[Congressional Record Volume 162, Number 66 (Thursday, April 28, 2016)]
[House]
[Pages H2095-H2102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MINIMUM WAGE
The SPEAKER pro tempore (Mr. Walker). Under the Speaker's announced
policy of January 6, 2015, the gentleman from California (Mr.
DeSaulnier) is recognized for 60 minutes as the designee of the
minority leader.
General Leave
Mr. DeSAULNIER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks and
include extraneous material on the subject of my Special Order.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. DeSAULNIER. Mr. Speaker, I rise today to support the Raise the
Wage Act that was introduced almost exactly 1 year ago today.
Raising the minimum wage is critical to addressing income inequality
in the United States, one of the most pressing issues facing our
Nation. But the majority has not even called a hearing on this issue.
Yesterday, the Committee on Education and the Workforce Democrats
held our own forum on this issue, during which we considered the
evidence in support of raising the minimum wage. We heard from business
leaders and economists that raising the wage will reduce workforce
turnover, stimulate consumer spending, and grow jobs.
The evidence is absolutely clear that raising the minimum wage will
give 35 million workers a raise and lift 4.5 million Americans out of
poverty. It is also abundantly clear that raising the minimum wage will
benefit businesses in the U.S. economy. That may be why in a recent
poll from Republican pollster Frank Luntz, 80 percent of business
executives supported raising the minimum wage.
The record could not be more clear: raising the minimum wage is good
for workers, businesses, and the American economy. That is why today I
include in the Record testimony from yesterday's Member forum on the
Business Case for Raising the Federal Minimum Wage, presented by David
Cooper of the Economic Policy Institute; Sherry Deutschmann of
LetterLogic, Inc.; Scott Nash of MOM's Organic; and Carmen Ortiz Larsen
of AQUAS, Inc.
Written Remarks from Carmen Ortiz Larsen, President of AQUAS Inc. and
Chair of the Board of the Hispanic Chamber of Commerce, Montgomery
County, MD
Submitted to the House Education & the Workforce Committee--Minority
Panel on the Business and Economic Case for Raising the Minimum Wage,
April 27, 2016
My name is Carmen Ortiz Larsen, and I support an increase
in the Federal minimum wage to at least $12 by 2020; I
support the Raise the Wage Act. I am the owner and President
of an Engineering and Information Technology firm called
AQUAS Incorporated. I am also the Chair of the Board of the
Hispanic Chamber of Commerce of Montgomery County, Maryland.
AQUAS Inc. staff includes professionals, administrative
personnel, and field technicians. Our lowest wage is $14 an
hour. Our plan is to have the minimum wage in our workplace
at $16/hour within the next 18 months.
Being a small business owner is hard work. Small business
owners have to be frugal, prudent, smart and alert to
opportunities, navigating cash flow ups and downs, and
managing cost increases and price competitiveness.
Controlling costs is essential to ensure sufficient margins
for funding growth, long-term success and customer
satisfaction. If I don't control costs wisely, though, the
dollars I save in one area of the business could cost me more
in other areas.
Some years ago we sought to keep costs down by using the
lowest legal minimum wage as compensation for clerical and
field staff. We found that these workers had a greater
incidence of health issues, absenteeism and turnover. The
cost of replacing and retraining staff outweighed any savings
in keeping their pay rate low.
We found that it was a smarter business policy to raise the
hourly rate for the lower paid jobs. The results were better
staff morale, increased loyalty and better service to the
customer. We gained a more stable workforce and improved
performance.
Markets are competitive, and every year costs go up. We
have to face yearly increases in cost of insurance, supplies,
advertising, facilities, services. We take this for granted
as the cost of doing business. It should be no different to
expect wage increases, especially for the lowest paid
workers. All employees deserve a wage that is sufficient to
live without the anxiety of being left without food or
shelter.
AQUAS does not believe that the answer to cost management
or competitive challenges lies in paying our staff poverty
wages; this simply diminishes the quality and ongoing success
of our enterprise. Instead, we remain competitive through
efficiencies and quality improvements, through innovative
ways to maintain reasonable profitability and improve the
customer's experience. Our staff is part of who we are as a
company, and they deserve to make ends meet.
