[Senate Hearing 117-29]
[From the U.S. Government Publishing Office]
S. Hrg. 117-29
WHY SHOULD TAXPAYERS SUBSIDIZE
POVERTY WAGES AT LARGE PROFIT-
ABLE CORPORATIONS?
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
February 25, 2021
__________
Printed for the use of the Committee on the Budget
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
44-967 WASHINGTON : 2021
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COMMITTEE ON THE BUDGET
BERNARD SANDERS, Vermont, Chairman
PATTY MURRAY, Washington LINDSEY O. GRAHAM, South Carolina
RON WYDEN, Oregon CHARLES E. GRASSLEY, Iowa
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island PATRICK TOOMEY, Pennsylvania
MARK R. WARNER, Virginia RON JOHNSON, Wisconsin
JEFF MERKLEY, Oregon MIKE BRAUN, Indiana
TIM KAINE, Virginia RICK SCOTT, Florida
CHRIS VAN HOLLEN, Maryland BEN SASSE, Nebraska
BEN RAY LUJAN, New Mexico MITT ROMNEY, Utah
ALEX PADILLA, California JOHN KENNEDY, Louisiana
KEVIN CRAMER, North Dakota
Warren Gunnels, Majority Staff Director
Nick Myers, Republican Staff Director
C O N T E N T S
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THURSDAY, FEBRUARY 25, 2021
Page
STATEMENTS BY COMMITTEE MEMBERS
Chairman Bernard Sanders......................................... 1
Ranking Member Lindsey Graham.................................... 4
WITNESSES
Statement of Craig Jelinek, President and Chief Executive Officer
(CEO), Costco Wholesale Corporation............................ 6
Prepared Statement of............................................ 41
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 133
Statement of Terrence Wise, McDonald's Worker, Kansas City,
Missouri....................................................... 14
Prepared Statement of............................................ 44
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 134
Statement of Cynthia Murray, Walmart Worker, Hyattsville,
Maryland....................................................... 16
Prepared Statement of............................................ 47
Statement of Thea Mei Lee, President, Economic Policy Institute.. 18
Prepared Statement of............................................ 53
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 135
Senator Sheldon Whitehouse............................... 138
Statement of Douglas Holtz-Eakin, Ph.D., President, American
Action Forum................................................... 20
Prepared Statement of............................................ 62
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 141
Statement of Carl Sobocinski, President, Table 301 Restaurant
Group.......................................................... 21
Prepared Statement of............................................ 68
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 143
Statement of Jacob L. Vigdor, Ph.D., Professor of Public Policy
and Governance, University of Washington....................... 23
Prepared Statement of............................................ 71
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 145
Statement of Cindy Brown Barnes, Managing Director, Education,
Workforce, and Income Security, U.S. Government Accountability
Office (GAO)................................................... 37
Prepared Statement of............................................ 77
Questions and Answers (Post-Hearing) from:
Senator Mike Braun....................................... 150
Senator Sheldon Whitehouse............................... 153
ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD
Letter from Eggs Up Grill CEO Ricky Richardson Submitted to the
Record by Senator Graham....................................... 154
Working Paper by Aaron Sojourner and Jose Pacas Submitted to the
Record by Senator Merkley...................................... 156
WHY SHOULD TAXPAYERS SUBSIDIZE POVERTY WAGES AT LARGE PROFITABLE
CORPORATIONS?
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THURSDAY, FEBRUARY 25, 2021
U.S. Senate,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to notice, at 10:17 a.m., via
Webex and in Room SD-608, Dirksen Senate Office Building,
Honorable Bernard Sanders, Chairman of the Committee,
presiding.
Present: Senators Sanders, Whitehouse, Warner, Kaine, Van
Hollen, Lujan, Padilla, Graham, Crapo, Toomey, Johnson, Braun,
Scott, and Romney.
Staff Present: Warren Gunnels, Majority Staff Director; and
Nick Myers, Republican Staff Director.
OPENING STATEMENT OF CHAIRMAN BERNARD SANDERS
Chairman Sanders. Good morning, everybody, in person and
virtual, and let me call this meeting to order, and let me
thank Ranking Member Lindsey Graham and the other members of
the Committee for being with us in person or on video.
I would also like to thank the many witnesses who will be
testifying today, most of whom will be joining us remotely
because of this pandemic.
I want to call this hearing to order in order to discuss a
very simple yet, I believe, profound question, and that
question is this: Why should the taxpayers of our country, many
of whom are struggling economically as a result of the
pandemic, be subsidizing the starvation wages being paid by
some of the largest and most profitable corporations in
America?
That is the simple question: Why should working people be
subsidizing some of the wealthiest families and largest
corporations in America because of the starvation wages they
pay their workers?
And let me be very clear. The largest welfare recipient in
America happens to be the wealthiest family in America, the
Walton family; a family that owns the largest corporation in
America, Walmart. This is a family that is worth over $200
billion. It is a family that has become $50 billion wealthier
since March of 2020 during the worst public health crisis in
over 100 years.
This corporation that they own, Walmart, made over $15
billion in profit last year alone, and yet despite this massive
family wealth, despite these very high corporate profits,
Walmart pays wages so low that tens of thousands of their
employees are forced to rely on public assistance in order to
survive. They are forced to rely on food stamps to feed their
children, paid for by the U.S. taxpayer. They are forced to go
into public housing to put a roof over their heads, paid for by
U.S. taxpayers. And they are forced to go on Medicaid to get
the health care they need, all of which is paid by U.S.
taxpayers.
While Costco, Amazon, Target, Best Buy, and other major
corporations have all raised their minimum wage in recent years
to at least $15 an hourand in a few minutes, we are going to
hear from the CEO of Costco--the minimum wage at Walmart has
remained stuck at $11 an hour for the last 3 years. The result:
760,000 workers at Walmart--Walmart is the largest employer in
America--760,000 employees, about half of their U.S. workforce,
are paid less than $15 an hour.
Now, I do not know. Maybe if you are a billionaire family
you may not understand this, but the simple truth is that no
one in America can live with dignity, can raise a family on $11
or $12 an hour. And I must say on a personal level that I have
talked to too many employees in this country who, with tears in
their eyes, tell me about the struggles that they are having
trying to feed their kids, pay their rent on the starvation
wages that they receive.
Today we are going to ask how Walmart can afford to pay its
CEO, who declined my invitation to be with us today, over $22
million in compensation last year--$22 million in
compensation--but somehow they cannot afford to pay their
workers a living wage. We are going to ask how Walmart can
afford to spend $8.3 billion on stock buybacks in 2017 but
cannot afford to pay its workers at least 15 bucks an hour. And
if Walmart thinks that they are going to avoid answering that
question because they did not show up today, they are deeply
mistaken. The American people are sick and tired of subsidizing
the wealthiest family in America
Well, let us be clear. Walmart is not alone. Last year,
Dollar General made over $10 billion in profits, had enough
money to pay its CEO $12 million in compensation, while the
average Dollar General cashier is forced to survive on just
$8.38 an hour.
In 2019, McDonald's made over $6 billion in profits and
paid its CEO over $18 million in compensation while the average
worker at McDonald's makes as little as $9 an hour.
Unfortunately, the CEO of McDonald's also declined to testify
before us today.
Further, a November 2020 Government Accountability Office
report that I requested found that taxpayers are not only
subsidizing the poverty wages at Walmart, McDonald's, and
Dollar General, but Dollar Tree, Wendy's, Burger King, Uber,
Subway, Dunkin' Donuts, Home Depot, Lowe's, CVS, and Walgreens.
We will hear from the author of that GAO report later this
morning.
In America today, one of the great scandals of our economy
is that nearly half of all workers who make less than $15 an
hour are forced to rely on public assistance programs costing
taxpayers $107 billion each year. And today we are going to be
discussing about what it means to work for a large corporation
that makes billions of dollars in profit, but yet as a worker
you are not sure when you wake up in the morning if you are
going to have enough food to feed your kids.
During this hearing we are going to hear from employees who
work for McDonald's and Walmart. We are going to hear about
half of American workers living paycheck to paycheck. We are
going to hear about the fact that the Federal minimum wage of
$7.25 an hour has not been raised by Congress since 2007. Got
that? Minimum wage has not been raised by Congress since 2007,
14 years ago. And let us be clear, no ifs, buts, or maybes:
$7.25 an hour is a starvation wage. That is what it is.
We must raise the minimum wage to a living wage, at least
$15 an hour, and when we do that, not only will we be lifting
millions of Americans out of poverty; we will be providing a
raise to 32 million American workers. And not only is raising
the minimum wage to $15 an hour the right thing to do; it is
also what the overwhelming majority of Americans want us to do.
Poll after poll, over 60 percent of the American people
have told us they support increasing the minimum wage to $15 an
hour. Since 1998, every time a State has had an initiative on
the ballot to raise the minimum wage, it has won, no matter
whether that State was red, blue, or purple.
Today 8 States and over 40 cities have adopted laws to
raise the minimum wage to 15 bucks an hour. This is not a
radical idea.
Now, I do understand that concern has been raised about the
Raise the Wage Act, which I have sponsored, which gradually
raises the minimum wage to $9.50 this year, $11 in 2022, $12.50
in 2023, $14 in 2024, and $15 an hour in 2025. That is a
gradual increase. Some people believe that these increases will
harm small businesses. I understand that.
Now, I fully understand that there is a major difference
between Walmart and a small struggling business. Many small
businesses, all of us understand, are struggling today in
Vermont, South Carolina, all across this country, and they need
our help.
To date, Congress has already provided $800 billion in
financial assistance to small businesses, and an additional $50
billion is included in the reconciliation bill working its way
through the Senate.
I am also sympathetic to providing small businesses with
the tax relief that they need to offset some of the increased
labor costs associated with the minimum wage increase, just as
Congress has done virtually every time that it has increased
the minimum wage.
But let me say this: Study after study has shown that a
gradual increase in the minimum wage does not lead to increased
unemployment. In fact, a review of 138 minimum wage increases
at the Federal, State, and local level since 1984, published in
the Quarterly Journal of Economics found no evidence that these
laws reduce employment. Zero.
My own State of Vermont, for example, a very rural State,
largely dependent on small business, has the third lowest
unemployment rate in the country at 3.1 percent while it also
has one of the highest minimum wages in the country at $11.75
an hour.
In my view, the best way to help small business is to put
cash into the pockets of low-wage workers who will then spend
that money in grocery stores, restaurants, and small businesses
all across this country.
But I hope no matter what our views on the minimum wage may
be, I hope that we all agree on one thing: U.S. taxpayers
should not be forced to subsidize some of the largest and most
profitable corporations in America. It is time for the owners
of Walmart, McDonald's, Dollar General, and other large
corporations to get off welfare and pay their workers a living
wage.
With that, I am delighted to introduce Senator Graham.
OPENING STATEMENT OF SENATOR LINDSEY GRAHAM
Senator Graham. Thank you, Bernie, Mr. Chairman.
Listen, this Committee is going to be a fun place to be, I
hope, because we are talking about things that matter. And, you
know, the budget can be a very dry topic, but the budget is
basically a process where we take money from people,
businesses, corporations, individuals, and we decide what to do
with that money. Then we decide what tax rates to set for the
country and what deductions to give. We are trying to set
policy up here, taking other people's money to make sure the
economy can grow and that everybody in America can have a shot
at the American dream.
So the Chairman rightly talked about small businesses and
the effect his proposal may have on them. I want to spend a
little bit more time on that. My family owned the Sanitary Cafe
in central South Carolina. My mom ran the restaurant/bar. My
dad ran the liquor store on the other side of the panel. And
downstairs was a three-table pool room, and when I got old
enough, I ran that. We hired one or two people, depending on
how business was. We were by no means rich, but owning your own
business has a certain pleasure to it.
One thing I remember, Mr. Chairman, is that you cannot get
sick. If you actually own a small business and you do not open
up, you do not get paid. I have seen my mom and dad go to work
dog-sick because if they did not open up, they did not get
paid. And every time there was a cost of doing business that
had to be absorbed--and there is only so much you can pass on
to the customer. Inflation is going to be an increasing problem
in this country, so I want the American people to understand
that there is a consequence to spending all this money. There
is a consequence to flooding the zone with money. And when you
start imposing cost into the economy, it will eventually be
passed on to you because people are in business to make a
profit.
Now, Walmart. The theory of the case that the Chairman
espouses is that the CEO of Walmart could make $20 million, not
$22 million, and they could absorb an increase in minimum wage
and not give stock dividends, not pay their top people so much,
and they just choose not to do that.
