world out there and I live
in it, and I still live in it.
And Mr. Chairman, I have some testimony from the following
small businesses: Boyer's Food, Knoebels Amusement Park in my
district, Luigi's Brick Oven Pizza. Great pizza in Tamaqua.
Klinger's Restaurants and Gary Seibert, who runs a Small
Business Resource Association. And Boyer's Food has 374 full-
time employees, 709 part-time. Their average wage is about $13.
Supermarkets run on 1 percent margins. Okay? So doing this will
force them to raise prices and have a more difficult time than
they have already had. Knoebels is an amusement park that
largely provides for summer jobs during the season, seasonal.
Every kid within 60 miles, young person, wants to work for
Knoebels during the summer because they sit at a pool and watch
people come down on log flumes. And if we were to do this they
would have to enormously cut back. They are in Central
Pennsylvania, not Austin, Texas or, you know, New York City.
Klinger, a restaurant, same sort of situation. They believe
they would have 40 percent less business. They would have to
increase their prices and lose customers. And Luigi's says the
same thing. He would have to increase his prices which equals
in the real world less customers. Increase the price, people
want less of it.
So I will ask Ms. Greszler this. Since our restaurants have
had the most difficult time during this pandemic and should be
targeted in the upcoming so-called Relief Package, what will
this do, Ms. Greszler, to restaurants applying this mandate on
them?
Ms. GRESZLER. This is in the worst possible time that we
could put a new mandate on restaurants. They have already
reduced their employment by 20 to 30 percent during the
pandemic. Dozens of restaurants have gone out of business
completely. Big name restaurants. I mean, hundreds, if not
thousands across the United States have. And so when Congress
is looking at ways to help these restaurants and other small
businesses, this is not throwing them a lifeline. This is
throwing them a load of bricks. These businesses are out there
struggling to survive and they have the hope, especially as the
vaccines are rolling out, that there is a future there and that
they will be able to recover. But jobs that are lost to a $15
per hour minimum wage will not come back. Those are the types
of jobs that big companies like Amazon will be able to, you
know, automate out of existence, outsource to other companies.
I mean, these jobs will not come back and that is the sad
reality here is that we are talking about a completely
different environment where there are not opportunities for
tens of millions of Americans, especially young workers, to get
their foot in the door.
Mr. MEUSER. Thank you very much. I yield back, Mr.
Chairman.
Chairman PHILLIPS. We will see if we cannot do a second
round of questioning, too, and come back, Mr. Meuser.
Now I recognize the gentlelady from California, Ms. Chu,
for 5 minutes.
Ms. CHU. Thank you.
Dr. Shierholz, your testimony discusses the importance of
eliminating the subminimum wage for tipped workers. In my home
state of California, tipped workers are paid the same minimum
wage as nontipped workers, at least $14 an hour, arising to $15
an hour by next year. I am so proud of my state for leading the
country by raising the wage to $15 and for eliminating the
harmful and discriminatory subminimum wage for tipped workers.
So these steps have been a success.
Now, before the pandemic, our restaurant industry was
robust employing nearly 1.5 million people at over 75,000
establishments. That includes an estimated 1,700 restaurants in
my district alone. What is the problem with the subminimum wage
and what advantages do tipped workers in states like California
have over those in states that have a subminimum wage, tipped
wage which can be as low as $2.13 an hour?
Ms. SHIERHOLZ. The advantages in those seven states that do
not have a subminimum wage for tipped workers is enormous. So
one of the things we know is that tipped workers have much
higher poverty rates than nontipped workers but that difference
is substantially lower in those states that have phased out
their subminimum wage for tipped workers. What that means is
that the subminimum wage for tipped workers reduces living
standards of tipped workers. It raises poverty of tipped
workers and doing away with it could help reverse that.
I think one of the things that happens is people think of,
you know, people typically think of tipped workers as being
servers in fine dining establishments who actually bring in a
lot of tips and those people exist but they are a very small
slice of tipped workers. And we need to actually keep the big
picture in mind.
Can I just make one little thing? There has been a lot of
talk about teenagers in this hearing and I just think it is
useful to bring some data to this. While people who would
benefit from increasing the minimum wage are frequently
characterized as teenagers, that stereotype is profoundly
wrong. Only 1 in 10 people who would benefit from raising the
minimum wage to $15 in 2025 is a teenager. I think teenagers
should get decent wages but let's actually just be clear about
who is really being impacted by this policy.
Ms. CHU. And I want to thank you for saying that because
there are those who are saying we do not have to raise the
minimum wage because these are just teens trying to earn extra
money. But as you said, that is not true; only 10 percent of
them are teens. But they also should earn a decent living from
their work.
Ms. SHIERHOLZ. Yeah. More than half of the people who would
see a raise are what are known as prime working age adults
between the ages of 25 and 54 who provide a ton of the income
that their family needs to make ends meet. These jobs matter
for these people.
Ms. CHU. Exactly.
Dr. Shierholz, another thing that distresses me is the
gender pay gap. And women earn just 81 percent of the median
weekly pay earned by men. Women of color are even more
disproportionately affected. Black women earn 61 cents for
every dollar earned by men. Native American women, 58 cents.
Latinas, 53 cents, and AAPI women, while they earn 85 cents.
But the thing is that we can close this wage gap. In
California, women own 89 percent of the median wage earned by
men. And in fact, those states with the smallest gender pay gap
all have minimum wages that are above the Federal minimum wage
of $7.25.
So can you explain to us why a $15 minimum wage will reduce
the gender pay gap?