We look to you as elected officials to set boundaries that
cut across special interest areas, to make those tough
decisions that create a delicate balance between an
unrestrained commercial interest and a level
[[Page H2096]]
playing field for businesses and acceptable conditions for
individual sustainability. The current minimum wage adjusted
for inflation is lower than it was in 1950. This is simply
untenable and should be unacceptable in our country.
The current $7.25 an hour does not provide minimum wage
workers with a wage with which they can live with dignity,
have a decent home, nutritious food, and a reliable way to
get back and forth from work, without worrying about whether
or not they will lose their job or their family if they
can't. The minimum wage is so low that workers have to seek a
second job or public assistance of one kind or another. I
want to contribute to my community--not burden it by paying
wages my employees can't live on. Raising the federal minimum
wage is long overdue.
In my community engagement as a business owner and as the
Chair of the Board of the Hispanic Chamber of Commerce, I see
an awful lot of the consequences of poverty wages in the
community; I see families that fall apart and struggle to
stay healthy, with each adult working more than one job, and
still having a hard time making ends meet. These people are
our consumer base, they are our neighbors, they buy from us,
they vote for you. I don't want my government supporting
policies like an inadequate minimum wage that promote
poverty, weaken consumer demand, and ultimately hurt my
business and other businesses. We have to set a reasonable
wage floor.
I am here today to testify on behalf of a decent minimum
wage that will reinforce employee productivity and ensure
that when an employee goes home after work, they have the
time, energy and enthusiasm to give to their families and
community without fear, without anxiety and without hunger.
Thank you.
____
Written Remarks from Scott Nash, Owner, MOM's Organic Market
Submitted to the House Education & the Workforce Committee--Minority
Panel on Business and Economic Case for Raising the Minimum Wage April
27, 2016
My name is Scott Nash. I am the founder and CEO of a
grocery chain called MOM's Organic Market. With an investment
of $100, I started MOM's in 1987 out of my mother's garage in
Beltsville, MD. We currently have 15 locations in Virginia,
Maryland, Pennsylvania and the District of Columbia. By the
end of this year as we expand into New Jersey and elsewhere,
we will have 18 stores and more than 1,000 employees. Our
annual sales are more than $200 million. We support raising
the federal minimum wage to at least $12 by 2020.
In 1980, just as I turned 15, I took my first part-time
job. I ran the fry station at Burger King for $3.10 per hour.
That's actually more than today's minimum wage adjusted for
the cost of living. I was surrounded by full time adult co-
workers--some with children--and they relied on their
paychecks to survive. Most of my coworkers had good
attitudes, even though every day their lives were permeated
with struggle and stress.
A minimum wage that is too low puts millions of people
between a rock and hard place. Over the years, we at MOM's
have gradually increased our hourly minimum wage from $8.00
to $11. I'm happy to report that after multiple raises to $9,
$10, and $11, MOM's is the most profitable we've ever been.
All good businessmen know that their most important asset
is their employees. At MOM's, we consider paying a higher
wage not a burden, but rather a high-return strategic
investment. Our workforce is more productive, engaged and
dedicated. They are happier, have less stress in their
overall lives, and feel appreciated and secure.
With this higher employee morale and strengthening of our
corporate culture, our retention rates have skyrocketed over
the years, which has driven down our training and hiring
costs. Studies show that the costs of hiring and training are
substantial--thousands of dollars per employee. An employee
generally doesn't operate at full efficiency until he or she
has been working for at least 5 months. Longer term employees
also offer more expertise and better customer service, which
helps increase revenues. Customers love shopping at places
with engaged employees.
Raising the minimum wage is smart business strategy. I
can't hire anyone unless people buy our products. People like
me start companies to fulfill the needs and desires of
consumers. These needs and desires are not created by
entrepreneurs; rather they are fulfilled by entrepreneurs.
When workers' purses and wallets have more money in them,
they spend more at local businesses. Increased consumer
spending means more entrepreneurs start companies, the
economy grows, and more wealth is created at all levels. One
of the best quotes I've heard on job creation was, ``For a
CEO to take credit for job creation is like a squirrel taking
credit for evolution.'' Contrary to what some CEOs claim,
raising the minimum wage will actually create jobs, not cut
them.
Many full-time hourly workers who are paid the minimum wage
are also dependent on government subsidies, as the current
minimum wage is not a living wage. A low minimum wage
essentially amounts to a tax-payer subsidy for incredibly
profitable large corporations and industries. Want to see
unnecessary government spending go down, raise the minimum
wage!