Well, we can have our discussion about that concept, but
here is where we should agree: that if you are running the
Sanitary Cafe, you do not have that luxury, because there is
just only so much money coming in the door, and if you have to
double the cost of paying a worker, you are probably not going
to hire anybody else. And teenagers and senior citizens benefit
from jobs in the hospitality industry and the service industry
and make a little extra money that first job. But if you
increase costs on the restaurants throughout this country right
now, you are going to crush them, Mr. Chairman.
In South Carolina, it is anticipated that 50 percent of the
restaurants that have been hit by COVID will never come back.
The State government and local government are mandating reduced
seating because of COVID. They are mandating increased costs of
doing business, and restaurants are struggling to stay alive.
The Paycheck Protection Program (PPP) loans have been helpful,
but they are not going to be around forever. And the bottom
line, Mr. Chairman, is if we impose a new mandate on the
expense side combined with mandates to reduce revenue, we are
going to crush these people.
You have been championing this idea for a long time. I
would just urge you that during the COVID crisis, the last
thing the Federal Government should be doing is doubling the
cost of doing business for small businesses in the hospitality
and service industry that are barely making it to begin with,
and this has got nothing to do with COVID. It is in the COVID
package.
So I hope that you will understand that the 1.4 million
jobs that Congressional Budget Office (CBO) anticipates to be
lost are going to come from people at the lower end. The
Walmart guy is not going to lose his job. Who is going to lose
his job? Some teenager or senior citizen who is, you know, able
to get a little extra money and start building a resume.
So my belief is there will be a time to look at increasing
the minimum wage, but during the COVID crisis this is the worst
possible time to increase mandates on small businesses because
they are barely making it to begin with. And I look forward to
working with you about how could we in a responsible way
increase the minimum wage, but right now is not the time, in my
view. And the construct you set up about corporate America
versus everybody else, we will have decades to talk about that,
years to talk about that. I would just implore you to think of
what we are doing. At a time of restaurants and hotels barely
hanging on because of the restrictions on travel, the golf
industry in Myrtle Beach has been hit hard because people
cannot come and go like they used to.
Now is not the time to do this, and I would just ask my
Democratic colleagues to think long and hard about what you are
doing, because at a time when business is barely making it, if
this ever became law, we would crush them. And people work too
hard, too long, too many hours, too many worrisome
conversations to keep their business alive for the Federal
Government to come in and crush them. And that is what this
would do.
Thank you.
Chairman Sanders. Thank you very much, Lindsey.
Our first panelist, our first guest, is Craig Jelinek. Mr.
Jelinek is the president and CEO of Costco. Costco is a company
that made some $4 billion in profits last year while paying its
employees a living wage of at least $15 an hour.
Mr. Jelinek has been director and president of Costco since
February 2010 and CEO since January 1, 2012. Mr. Jelinek
started at Costco as a warehouse worker in 1984. He has worked
in numerous jobs inside the company, and in 2012, he became the
CEO, succeeding Costco's founder.
Mr. Jelinek is, as I understand it, going to have to leave
us at 11:00 a.m. We are very appreciative that he is with us
today.
Mr. Jelinek, thank you very much for joining us.
STATEMENT OF CRAIG JELINEK, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, COSTCO WHOLESALE CORPORATION
Mr. Jelinek. Good morning, Chairman Sanders, Ranking Member
Graham, and members of the Committee. I am Craig Jelinek,
president and CEO of Costco Wholesale, and I appreciate the
invitation to speak with the Committee today.
Costco is a membership-based retailer with headquarters in
Washington State, and 803 locations worldwide, including 558 in
45 U.S. States, Washington D.C., and Puerto Rico. The basic
principle of Costco's business is to provide our member
customers with high-quality goods and services at the lowest
possible prices. Our business model is based on very high sales
volume on a limited selection of products, in an efficient, no-
frills shopping environment.
Costco is fortunate to be one of the top retailers in the
U.S. and the world.
We owe our success to many different factors, but one of
the most obvious is that we have the best employees in the
retail industry. There are currently more than 180,000 Costco
employees in the U.S. and 275,000 worldwide.
Since Costco's inception, the company has been committed to
paying employees very competitive retail wages and providing
them broad and affordable health care benefits. Two years ago,
we moved our starting hourly wage to $15 everywhere in the U.S.
Effective next week, the starting wage will go to $16.
Although there is a lot of external focus on starting wages
and minimums, it is important to us that Costco employees have
an opportunity to make more than just $15 or $16 an hour.
Costco employees receive regular, scheduled increases based on
their hours worked. Employees working full-time hours will
generally see two wage increases during the course of each
year, and employees working part-time hours will see one
increase--until they reach the top of our scale, which
increases every year. More than half of our hourly employees in
the U.S. are paid at the top of our scales, in excess of $25 an
hour. And most of these employees also receive regular, twice-
yearly `extra checks' or bonuses--up to $4000 twice each year--
which benefit our long-term employees.
Our average wage for hourly employees in the U.S.,
excluding any overtime premium, but including the extra check
component, is around $24.
This average wage does not take into account the premium
pay Costco employees received during the COVID-19 pandemic.
Beginning in March of 2020, as we saw increased business
sparked by the pandemic, we instituted a $2-an-hour premium for
hourly employees in our locations. We have now extended this
premium pay multiple times, and it continues today. As we
approach the 1-year mark of this extra pay, we will end the
temporary premium but convert some of the premium to a
permanent increase by raising each step on our hourly wage
scales.
At Costco we are also proud to provide our full-time and
part-time employees with broad and affordable benefits,
including health care coverage for employees and dependents.
About 89 percent of our employees are currently eligible for
our health care plans, and about 97 percent of those eligible
are enrolled, which speaks to the quality and the affordability
of the benefits. And we guarantee employees will be scheduled
enough hours to maintain their benefits. We also make sizable
annual contributions to employees' 401(k) retirement accounts,
based on employees' years of service, irrespective of their own
contributions. We also believe our paid sick time and vacation
time policies for hourly employees are very competitive by
retail standards.
I want to note: this is not altruism. At Costco, we know
that paying employees good wages and providing affordable
benefits makes sense for our business and constitutes a
significant competitive advantage for us. It helps us in the
long run by minimizing turnover and maximizing employee
productivity, commitment, and loyalty. We encourage our
employees to view Costco as providing a career rather than just
a job.
And as a result, our employee retention rates are very high
by retail standards. In the U.S. our employees average over 9
years of service with the company. Over 60 percent of our U.S.
employees have 5 or more years with Costco, and over one-third
have more than 10 years. We are very proud of the fact that
more than 12,000 of our U.S. employees have worked for the
company for 25 years or more. Again, we feel the experience
level and loyalty of our employees is a significant advantage
for our company.
As I conclude my remarks, I would like to make it clear
that the past 37 years of my long retail career have been
working for Costco, and Costco is what I know. I am not an
economist, a regulator, or a legislator, and I do not pretend
to know the methods or models that are right for any other
large or small companies or any other industries. But I do know
what is right for Costco.
We are certainly not perfect, but we try to take care of
our employees because they play such a significant role in our
success.
With that, thank you, and I would be happy to answer any
questions that you may have.
[The prepared statement of Mr. Jelinek appears on page 41]
Chairman Sanders. Well, Mr. Jelinek, thank you so much for
being with us today.
Some might say, ``How do you make money if you are paying
workers high wages?'' And your point is not just the minimum
wage but throughout the company, if you are paying them strong
benefits, you are spending a lot of money on your employees.
Other companies are not. And yet you are arguing that you are
not doing this simply out of generosity, out of morality. You
are doing that because this is good business.
So if you could, tell us what does it mean to the company
and how your workers respond to the customers they interact
with, in terms of absenteeism, in terms of how long they stay
with the company? What does treating workers with respect and
dignity mean to your overall successful of your company?
Mr. Jelinek. You know, for us, this is relatively, I think,
simple. It takes a lot of time to interview and find employees,
a lot of labor involved just trying to hire individuals. We
want people to stay with us. There are people with long-term
working skills, much easier to manage, much more loyalty to the
company, and they feel like they are part of the company. We
love loyalty, and we think less turnover makes you a much more
productive company, less learning job skills, and they bring a
lot of value based on their experience with the company. And we
have always wanted longevity. We are not in to try to figure
out how to lower the wage. We are always trying to figure out
what we can do for the employee so they will stay longer with
our organization.
As I said before, we are certainly not perfect. We have our
issues just like any other company.
Chairman Sanders. As you indicated a moment ago in your
testimony, not only will you be increasing your minimum wage
from $15 to $16 an hour next week, but half of your hourly
workers receive over $25 an hour. As I understand it, all of
your employees receive paid vacation. Almost all of your
workers receive high-quality health care benefits.
What do these types of wages and benefits mean to employee
morale at Costco?
Mr. Jelinek. Well, I think that speaks for itself for the
simple reason that I think we have a--we are customer-centric.
We have low turnover. Our turnover in the retail industry is
less than 10 percent. Anybody with the company over a year, our
turnover is about 6 percent. So we do not turn a lot of
employees, which we think is very beneficial. We lower our
costs by paying wages and keeping employees.
Chairman Sanders. So you think you have a business model
which is not only the right thing to do but works for you
economically?
Mr. Jelinek. Yes, it does.
Chairman Sanders. Good. Okay. Lindsey?
Senator Graham. Thank you, Mr. Chairman.
How do you say your last name, sir?
Mr. Jelinek. ``Jelinek.''
Senator Graham. Mr. Jelinek, one, I want to congratulate
you for your attitude that you have about your employees, and
it is a great business you have. What was the gross revenues
last year of Costco?
Mr. Jelinek. Last year?
Senator Graham. Yes.
Mr. Jelinek. $163 billion.
Senator Graham. Okay. What about the year before that?
Mr. Jelinek. The year before that was 148.
Senator Graham. Okay, so it has been pretty consistent,
right?
Mr. Jelinek. Correct.
Senator Graham. Now, you said something I thought was very
wise. You are not testifying about other areas of the economy,
other sectors of the American economy. You are just telling the
Costco story. Is that correct?
Mr. Jelinek. That is correct.
Senator Graham. And you have paid vacation?
Mr. Jelinek. Yes, we do have paid vacation.
Senator Graham. I just want to give an aside. I cannot
remember going on a vacation until I was in high school,
because if you own a restaurant, it is hard to close. And if
you are not there, people will steal you blind. So I just want
to let you know that my concern is not really about Costco
because I think anybody that makes $158 billion, 153, whatever
the number is, you can absorb some increasing costs.
I am worried about the small business owner who is
struggling because COVID has reduced their capability to earn a
living. Do you understand where I am coming from?
Mr. Jelinek. If you are asking me, correct, I do understand
where you are coming from.
Senator Graham. So if you own a restaurant or a hotel and
nobody can travel in the country and seating capacity has been
reduced by half or more, the revenues are down. Can you
understand why an increased mandate from the Government in
terms of cost would be a devastating blow?
Mr. Jelinek. No, I cannot understand why it would be a
devastating blow. I think it is a devastating blow to the
employees.
Senator Graham. Okay, but you cannot understand--let me see
if I got this right. You cannot understand why a restaurant in
South Carolina who has got half seating capacity because of
COVID, barely hanging on, it would be devastating to them to
increase their costs in terms of doubling the minimum wage? You
do not understand that?
Mr. Jelinek. I do not know that I was suggesting doubling
the minimum wage.
Senator Graham. That is what the proposal is.
Chairman Sanders. The proposal is over 5 years, Lindsey.
Senator Graham. Yeah, well, in 5 years from now.
Mr. Jelinek. And, you know, my view is I am not here to
discuss the proposal.
Senator Graham. Okay.
Mr. Jelinek. I am here strictly to discuss Costco.
Senator Graham. Okay, that is fair enough. That is fair
enough. Would you support an $11-an-hour minimum wage increase
being proposed by Senator Manchin?
Mr. Jelinek. $11?
Senator Graham. Yeah.
Mr. Jelinek. It is better than $7.25.
Senator Graham. Fair enough. Thank you very much.
Chairman Sanders. Is that it, Lindsey?
Senator Graham. Yeah.
Chairman Sanders. Okay. Senator Whitehouse.
Senator Whitehouse. I am good.
Chairman Sanders. Senator Toomey--oh, I am sorry. Senator
Warner? Mark, are you there?
Okay. Senator Padilla?
Senator Padilla. Thank you, Mr. Chair. I will actually
reserve my questions for the following panels, but I appreciate
the CEO from Costco articulating just how valuable it is--
sometimes it is hard to monetize, but how valuable it is to
have well-compensated employees in terms of satisfaction of
those employees, performance, and a commitment to a thriving
business and company.
Chairman Sanders. Okay. Senator Toomey, if Pat is with us?