Ms. SHIERHOLZ. Yeah. No, that is a really important
question. We know like the CBO's report shows that raising the
minimum wage to $15 in 2025 will reduce overall income
inequality but it will also reduce other kinds of inequality
like gender pay gaps. What we know is that due to the impacts
of structural sexism, women are more likely to be in jobs that
are affected by a minimum wage increase. So that just
mechanically mean that raising the minimum wage is going to
reduce gender wage gaps. It is a very important tool to create
a more equal economy along gender lines than we have right now
which is deeply unequal.
Ms. CHU. Yes. And the states with the largest gender pay
gap all follow the Federal minimum wage. I would point that
out.
Ms. SHIERHOLZ. I did not know that.
Ms. CHU. And I yield back.
Chairman PHILLIPS. The gentlelady from New York, Ms.
Tenney, is recognized for 5 minutes.
Ms. TENNEY. Thank you, Mr. Chairman. It is an honor to be
on the Committee with you, and I hope to get to know you well.
I just wanted to speak as a small business owner, someone
who has lived through this minimum wage and the negative
effects, though well intentioned, it has been my experience as
a business owner that although I would love to pay all my
employees the highest wage I could possibly pay, I also had to
deal in a competitive industry where my cost as a New York
State business competing across state lines was significantly
difficult.
And I wanted to put into the record, Mr. Chairman, some
testimony and a letter from Amanda Potter, who runs a women-
owned business that she started with her husband. It is called
AP Master Images in Utica, New York. Mr. Potter had a really
tough lifestyle growing up in foster care and his wife Amanda
led the charge to really put forth this wonderful business. And
has expressed deep concern about raising the minimum wage and
the effects it could have on their company. She cites a few
specific things. If I could get that in the record I would
greatly appreciate it.
Chairman PHILLIPS. Without objection.
Ms. TENNEY. Thank you so much.
Among those, as I think many people do not realize, is that
once the minimum wage is increased, that also increases a lot
of the other expenses that go along with maintaining
competitiveness and having employees, such as the taxes, the
healthcare insurance, paid leave in New York State, and many
other items. Ms. Potter indicated to me in her testimony, and I
will just summarize that it costs them over $100,000 over the
next 2 years just by the increase in minimum wage in New York
State. This made them less competitive and unable to compete
across state lines. But also, unable to compete for employees
in some ways and also give advantages to employees who, for
reasons, you know, are part-time and just looking for part-time
work.
And that is something I wanted to bring up and I wanted to
ask Dr. Shierholz if she could answer a question for me.
Ms. SHIERHOLZ. Yes, wait, sorry. What was the question?
Ms. TENNEY. Yeah, I wanted to just ask you a question. You
indicated in your testimony that the $15 is the ideal wage that
we should move to now. And you also alluded to the fact that
$23 per hour is what the wage should be. And based on your
testimony, can you tell me why the wage should not go to $23 an
hour instead of just $15? And what economic reasons would you
argue that we do not need to go to $23 an hour today?
Ms. SHIERHOLZ. That is a really good question. So one thing
obviously that even the $15 does not go to $15 today. It goes
in five steps by 2025. What that, $23, I am actually not
suggesting that that is necessarily where the minimum wage
should be. What it says to me is that there is a lot of wiggle
room. Even above 15 where the economy could still afford to pay
workers that little if it had just kept up with productivity
growth----
Ms. TENNEY. Just to reclaim my time for a minute. Can you
tell me, yeah, just I want to get a more precise answer. Why
are you not advocating for a $23 minimum wage, or even a $50 if
it is such a benefit? And why would it not be good either way?
I mean, $50 would be even better, $23 would be even better.
Twenty-three or 50 would be even better than a 15. So why would
you not advocate for those if it is going to be such a boon to
the economy and it would make it even across the board?
Ms. SHIERHOLZ. I do not think that it would. I think we
have two key programs or two key things that deal with the
issue of low wages in this country. It is the minimum wage in
broad terms, the minimum wage and the EITC. Those things work
together to make sure that low-wage workers actually have
enough to make ends meet. And so a $15 minimum wage combined
with a strong EITC is the program that I would go for instead
of trying to make it all up with increasing the minimum wage.
Ms. TENNEY. Okay. So thank you. So let me just summarize
your answer is that government needs to come in and determine
wages as opposed to the free market.
I just wanted to suggest another issue in terms of issues
with the minimum wage. There are also people who serve in a
part-time capacity who now would lose their wages. One of the
most compelling testimonies I received from people on this
issue before was from a group of students who now would lose
their summer jobs because of the increase in minimum wage and
less of them would be able to work. So those were government-
paid jobs. And I just want to emphasize that we would love to
all pay our employees more, but unfortunately, inflation and
the economy have prevented us from being able to do that. But I
want to thank the Chairman, and I look forward to further
discussion on this issue. Thank you so much.
Chairman PHILLIPS. Now I recognize the gentleman from
Pennsylvania, Mr. Evans, for 5 minutes.
Mr. EVANS. Thank you, Mr. Chairman. And I am going to have
to visit Minnesota to get some of Mr. Puckett's pizza. I want
to ask him a question.
Do you think that retention rate would be 2.5 percent
longer than the industry average if you did not pay your
workers more than the minimum wage? And what are the benefits
in terms of it on the turnover rate, since you are in the real
world?
Mr. PUCKETT. Thank you for our question, Representative
Evans.
I think pay is a key part of it. I think when you pay your
people well, it makes them feel valued. And that is why the
pressure is on Punch to figure out with the minimum wage
increasing, can you pay more than the minimum wage? Because I
think there is a very positive feedback loop of treating your
people better than your competitors are treating them. But pay
is not it. Pay is not everything. You need to have a company
culture that they believe in. They need to like their boss of
the store or their boss in the office, like myself. They need
to believe in the product and think they are making something
great versus something average. All those things I think
contribute to people staying. But I think without a doubt, when
people feel good about their employer and feel well taken care
of, whether it is pay and benefits, retention increases.
