[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

                              ----------                              

                      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?

                              ----------                              

                      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.]

         ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD

    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]

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