Senator Toomey. Thank you, Mr. Chairman. Can you hear me
okay?
Chairman Sanders. Yeah, a little bit louder, if you could.
You are low.
Senator Toomey. Can you hear me okay now?
Chairman Sanders. Not much better.
Senator Graham. What country are you in?
Senator Toomey. I am in the strange country called
``Washington, D.C.'' I will try to speak a bit more loudly and
hope this will be audible.
Chairman Sanders. We are good now, Pat.
Senator Toomey. Okay. Great.
Mr. Jelinek, thanks for joining us. Thanks for your
testimony. I just think it would be helpful to understand a
little bit about your business model and how it compares to
some of the other big players in your space.
Costco had a recent Securities and Exchange Commission
(SEC) filing in which you state--and I will quote this. It is
not too long. You say, ``Because the hours of operation are
shorter than other retailers and due to other efficiencies
inherent in a warehouse-type operation, labor costs are lower
relative to the volume of sales. Merchandise is generally
stored on racks above the sales floor and displayed on pallets
containing large quantities, reducing labor required.''
So from what little I know about your business and from
what I have just read in the SEC filings, would it be fair to
infer that, relative to most of your most direct large
competitors, you have fewer workers per dollar of sales?
Mr. Jelinek. Absolutely.
Senator Toomey. Right, so you pay more, but you pay more to
fewer people.
Mr. Jelinek. Well, of course, because we have efficiencies
built into the business.
Senator Toomey. Right, you have a business model that does
that. And I think the important thing to note here is that that
is exactly what you get if you decide to arbitrarily establish
a wage that is higher than the prevailing market rate. Some
people will actually get raises, and other people will lose
their jobs. I am reminded of the wisdom of Thomas Sowell, who
said, you know, ``Government can set any minimum wage it wants.
There is always a minimum wage of zero.'' And that is why the
CBO estimates that if, indeed, our Democratic colleagues go
ahead and double the minimum wage, 1.4 million or more
Americans will just lose their jobs.
Let me ask another question. Surely you would acknowledge
that there is a very different cost of living in New York City
and San Francisco than in Altoona, Pennsylvania, or Birmingham,
Alabama, right?
Mr. Jelinek. Correct.
Senator Toomey. So doesn't it make sense for the States to
decide what is an appropriate minimum wage to reflect the
preponderance of the cost of living in their State? I mean,
Alabama has a very, very different cost structure as a general
matter than Massachusetts. Doesn't it make sense to allow the
two States to decide which is best for their citizens?
Mr. Jelinek. That is to States to make that decision. We
pay the same wage no matter what State we are in.
Senator Toomey. I understand that, but our Democratic
colleagues are proposing to have a national uniform minimum
wage that disregards what various States' preferences are.
Mr. Jelinek. I am not here to debate that. I am just here
to tell you what Costco does.
Senator Toomey. So you are not here to advocate for a
particular minimum wage?
Mr. Jelinek. I think a minimum wage is important. I am only
here to tell you what Costco does.
Senator Toomey. Okay. Well, thanks very much, and I will
yield the balance of my time.
Chairman Sanders. Thank you very much, Pat.
Mark Warner, Senator Warner?
Senator Warner. Thank you, Mr. Chairman. To my good friend
Senator Toomey, I think States ought to have some flexibility,
but I do think we need a Federal minimum wage. It is not a top-
end wage. And when $7.25--which is still the minimum wage in
Virginia because it has not adopted a change, that does not
allow any reasonable family to put food on the table and a roof
over their head. So I think the idea of a national minimum wage
makes an enormous amount of sense, and then if States want to
raise that above that, that ought to be their choice. But no
one in America should be working full-time and not be able to
feed their family or put a roof over their head.
Mr. Jelinek, thank you for appearing. I have spent a long
time on this issue of how you actually make capitalism work for
a greater group of people. I think capitalism, when it really
works, is taking more people out of poverty than any other
system. The Chairman and I have had lots of discussions on this
issue, and I respect his passion on these issues. But one of
the things I think you are showing is that you can have an
extraordinarily successful company, pay people that living wage
of $15--the fact that 90 percent of your workers have health
care and you have got 401(k) plans; you have got vacation time;
you have got the ability for family leave. You have not decided
to outsource a huge amount of your workforce the way many other
retailers have. And I know the Chairman already asked you about
turnover, retention, and productivity. I guess what I would
like to talk to you about is can you also talk about what you
have done at Costco not only to retain workers but to provide
that upward level of mobility for someone that may be coming
in, you know, in a starting position but could make a career? I
know you have got a much longer timeline than most people in
the retail sector, and I would love for you to talk a little
bit about that upper mobility path you give to your workforce.
Mr. Jelinek. Well, 95 percent of our employees we promote
within the organization. We usually--liken maybe attorneys
counsel, although we have three homegrown attorneys that came
through the system. Pharmacists, sometimes you have to go from
the outside, although we have had techs that come in the
pharmacy business that become pharmacists. But 95 percent of
the individuals grow through our organization, so that is
really what we do. We think they know that. They have been
there. They have credibility. They grow through the
organization, which gets them the opportunity to make higher
wages as they go into management positions, buying positions,
tech positions, and to just grow with the organization and
continue to improve their economic situation.
Senator Warner. Mr. Jelinek, one of the things I have been
looking at for a long time--and, again, I commend how you treat
your workforce. But my fear is we have got an unlevel playing
field from a tax accounting and reporting system in terms of
investment in human capital versus investment in tangible
goods. If you were to buy a robot to automate some of your
processes at Costco, you know, back-office automation, you
spend $5,000 in that robot, you get an R&D tax credit. The
robot is an asset you can put on your balance sheet. You take
two of your workers and train them to be more efficient than
the robot, you do not get the same tax treatment or the same
accounting treatment. I have been looking at trying to create
the equivalent of an R&D tax credit for employers that actually
up-skill their workforce.
I know I am springing this on your right now, but, you
know, the idea of incentives for employers to up-skill their
workers, could you talk to me generally about that in my last
46 seconds?
Mr. Jelinek. When you say up--we are always looking to
become more efficient for a lot of reasons--to make it safer
for the employee, to reduce injuries. Anything that we could
do, you are always looking for efficiencies in the way you run
your business. So just like any company, you do have to control
your costs.
One of the reasons that we do that is not because of wages.
If we can make work more efficient, as we said before, we work
off of lower margins. That is what we do. You can have more
people. You just raise your prices, and just like other
companies could do, they work off of higher margins. We pay
higher wages, but always figure out how to become more
efficient the way we run our business.
Senator Warner. Thank you.
Thank you, Mr. Chairman.
Chairman Sanders. Thank you, Mark.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
Mr. Jelinek, I want to go back to Lindsey's point about
your business model in comparison to your competitors' business
model. Again, you have an admirable business model, providing
good products at a very low price because you engage in high
volume, low margin. But one of the reasons you are able to do
that is you have a very low cost structure, correct? Do you
have any idea--and, again, you compete against people like
Walmart, Sam's Club. But also you compete against the little
small mom-and-pop shop retailers as well. Do you have any idea
your cost advantage compared to a smaller retailer maybe in the
neighborhood that is a little more convenient for consumers to
get to versus going to your locations in strip malls? I mean,
what kind of--how much lower are your costs, cost of sales
versus a standard retailer that has a bunch of products just on
the shelves?
Mr. Jelinek. Oh, it could probably be from anywhere to zero
to 20 percent, 25 percent. No question about that.
Senator Johnson. So you have got lower costs. You probably
have lower rent per square foot. Your bulk display is just a
different way of shopping that, again----
Mr. Jelinek. Absolutely.
Senator Johnson. --consumers can make that choice.
Mr. Jelinek. Those are the efficiencies that we build in.
Senator Johnson. So, again, you can afford $15 an hour, but
some of your smaller competitors cannot. Wouldn't it be true if
you raise the minimum wage up too high, you start putting those
smaller competitors out of business? That would be an advantage
to Costco, wouldn't it?
Mr. Jelinek. We do not want to put anybody out of business
because some of those small businesses buy from us.
Senator Johnson. I understand, but----
Mr. Jelinek. That would not be--that is not logical.
Senator Johnson. But, again, I think that is the concern a
lot of us have, you know, the 1.4 million people who lose their
job, the businesses that cannot afford whatever the Government
dictates in terms of a wage being put out of business. In the
end, that is going to benefit people like Amazon and yourself
that, again, have high volume, low margin, can afford to pay
more than a smaller retailer.
Mr. Jelinek. If anybody--the pie is only so big. If people
go out of business, you are absolutely right; someone has to
get that business. As I----
Senator Johnson. My----
Mr. Jelinek. If you can just let me finish, I am only
trying to talk to you what is right for Costco.
Senator Johnson. No, I understand. So I am trying to make
the point that what is right for Costco is not necessarily
right for smaller retailers that also have a value to
consumers.
Mr. Jelinek. Absolutely. I cannot answer about--that is a
decision that everybody else has to make. I do not make that
decision.
Senator Johnson. But when the Government comes----
Mr. Jelinek. I can only tell you----
Senator Johnson. But when the Government comes in and
mandates a cost structure, a wage, and puts a smaller
competitor out of business, that is what concerns many of us.
Let me ask you another question.
Mr. Jelinek. I can tell you my past experience that wages
usually do not put people out of business. How you run your
business will put you out of business.
Senator Johnson. Again, you have been working at Costco. I
have got experience in manufacturing. My experience in
manufacturing, by the way, tells me that a $15 minimum wage is
a moot point because most manufacturers--quite honestly, most
employers I talk to in Wisconsin, their biggest problem is they
cannot hire workers almost at any wage, because, you know, one
of the reasons we are plussing up unemployment benefits, and at
least half of people that are on unemployment are making more
now than when they were actually on the job.
But let me ask you that question. How many unfilled
positions do you have a Costco right now?
Mr. Jelinek. Very few.
Senator Johnson. Because you are paying $15 an hour.
Mr. Jelinek. And above.
Senator Johnson. And, again, that is what the marketplace
actually does. But, again, I have employers, manufacturers in
Wisconsin that cannot hire people at $15 an hour. They cannot
hire people at $18 or $19 an hour, so that is also a huge
problem.
But, again, Mr. Jelinek, I think Costco is a great store.
It is the right place to shop for certain things. But, again, I
think those of us on this side of the aisle are certainly
concerned about the smaller mom-and-pop shops that also provide
products and services in a way that consumers value as well. We
do not want to see them put out of business because of a
Government-mandated wage.
Thank you.
Mr. Jelinek. You are welcome.
Chairman Sanders. Mr. Jelinek, we are going to respect your
request. I know you have to leave at--you are on the west coast
now, is that right?
Mr. Jelinek. Correct.
Chairman Sanders. So we appreciate very much your being
with us, and you told us you had to leave at 11:00, and it is
11:00. We are going to discharge you, and thank you very much
for your testimony.
Mr. Jelinek. Thank you very much.
Chairman Sanders. Our next panelist is Terrence Wise. This
is panel number two, and our first panelist on this panel is
Terrence Wise, who is a McDonald's worker, a Fight for $15
advocate, and a union leader from Kansas City, Missouri. Mr.
Wise is a 41-year-old father of three who works for McDonald's
making less than $15 per hour. Despite his fiancee also working
full-time as a home care aide, their low wages mean the family
struggles to make ends meet. They were evicted a year ago and
face eviction again during this pandemic.
Mr. Wise, thank you so much for being with us.
STATEMENT OF TERRENCE WISE, MCDONALD'S WORKER, KANSAS CITY,
MISSOURI
Mr. Wise. Thank you. Thank you, Chairman Sanders, Ranking
Member Graham, and members of the Committee. Thank you for the
opportunity to testify today. My name is Terrence Wise, and I
am a 41-year-old, second-generation fast-food worker from
Kansas City, Missouri. I am honored to speak with you on the
issue of taxpayers subsidizing poverty wages of large,
profitable corporations like the one I work for, McDonald's.
I began fighting for $15 and a union in 2013. I felt the
struggle of raising a family on low wages my whole life. It
began in South Carolina where I grew up in Government housing
with my brothers and sister. My mom worked full-time at
Hardee's for 30 years, and my dad was a cook in the military.
My mom would be up at 4:00 a.m. getting ready for work, and
it was my job soon after to get my siblings up and ready to go
to school. It was also my job to sign for the food stamps--we
signed back then--from the postman. Even with two full-time
incomes, my family had to skip meals. One winter I did not even
have a coat until the guidance counselor gave me one from the
lost and found. Hardworking people with two full-time incomes
should not have to live like this in the richest Nation on
Earth.