As a member of Business for a Fair Minimum Wage, I can
share that raising the minimum wage has strong support from
the business community. To summarize, raising the minimum
wage will increase American productivity, decrease the number
of full-time workers on government entitlement programs, grow
consumer spending and the economy, increase wealth, and
improve the lives of hard working people. It's time we raise
the minimum wage to $12 by 2020.
____
WRITTEN REMARKS FROM SHERRY STEWART DEUTSCHMANN, FOUNDER AND CEO,
LETTERLOGIC, INC. AND COUNCIL MEMBER, NATIONAL WOMEN'S BUSINESS COUNCIL
Submitted to the House Education & the Workforce Committee Minority
Panel on the Business and Economic--Case for Raising the Minimum Wage,
April 27, 2016
Representative Scott, thank you for inviting me to speak
today. It is an honor.
My name is Sherry Stewart Deutschmann and I am the founder
and CEO of LetterLogic, a small business in Nashville, TN. I
am also a member of the National Women's Business Council, a
small group of female business leaders whose role is to
advise the Small Business Administration, the President, and
Congress on issues related to female entrepreneurship.
Please allow me to share some basic background information
on myself and my business. In 2002, as a single mom with only
a high-school education, I cashed in my 401k and had a week-
long yard sale to raise the capital needed to start my own
company, LetterLogic, in the basement of my home. That bet on
me turned out to be a good one because my company quickly
outgrew my basement and is now a $36 Million company. Indeed,
our growth has enabled us to be recognized by INC Magazine as
an INC 5000 company for nine consecutive years, an honor
bestowed upon the fastest growing privately held companies in
the US.
My company processes and delivers patient billing
statements for hospitals nationwide, doing so in both
traditional print/mail formats and also electronically.
Though our business has a high-tech component, most of our
jobs are in the factory, where our employees operate
machinery that prints, folds, inserts, and then sorts over
235,000 bills each day. These positions could easily be
filled at the minimum wage, which is $7.25 an hour in
Tennessee. However, our entire business model was built on my
belief that I could build a better company if I took
extraordinary care of the employees. I believed that well-
cared for employees could better focus on turning out a high
quality product and impeccable service, and their loyalty and
dedication would create a corresponding loyalty among our
clients. And, I believed that a loyal client base would
happily pay a higher price for the best service.
Though we've always paid the highest wages in our industry,
until a few years ago our entry-level pay was $12 an hour. At
that time, we began looking at our employees and trying to
understand the kind of life we were enabling them to create,
and as our ``litmus test'' we used the following baseline:
``If the two lowest-paid employees of LetterLogic got
married, what kind of housing could they afford? Could they
afford to start a family? What schools would their children
attend? How much of their income could they save?'' And, at
that point, we raised our starting wage to $14 an hour, and
then just a few months later, we raised it to $16.
In the months since we increased our minimum starting wage
from $12 an hour to where it is now at $16 an hour, my
company has grown from annual revenues of $27.5 Million to
$36 Million, 25% growth over a 27-month period. But what
happened to the bottom line is even more striking. In that
same time frame, our net profit increased 300%. Yes, when we
increased our minimum starting wage from $12 an hour to $16
an hour, our revenue increased by 25% and our profit margin
tripled. Yes, we made other smart business decisions that
helped us achieve those results, but we believe that putting
the needs of the employees above all else was a major
contributor.
Moreover, my fast-growth company has zero debt--also a
factor we attribute to the financial results of paying our
employees fairly.
We are confident that our results are duplicable, that
putting the needs of the employees first is a great business
model. During the last three years, we've polled our clients
bi-annually and they express their happiness and loyalty when
100% of the respondents say they'd recommend us, and 99% say
they rank our service as Excellent or Good. But they
DEMONSTRATE their loyalty by staying with us. Indeed, over
the last three years, our revenue churn rate has been only
3.2%.
I'd also like to touch briefly on how a higher minimum wage
affects the local economy by sharing the story of Kim, a
woman we hired a few years ago. She says this is the first
workplace in her life that she is making enough money that
she has to work only one job. She is now able to fully commit
her energy and attention to her job at LetterLogic, taking
great care of our customers and better care of her family.
And, she left an open position for someone else to fill.