Mr. EVANS. Ms. Hamilton, can you explain how using the Fair
Pay model has helped you retain employees and the fiscal
benefit it has brought?
Ms. HAMILTON. Absolutely. Well, we also, like Punch Pizza,
have a good starting base salary, and that is the basis of how
we structure our employment benefits here. And what we have
found is that by treating our employees well, by paying
everyone a living wage, people here are really engaged and we
have an extremely high retention rate. We have a lot of
employees who have been here between 10 and 20 years. Our
average employee time here is 7-1/2 years. And what that allows
us to have is to have a workforce who is experienced. We have
low error rates. We do not have to invest money in recruitment.
We have a productive workforce that helps us to be creative,
innovative, and successful.
Mr. EVANS. Thank you.
This is my last question. Dr. Shierholz, can you describe
how a large amount of income inequality might hurt the growth
of the economy?
Ms. SHIERHOLZ. Yeah, no, that is a very good question. So
income inequality hurts the growth, overall economic growth
because it means there is more money in the pockets of people
who are not spending constrained. They already have everything
they want. And so when you give them another dollar it does not
actually boost the economy and lead to an increase in demand
for business services. So if income inequality rises and you
shift money from low-wage workers who do spend every extra
dollar they have because they have no choice, if you shift that
money, redistribute it through rising income inequality to
highly-paid workers who are less likely to spend it, it holds
back the economy.
Mr. EVANS. Thank you.
Mr. Chairman, I yield back. And we have to go have some
pizza there in Minnesota.
Chairman PHILLIPS. I do not think there would be any
objection, Mr. Evans.
And with that I recognize the Ranking Member of the Small
Business Committee, Mr. Luetkemeyer from Missouri, for 5
minutes.
Mr. LUETKEMEYER. Thank you, Mr. Chairman. And it is great
to be with everybody today. I think it is paramount we have
this debate and actually listen to small businesses on the
ground that they will be impacted by this type of mandate.
I would like to insert two letters from my constituents who
are small businesses themselves, the 54th Street Bar and Grill
who have written to us, as well as Rosebud Tractor from
Rosebud, Missouri, who is a tractor and implement dealer. They
detail in their letters the disaster that this thing is going
to be to their businesses which we will go into shortly.
I would also like to put into the record the report from
the Congressional Budget Office, which I think Congressman
Meuser noted, but I think it is important we put it in the
record because it gives the budgetary effect of the Raise the
Wage Act, which is what we are talking about, as well as the
latest study from the MFIB Research Center as of June 25th that
talks about the effects of the Wage Act on small business.
Chairman PHILLIPS. Without objection.
Mr. LUETKEMEYER. Thank you.
Ms. Greszler, in your testimony you describe that there has
been a steep decline in workers earning a minimum wage. You
mentioned that pro-growth policies assisted in this area.
According to a vast amount of research, small businesses are
projecting optimism and confidence prior to COVID-19. The
unemployment rate was at historic low levels before we were hit
with the pandemic. Can you describe in more detail how pro-
growth policies assist workers?
Ms. GRESZLER. Yes, thank you. I think this is a good point.
While the minimum wage has not risen for more than a decade,
the proportion of people who are earning the minimum wage has
dramatically declined, 65 to 80 percent because most people are
earning above that. And it is this combination of reducing
unnecessary regulations on businesses, allowing them to keep
more of their hard-earned dollars. When they have those extra
resources, they invest them in their workers. They can raise
wages. They can provide additional training. They can provide
additional benefits, things like paid family leave. And all of
this is why we saw just over 3 years, between 2016 and 2019,
the wages of the lowest income earners, the 10th percentile of
people who are making about $10 per hour, their wages increased
almost 15 percent over 3 years. And that was far more than the
median, and it was more than the highest earners as well. And
that is because when you have a positive environment that keeps
opportunities open for people, that allows the businesses to
run their businesses as they see best and not as policymakers
in D.C. tell them they should do them, then you see these
rising wage gains, especially at the bottom.
Mr. LUETKEMEYER. Thank you for that.
You know, the letters I have from my constituents really
point out, I think, the problem with the minimum wage situation
here in that the Rosebud Tractor folks, they have a tractor and
implement store where they not only sell new tractors but fix
them. Fifty-seven percent of their expenses are employee
payroll, which points to the fact when you increase over half
of your expenses significantly, it is going to amount to
something. And for them it is going to amount to about $190,000
more, even though they pay an average wage in their business of
$18.56.
With regards to the 54th Street Bar and Grill, they are
going to wind up losing about $425,000 after they raise the
wages to the minimum wage here which means they are going to
have to raise everything on their menu or go out of business.
And we have already stressed the restaurant business with the
COVID problem enough. And in fact, here is an article out of
Roll Call of all places back on January 26th which says the
restaurant industry already wracked by COVID-19 now faces a
minimum wage hike in which they talk about one more blow to our
restaurants. One more blow to people who cannot afford one more
blow. So why are we thinking about this?
So I guess, Ms. Greszler, do you think this is a
responsible thing to do to put another burden on businesses
like this that are really struggling to add a minimum wage,
another blow to them? How would you react to that?