I was a great student, and in the eighth grade I was in
advanced placement classes. My teachers were saying things
like, ``Terrence, you are going to do great stuff. You can be
whatever you want to be.''
I was going to be a Gamecock. I was going to go to the
University of South Carolina and be a writer. But I went to
work at age 16 to try to help my family survive. One day I came
home from school, there was no food in the fridge, and the
lights were turned off. So I went and got my first job at Taco
Bell, making $4.25 an hour. I remember my first check was 150
bucks, and I gave it to my mom to help pay the light bill. But
one job was not enough. So I got a second job at Wendy's to
bring in more money to help my family.
I tried to balance both work and school. I had A's in
history, English, science, and math. But I started falling
asleep in class. My teachers then began asking me, ``Terrence,
what is wrong?'' I did not need AP calculus to run the numbers
at home. There simply was not enough money for basic
necessities. I had to leave school and my dream of college
behind at 17, and I became a full-time worker.
I have been working in fast food ever since. Now I have a
family of my own. My fiancee is a home health care provider,
and we have three daughters--ages 18, 17, and 15. She takes
care of some of the most vulnerable people in our society, but
neither of us make enough money to make ends meet.
My family has been homeless despite two incomes. We have
endured freezing temperatures in our purple minivan. I would
see my daughters' eyes wide open, tossing and turning, in the
back seat. Try waking up in the morning and getting ready for
work and school in your minivan with your family of five. That
is something a parent can never forget and a memory you cannot
take away from your children. You should never have to work
multiple jobs in the United States and have nowhere to sleep.
And that was before the pandemic. Since COVID-19, it has
gotten harder. In March, my hours were cut from 40 to 28, and
some of my co-workers were taken off the schedule entirely. My
family and I have been evicted and had to move in with
relatives. We had 11 people in a three-bedroom, one-bathroom
house.
During the lockdown, McDonald's gave me a piece of paper to
show the police in case I got pulled over. It said I was an
``essential employee.'' But I can tell you, they treat us more
like second-class citizens than ``essential workers.''
I work for McDonald's, the second largest corporation in
America, and still rely on food stamps and Medicaid. I do not
receive as much as I did in food stamps when I was making $8 or
$9 an hour, but I still need help.
I want to stand on my own. I want to provide my girls with
three meals a day and give them the opportunities I did not
have. I do not want to go to the supermarket with my kids and
pull out my benefit card to pay for food. My check should
handle that.
This is what generational poverty looks like in America. It
is what our movement has been fighting to end. It is why I
joined the Fight for $15 and a movement to ensure that my
mother's past and my present is not my daughters' future.
We need Congress to act immediately to raise the Federal
minimum wage to $15. Everyone who wakes up and works in our
country deserves access to the promise that America made to
each and every one of us: ``life, liberty, and the pursuit of
happiness.'' It is a promise to this day that remains
unfulfilled for too many of us.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Wise appears on page 44]
Chairman Sanders. Mr. Wise, thank you very, very much.
Senator Chris Van Hollen, will introduce Cynthia Murray,
who is a Walmart worker from Hyattsville, Maryland. Chris?
Senator Van Hollen. Thank you, Mr. Chairman, and it is an
honor to introduce to the Committee a great Marylander, Cynthia
Murray, who has been an associate at the Walmart store in
Laurel, Maryland, since the year 2000. Ms. Murray works in the
fitting department. She also handles all returns for seven
different departments. She has got a lot of experience and so
is often called upon by her colleagues to trouble-shoot and
solve problems. Ms. Murray works 32 hours a week and even after
20 years in her position still makes less than $15 an hour.
Fortunately, in Maryland, that is going to change where our
State minimum wage will gradually increase to reach $15 an hour
in the year 2025, but that is not the case in so many other
States, as we are hearing, where the minimum wage has remained
stuck at $7.25 since 2009.
Ms. Murray is a founding member of the nonprofit worker
organization United for Respect, and she volunteers on the
board of directors there. Raised in a union family, she has led
efforts to change policies at Walmart to better the lives of
essential workers, and her activism has contributed to winning
family leave policies for pregnant and parenting Walmart
workers and better wages, a fight that she continues here
today.
Members of the Committee, Ms. Murray is also a Walmart
stock shareholder, stockholder, and she has been a vocal
advocate against excessive stock buybacks at Walmart and has
brought shareholder resolutions to the company to improve the
lives of associates. She is a proud mother, grandmother, and I
thank her for joining us here today as we conduct these very
important hearings for the well-being of people throughout the
country.
Thank you, Mr. Chairman, Ranking Member.
Chairman Sanders. Ms. Murray.
STATEMENT OF CYNTHIA MURRAY, WALMART WORKER, HYATTSVILLE,
MARYLAND
Ms. Murray. Good morning, Chairman Sanders, Ranking Member
Graham, and members of the Senate Budget Committee. My name is
Cynthia Murray. I live in Hyattsville, Maryland, and I have
been a Walmart associate for 20 years. I have asthma, and my
son also has underlying health conditions. Like tens of
millions of essential workers, I have been working full-time
since the virus hit, putting my life--and my son's--on the
line, every day, for less than $15 an hour. I am here today as
a leader with United for Respect to speak out on behalf of the
1.4 million hourly associates who work for Walmart, the largest
private employer in the United States.
The U.S. Senate, the President, and the American people
need to hear from people like me because we are the experts on
why raising the Federal minimum wage simply cannot wait another
day.
Nobody working for the richest family in America should be
going hungry. But, Senators, at my store people in the break
room at lunch time have nothing to eat for lunch. Walmart
paychecks simply do not cover rent, bills, and groceries, so
working people sit there hungry, while the Walton family has
made over $50 billion since the pandemic began. The Waltons
pocket $5.7 million every hour, but Walmart's CEO is saying
that somehow a $15 minimum wage is too much compensation for
front-line workers like me. I do not think so.
In 2017, Walmart rewarded their shareholders with a $20
billion handout to buy back their own stock. Had they invested
half of that amount in workers, a million Americans could have
had a raise of more than $5 an hour.
This month Walmart did it again, approving a new $20
billion share-repurchase program, while keeping the starting
wage at $11. Walmart is the largest private employer of
American women and the largest corporate employer of black and
brown people in America. Wages at Walmart matter for America.
Let me tell you about Kendra Wilson from Jonesboro,
Georgia. She is a single mother of two, and she has been at
Walmart for 4 years and works as a personal shopper. She
currently earns $11.94 an hour. Kendra must rely on public
assistance, Medicaid and SNAP, and on local food pantries to
provide for her two young sons. Kendra says, ``Working for one
of the largest corporations in the world, I should not have to
choose between paying my bills and feeding my children.''
Another associate, Kellie Ruzich, and her husband both work
at Walmart in Duluth, Minnesota, supporting their three
children. Kellie makes $12.38 and relies on Special
Supplemental Nutrition Program for Women, Infants, and Children
(WIC) for formula for their baby, but says WIC does not provide
her with enough formula. Kellie goes uninsured because she had
to choose between the $85-a-month premium and feeding the baby.
She chose feeding her hungry baby.
Mr. McMillon announced last week that the starting wage
will remain $11 an hour. That starting wage is a starvation
wage. It is a wage that requires the Federal Government to foot
the bill for feeding Walmart associates' families, and many of
us are still going hungry. They say they will do it gradually,
and you do not have to force their hand. But let me tell you
something: The only way Walmart is going to raise our wages is
if you make it the law, and it is way past time to do so.
Last month there was a COVID outbreak in my store. We were
scared, so we organized. I want to personally thank you,
Senator Van Hollen, for standing with us. After your inquiry to
Walmart, we have soap and hot water in the bathrooms and break
rooms so we can wash our hands during a deadly global pandemic.
Working people deserve basic respect. I work hard at my
job, and I am good at what I do. I am 65 in 3 months, and I
have no retirement plans. My doctor says I need an Magnetic
Resonance Imaging (MRI) for my back, but I am putting it off
because I cannot afford the copayment. People like me are
putting off retirement, putting off health care, because people
like you have put off raising the minimum wage for 12 years.
I grew up in Pittsburgh, youngest of four children, raised
by my dad and my grandmother. My dad was a Teamster. He had a
good job and a strong union. As a single parent, he was able to
support us. Senators, that is a story from a bygone era. That
day in America is gone. Our reality today is that 40 million
people are working in poverty, sometimes two and three jobs. We
have to stop being a country of billionaires and working poor.
You can end that. We can end that. It is time to raise our
minimum wage.
Thank you for hearing my testimony today.
[The prepared statement of Ms. Murray appears on page 47]
Chairman Sanders. Ms. Murray, thank you very much for being
with us. We appreciate it.
Next on this panel we have Thea Lee, who is president of
the Economic Policy Institute (EPI). EPI is a nonprofit,
nonpartisan think tank created in 1986 to include the needs of
low- and middle-income workers in economic policy discussions.
Ms. Lee, thanks very much for being with us.
STATEMENT OF THEA MEI LEE, PRESIDENT, ECONOMIC POLICY INSTITUTE
Ms. Lee. Thank you so much, Chairman Sanders, Ranking
Member Graham, and members of the Committee, for inviting me to
participate in today's important hearing. I am Thea Lee,
president of the Economic Policy Institute, the Nation's
premier think tank for analyzing the effects of economic policy
on America's working families.
Today's hearing poses an important question: Why do large,
profitable corporations pay such low wages that their employees
are eligible for and must rely on federal anti-poverty programs
just to make ends meet? And what policies are necessary to
address this problem?
I would like to make the case today that the wage-setting
mechanism in the U.S. labor market is massively broken. Four
decades of flawed policy decisions have systematically eroded
the bargaining power of workers, while simultaneously
concentrating the political and economic power of large
corporations and the wealthy.
The result is a labor market where, contrary to neoliberal
economic equilibrium models, actual wage levels for most
workers reflect generations of accumulated systemic racism,
sexism, and occupational segregation; where the federal minimum
wage is egregiously inadequate, leaving too many workers below
a decent and adequate standard of living; where workers'
ability to join a union and bargain collectively has been
eroded; and where highly profitable corporations remunerate
their executives lavishly, but choose to pay poverty wages to
their front-line and production employees.
This is not just unfair and inhumane for workers and their
families. It is also inefficient in that it rewards a short-
term business model characterized by high turnover and
overreliance on Government safety net programs. It contributes
to slower growth and growing inequality, especially along race
and gender lines. And during the pandemic, we saw vividly that
those workers most at risk of contracting the virus on the job
were also disproportionately those earning at or near the
minimum wage.
According to the GAO report that we are discussing today,
12 million wage-earning adults are enrolled in Medicaid, and 9
million wage-earning adults are in households receiving food
stamps. About 70 percent of those work at least 50 weeks a
year, and about 90 percent work in the private sector. Full-
time work should provide a path out of poverty, but the reality
in the United States today is quite different.
Federal anti-poverty programs provide an essential lifeline
to people who need it, but these programs were never intended
to relieve profitable corporations from their responsibility to
pay a living wage and benefits. We need to strengthen and
expand these programs, but we also need to ensure that our
labor market and broader economic policies rebalance bargaining
power between workers and employers so that unscrupulous and
uncaring corporations do not benefit from federal safety net
programs, which puts more responsible employers at a
competitive disadvantage.
Key elements to rebalance bargaining power include: first,
raise the minimum wage to $15 an hour by 2025; second, reform
and modernize our labor law so that workers have a fair chance
to exercise their rights to form unions and bargain
collectively; and, third, pass a robust and comprehensive
relief and recovery bill, as President Biden has proposed.
Going forward, we should prioritize achieving and maintaining a
full employment economy.
In principle, people cannot supply their labor if they
cannot sustain themselves and their families. We heard amazing
testimony this morning from Terrence Wise and Cynthia Murray,
about how unconscionably inadequate the current federal minimum
wage is. Today, according to EPI research, in every region of
the United States, a single adult without children needs at
least $31,200 to achieve a modest but adequate standard of
living. That is what a full-time worker making $15 an hour
earns annually. And by 2025, when the Raise the Wage Act will
be fully implemented, this will hold true not just in every
region of the United States but in every single county, both
urban and rural.
Congress has a once-in-a-lifetime opportunity to pass the
Raise the Wage Act, which is included in President Biden's
American Rescue Plan Act. Raising the federal minimum wage now
is an essential element of a robust and equitable recovery
package, and it is affordable, both for businesses and for the
economy. We see that the minimum wage has lost almost a third
of its value since 1968, and yet over those 50 years, the
economy's capacity to deliver higher wages has more than
doubled, as measured by labor productivity.