From my experience operating a small business, I can attest
to the value of paying a living wage. When employees are paid
a wage they can live on, they are better able to focus on the
demands of their jobs. The
[[Page H2097]]
quality of the goods and services they create are much better
and build customer loyalty to the point where the company can
be more profitable and sustainable.
When I pay a starting wage of $16 plus benefits my
employees have more money to spend at other businesses. The
very least other businesses can do is pay a wage that allows
their employees to afford the basics.
My business can set a good example, but I can't do it
alone. The businesses with me in Business for a Fair Minimum
Wage can't do it alone. The federal minimum wage, which
Tennessee follows, has not been raised since 2009.
Increasing the minimum wage to $12 by 2020, as called for
in the Raise the Wage Act, is an overdue step in raising the
floor for businesses, communities and our economy. Raising
the minimum wage will increase productivity and reduce the
costly turnover that plagues so many short-sighted low-wage
businesses. It will boost sales by putting more money in the
pockets of workers who most need to spend it.
Raising the minimum wage is good for business!
____
The Impact of Raising the Federal Minimum Wage to $12 by 2020 on
Workers, Businesses, and the Economy
Testimony before the U.S. House Committee on Education and the
Workforce Member Forum
(By David Cooper, Senior Economic Analyst, Economic Policy Institute,
April 27, 2016)
Ranking Member Scott, members of the committee, and Members
of the Democratic Caucus, thank you for inviting me to speak
with you today. My name is David Cooper. I am the Senior
Economic Analyst at the Economic Policy Institute (EPI), a
nonpartisan, nonprofit research organization that focuses on
improving the economic conditions of low- and middle-income
workers and their families.
I am going to speak today about the appropriateness of a
$12 federal minimum wage in 2020, and what the research tells
us about the effect of raising the minimum wage on workers,
businesses, and the economy.
First, it cannot be emphasized enough that the current
federal minimum wage of $7.25 is incredibly low by every
relevant benchmark. In 1968, the high point of the federal
minimum wage in inflation-adjusted terms, the minimum wage
was equal to roughly $10 an hour in today's dollars. (Using
the Bureau of Labor Statistic's longest-running measure of
inflation, it was worth $10.95 in today's dollars; using the
Bureau's current method for measuring inflation, it was worth
about $9.60.) This means that minimum wage workers today are
paid between a quarter and a third less than what similar
jobs paid almost 50 years ago, depending on how you measure
inflation.
As a consequence, the majority of low-wage workers in
America today must rely on federal and state public
assistance programs in order to afford their basic needs: 53
percent of workers earning less than $12 an hour rely on some
form of means-tested government assistance--such as food
stamps, Medicaid, refundable tax credits, and housing and
energy subsidies. The federal government spends over $78
billion dollars each year to support the families of workers
earning less than $12 an hour, and this is undoubtedly an
underestimate because it does not include the value of
Medicaid or premium subsidies in healthcare exchanges. To be
clear, these dollars are going to workers and families who
desperately need this support and if anything, our anti-
poverty programs need to be strengthened and expanded. Yet
there is considerable savings to be had in these programs if
businesses were simply held to the same standard to which
they were held in the 1960s. In a paper EPI released last
year, we estimated that federal antipoverty programs would
save $17 billion annually if the minimum wage were raised to
$12 by 2020. That very savings could be used to strengthen
government's antipoverty tools.
The current minimum wage is also exceptionally low relative
to the pay of typical workers. In the 1960s, the minimum wage
was equal to just over half of the median full-time wage in
the United States (between 52 and 55 percent of the median,
depending upon how one measures wages). Today, the federal
minimum wage is equal to roughly 36 percent of the median
wage. This means that someone working at or near the minimum
wage is much farther away from a middle class job than
similar workers a generation ago. Sometimes it is said that
minimum wage jobs are just starter jobs for young people
entering the labor force. First of all, we know that is not
true--the average age of workers that would get a raise from
a minimum wage increase to $12 is 35 years old and the vast
majority (90 percent) are 20 or older. Yet even in cases
where it is true, those young people are starting off their
careers much further from the middle class than young people
of previous generations.
Raising the federal minimum wage to $12 by 2020, as the
Raise the Wage Act would do, would restore the national wage
floor to the same relative position that it had in the late
1960s. Under conservative assumptions for wage growth at the
median, $12 in 2020 would be equal to roughly 54 percent of
the full-time median wage, bringing low-wage workers closer
to the pay of a middle-class job, and helping undo some of
the growth in wage inequality that has taken place since
1968.
