[Congressional Record Volume 141, Number 32 (Tuesday, February 21, 1995)]
[House]
[Pages H1954-H1955]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              THE MINIMUM WAGE AND REAL WORLD EXPERIENCES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey [Mr. Saxton] is recognized for 5 minutes.
  Mr. SAXTON. Mr. Speaker, I would like to tell you about a letter that 
was sent to me from Mr. Edward Satell. Ed is the president of 
Progressive Business Publications, a small company in Pennsylvania that 
publishes newsletters for business executives.
  The letter Ed sent to me was dated August 1993 and was addressed to 
Professors David Card and Alan Kruger of Princeton University, and 
interestingly associates of Secretary of Labor Reich. The letter was a 
response to a New York Times article which hailed Card and Kruger's 
studies on the minimum wage.
  And, I might add, these are the same studies conducted by the same 
professors that the Clinton administration has been glorifying in their 
efforts to push a higher minimum wage through this House.
  In the letter, Ed noted that the 6 branches of his company provide 
about 300 full-time summer jobs to college students in the greater 
Philadelphia area.
  He said he was thinking about setting up two offices in south Jersey, 
where my constituents live, but instead he decided to open a couple of 
more offices in Pennsylvania.
  You see, New Jersey had just increased their minimum wage and kept 
these jobs away from my constituents.
  I am going to read some excerpts from Ed's letter that demonstrate 
how a successful entrepreneur can expand his business and reward his 
workers without government intervention.
  He said,

       Our employees have income incentives in addition to the 
     base salary. The result is the vast majority make 
     substantially more than the minimum wage. But the minimum 
     wage is important to us as it sets the base from which the 
     incentives begin.
       We give three incentives, all of which work well:
       A. 25 cents per hour if the employee comes to work on time 
     each day during a given week. With my workers this incentive 
     influences the work ethic and helps productivity.
       B. 50 cents per hour [is added] if the employee works for 
     ten weeks like they agree to do at the time they are hired. 
     This cuts down on turnover and adds to productivity.
       C. Performance bonuses that can add an additional $6.50 per 
     hour [think of it, a total of $11.50 per hour].

                              {time}  2200

  He goes on to say: ``If the minimum wage were higher, it would have 
to be offset by lower incentives or fewer workers or both.''
  Madam Speaker, Ed has shown us exceptional creativity in increasing 
the productivity of your business by rewarding your best workers and 
helping them develop a strong regard for their work. I only wish that 
New Jersey's minimum wage hadn't inhibited our ability to attract these 
jobs to southern New Jersey.
  By the way, since Ed sent his letter to Professors Card and Kruger, 
not even 2 years ago, his business doubled its employment, from 300 to 
600 employees. I guess I should add that I wish New Jersey's minimum 
wage hadn't inhibited Ed's jobs from coming into my State.
  Ed's experience supports the bulk of scholarly evidence. The losses 
in jobs incurred by an increase in the minimum wage are concentrated 
among young, and low-skilled workers.
  Ed also points out that Card and Kruger's study was with the fast-
food industry, an industry that is ``a rather healthy, fundamental, and 
pervasive business.'' He adds, ``This distorts the picture. I don't 
think the results would be the same with businesses that are not as 
fundamental and are thus more optional.'' Business, ``like mine,'' he 
said.
  What is more amazing, Madam Speaker, is that Card and Kruger seem to 
acknowledge these facts. In a reply to Ed's letter, they admit that 
there are job losses which accompany minimum wage increases.
  Then they thanked him for sharing his real world experiences.
  Well, I'm no Princeton economist, but I do know that in business, 
there are nothing but real world experiences. It's pretty sad that 
these two Ivy League professors, trapped in the ivory tower, have 
completely lost touch with reality.
  They make no sense to me at all.
  They admit that job losses result from minimum wage increases, but 
then they turn around and insist that their narrow, error-laden studies 
about fast-food restaurants in New Jersey demonstrate that a minimum 
wage increase results in job gains. What's even 
[[Page H1955]] sadder is that the Clinton administration is buying it.
  Madam Speaker, with a national minimum wage increase, Ed Satell won't 
have the choice between New Jersey and Pennsylvania any more and many 
of his young workers will just be out of luck.


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