Ms. GRESZLER. No, I think this is reckless and tone deaf to
the realities and the struggles that these small businesses are
facing out there. And to potentially decimate entire industries
by implementing a ``one size fits all'' $15 minimum wage does
not make any sense. As some of the business owners here have
attested to, a lot of individuals work for small employers and
there is real value in that to having that relationship and
feeling like you are a part of something. And a lot of the
restaurants and industry people are working for smaller,
independently-owned restaurants, and they have that upward
mobility opportunity. But as I said before, if we implement a
$15 minimum wage now, those jobs that are lost will not be
coming back and you are completely just devastating that
industry and those opportunities that are out there for people
to get their foot in the door and potentially stay in that
industry and be able to have a good career.
Mr. LUETKEMEYER. Thank you for that. And I appreciate the
extra time by the Chairman. And I also would like to welcome
Congresswoman Tenney to the Committee. We are excited to have
her back in Congress, have her back on this Committee to be a
very valuable member, and I look forward to working with her
over the next 2 years.
Thank you, Mr. Chair, and I yield back.
Chairman PHILLIPS. Thank you, Mr. Luetkemeyer.
And now I recognize the gentlelady from Kansas, Ms. Davids,
who is the Chairwoman of the Subcommittee on Economic Growth,
Tax, and Capital Access, for 5 minutes.
Ms. DAVIDS. Good morning. Thank you, Chairman.
Well, I am glad we are holding this hearing today. I
represent the 3rd Congressional District in Kansas, which is
the Kansas City Metro area. And we have a pretty vibrant
entrepreneurial ecosystem in our area. And that is part of the
reason that during my time in Congress I have been committed to
working on the Federal minimum wage issues that we are getting
a chance to talk about today so that we can help our
hardworking Kansans, their families, and also be mindful about
our small business community.
We have heard it multiple times it has been over a decade
since we raised the minimum wage and the cost of living for
folks has certainly increased over that time. I do continue to
be concerned about the impact that our policy decisions that we
make here in Congress related to the minimum wage, what those
impacts will be on our small businesses who right now are
facing an unprecedented economic crisis. And last Congress I
pushed for a tax credit to be included to help our small
businesses cover increased expenses. I was disappointed to see
that it was excluded, but I was also proud to support an
amendment that was included commissioning the study for what
the impacts of the bill that we passed would have so that we
can get a clear understanding and make decisions based on the
evidence. So I am really glad that we are getting the chance to
hear from experts and small business owners about an increased
minimum wage today.
I want to start off with Mr. Puckett and Ms. Hamilton. I am
curious about your thoughts on the impacts that the tax credits
we have been talking about would have on small businesses and,
you know, how helpful that might be in transitioning as the
minimum wage starts to go up.
Mr. PUCKETT. Go ahead, Ms. Hamilton.
Ms. HAMILTON. Thanks.
Well, I want to start by saying that with or without the
tax credit, I believe that raising the minimum wage would be
beneficial for our business and for our community here in New
Hampshire where we still follow the Federal minimum wage of
$7.25. That said, if there is a tax credit that can support our
business and businesses in our community in making that
transition and it does not harm the community members and
employees then I think that would be an all-around beneficial
thing.
Mr. PUCKETT. I second that. Anything that can be done to
help small businesses weather this storm and make it through to
the other side, because small businesses really did not have
the capital structure that the big, big chain businesses did in
our industry. So anything that helps small businesses like
Punch would be really appreciated.
Ms. DAVIDS. And then I heard both of you talked a little
bit about the kind of longer term impacts, whether it is
retention, training, these kinds of things. Could you talk a
little bit more about just I guess how you envision, are these
things that you talk to your employees about when they come on
board? Because I imagine folks might even actually wonder why
you are maybe paying the wages that you are paying at entry
level jobs.
Mr. PUCKETT. One of the things that we are just starting to
use is the technology like we are using today to do job fairs.
And we are doing internal job fairs to explain all the
opportunities our employees have from opening, from starting to
grow. And then we also do HR Week every 6 months and sit down
with every employee and talk about how they can grow with the
company.
Ms. HAMILTON. Yeah, at Badger as well, when we onboard new
employees we talk about our pay structure and how that is
integral to the decisions we make in our company and that we
are committed to treating our employees fairly and to creating
a good work-life balance and supporting them to grow in our
company.
And then additionally what I would say is that I had
mentioned earlier we have a really low attrition rate so that
we have employees who stay here for a very long time and that
has helped us to be successful. We are now a second generation
owned family business. We have not ever had to take outside
investing and that comes from being a successful business, and
a lot of the success really comes back to the structure that we
have created and how we treat our employees.
Ms. DAVIDS. Thank you. I appreciate that. Just curious
based on some of the relationship conversation that was
happening earlier.
Chairman, I appreciate the hearing today and I yield back.
Chairman PHILLIPS. Thanks, Ms. Davids.
And now I recognize the gentleman from Florida, Mr.
Donalds, for 5 minutes.
Mr. DONALDS. Thank you, Mr. Chairman.
Really what I want to do here is read in a statement from a
business owner in my district. Her name is Stephanie Figueroa.
She owns three restaurants in Florida in my district called
Fernandez the Bull. Fernandez the Bull is a family-owned
restaurant since 1985 that features traditional Cuban cuisine
with a unique flair. I go there often. It is amazing. I
recommend it to anybody who comes down. The quality, the
consistency and the customer care that has been at their
establishment has made it one of Naples most popular
restaurants. Fernandez the Bull is more than just a small
business; it is the American Dream. It started in the
restaurant industry basically out of love for Cuban food. The
owner actually started as a server and she is now the proud
owner of three restaurants. She employs 85 incredibly talented
people throughout southwest Florida. Some of these career
servers, some of them started as entry-level students and some
of them are, yes, single parents. All of them are family.