Whenever increasing the minimum wage is discussed, there is
always concern that doing so might hurt job growth or imperil
businesses that employ low-wage workers. In the 22 times the
federal minimum wage has been raised, and the over 300 times
that states or localities have raised their minimum wages
just since the 1980, these concerns have never materialized.
The effect of increasing the minimum wage on employment is
probably the most studied topic in labor economics, and the
consensus of the literature is that moderate increases in the
minimum wage have little to no effect on employment. In fact,
this was the conclusion of a letter signed by over 600 PhD
economists--including 8 winners of the Nobel Prize--sent to
the leaders of both houses of Congress in 2014. The letter
stated, ``In recent years there have been important
developments in the academic literature on the effect of
increases in the minimum wage on employment, with the weight
of evidence now showing that increases in the minimum wage
have had little or no negative effect on the employment of
minimum-wage workers, even during times of weakness in the
labor market.
The most detailed study in recent years of the minimum
wage's effects was published in a 2014 book by economists
Dale Belman and Paul Wolfson. Belman and Wolfson conducted a
meta-analysis (a study of studies) of over 200 scholarly
papers on the minimum wage published since 1991. They
conclude that ``modest minimum wage increases raise wages for
the working poor without substantially affecting employment
or work hours, providing solid benefits with small costs.''
(p.401) Belman and Wolfson's book was subsequently awarded
Princeton University's Bowen award for the book making the
most important contribution toward understanding public
policy related to the operation of labor markets.
In recent years, research has found not only that have
minimum wage increases have had no measurable negative
effects, but they have often produced positive effects on the
functioning of the low-wage labor market. Higher minimum
wages tend to reduce turnover and increase job tenure among
low-wage workers--leading to productivity improvements and
lower turnover costs at affected businesses.
Most importantly, research has consistently shown that
raising the minimum wage boosts the pay of low-wage workers
who typically come from low- and moderate-income households.
Because these households typically spend a larger portion of
their income than wealthier households, the rising wage floor
can provide a modest boost to consumer spending, generating
new business activity, particularly in lower-income areas
where consumer demand is more depressed. And this is true
even if some firms have to enact small price increases as a
result of the higher minimum wage. Pay raises for low-wage
workers resulting from higher minimum wages are vastly larger
than any resulting price increases--typically by a factor of
more than 10 to 1. This is because labor costs are only one
piece of businesses' overall operating costs, and as
previously noted, raising pay simultaneously generates
savings from higher productivity and lower turnover.
In summary, raising the minimum wage to $12 by 2020 would
boost the wages of tens of millions of American workers,
increase low-income households' buying power, reduce reliance
on federal assistance programs, and bring the wage floor back
up to the same relative value it had in the 1960s. The
research indicates that such an increase would not be overly
burdensome on businesses or hamper job growth, and could, in
fact, strengthen the consumer demand that drives the U.S.
economy. I strongly encourage Congress to pass the Raise the
Wage Act.
Mr. DeSAULNIER. Mr. Speaker, it is past time for Congress to raise
the Federal minimum wage. We learned yesterday that, of the people who
would most be impacted by raising the minimum wage, only 10 percent are
teens, as opposed to a popular misconception. In fact, the average age
affected is 35, and 56 percent are women. In addition, nearly one-third
of all Hispanics and one-third of all African Americans would get a
raise by enacting this act, and 30 percent of working mothers would get
a raise.
It is time that we stand up for hardworking people all across America
and give them a well-deserved and long-overdue raise.
I yield to the gentleman from California (Mr. Takano).
Mr. TAKANO. Mr. Speaker, I thank my colleague from the State of
California, my home State of California, for yielding.
I am glad to stand here today in support of the Raise the Wage Act. I
want to thank my colleagues for standing with me today to promote the
benefits of increasing the minimum wage.
While critics warn of mass layoffs and economic calamity, studies
consistently show that a higher minimum wage will stimulate the economy
and lift workers out of poverty.