And the weight of economic research is definitive and
convincing: Minimum wage increases have worked exactly as
intended, by raising wages without substantial negative
consequences on employment. High-quality academic scholarship
that I cite in my testimony examining dozens of case studies
confirms that modest increases in the minimum wage have not led
to detectable job losses. And even some studies that predict
job losses, as did a recent CBO study, also predict that a $15
minimum wage in 2025 would overwhelmingly benefit the low-wage
workforce, raising wages for 27 million workers and reducing
the number of people in poverty by nearly a million.
When the GAO revealed that millions of full-time workers
rely on food stamps and Medicaid, it underscored how deeply
broken our labor market is today. Especially in the wake of the
pandemic and associated economic cataclysm, it is urgent that
Congress act to rebalance bargaining power in the labor market.
Thank you for your attention. I look forward to your
questions.
[The prepared statement of Ms. Lee appears on page 53]
Chairman Sanders. Thank you very much, Ms. Lee.
Our next witness is Doug Holtz-Eakin, president of the
American Action Forum. Dr. Holtz-Eakin is a former CBO Director
and was Chief Economist with the President's Council of
Economic Advisers under President George W. Bush.
Dr. Holtz-Eakin, thanks very much for being with us.
STATEMENT OF DOUGLAS HOLTZ-EAKIN, PH.D., PRESIDENT, AMERICAN
ACTION FORUM
Mr. Holtz-Eakin. Well, thank you, Chairman Sanders, Ranking
Member Graham, and members of the Committee, for the privilege
to be here today and testify on this important topic. I want to
make three very simple points, and then I would look forward to
the opportunity of answering any questions you may have.
Point number one is the data clearly display this overlap
between the working population and the social safety net
population in the United States. Whether that is a large or
small overlap is in the eye of the beholder, but there is no
question it is there.
Some interpret this overlap as a subsidy to employers by
providing social safety net benefits to some of their
employees. But I think the economics actually indicate the
opposite. The availability of outside income, an alternative
for those workers, would force employers to pay more, not less,
to attract people out into the labor force and into employment.
And so in my written testimony, I have tried to gauge the
overall magnitude of the increase in wages that have been
necessitated by the U.S. social safety net. Frankly, the
research on this is sufficiently unclear that you cannot get a
definitive answer. But the direction is unambiguous. Wages are
higher than they otherwise would be in the absence of those
social safety net programs.
The third point I want to make is that the proposal to
raise the minimum wage to $15 by 2025 would not eliminate this
overlap. There would still be--and there are in the data--
people who are eligible for Medicaid receiving SNAP benefits
when they make more than $15 an hour.
It is also, I think, an unfortunate time to contemplate
raising the minimum wage, especially an increase of that
magnitude. As the Congressional Budget Office said, this in
general is going to cost something like 1.4 million jobs in the
United States, and the reason for that job loss is that by
writing a law that says the minimum wage is going to go from
$7.25 to $15, you have not created any additional income to pay
those higher minimum wages. So that income will have to come
from somewhere else, and that income is going to come by not
hiring additional workers and cutting the total labor cost and
outlay, or it might come from a small business that does not
reopen and, thus, essentially comes from that business owner.
And so the reality will be that we will take money from
someone who does not get a job and give it to someone who has a
job. That is a pretty perverse and unfair thing to do,
especially at this time. We will take it from someone who
cannot reopen their restaurant and give it to someone who has a
job, again, an incredibly perverse and unfair sort of
redistribution.
This is not a hypothetical. About 60 percent of the minimum
wage workers are in the leisure and hospitality sector, and in
the spring of 2020, we lost 8.3 million jobs in leisure and
hospitality. And while we have climbed back and put about 4.4
million of those people back to work, there are still millions
of leisure and hospitality workers out of work. And an increase
in the minimum wage of this magnitude will guarantee that some
of them will simply stay there.
We lost about 50 percent of the small businesses in the
leisure and hospitality sector last spring, and we have far
from reopened those businesses. And so we will guarantee that
they never open their doors again in the United States, and we
will have to find other places for people to get jobs.
In general, the CBO says that raising the minimum wage to
$15 is a $500 billion mandate on employers in the United
States. We are trying to climb out of the steepest, most rapid
recession in the history of the United States, and raising
taxes by $500 billion is on no one's list of ways to do that.
This is a de facto stealth $500 billion tax increase that would
impede the ability to recover, far from supporting it.
So I would encourage you to contemplate raising the minimum
wage but by a smaller amount at another point in time when the
economy can handle it, but to do so now would be a grievous
policy error.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Holtz-Eakin appears on page 62]
Chairman Sanders. Thank you very much, Dr. Holtz-Eakin.
Now we have Mr. Carl Sobocinski, and I hope I pronounced
the name correctly. Mr. Sobocinski is the owner of Table 301
Restaurant Group and a board member of the South Carolina
Restaurant and Lodging Association. Table 301 Restaurant Group
has several restaurants that employ hundreds of people.
Mr. Sobocinski, thanks so much for being with us.
STATEMENT OF CARL SOBOCINSKI, PRESIDENT, TABLE 301 RESTAURANT
GROUP
Mr. Sobocinski. Thank you, Mr. Chairman, Ranking Member
Graham, and members of the Committee. Thank you for the
invitation to testify today. My name is Carl Sobocinski, and I
am the founder and president of the Table 301 Restaurant Group.
I have worked tirelessly in this industry for over 30 years
and built this company. Today our company stands at nine
restaurants and over 300 associates, as you mentioned. We are
down over 100 associates from where we were a year ago today.
On May 1st, we will open our tenth restaurant and add 50 more
jobs. Table 301, like the restaurant and hospitality industry,
is a job generator, and with over 15 million restaurant and
food service workers in America, our industry employs nearly
one in ten U.S. workers.
Sixty-three percent of adult workers have worked in the
restaurant industry at some point in their careers. And did you
know that 48 percent of adult workers, nearly half of all
Americans, got their start, their first job, in the restaurant
industry. Our industry is impactful. We are making a difference
in America's workforce. We have a story to tell, and we should
have a seat at the table when discussing wage issues.
My story does not differ from the thousands of
restaurateurs and chefs around this country. I started in an
entry-level position as a college student. I immediately fell
in love with this industry. I worked my way up to management
and a food and beverage director position, and then after my
on-the-job training, I took a leap of faith, took on
significant debt, and opened my first restaurant in 1993. Four
years later, I opened Soby's New South Cuisine, which is the
flagship restaurant of the Table 301 Restaurant Group.
Along the way we have had some incredible successes and a
few hardships, like closing two restaurants and eliminating
significant jobs during the recession of 2009 and again for
unforeseen circumstances in 2013.
Our greatest success is the selling of three of our
concepts to three long-term, hardworking chefs and managers. We
are establishing the next generation of restaurants and
entrepreneurs.
One beautiful story is that of Jorge Barrales. Jorge,
affectionately known as ``Papi,'' started with us in 1997 on
opening night. He worked his way up into a management position,
and in 2013, he and I together opened a little store, Papi's
Tacos. In 2019, Papi and his family were able to purchase that
restaurant and are now the sole proprietors and proud owners of
Papi's Tacos.
Our industry has always been one to fight back in the face
of adversity, and restaurant workers are some of the most
resilient in any industry. Despite this pandemic and losing one
in six restaurants around the country, our industry will fight
every day, and I am optimistic and enthusiastic about the
future and about our recovery.
I would like to thank you at this time for the quick work a
year ago to provide PPP funding, which we applied for and did
receive. That is the sole reason that my restaurants are all
still operating today. But this leads me to the reason I am
here today.
Mr. Chairman, it is unfathomable to me that Congress can
consider the Raise the Wage Act in the middle of the pandemic.
The exact people you are trying to help will very likely either
end up with diminished wages if we eliminate the tip credit,
lose their jobs to technology, or lose jobs in general as
operators will eliminate several entry-level positions.
Let me be clear, and I think I speak for most sensible
business owners. I am not opposing a minimum wage increase, but
I am looking for a common-sense approach to this. This is not a
one-size-fits-all solution. Fifteen dollars an hour in New York
City, San Francisco, Washington, D.C., is not the same as $15
an hour in Greenville, South Carolina.
I think most can agree that $7.25 as a wage is too low for
even an entry-level position. Table 301 is a great example of
the free enterprise system working, where our entry-level wage
is at $10 an hour, not the current minimum wage. If the minimum
wage goes up to $15 an hour, take our entry-level wage of $10
an hour. We are now increased 33 percent. That means that every
worker would expect, rightly so, a 33-percent increase. So take
every $100,000 in payroll that I currently have and add $33,000
to that, increased employer taxes, increased premiums on
workmen's comp policies, and increases in expenses for benefits
such as 401(k) contributions, and you will have businesses
closing faster than they have during this pandemic.
Today I urge you to abandon this fast-tracked approach and
instead have a real and honest conversation with small business
owners across a broad spectrum to devise a responsible wage
increase that will provide opportunities for workers without
eliminating jobs for far more than we would be able to help. We
have to do better than this.
I do want to thank you for acknowledging the difference in
small businesses versus these large corporations. There are 5.8
million small businesses in the U.S. comprising of 96 percent
of all U.S. businesses. Let us not legislate to the 4 percent
large corporations in the U.S. Let us come up with a common-
sense approach to protect the 96 percent of American small
businesses.
Mr. Chairman, thank you for the opportunity to testify, and
I look forward to answering any questions you all may have.
[The prepared statement of Mr. Sobocinski appears on page 68]
Chairman Sanders. Mr. Sobocinski, thank you very much for
being with us.
The last witness in this panel will be Professor Jacob L.
Vigdor. Since 2014, he has been a professor of public policy
and governance at the University of Washington.
Professor Vigdor, thanks so much for being with us.
STATEMENT OF JACOB L. VIGDOR, PH.D., PROFESSOR OF PUBLIC POLICY
AND GOVERNANCE, UNIVERSITY OF WASHINGTON
Mr. Vigdor. Thank you. Good morning, Chairman Sanders,
Ranking Member Graham, members of the Committee. I am Jake
Vigdor, professor of public policy and governance at the
University of Washington in Seattle. Thank you for the
opportunity to speak today.
In June 2014 the Seattle City Council passed a minimum wage
ordinance. Starting from $9.47, the minimum wage was to rise to
$15 an hour and was then indexed to inflation. Today Seattle's
minimum wage stands at $16.69 per hour for most employees.
On the day the City Council passed this ordinance, it also
passed a resolution calling for a 5-year independent academic
study of its impact. I had the privilege of leading this 5-year
study, which was conducted without the support of either
business or labor groups. Today I am here to share with you
some of the things we learned in the course of our study.
There were many facets to our work. We conducted repeated
surveys of business owners and managers. We went interviewers
and sometimes interpreters into the homes of parents trying to
raise children on low-wage jobs. We sent researchers into
stores, restaurants, and bars once a month to track consumer
prices. And we used administrative employment and revenue data
from the State of Washington to track the experiences of
individual businesses and employees over time.
My written testimony provides some additional detail, but
let me focus on six key findings.
Finding 1, businesses survived. To be precise, our research
concluded that the higher minimum wage was only leading to the
closure of about seven out of every thousand businesses for a
survival rate of 99.3 percent.
Finding 2, price increases were confined to the restaurant
industry. We conducted intensive studies of grocery prices,
tracked gas prices and rents closely, and monitored street-
level retail. We found that restaurant prices went up about 10
percent, but that was the only detectable impact.
Finding 3, businesses saw reduced turnover and higher
productivity. Turnover rates in low-wage businesses are high.
Our data show that if you take a set of employees working for
low wages at any point in time, only about half of them would
still be working for the same employer in a year and a half.
This ratio increased in Seattle. At the same time, sales per
hour of labor increased.
Finding 4, workers who had low-wage jobs before the minimum
wage increases kept them. We found no increase in unemployment
among individuals already working. So far, so good.
But this brings me to Finding 5. Although existing workers
kept their jobs, they saw their hours reduced. Employers found
many ways to cut back their staffing without laying workers
off. Some cut back their operating hours. Child care centers
brought in fewer workers per shift. Some employers converted
tasks performed by employees into tasks performed by customers
themselves. This could mean anything from using the Starbucks
application to order and pay for your coffee to asking your
customers to bus their own tables at a counter service
restaurant. And some became more aggressive about sending
workers home if business was slow or telling employees they
would call them if they needed them instead of scheduling them
in advance.
Finding 6, employers lean more heavily on their experienced
workers. In the course of conducting this survey, we heard
managers say lots of negative things about hiring teenagers: We
need to train them. They do not show up to work on time. If
they ask for time off, they will quit if you do not give it to
them.