When she started her business, she had a pride of knowing
many of the opportunities that the company had created. It has
been the place where people have shared their griefs over
meals, celebrated victories over drinks, and proposed to love
their life and so much more. She loves to tell the story of one
of her most treasured employees who started as a dishwasher and
worked his way up to being a manager. She thinks that young
people who have come there to work have learned customer
service skills, problem-solving skills, or they have learned
that they had a passion for management or the culinary arts.
Members of the Committee may not be aware but in the last
election cycle a constitutional amendment barely passed in the
State of Florida that puts us on a trajectory similar to the
proposal. The owner is a proud member of the Sunshine State and
she is actually quite thankful that even during that election
process that I opposed the minimum wage that was on our ballot
even though it barely passed.
And her concerns are very clear. A Federal mandate of a $15
minimum wage is unreasonable and out of touch. It would
actually shut down Main Street America. She believes that what
it will actually do is that it will actually make some of her
servers leave the industry because of what it will do to the
tip environment. Many of her servers already make more than $15
an hour. The mandate will intentionally cost many of her
employees to lose income.
In short, Mr. Chairman, her belief is not only will it
cause her employees to lose this income, but it will also cause
her to raise prices in her establishment. It will increase the
costs from vendors in her establishment. And all that is going
not be borne by the consumer.
And I would like to enter in this letter from my
constituent in the record, Mr. Chairman.
Chairman PHILLIPS. Without objection.
Mr. DONALDS. Thank you so much, Mr. Chairman.
One of my questions I really had, and I was watching the
testimony from my office before I made it down to the Committee
room, but could any member, any one of the witnesses today,
could they actually speak to the actual costs a business would
have to bear with an artificial raising of the Federal minimum
wage in such a drastic manner as being purported in the
proposal? Is there a witness that can speak to that?
Ms. GRESZLER. I would be happy to. When we were talking I
think earlier there was a mention of the grocery store and
their small profit margins and so I just quickly did a
calculation there. If you have a 1 percent profit margin and
you go from a $7.25 wage to a $15 per hour minimum wage, that
employee, just paying them that extra amount of money each day,
they have to sell over $6,000 more in food. Maybe if it is a
smaller percentage margin or a larger percentage margin, we are
still talking about thousands of dollars more. And as you
pointed out, Mr. Donalds, the tipped industry, this is a 600
percent increase in the tipped minimum wage. And make no
mistake; there is no subminimum wage in the United States. If
you are making the ``subminimum'' wage and you earn less than
the actual minimum wage, your employer has to bring those wages
up. But the reality is that those tipped workers have fought to
overturn increase in the tipped minimum wage because it has
actually reduced their incomes in those areas. And so this is
just drastic assumptions that we are making that these
employers can raise their prices or somehow pull this money out
of who knows where. But to say that we are going to allow
employers to pay their workers $15 per hour by mandating it,
where is that money coming from? Where are the thousands of
dollars per worker in new sales going to come from?
Mr. DONALDS. Thank you so much.
And with the last 15 seconds, Mr. Chairman, what I will say
is one of my closest friends was in Seattle after they raised
their minimum wage. A Subway sandwich that was $6.63 in Florida
was $11.83 in the City of Seattle. So the prices will go up on
all Americans.
I yield back.
Chairman PHILLIPS. Thank you, Mr. Donalds.
Now I recognize the gentlelady from Georgia, Ms. Bourdeaux
for 5 minutes.
Ms. BOURDEAUX. Thank you so much, Chairman Phillips and
Ranking Member Van Duyne for holding this hearing to examine
the benefits and challenges to small businesses of raising the
Federal minimum wage.
I firmly believe that we do need to raise the minimum wage
in this country to get it to a living wage. The current Federal
minimum wage has not been raised since 2009 and at $7.25 an
hour it amounts to just around $15,000 per year. I personally
have worked for a minimum wage back in the 1980s when it was
$3.25 an hour and I know how incredibly difficult it is to make
ends meet when you are working for this kind of very low wage
and work two jobs to try to just pay for rent and food and keep
going. Luckily, I was single and young at the time and so it
was not catastrophic, but if I had children this would be
almost impossible to survive. And now, far too many hardworking
Georgians are working two jobs, 60-plus hours a week, and
really cannot make ends meet.
That being said, I definitely understand that we are
increasing this quickly and we need to think carefully about
our small businesses and the ``mom and pop'' shops in
particular throughout my district. More than doubling the
current Federal minimum wage over the next 5 years, we are
asking small businesses to really bear the entire burden of
getting us to a living wage. So I am very, very interested in
some of the proposals that are out there to try to soften the
burden on small businesses for doing this. One of the proposals
reported to be under consideration by some senators is to
complement the Federal minimum wage increase with a package of
small business tax cuts. I know we have some academic experts
here on this and I wanted to just ask, Dr. Shierholz, in your
opinion, are there policy proposals that we should be
considering to complement the wage hike and soften the blow to
small businesses? Are there any strategies in this respect that
would be preferred one versus another?
Ms. SHIERHOLZ. So there are certainly plenty of targeted
investments for small businesses in the COVID relief
legislation, so some of that is already totally on track. It
has additional PPP funds, targeted relief through the Economic
Injury Disaster Loan Program, targeted relief for restaurants,
targeted relief for shuttered venues. So there is a lot already
in there.
But I will say that minimum wage increases have certainly
been coupled with things like small business tax cuts in the
past. I am assuming that is under consideration here, too,
though it is actually worth nothing that we saw a lot of
business tax cuts in the TCJA without a minimum wage increase.
Ms. BOURDEAUX. So some of those have already happened.