We cannot allow ideology and partisanship to stop millions of workers
from earning a living wage. A report on poverty in my own community,
which my office produced last year, revealed
[[Page H2098]]
the urgency of this issue. Here is what we found:
Last year, a single parent of two kids working full time at the
minimum wage in Riverside, California, was likely to fall $600 short of
what they need to get by every month. Not only does this situation
violate the premise of the American Dream that working hard and playing
by the rules will land you in the middle class, it also damages our
economy.
A University of California, Berkeley study found that low wages cost
American taxpayers $152 billion each year on social welfare programs
for working families. We are effectively subsidizing companies that do
not pay their workers a living wage.
Now, there is a myth--a myth--that the typical minimum wage earner is
a high school student, a high school student living at home working
part time. But young people make up just a tiny fraction of the minimum
wage workforce. Eighty-nine percent of workers who would benefit from a
Federal minimum wage increase to $12 per hour are actually age 20 or
older. Nearly 40 percent of this workforce is older than 40.
These are not kids on a summer job. These are parents who are seeking
to provide for their children. With more money in their pockets, these
workers could take a few extra trips to the grocery store, buy new
school supplies for their children, or save up to buy a home, all of
which would help stimulate our economy.
All of us have expressed serious concerns about rising income
inequality in our communities. We all understand that the economy has
been thrown out of balance because the rules that protect workers from
exploitation have atrophied over time. The minimum wage is a clear
example of that trend.
The real value of the Federal minimum wage has declined 24 percent
since 1968. Workers are not worth 24 percent less than they were 50
years ago, and families cannot get by with 24 percent less than they
did 50 years ago.
Raising the minimum wage is not only good policy, it is popular
policy. Paying workers a living wage reduces turnover, improves worker
morale, and increases productivity. For those reasons, a poll by the
American Sustainable Business Council found that 60 percent of small-
business owners support raising the minimum wage to $12 an hour by
2020. And most revealing, the Republican pollster Frank Luntz found
that 80 percent of business executives support raising the minimum
wage.
Mr. Speaker, I include in the Record an article from The Washington
Post describing this secret poll done by Frank Luntz of these business
executives--the very one I mentioned in my remarks--that found that 80
percent of business executives support increasing the minimum wage.
[From the Washington Post, Apr. 4, 2016]
Leaked Documents Show Strong Business Support for Raising the Minimum
Wage
So why do most chambers of commerce still oppose it?
(By Lydia DePillis)
Whenever minimum wage increases are proposed on the state
or federal level, business groups tend to fight them tooth
and nail. But actual opposition may not be as united as the
groups' rhetoric might make it appear, according to internal
research conducted by a leading consultant for state chambers
of commerce.
The survey of 1,000 business executives across the country
was conducted by LuntzGlobal, the firm run by Republican
pollster Frank Luntz, and obtained by a liberal watchdog
group called the Center for Media and Democracy. (The slide
deck is here, and the full questionnaire is here.) Among the
most interesting findings: 80 percent of respondents said
they supported raising their state's minimum wage, while only
eight percent opposed it.
``That's where it's undeniable that they support the
increase,'' LuntzGlobal managing director David Merritt told
state chamber executives in a webinar describing the results,
noting that it squares with other polling they've done. ``And
this is universal. If you're fighting against a minimum wage
increase, you're fighting an uphill battle, because most
Americans, even most Republicans, are okay with raising the
minimum wage.''
Merritt then provided some tips on how to defuse that
support, such as suggesting other poverty-reduction methods
like the Earned Income Tax Credit. ``Where you might find
some comfort if you are opposing it in your state is, `how
big of a priority is it against other priorities?' '' he
said. ``Most folks think there are bigger priorities.
Creating more jobs rather than raising the minimum wage is a
priority that most everyone agrees with. So when you put it
up against other issues, you can find other alternatives and
other things to focus on. But in isolation, and you ask about
the minimum wage, it's definitely a winner.''
Sixty-three percent of respondents said they belong to a
chamber of commerce, whether on the local, state, or federal
level--suggesting that the groups' public statements might be
out of step with their members' beliefs. The materials shed
light on how some business trade associations operate, and
why they've continued to oppose minimum wage increases even
as the rest of the public thaws towards them.
The research had been commissioned by the Council of State
Chambers, a small, non-political umbrella organization that
coordinates messaging across the dozens of groups that make
up its membership. The main purpose of the survey, says
Council director Joe Crosby, had been to assess what the
broader business community thinks about state chambers, and
what kind of language they respond to best. (Under the terms
of its contract, Crosby says, LuntzGlobal was forbidden from
discussing the survey publicly.)