Teenagers can have a lackadaisical attitude about work in
part because they often do not need the income to survive. This
pattern had a beneficial impact on older workers, the adults
trying to make ends meet, often while raising children. They
kept more of their hours and saw a bigger boost to their
paycheck.
Less experienced workers on average saw their hours cut so
severely that their paychecks ended up smaller rather than
larger for more than a year after the minimum wage started to
increase. And workers who had no experience at all found it
harder to land that first job. The flip side of lower turnover
is fewer job openings.
The bottom line is a mixed message. If you want to raise
the minimum wage in order to help individual adults and
families struggling to make ends meet on the basis of low-wage
work, the Seattle evidence supports your argument. The Seattle
evidence also demonstrates the capacity of businesses to adapt
with a 99.3 percent survival rate in a year when the minimum
wage went up by over $3.50.
On the other hand, if you are worried that raising the
minimum wage will erode the ability of young workers to find
their first job, the Seattle evidence validates your concern.
Think of it this way: Business owners are so reluctant to hire
inexperienced teenagers, the only thing that the youth can do
to get themselves a shot is to offer to work for a very low
wage. But that in turn puts downward pressure on the wages of
more experienced workers. Deciding to raise the minimum wage
really boils down to whether you want to give an advantage to
older or younger workers.
That concludes my prepared remarks. I am happy to take any
questions you may have.
[The prepared statement of Mr. Vigdor appears on page 71]
Chairman Sanders. Professor Vigdor, thanks. Thank you very
much.
Let me begin the questioning for our panelists, and I think
one point that I did want to reiterate, because I keep hearing
some confusion about this, the minimum wage bill that I am
proposing does not raise the minimum wage to $15 an hour this
year. It is a 5-year process. The first year it goes up to
$9.50 an hour.
Let me, if I might, ask both Terrence Wise and Cynthia
Murray a question, and that question is: We had invited the
CEOs of Walmart and McDonald's to be with us today. And as our
testimony has indicated, these are both very, very profitable
corporations paying their CEOs very large compensation
packages. If the CEO of Walmart or the CEO of McDonald's was
with us today, Mr. Wise and Ms. Murray, starting with Mr. Wise,
what kind of questions would you ask them? What would be your
comment to them about working conditions at McDonald's or
Walmart? Mr. Wise, do you want to begin that?
Mr. Wise. Oh, yeah. Well, you know, I am glad that you
mentioned he did have the opportunity to come today, and, you
know, I was recently on a call with CEO Chris Kempczinski and,
you know, leads in McDonald's, only to be muted. I actually had
my phone line muted. You know, they did not take any questions.
But I would definitely want to know--you know, a few years ago,
when McDonald's came out and said they would be just fine
paying their workers $10, $12 an hour, we know that they can
afford to pay their workforce $15. We know they spend billions
to buy back stocks. They pay celebrities millions in
advertisement fees. The money is absolutely there to pay their
workers, not only that but to allow us to have a seat at the
table.
I heard the gentleman from South Carolina saying we have
got to have a seat at the table when it comes to wages and
things that dictate our everyday lives in the workplace. We
have got to have democracy in the workplace. And I would simply
ask Chris, ``Why? Why not $15? You do not have to wait on
legislation or any law to be enacted. You can pay your workers
today.'' And, ``Silence has not been the answer, Chris. Give us
a seat at the table. McDonald's workers are ready to talk and
negotiate wages and benefits on the job, but you have got to
open that line for conversation. You have got to show up. If
you care truly about America and the community and what your
business brings to this country, then you should be open and
willing to discuss these things, and $15 should not be
negotiable. You should be able to pay your workers that.''
Chairman Sanders. Let me jump in because I want to hear
from Ms. Murray. But, Mr. Wise, thank you very much.
Ms. Murray, did you want to make a point about what you
would ask the CEO of Walmart?
Ms. Murray. Yes, I would definitely like to ask the CEO of
our company, ``Why not pay your workers $15 an hour?'' They
made $50 billion since this pandemic began. Our CEO says that
he is going to raise some of the wages to $15, $16, $17 an
hour. But I am here to ask him, ``Why are we on the front lines
and we are front-line workers putting our lives at risk every
day? Why are you not embracing your workers but keep cutting
our workers, keep cutting our hours?''
They talked about giving us a bonus. They took it right
back in the wages of taking--cutting hours from workers and
cutting days. To me, that is not telling the truth to America.
It is not telling them that they put $20 billion back to share
buybacks for their shareholders. I am a shareholder, and a lot
of us workers are shareholders. We have a lot of great workers
that work for their company. I do not understand why they are
not embracing them, lifting them up, giving them better health
care, giving us better policies that if we are sick, we can
take time off without being pointed out and being fired for
being sick, or due to bad weather.
You know, there are a lot of policies that I want Doug
McMillon to answer for me, like why would you slow-walk giving
people in the South less money than the people in New York City
or in D.C.? We did a study, and nowhere is $15 an hour enough
to rent a two-bedroom apartment.
So, you know, I am here to say, again, we cannot wait until
2025. We need $15 an hour now. We are living in poverty, and it
is not right that we work for the most richest company in the
world and we are still stuck at $11 an hour, which is poverty
wages.
Chairman Sanders. Ms. Murray, thank you very, very much.
Senator Graham.
Senator Graham. Mr. Chairman, I would like to yield to
Senator Braun. I think he has a scheduling problem, and I will
let him go, and I will get my time later.
Senator Braun. Thank you, Chairman Sanders. Thank you,
Senator Graham.
I recently come from this very discussion. I built a
business over 37 years before I became a Senator, and as you
can see, this discussion has got a dichotomy to it. You have
got Wall Street and big business on one side, and you have got
Main Street on the other side.
My question is going to be for Mr. Sobocinski here in a
moment, but the fact that he made the point earlier that we are
rushing this through in a one-size-fits-all, like the Federal
Government does on almost everything, it misses the mark. We
are made up of 50 States. We are made up of businesses that are
mostly small in this country. And this whole discussion of
trying to raise a minimum wage, all of us as business owners
aspire to do that, and we do it with all the tools we have to
keep good employees, to make sure they work for us for a long
time. And if you just look on Main Street, that is happening.
But what you do here when you have a mandate, the amount of
which is huge, it is going to mostly fall on the shoulders of
small business.
Costco was not mentioned. His salary I think was 7.9
million bucks. That seems like a bargain for big companies. If
you are going to go somewhere, maybe talk to that sector about
what you want to do to tout what you do within companies where
you have got so much room to spare.
Senator Graham hit it on the head. When you run a small
business, when you are on Main Street, you are turning the
lights on when you get there, off when you leave after a long
day. You treat your employees like family. And when you put a
mandate like this, it does a couple things. All the 1.4 million
jobs that are forecast to be lost are going to fall on the
backs of small businesses, many in the restaurant industry,
which has been the hardest hit during the whole COVID crisis.
And it just goes to show, when you try to do something
quickly--I am afraid this is the opening salvo, that we are
going to see many different policies that are not going to be
thought out, and we will pay the consequences for it later.
Indiana versus New York, places that have high costs of
living, they probably need a minimum wage above 15 bucks an
hour. But do not set it in a way that is going to start taking
States that have lower costs of living, that do not need that,
that got robust economies, because it is working with the
current framework in place where you have got maybe especially
a small business-friendly climate there. A lot of moving parts
to this discussion.
When you look at it, it also begs the question: How does a
place like the Federal Government that is running trillion-
dollar deficits expect to do anything to move the equation when
it comes to chain for more unemployment that would result and
doing anything that you need to do through the Federal
Government? It does not make sense. We need to slow it down. We
need to figure out how we pay for things as we go forward and
acknowledge that this is a big discussion, that the main result
is going to be you are going to hurt Main Street. Wall Street
is going to be unscathed by it because it could do a lot of
this if they just chose to.
I want this question to go to Mr. Sobocinski because, to
me, he reflects who will pay the price. The restaurant industry
has been hit so hard. I would like you to talk about the wages
that are currently being paid within your industry and if you
did again a minimum wage that does not reflect the tipped wage,
which in many cases for part-time work pays union wages, tell
the American public about that and what would be lost.
Mr. Sobocinski. So I think there are two ways I can answer
that. The first is what we are living through right now with
low revenues, and we are managing to see those lower revenues
to keep afloat and to stay alive. I mentioned earlier that we
are down 100 jobs from where we were a year ago today, so this
pandemic is--even with some of the recovery, we are down 25
percent of our jobs in order to manage to the lower revenue. So
it will work in the opposite. If our expenses go up, then we
have to eliminate those jobs because our revenue is going to
stay flat, or we are going to raise our prices, and we are
going to lose customers, especially right now while we are in a
pandemic.
When you talk about the tip wage, there is overwhelming
support from tipped employees--servers, bartenders, folks that
participate in tip pooling in these entry-level jobs. There is
overwhelming support, and they love the system the way it is
set up. Customer love the system the way it is set up. These
employees can earn as much as--in our case, we have several
employees full-time that have built their own little business
in their section of the restaurant and can make $30, $35 an
hour. Our average tip, when you spread it all out amongst our
food runners, bussers, all the entry-level plus service
bartenders, our employees are making $22 an hour, and the
national industry average is $19 to $25.
Senator Braun. Thank you. We are out of time, but I am glad
you were able to point that out. That would go when you try to
do a one-size-fits-all.
Thank you.
Chairman Sanders. Senator Whitehouse.
Senator Whitehouse. Thank you.
Mr. Holtz-Eakin, you say in your testimony that now is a
terrible time to raise the minimum wage. When would be a good
time to raise the minimum wage?
Mr. Holtz-Eakin. Senator Whitehouse, when the economy gets
back to full employment. We are well below full employment now.
We have millions of people out of work, many for long periods
of time, and so----
Senator Whitehouse. And when you say ``full employment,''
what do you meant?
Mr. Holtz-Eakin. When the unemployment rate gets down to
something like 5, 4, in the vicinity of where it was in 2019.
Senator Whitehouse. And in that environment you would
support this raise to the minimum wage?
Mr. Holtz-Eakin. I would not support this raise to the
minimum wage. I think the issues of different in cost of
living----
Senator Whitehouse. You would support some raise to the
minimum wage?
Mr. Holtz-Eakin. Yes.
Senator Whitehouse. You say that the consequences of this
minimum wage increase will be negative employment effects,
i.e., if we raise wages, we lose jobs. Correct?
Mr. Holtz-Eakin. I am worried about that, yes.
Senator Whitehouse. Is the corollary of that also true,
that if we lower wages, we will gain jobs?
Mr. Holtz-Eakin. In some cases, yes.
Senator Whitehouse. And if you follow that out to its
logical conclusion, if we paid no wages and lived in an economy
of indentured workers, we would gain even more jobs still.
Mr. Holtz-Eakin. No, the way to raise wages is to have
strong economic growth. At the end of 2019, we had record-low
unemployment across the labor force. Taking some of the pockets
that typically had high unemployment, we saw wages rising
rapidly, especially at the low end. I think the thing to be
concerned about here--and I----
Senator Whitehouse. I am just trying to figure out what
your principle looks like as you describe it. Your principle
looks like as you describe it is that if we raise wages, we
lose jobs; if we lower wages, we gain jobs. And I do not know
why that does not lead to the natural conclusion that the lower
the wages, the more the jobs.
Mr. Holtz-Eakin. So the question is----
Senator Whitehouse. Other than that you do not like that
end result.
Mr. Holtz-Eakin. The question is: What kind of a mandate do
you want to place on the private sector? Wages will rise with
growth. There is no question. We have seen that. That is the
best way to get raises, is to have strong economic growth,
rising productivity, increasing the standard of living. It is
the basic recipe that has made the United States the largest,
strongest economy the globe has ever seen. This is----
Senator Whitehouse. Do you agree that there should be a
minimum wage?
Mr. Holtz-Eakin. This is different. This is raising--this
is imposing a mandate on a business----
Senator Whitehouse. Yeah, I know.
Mr. Holtz-Eakin. --that does not have any additional
income. So you are just transferring income. There is no rising
wages. There is not additional output, additional income.
Senator Whitehouse. I guess I am trying to figure out where
the bottom point is for you. If we had no minimum wage at all,
would that increase jobs even more than lowering the minimum
wage would?
Mr. Holtz-Eakin. No. There is going to be national
competition for labor to begin with, and we are going to have
positive wages in the economy, and there is going to be a rise
in productivity. So zero is not ever going to----
Senator Whitehouse. So let the economic nature sort it out,
do not have a minimum wage?
Mr. Holtz-Eakin. You could have a minimum wage and it would
have no impact if it was below the----
Senator Whitehouse. Well, that is my point, and that would
be pointless, which is why we have a minimum wage, so that
people do not have to live in economic suffering in order to
let the economy and the state of nature have its way with them.