Just to follow up on that, the PPP and these Shuttered
Venues operations grants, things like that, those are temporary
mainstays, right, to get us through the COVID period. Are there
longer term policies that we should be looking at, you know, as
we go about increasing the minimum wage?
Ms. SHIERHOLZ. That is a very fine question and I do not
have a complete answer so if others do I am totally up for
hearing about that. But I do think it is important to loop back
around, that what we know the literature shows us is that
increasing the minimum wage actually does not cause meaningful
job loss. So keeping that as a backdrop, I think it does
underscore that businesses in this country are able, the
empirical evidence shows they are able to absorb these costs.
So I love all the stuff that is in the COVID relief
legislation. The efforts we talked about are a really good idea
but I do not think that we have to really go too far down that
road because what we know is that businesses are able to
increase these wages, that is what the data show without
negative consequences on that.
Ms. BOURDEAUX. Okay, I have got a few more minutes. One
quick question about that. Why is that? You would assume,
right, if you are increasing wages in that way, but also, I
think people need to realize this feeds back into the economy
because people now have more money to spend and so they are
buying new things. Right? And you have this kind of circular
benefit to raising the wage. But do you have other insights on
sort of why it is that this does not lead to those kinds of
problems?
Ms. SHIERHOLZ. Yes. I am glad you asked that. So we have
talked about a couple of things. Like, it reduces turnover and
turnover is very expensive. So some of it is recouped that way.
What you just said, it boosts demand for goods and services. So
that is good for business. It increases revenues.
Another thing that is clear, and I think there has been a
lot of confusion about this in this hearing, is it is true that
some of the impact of minimum wage increases are passed along
in the form of higher prices. So that is another way that
businesses help absorb the impact of the higher labor costs.
But I just want to put that in context a little bit.
Increasing the minimum wage to $15 in 2025 will increase the
total wages going to low-wage workers by $107 billion. That is
a lot, but total personal consumption expenditures annually in
this country are over $14 trillion. So that $107 billion is
well under 1 percent of total personal consumption
expenditures. So even if the entire amount were passed on in
the form of higher prices which will not happen, it would still
have a barely perceptible effect on the overall price level as
it was phased in. And then after the phase-in happened when we
just had regular indexing, it would have zero effect on the
overall price level. So it is one way that businesses can
absorb some of the minimum wage costs but it is not at all a
larger macro problem.
Ms. BOURDEAUX. Thanks so much for your insights.
And I yield back the balance of my time.
Chairman PHILLIPS. And now the gentleman from Wisconsin,
Mr. Fitzgerald is recognized for 5 minutes.
Mr. FITZGERALD. Thank you, Mr. Chair.
First of all, thank you to Mr. Puckett and Ms. Hamilton.
You are running much different types of businesses, are you
not? One involved obviously in pizza and the other one in hand
balm and lotions. So my question would be, and I think it is
really negligent of us not to continue to talk about this is a
proposal that has come up in the middle of the pandemic. And I
think a lot of the studies and any of the research that you
have had, and I have seen many of these going back to my days
in the state legislature, you know, have all been turned on
their head as a result of COVID. So the idea that, you know,
while small businesses are literally closing day by day that
this would even come up at this point is kind of amazing to me.
But here we are.
I was just going to say, in Wisconsin, the big three for us
are tourism, agriculture, and manufacturing. And for the most
part, small manufacturing, all very susceptible to changes in
wages. And I think that is not the case, obviously, in many
other states. So it is another thing that we have to be aware
of.
The other industry I just say that could be directly
affected, because there are always questions about trying to
increase wages without losing employees is assisted living. It
is something that we had worked on for many years in our state
budgets, and it just feels like that is another, you know, it
is a necessary industry, obviously, to take care of those
individuals, but at the same time it is susceptible to the back
and forth of a small business. And these are all things I think
that need to be considered. And like I said, just underscore
the idea, we are in the middle of a pandemic and businesses are
completely in trouble right now. And the idea that we would be
talking about an increase in the minimum wage is kind of
ridiculous to me.
So I yield back. Thank you.
Chairman PHILLIPS. Now I recognize the gentlewoman from
California, Ms. Kim, for 5 minutes.
Ms. Kim?
Ms. KIM. Yes. I just unmuted myself. Thank you. Thank you,
Chairman Phillips and Ranking Member Van Duyne for hosting this
important hearing today. I look forward to working with both of
you and everyone else in the Committee to ensure our small
businesses have the tools and resources to overcome this
pandemic.
This proposal to increase the minimum wage comes at a time
when many small businesses in California's 39th District are
struggling to keep their doors open due to our state's heavy-
handed lockdown.
So Chairman, I have a statement from Steven and Patricia
Bangos of Eureka Pizza. They are small business owners in my
39th District and I had a chance to visit with them and speak
with them. They are already running a razor think line with
micro thin margins for profit. And COVID-19 has already had a
major impact ranging from cost of goods to food costs. I would
like to ask their full statement to be entered into the record.
Chairman PHILLIPS. Without objection.
Ms. KIM. Thank you.
According to a study, approximately 62 percent of all small
businesses think the worst of the pandemic is ahead of them,
not behind them. Instead of increasing costs for small
businesses, we should be looking to decrease costs and restore
some of the economic certainty that was lost due to the
pandemic.
I would like to pose a question to Ms. Greszler. As a
former business owner myself and mother of four, I was troubled
by the findings in your study estimating that a $15 minimum
wage would increase the cost of childcare by an extra $3,728 in
costs for a family with two children. So can you please
elaborate on how would an increase of the Federal minimum wage
to $15 result in higher childcare costs?