So why do state chambers, which are usually the largest and
most powerful business organizations represented in state
capitols, seem so far apart from the broader business
community when it comes to the minimum wage?
Crosby argued that modest minimum wage hikes don't impact
the majority of chamber members, and so they actually tend to
leave the issue to trade groups for retailers, hotels and
restaurants, which employ most low-wage workers.
``In chambers, historically, it's more successful
businesses that are in manufacturing and other higher wage
industries,'' Crosby says. ``They tend to see themselves as
the voice of business, but there are other groups that are
focused on sectors that are focused on different wage
mandates.''
In the more liberal areas where minimum wage increases have
succeeded, that's often true: Broad-based business groups
have hesitated to speak out too strongly against the popular
measures, leaving those industries that are most affected out
in the cold.
In some instances, advocates have even targeted low-wage
service industries first--a hotel wage ordinance passed in
Los Angeles before the across-the-board increase, for
example, and New York Gov. Andrew Cuomo raised wages for fast
food workers before launching a campaign to do so for all
workers (which New York City-based chambers of commerce
actually supported).
But in most states, chambers of commerce haven't been as
shy in their opposition to minimum wage hikes. Pennsylvania
Chamber of Business and Industry president Gene Barr says he
canvasses his members regularly on lots of issues, and they
are against raising the state's minimum wage above where it
still sits at the federal floor of $7.25--even the big, high-
tech industries that already pay well above it.
``Our larger businesses get that,'' said Barr, who sat
through the LuntzGlobal presentation. ``We don't get pushback
saying that `you really need to get behind a minimum wage
increase,' because they understand that it's really not
appropriate.''
Minnesota Chamber of Commerce president Doug Loon says his
members' opinions don't match those of the LuntzGlobal
survey--including those regarding requirements that
businesses offer benefits like paid paternity leave, which 82
percent of respondents supported, or more paid sick leave,
which 73 percent supported. The Minnesota Chamber has found
that even those of its members who are offering those
benefits would rather have the choice of whether to do so,
and how.
``It's what most employers are moving to,'' Loon says. ``Do
we need to pass a one-size-fits-all on sick leave? We would
argue that we do not.''
So Loon and Barr say they're just following their members'
wishes. Some business groups have a different perspective--
but don't necessarily have the power to combat a state
chamber when it puts its mind to something.
The South Carolina Small Business Chamber of Commerce has
supported a higher minimum wage, but its president Frank
Knapp says his members simply don't have the bandwidth to
push for it, with so many other issues on their plate. ``When
you actually talk to those people one on one, you find that
yeah they're fine with raising the minimum wage,'' Knapp
says. ``But they're not going to crusade for the minimum
wage.''
That might be true of traditional chamber members too,
Knapp thinks, many of whom mostly join for the networking
benefits rather than the political advocacy aspect anyway.
But within those groups, the industries that care most about
a given policy matter--hotels and restaurants, in the case of
the minimum wage--drive the organization's agenda. ``Usually
the most vocal members of the state chambers dominate on that
particular issue, and everybody else stays quiet,'' Knapp
says.
When that happens, it's easy for politicians and the public
to get the idea that the private sector stands united against
raising the minimum wage, when opinions are actually much
more diverse.
Holly Sklar is CEO of a national group called Business for
a Fair Minimum Wage that favors raising the wage floor in
states and nationwide, and she points to a number
[[Page H2099]]
of surveys by reputable pollsters--from CareerBuilder, Small
Business Majority, and the American Sustainable Business
Council--that found most businesses agree Many of those
businesses don't join state chambers, which means their
opinions don't filter up to the organization's leadership, so
its positions don't change--and that's what gets conveyed to
politicians.
``Sometimes you end up confused by the fact that someone
has enough money to be in the halls of the state senate, day
after day after day, funded by some of the bigger
corporations that have more of an investment in the status
quo,'' Sklar says. ``It has an impact on how it's perceived--
you start thinking that's what business thinks.''
Mr. TAKANO. Mr. Speaker, I urge my colleagues to listen to their
constituents, listen to these businessowners, and raise the minimum
wage. It is past time that we took this action to improve the lives of
millions of working Americans and strengthen our economy.