Mr. Holtz-Eakin. But the point, I think, is the one that
Professor Vigdor made, which is the minimum wage involves
trade-offs. You will take away opportunity from the less
skilled, the least educated, and the youngest, the teenagers,
to raise the standard of living----
Senator Whitehouse. Yes, I will concede that there are
trade-offs.
Mr. Holtz-Eakin. Yes.
Senator Whitehouse. And I think that the simple conception
that if we raise the minimum wage that will cost us jobs
misstates the nature of that trade-off and misunderstands the
suffering of people who are living in an unsustainable way, in
an undignified way on the existing wages. And that factor I
think belongs in this calculus, and particularly highlighted by
your concession that, by your own analysis, if we were to lower
the minimum wage, we would gain jobs. But even you are not
arguing that.
Mr. Holtz-Eakin. My concern is exactly the same as yours.
Those who are most likely to have their hours cut, not get
hired, are the least skilled, least experienced, least
educated, and most in need of help. And this move would make
them worse off, not better.
Senator Whitehouse. Well, I doubt that in a state of
economic nature those people are going to be well taken care of
in our economy.
Thank you.
Chairman Sanders. Thank you.
Senator Graham.
Senator Graham. Thank you very much, Mr. Chairman.
To Mr. Wise and Ms. Murray, thank you very much for your
work ethic. Mr. Wise, I know you started this journey in South
Carolina, and--are you with us, Mr. Wise?
Mr. Wise. Oh, yeah.
Senator Graham. Where are you from in South Carolina?
Mr. Wise. Columbia.
Senator Graham. Columbia, all right. Go Gamecocks.
What did your father--was he a military person?
Mr. Wise. Yeah, he worked at Fort Jackson. He was a cook in
the military. You know, he served abroad in Germany as a cook
in the military, and that was his duties.
Senator Graham. Did he retire from the military?
Mr. Wise. He did. He actually was--he got a little up in
age and had to leave, but he is now a hospital worker. He is
still in the workforce.
Senator Graham. The reason I want to say that, you have a
very hardworking family, and I want to recognize that. And the
same to you, Ms. Murray. You know, being 65 and working at
Walmart is no easy thing to do. So let us start with that
concept, that we want to reward hardworking people.
Doug, so this conversation with Senator Whitehouse I think
is interesting. The minimum wage was put in back in the 1930s.
Why?
Mr. Holtz-Eakin. It was part of the Fair Labor Standards
Act, and it was intended to provide a floor for wages and to
make sure that there was no incentive to hire children as well.
Senator Graham. Yeah, I think that is why it was put in,
exploiting underage kids.
Mr. Holtz-Eakin. Yeah.
Senator Graham. And back in those days, it was pretty tough
stuff. The minimum wage is part of American business culture.
Do you agree with that? The American business community has
accepted that the minimum wage is part of their business model?
Mr. Holtz-Eakin. Yes.
Senator Graham. And do you know of anybody that wants to
get rid of it?
Mr. Holtz-Eakin. No.
Senator Graham. Okay. So what we have got to do is find out
how to raise it without losing jobs and trying to create job
growth, not depress job growth.
Carl, are you there?
Mr. Sobocinski. Yes, sir.
Senator Graham. Okay. Well, I will be home. I am going to
head to your restaurant this weekend if I can get home. So you
have had a 25-percent decrease in revenue due to COVID?
Mr. Sobocinski. 35 percent year over year, 2020 versus
2019.
Senator Graham. Okay. Do you see it getting any better
right now?
Mr. Sobocinski. Not at the moment. January and February
started off on an even worse track. As you know down here, with
our nice climate, we are anticipating climbing out of this
around April 1st when things warm up.
Senator Graham. Okay. So you think 2021 is going to be a
tough year for you?
Mr. Sobocinski. Absolutely, without a doubt.
Senator Graham. Okay. Let us compare 2019. Was that a good
year before COVID?
Mr. Sobocinski. 2019 was our best year in the history of
the company.
Senator Graham. Okay. So the idea of raising the minimum
wage, if you did it maybe differently than we are proposing, is
that acceptable to you?
Mr. Sobocinski. Yes, sir. I tried to make that point
earlier, that this is not about not raising the minimum wage.
This is about that it is not a one-size-fits-all solution, and
a 107-percent increase----
Senator Graham. Right, okay. What percentage of your
business is college students--your employees?
Mr. Sobocinski. I do not have an exact number, but I could
pretty educatedly say a third of our workforce is high school
and college students working part-time.
Senator Graham. Okay. And on the top end, you have some,
you know, chefs and people who this is their career, right?
Mr. Sobocinski. Yes, sir.
Senator Graham. If we increase your cost at a time your
revenue is down, who suffers the most in your business model?
Mr. Sobocinski. The entry-level positions, those high
schoolers, those college students, those part-time workers. A
lot of the college students are trying to pay for college
education themselves and work while in college. So those would
be the first jobs to disappear.
Senator Graham. Well, let us pray for better days, and, Mr.
Chairman and my colleagues on the other side, Waffle House gave
me a plan to raise the minimum wage. I do not know if it would
be appealing to you, but count me in for the idea that we can
do this. I would just like to get the COVID in a little better
spot, and we will sit down and talk.
Thank you all very much. It has been a good hearing.
Chairman Sanders. Thank you, Senator Graham.
Senator Kaine.
Senator Kaine. Thank you, Mr. Chairman. Thanks to all the
witnesses.
I am just going to maybe take a minute to state a
proposition that I would like to hear any of the witnesses who
want to address it tackle. I sometimes get frustrated by
minimum wage discussions because the number is kind of
artificial. It is like debt ceiling limit. That is not really
meaningful. If you are talking about the debt, ratios are
meaningful, and I sort of feel the same way sometimes about
minimum wage discussions. Is it going be 15, be 11, be 16? The
number is not that meaningful. It is the policy that I think we
have to grapple with.
And so here is the way I have sort of developed to think
about minimum wage, and it is why I support the $15 proposal
because it is the only one that is on the table that meets my
philosophy or value. But I am going to posit the philosophy;
then I want to hear anybody address it however they want.
I think we should set a minimum wage so that a full-time
worker with two dependents could work that wage and not be
below the poverty level. That would be a philosophy, and then
adjust it periodically rather than to rate shock, which is
tough for business. If you only adjust it every 10 years, it
does pose challenges.
Right now an adult working full-time--and I think two-
thirds of people who work full-time for minimum wage are women.
An adult who works full-time with two dependents is
dramatically worse off than the poverty level. The poverty
level for three, a family of three, with an adult and two
dependents, is about 22,000 bucks. You work full-time for the
current minimum wage, I mean, you are way below that. You are
less than two-thirds of the Federal poverty level.
So I sort of believe why not kind of put our minimum wage
where our values are. We tell our kids hard work is important,
work hard, that is the key to success. If we tell people hard
work is important but we have a wage that says if you do work
hard full-time you are below the poverty level, then we are
lying, hard work is not important to us, because our values
would suggest that it is not.
So I have seen different proposals on the table. The one
that meets my objective is the $15 by 2025. I am not opposed to
some variations. I am not opposed to the idea of some regional
variations, and I also am not opposed to the idea of for
workers, young workers entering the market, maybe having, as
many States do and as the Federal Government does, too, some
lower wage for them to let them get their first job and learn
what the workforce is like for a limited period of time. But I
just want to get people above the poverty level, and if you
have full-time workers who are below the poverty level, then we
are lying to people when we tell them we value hard work.
So how about that as just a stated proposition? And I would
love to hear any witness address it. We should have a minimum
wage that if a full-time worker with two dependents worked
full-time, they would be above the poverty level. Anything
wrong with that idea?
Mr. Holtz-Eakin. So, if I could, Senator----
Ms. Lee. If I may?
Senator Kaine. Please, who was that? Was that Ms. Murray?
Chairman Sanders. That was Thea Lee.
Ms. Lee. Thank you, Senator Kaine, and thank you for your
question. We have a minimum wage so that workers will not be in
poverty, and the Economic Policy Institute has an amazing tool
on our website called the ``Family Budget Calculator.'' We have
calculated what is a modest but adequate standard of living for
ten different family types, and that is where we got the
estimate that even $15 an hour today is necessary for a single
worker without children. So I think what we can say is that $15
an hour is really what is needed for somebody to get to work
every day, to be able to pay for child care and transportation
and rent and food and health care and so on.
The $15 an hour national minimum wage is absolutely
affordable. It is affordable in the sense that the productivity
growth in the economy, that is, the hourly output of workers,
has increased. Workers are more educated. They are more
experienced than they were several decades ago. Therefore, they
can earn $15 an hour in a noninflationary way.
And so I would agree with you that we need to look at what
it costs to live, because it is not right that people work
full-time and they cannot afford their minimum but adequate
cost of living. This does not even include entertainment. It
does not include saving for retirement. It does not include
buying a house. It is really modest but adequate. Thank you.
Mr. Holtz-Eakin. So, Senator, you stated my position
perfectly. I agree with you completely. The question is: How do
you get there? You bought yourself a reading assignment. I
wrote up a proposal which does that by supplementing wages, not
mandating a minimum wage but by supplementing wages to make
sure that you are out of poverty at all times, regardless of
your family size. And that is in a structure similar to the
Earned Income Tax Credit (EITC), and that is a pro-work way to
get people out of poverty. The trouble with the minimum wage is
it ends up being anti-work in some circumstances, not
dramatically, not large, but for people who I worry a lot
about.
So I think you have got the right philosophy, but I think
this is the wrong way to get there.
Senator Kaine. My time----
Mr. Sobocinski. Mr. Chairman, if I may?
Senator Kaine. Please, if the Chair will allow. I am over
my time, but----
Chairman Sanders. Yeah, take a few more seconds here.
Mr. Sobocinski. This is Mr. Sobocinski. I would just like
to make a comment that every--there are so many different jobs
in America, and not every job is a head-of-household job. And I
like that term because I think it encourages people to work
themselves up and work their way up.
Mr. Wise, if you want to come back to South Carolina, you
have made an impression today, and you are underutilized, and I
am sorry that your employer does not recognize that. But we
would love to take you in South Carolina and put you in a
position where you had opportunity to grow. And I think
businesses that do that are the businesses that will succeed,
and that is how we fix America's wage problems.
Chairman Sanders. Okay. Well, thank you very much.
Senator Padilla.
Senator Padilla. Thank you, Mr. Chair. I wish we had an
item before us to vote on today because I cannot wait. But I do
want to share a couple of comments and observations from
today's hearing.
Just to reiterate some of what has been said before, I
associate myself with Senator Kaine's comments on the moral
imperative here, the value statement. Also to recognize, as you
have articulated, Mr. Chairman, you know, we are discussing and
debating a minimum wage, which in far too many locations in the
country is not a living wage or a livable wage.
We have touched on the dynamic between the CEO or other
executive compensation, which is not only multiple but
multiple, multiple times, sometimes exponential times the wages
or salaries earned by entry-level workers in so, so many
industries.
That, by the way, was an issue and I think a problem even
prior to COVID, so to shed, well, we cannot do this, it is
going to be hard because of COVID, COVID, COVID, I think is in
many cases a false argument because these dynamics we were
struggling with prior to the pandemic. They have been
exacerbated by the pandemic, if anything.
Recognition that in the restaurant industry and others as
well--it is not exclusive to the restaurant industry. There are
so many high school and college students that make up a chunk
of the workforce. It is one thing for a young person to want to
get that first job, second job, for the sake of experience,
building the resume, upward mobility. It is a whole different
ball game if you have to work 10, 20, 30 hours a week or more
because you are trying to put your way through college, right?
College affordability, Mr. Chairman--and I know you know--
is a whole other conversation that we need to be having
urgently, and given the ratios of employees made up of high
school and college students in so many industries, it is
clearly not separate and apart from the issue before us.
I also want to point out that, you know, the stress and the
anxiety of so many parents struggling to make ends meet, let
alone that of not being able to provide for your children and
your family in the way that parents would like to, starting
with meeting the basic needs, again, a dynamic that existed
prior to the pandemic, has only been exacerbated by the
pandemic. And I do not think it is lost on any of us the cruel
irony of the metrics that we sometimes refer to when it comes
to the state of the economy, both part of the pandemic and
especially since the pandemic, some people are pointing to the
Dow Jones, record Dow Jones. But at the same time, we see lines
and lines at food pantries across America.
So let us be mindful when we look at economic indicators
and whether the economy is doing well or not. Even in good
times prior to the pandemic, based on the Dow Jones, you had
far too many people both unemployed and underemployed, again,
exacerbated by the pandemic.