Ms. GRESZLER. Certainly. And so childcare is a little bit
of a unique industry in that they cannot use other options of
reducing the staff because of ratios and those things, and so
they have to pass all of those higher wages onto the customers.
As I said, 21 percent across the U.S. but as high as 43 percent
increase in costs in Mississippi. And California, where you
are, has actually already dealt with this to some degree, and
California's Department of Education looked at this impact and
they said, while we agree that $15 per hour, especially for
childcare workers is morally the thing that we should be doing,
nevertheless, this is going to be devastating for the childcare
industry because childcare workers tend to make lower than $15
per hour on average. And so you are in this catch-22. You
increase the prices and then people can no longer afford
childcare. And there has also been an experience in California
whereas a result of getting a wage increase, a family earns
more and now they lose hundreds, if not thousands of dollars in
childcare subsidies, as well as you have had the impact on the
childcare providers, those who accept subsidized clients will
no longer accept those lower rates when they have even higher
costs. And so this is an example where you are hurting the
exact people that we want to be helping.
Ms. KIM. Thank you for that.
I have another question to Ms. Greszler. In one of your
reports you mentioned that there are better ways to help
workers achieve lasting income gains. From your point of view,
are there ways to boost income without mandating an increase in
the Federal minimum wage? And can you please elaborate on some
of the ideas that you propose?
Ms. GRESZLER. Yeah, and really the only way that you can
boost someone's income permanently to have actual long-term
gains is to help them become more productive, to create more
things of value. And a $15 minimum wage creates an artificial
wage gain by taking it away from somebody else, but we would
rather just see these opportunities out there for people to
have alternative education, things like the apprenticeship
programs that you do not have to incur six figures of debt and
get a 4-year college degree. But nonetheless, will have a great
career ahead of you. Reducing the occupational licensing laws,
things that say you have to pay hundreds of dollars and go
through all this training to be able to arrange flowers or to
braid hair. There is no reason that we should have those
barriers out there.
And then also, just keeping the opportunity out there for
individuals of all income levels, all education levels to use
their skills to go out and to be independent workers and to
contract in whatever way they would like. And I know this is
particularly relevant as well in California with AB5 shutting
opportunities for a lot of workers.
Ms. KIM. Thank you.
One last question. We often talk about the 1.4 million jobs
that could be lost----
Chairman PHILLIPS. Ms. Kim----
Ms. KIM.--but the CBO study.
Chairman PHILLIPS.--your time is expired. We are going to
go to a second round, so perhaps if you want to stick around,
but our time is expired for right now.
Ms. KIM. Sure. Thank you. I yield back.
Chairman PHILLIPS. And with that, we are going to move to a
second round of questioning. And I am going to begin by
recognizing myself for 5 minutes.
First, I have enjoyed this discussion, and it is exactly
what I believe we needed. I also want to point out some facts.
That of the OECD countries, the United States currently ranks
14th of all the countries with a minimum wage of $7.25. We are
just below Slovenia and just ahead of Poland. Our neighbors to
the north, Canada, each province has a higher, significantly
higher minimum wage than we do in the United States, including
Ontario at $14.25 Canadian, which based on current exchange
rates is about $11.40. They also make certain exceptions for
students, for servers, and for those who work from home.
My question is to Ms. Greszler. I am curious how research
relative to how the minimum wage in Canada affects the Canadian
economy vis-a-vis our very low wage here in the U.S.
Ms. GRESZLER. I have not looked specifically at that but I
would just point out that regardless of what the minimum wage
is, what matters is what people are actually making. And we
have seen in the United States that not only are people having
higher incomes and earning more but that we have also had a
lower unemployment rate. And so there are fewer people who are
not able to find jobs.
Chairman PHILLIPS. Do you have a sense of what the median
wage is in the United States versus Canada?
Ms. GRESZLER. I do not know Canada's.
Chairman PHILLIPS. Okay.
Ms. GRESZLER. I believe the U.S. is around $25 per hour.
Chairman PHILLIPS. Okay. Perhaps the most important
question is, my hope was that this hearing results in some
ideas and ways to mitigate any potential policy effects. So if
in fact, Ms. Greszler, that this policy were to be instituted
as written, what would you argue would be the most important
mitigating policies that could prevent job losses and ensure
that small businesses do not close if this was enacted as
written?
Ms. GRESZLER. I think the most important thing would be to
not implement a ``one size fits all.'' And so to have a
provision in there, much like the Federal government does for
the general schedule pay scale that has locality-based
adjustments and to allow state and local governments to tie it
to their median wage in that area so that you do not
disproportionately impact those lower cost areas.
Chairman PHILLIPS. But if it is enacted as written, which
does not provide for any of those opportunities, what would you
propose we consider to mitigate the effects?
Ms. GRESZLER. I do not have any good proposal there because
I think that the mitigation measures would be so large and
consequential for the long-term economy that it is not
something that we would want to do. We are talking about
pitting small businesses against big businesses, lower cost
areas of living against higher cost areas of living. This is
just not simply something that would work well across the
United States.
Chairman PHILLIPS. Okay. I will close my questioning back
to Mr. Puckett. Mr. Puckett, you are already paying essentially
close to this minimum wage, and by the time this was fully in
effect 5 years hence, you would probably be over it. But based
on your experience in business, building Caribou, building
Punch, what would you argue we should be looking at as we
reflect on the potential consequences? I think we would all
agree that there are some benefits and there will be some
consequences. What would you like to see us consider as some
potential mitigating policies if we were to enact this wage
scale based on its current construct?
Mr. PUCKETT. Thank you for the question. We are blessed to
be operating in a great environment in the Twin Cities, very
competitive. So it has made us adapt and stay ahead of that for
our people strategy. I have sympathy for small businesses all
across the country in areas that this would be potentially a
much bigger jump than what Punch faces. So I do not have any
specific policy recommendations but I think considering the
different needs and rural versus urban, different parts of the
country is certainly an idea. I was curious how Canada's system
works. I do not know if it is possible to differentiate people
that are household heads or this is their main source of living
as a differentiation between someone that is doing that or a
part-time student. But those are things that could be
considered, I assume.
Chairman PHILLIPS. Well, thanks, Mr. Puckett. And I agree.
I think we should look to best practices as practice by some of
our peers around the world.
And with that, I will yield to Ms. Van Duyne, our Ranking
Member, for 5 minutes.
Ms. VAN DUYNE. Thank you so much, Mr. Chairman.
I want to read just a quote from a letter that we had
gotten from Casey Watts, who is a business owner from Loaf'n
Dog and Burger Bar in Cleburne. He said, ``COVID-19 crushed us
at the Loaf'n Dog. We were shuttered for most of the year until
we could get deliveries going and curbside pickup, but this was
not enough. I did receive a PPP loan which allowed me to keep
my employees but only by the skin of our teeth. Now our
business is facing a new ominous challenge, a call for the $15
per hour minimum wage mandate. In order to keep the doors open
with a wage increase like this I would have to raise many
prices at least 100 percent across the board. Perhaps in Destin
or Houston, or D.C. or New York, a local joint can charge $11
for a chili cheese dog but that is not going to fly in
Cleburne.''
According to the most recent data from the Bureau of Labor
Statistics, 392,000 workers made the prevailing minimum wage.
So these workers represent .48 percent of the hourly paid
workers. According to the U.S. Bureau of Labor Statistics, 17
percent were teenagers, 26 percent were between the ages of 20
and 24, so a total of 43 percent of those were under the age of
24. I think even more enlightening is that single parents,
single working parents, hardly any of them actually earn the
minimum wage. According to a 2017 report by the GAO's office,
only .15 percent of workers in the U.S. are single parents
earning at or below the minimum wage. That is really important
because I think a lot of the testimony that we have heard today
talks about having a living wage, a living wage for families.
But we have talked about increase. We have talked about
increases in food costs, at restaurants, increase in
healthcare. And I guess Ms. Greszler, with the impact of COVID-
19, the unstable school schedule over the last year, it just
seems like America's single working parents, but more
specifically single working moms, are facing some real
challenges. With all of these different increases outside of
just the minimum wage increase, how do you think that this
increasing the minimum wage would impact working single moms?
Ms. GRESZLER. I think that one of the biggest impacts is
going to be on that childcare cost. For single mothers, it is
not an option whether or not to work, and yet, when you would
be facing thousands of dollars more in childcare costs per
year, that is going to put these women in a bind, all these
working parents out there. And it is just going to negate any
of the potential benefits of having those higher wages. And it
is not just childcare, but there are reasons that we have more
targeted programs in the United States, whether it is through
food stamp benefits, childcare subsidies, these things are
aiming to help working parents who need them, and the minimum
wage is not aiming at those working parents. And so the reality
is that you just end up hurting the people that you are trying
to hurt out there. And also, you were bringing up the small
businesses out there who are being crushed. And I think it is
important to point out that these smaller businesses, they are
the same as households out there. And so if we were faced with
twice the rent or the mortgage payment, we would have to make
adjustments. The notion that these business owners can just dig
deep in their pockets and pay all this additional money is
ludicrous. And I have heard from small business owners they are
taking out lines of credit because they care so much about
their workers and they do not want to lay them off. They do not
want to have that single mother unable to pay her bills each
month. And they care about their workers. And these are not the
businesses that we want to be shutting down with a $15 ``one
size fits all'' Federal minimum wage.
Ms. VAN DUYNE. Thank you so much.
And Chairman, I yield back my time.
Chairman PHILLIPS. Thank you, Ms. Van Duyne.
Any other members wish to ask questions before we proceed
to closing?
Not seeing any, we will proceed.
I want to thank everybody. I want to thank our witnesses
for joining us today and my fellow members. This was the kind
of discussion that we need more of. I think it is fair to say
that we all agree we want to see Americans' wages go up. We
want to see more jobs created, not fewer. And we want to see
businesses thrive, especially small businesses that are the
backbone of our economy and the backbone of our communities.
And as many of you know, I have built businesses, some very
successful larger ones and currently own a small business that
does pay a $15 minimum wage. Not because the law requires it,
not because it is easy; rather, it is a principle in which my
partners and I believe. But I hear small businesses every
single day. They are concerned about this policy and I
understand their concerns. I know we all do. And I am grateful
that we were able to give voice to some of those concerns in
today's hearing.
We have got to consider options for raising wages for the
least advantaged in our country. I believe they have been
denied that for far too long and we have a responsibility. So I
am committed to working together with all of my colleagues,
Democrats and Republicans in a bipartisan fashion to build a
better economy for our small businesses and for the people that
build them, employees and owners.
I talk about the trifecta--higher wages, more jobs, and
more businesses. So I ask that we focus on that, not just
obstruct and not just demand that we not proceed; rather, come
up with solutions on how we can achieve all three because I do
not believe they are mutually exclusive. And I want to see
American once again be at the forefront. I want to see us be
the fastest growing economy and a country to which our peers
look to for the best policy in the world.
So with that I ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without any objection, so ordered.
And if there is no further business before the Committee,
we are now adjourned. Thanks, everybody.
[Whereupon, at 12:08 p.m., the subcommittee was adjourned.]
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