We have talked about those earning less and their
dependency on social services. I want to call special attention
to poverty, even when you are working, as trauma, detrimental
not just to physical but to mental health, the stress, anxiety,
depression, desperation that comes from not being able to make
ends meet easily, even when you are working full-time. Again,
something that existed prior to the pandemic, only exacerbated
by the COVID-19 pandemic.
So I do have two questions I want to pose for discussion to
both Mr. Wise and Ms. Murray. I have about a minute left. Folks
have talked about what a difference a $15 minimum wage would
mean to them. So the quick question--or the quick answer to a
question is: What would you do with that wage increase? Would
you invest in stocks? Or would you spend it? One of the big
conversations today is what does it mean for small business.
What it means for small business, I would imagine small
businesses would be helped by folks having more spending money
in working-class communities. And the others, if there is just
any additional experiences to share of what you have had to do,
what you have had to sacrifice to make ends meet or what you
maybe have been on the verge of that you never would have
contemplated before in your life, because I know my family
has--when I was growing up, either through additional----
Chairman Sanders. I am afraid that if you want them to
answer the question, they have virtually no time at all. So let
me turn it over to them. Mr. Wise, Ms. Murray, very briefly.
Mr. Wise. Well, even though me and Ms. Murray--we work for
the two biggest corporations on the face of the planet,
McDonald's and Walmart. You know, it is not lost on me the
small mom-and-pop businesses, especially in my community. You
know, on my way to work, when I pass Rosie's Flower Shop, Sam's
Shoe Store, not Costco, not Amazon, not Walmart, but just the
shops in my community that I cannot even on Valentine's Day
that just passed stop at the local flower shop and buy flowers
for my wife. I cannot stop and buy new shoes for my kids
locally in the community because low-wage workers like me just
do not have the funds to pour into our community. And if we had
$15 an hour, that is a 365-day-a-year spending package. Fifteen
is COVID relief. I would be able to buy my wife flowers. If in
Greenville, South Carolina, I would be able to take my family
out to Carl's restaurant. We simply do not have the funds to
even do that, have a fun night with the family, buy new shoes,
buy flowers.
You give low-wage workers money, we are not going to buy
beach-front property, invest in stock. We are going to pour it
into the economy, help grow it, and help grow jobs as well.
Cynthia?
Chairman Sanders. Okay. Thank you very much.
Senator Lujan.
Senator Lujan. Thank you so very much, Senator Sanders, for
this important hearing, and Ranking Member Graham and to all of
the witnesses that are here before us today.
Ms. Lee, more than four in ten children live in a household
struggling to meet basic expenses, and between 7 million and 11
million children live in households in which their parents are
unable to afford even enough food. Yes or no, does the Economic
Policy Institute estimate that a $15-an-hour minimum wage would
lift wages for 32 million Americans?
Ms. Lee. Yes.
Senator Lujan. And is it true that front-line and essential
workers would make up 60 percent of those that would benefit?
Ms. Lee. That is exactly right, Senator.
Senator Lujan.. And what percentage of workers that would
benefit from a minimum wage increase have children?
Ms. Lee. I think 28 percent of those who would benefit from
the $15 minimum wage by 2025 have children.
Senator Lujan. That is my understanding as well. And what
would the increase in the minimum wage mean for the economic
security of these families and children?
Ms. Lee. This would be a life saver. It is about $3,300 per
year, and that is enough to make a difference. And I just want
to reiterate what Terrence said, which is that during the
pandemic is exactly the time we need to raise the minimum wage
because this recession hurt low-wage workers so badly. What we
need to do to get out of the recession is put money into the
pockets of people who will spend it. That is what the answer is
for small business and for big business and for robust economic
recovery, but particularly for those workers who are trapped in
these low-wage jobs. They need to have the economic security
for themselves and for their children, and that is good
economics. That is not just good morality; that is good
economics. That is what is wrong with the economy: a lack of
purchasing power and too much inequality, and the minimum wage
increase would help address that.
Senator Lujan. I appreciate that.
Mr. Wise, I very much appreciated your responses to the
number of questions that you fielded today, and I just thank
you for being here and sharing your story and making sure that
you are ensuring that the rest of the country will hear your
story and your call, sir.
Mr. Wise, the question that I have for you is: How would
raising the minimum wage change the lives of you and fellow
workers, especially those raising children?
Mr. Wise. Well, you know, it would make us feel more like
humans, you know, more like human beings. It would not make me
rich. I would not all of a sudden be a millionaire. It would
just make life comfortable. And like we say, you should not
have to work in the richest Nation on Earth and be homeless,
have to skip meals. These are things that would be off the
table for millions of low-wage workers, not having to juggle
bills, worry about paying my daughter's senior dues. She is
graduating this year. Just the little things in life that we
take for granted. And, you know, folks think you work full-time
in this country, life must be great. Well, actually, it is not,
and that is what we have got to address.
So when you give my family $15 an hour, you are not only
helping me, my community, our country, but you are just making
the promise that I said earlier, that America make each and
every one of us a reality.
Senator Lujan. I appreciate that, Mr. Wise. You know, it is
the dignity of a paycheck. You know, I was raised in a
household where my dad was a union iron worker. He was also a
State representative later on, and, you know, he got involved
in public service. My mom retired after 33 years from the local
public school district. And, you know, when I got elected to
the United States Senate, sir, I was surprised that not all of
my colleagues had gone to Head Start. I thought all of us went
to Head Start. I forget that you have to qualify for Head
Start. And when you qualify for Head Start, it means that you
probably do not make so much money as well. These programs make
a difference in people's lives.
I understand there are two of us now in the United States
Senate that attended Head Start, myself and United States
Senator Raphael Warnock as well. So we might have to start that
Head Start Caucus. But the story that you just shared with me,
sir, the dignity of being seen and treated like a person and
being able to provide for our families, that is what this is
about. And I just appreciate, again, you being here today, Mr.
Wise. Congratulations to your daughter on that graduation, and
God willing, one of these days I look forward to maybe meeting
you in person, shaking your hand, and learning more from you.
Chairman, thank you for the time today and for this
important hearing, and I yield back.
Chairman Sanders. Thank you very much, Senator.
A vote has been called at 12:10, so the vote has begun
already. But what I would like to do is now invite up our last
panelist, who is Cindy Brown Barnes, who is the Director of
Education, Workforce, and Income Security at GAO. Ms. Barnes
joined GAO in January 1990. She oversees work on programs and
policies supporting Americans of all ages.
Ms. Barnes, thank you so much for being with us.
STATEMENT OF CINDY BROWN BARNES, MANAGING DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Ms. Barnes. Thank you. Chairman Sanders, Ranking Member
Graham, and members of the Committee, thank you for the
opportunity to discuss our October 2020 report that found that
millions of wage-earning American adults participate in Federal
health care and food assistance programs.
As you know, Medicaid and the Supplemental Nutrition
Assistance Program, or SNAP, two of the largest Federal social
safety net programs, provide health care and food assistance to
low-income individuals and families near and below the Federal
poverty line, including many working adults whose low incomes
make them eligible for these means-tested programs.
We previously reported that the characteristics of the low-
wage workforce had changed little in recent decades.
Specifically, low-wage working adults consistently comprise
about 40 percent of the U.S. workforce, their limited work
hours likely compound their income disadvantage, and
educational gains do not always result in higher wages.
Moreover, we found that the percentage of working families
in poverty has remained relatively constant, and that poverty
is most prevalent among families with a worker earning the
Federal minimum wage or below.
My testimony today will cover: one, what is known about the
labor characteristics of wage-earning adult Medicaid enrollees
and SNAP recipients; and, two, where these individuals work.
First, I want to summarize what we found at the national
level. From our analysis of 2018 census data, we found that
millions of wage-earning adults who were enrolled in Medicaid,
were living in households that received SNAP food assistance,
shared common labor characteristics, including working
predominantly for private sector employers, mostly working
full-time work schedules, and being highly concentrated in five
industries and occupations. Specifically, an estimated 12
million adults enrolled in Medicaid and 9 million adults living
in households receiving SNAP benefits earned wages in 2018.
More than two-thirds of these workers in each program worked 35
hours or more per week, and the majority of them worked full-
time hours 50 weeks or more in 2018.
About 90 percent of these wage earners worked in the
private sector in 2018. About seven in ten of these wage-
earning adult Medicaid enrollees and SNAP recipients worked in
five industries and occupations. These workers were more
concentrated in the leisure and hospitality industry, which
includes lodging and food service, than otherwise similar
workers. Similarly, these workers worked in one of the top five
occupations, which include sales, food preparation, and
building and grounds cleaning and maintenance.
Next, I would like to highlight what we found when
examining employers in selected States from February 2020, just
prior to the onset of COVID-19. These data from six State
Medicaid agencies and nine State SNAP agencies provided insight
into where adult Medicaid enrollees and SNAP recipients work.
Specifically, most of these working adults work for private
sector employers, restaurants and other eating places--a
category that includes sit-down restaurants, fast-food
franchises, and pizza shops--employed the largest percentage of
these individuals in these States. Department stores, grocery
stores, employment service agencies, and general merchandise
stores such as big-box and discount stores also feature
prominently across the States we examined.
Public sector employers, including Government entities,
such as Federal, State, tribal, and local, and public
university systems also employed Medicaid enrollees and SNAP
recipients in most of the States that provided data. And the
nonprofit sector--hospitals, disability service organizations,
and charitable organizations--were among the leading employers
of these workers.
Finally, many adult Medicaid enrollees and SNAP recipients
were self-employed. For example, babysitting, cleaning
services, hair stylists, landscaping, and construction were
frequently cited sources of self-employment income in these
States.
In conclusion, our report shows that, irrespective of the
overall economy's health, there remain millions of low-income
workers who contribute to the workforce by working full-time
jobs while raising their families. Unfortunately, they still
cannot make ends meet. Federal social safety net programs like
Medicaid and SNAP offer such families a lifeline and play a
vital role in stemming poverty.
Chairman Sanders, Ranking Member Graham, and members of the
Committee, this concludes my prepared remarks. I will be
pleased to respond to any questions you may have at this time.
[The prepared statement of Ms. Barnes appears on page 77]
Chairman Sanders. Well, Ms. Brown Barnes, thank you very
much for your very important work.
Let me ask you a brief question. Is it true that among the
15 agencies you reviewed in the States that you looked at,
Walmart was in the top four employers of program beneficiaries
in each and every one?
Ms. Barnes. Yes, that is true.
Chairman Sanders. Is it correct that McDonald's was a top
five employer of employees receiving Federal benefits in 14 of
the 15 agencies?
Ms. Barnes. Yes, that is also true.
Chairman Sanders. You were unable to look at 50 States. You
looked at how many States?
Ms. Barnes. We looked at 11 States, but it included 15
State agencies, so there were a couple of States that also
provided us data about Medicaid enrollees as well as the SNAP
recipients.
Chairman Sanders. Are you able to come up with any estimate
as to how much in tax-supported programs low-wage workers
nationally receive?
Ms. Barnes. We were not able to come up with that estimate
on a national level. This is the data that we set out to
collect, but it is just not collected.
Chairman Sanders. You just did not have the information to
make that estimate?
Ms. Barnes. That is right.
Chairman Sanders. Okay. Well, I think the bottom line of
your report is that we have a whole lot of people who are
working full-time, who are working hard, but need to get public
assistance in order to take care of themselves and their
families. Is that kind of the bottom line?
Ms. Barnes. Yes, that is one of the bottom lines.
Chairman Sanders. Okay. Senator Graham.
Senator Graham. Thank you, Mr. Chairman. This has been a
very good hearing. I have enjoyed it. Thank you.
Do you agree with the CBO estimate that raising the minimum
wage as being proposed would result in 1.4 million jobs being
lost?
Ms. Barnes. We have not looked at the minimum wage proposal
or studied the CBO report.
Senator Graham. Okay, so you have not looked at that. What
percentage of businesses in America employ less than 50 people?
Ms. Barnes. What percent?
Senator Graham. Yeah, of American employers hired less than
50 people.
Ms. Barnes. I do not have that because ours focused on
those employed----
Senator Graham. Yes, ma'am. Do you know what percentage of
the American business community is classified as ``small
business''?
Ms. Barnes. I do not. We did not look at that specifically
in this study.
Senator Graham. Thank you. Thank you very much.
That is all. Thank you.
Chairman Sanders. All right. I do not believe that there
are any other Senators who wanted to ask questions. Anybody
else there?
All right. If not, this hearing is adjourned, and we thank
all of the guests who joined us today. Thank you very much.
Ms. Barnes. Thank you.
[Whereupon, at 12:23 p.m., the Committee was adjourned.]
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