Mr. DeSAULNIER. Mr. Speaker, I thank my colleague from California.
Mr. Speaker, I yield to the gentlewoman from Connecticut (Ms.
DeLauro).
Ms. DeLAURO. Mr. Speaker, I thank my colleague. I am proud to join
with him this afternoon to talk about an issue of critical importance
to the people of this Nation.
Obviously, I want to be very, very clear about the issue of a rise in
our minimum wage. For the length of time that I have served in this
body, which is for 25 years, I have been a strong supporter of
increasing the minimum wage. I believe that it has sustained America's
working families and it is justified, which is why I strongly support
the Raise the Wage Act.
We need to index the minimum wage. It needs to keep up with
inflation. It is long past time that this gets done. Time goes on,
costs increase, and the minimum wage ought to increase. We can't afford
to settle for the status quo.
Full-time, year-round work at the current minimum wage of $7.25
leaves a family of three below the Federal poverty line. This
disproportionately, by the way, hurts women, who make up nearly two out
of three workers making the minimum wage. This means low-wage workers
have to work longer hours just to achieve the standard of living that
was considered the bare minimum almost a half century ago.
The greatest economic challenge that faces our Nation today is that
too many Americans are in jobs that do not pay them enough to live on.
Raising the minimum wage would directly or indirectly lift wages for
more than 35 million workers--or more than one in four in the United
States. The Raise the Wage Act would lift 4.5 million Americans out of
poverty and reduce income inequality.
The low minimum wage, by the way, is not just bad for workers. It is
bad for business, and it is bad for the entire economy. Low wages limit
consumer demand, which stalls our country's economic growth. That hurts
everyone.
A raise is long overdue for hardworking Americans if you realize,
between 1948 and 1973, productivity and compensation grew at nearly
equal rates; but from 1973 to 2014, American workers' productivity grew
by 72 percent--they were producing more--while hourly worker
compensation grew by just 9 percent.
Wages for the top 1 percent have grown 138 percent since 1979, while
wages for the bottom 90 percent have only grown 15 percent. We have an
opportunity to make a real step toward closing this gap.
There is a broad and growing consensus on a need to raise the wage.
In a poll--and my colleagues have referenced this poll. This is a poll
of business executives, and I think they were trying to hide it. I
don't think that they wanted to get it out. But business executives--
and this is a poll conducted by Frank Luntz, who is a Republican
pollster, and he found that 80 percent supported raising the Federal
minimum wage.
If our colleagues across the aisle want to make a real impact on
poverty in the United States, they would support legislation that helps
working families cope with rising costs like the Raise the Wage Act.
The American people have waited long enough. It is time to make sure
that all of our workers can make decent pay for a hard day's work, get
a decent day's pay.
I urge my colleagues to pass this legislation.
Also, if I can, Mr. Speaker, Republicans contend that they can't
raise the wage because doing so would kill jobs. So I include in the
Record a paper from the National Employment Law Project describing,
among other research, two meta-studies on the effect of the minimum
wage on employment.
Employment and Business Effects of Minimum Wage Increases
Introduction
While the U.S. economy continues to see steady growth,
wages have been flat or falling for much of the labor force.
This dynamic has spurred the most significant wave of action
to raise the minimum wage in fifty years, with momentum for
significant increases at the federal, state and local levels.
The growing momentum for raising the minimum wage has focused
attention on the impact of higher minimum wages on employment
levels. Supporters argue that higher minimum wages help
workers and the economy, and that research shows any adverse
effect on jobs is minimal. Opponents, by contrast, generally
contend that higher wages will reduce employment or slow job
growth.
The fact that many states and cities in the U.S. have
raised their minimum wages in recent years while others have
not has created a rich store of data for research and
analysis and has made the minimum wage one of the most
studied questions in economics.
This brief reviews the extensive body of research on the
impact of higher minimum wages in the U.S. over the past
twenty years and draws these key findings:
The bulk of rigorous research examining hundreds of case
studies of minimum wage increases at the state and local
levels finds that raising the minimum wage boosts incomes for
low-paid workers without reducing overall employment job
growth to any significant degree.
The minority of researchers reaching different conclusions
rely on less precise or flawed methodologies that fail to
take advantage of the most recent advancements in economic
research.
Businesses are able to absorb the cost of paying higher
wages without reducing employment through a range of
channels, including savings from increased employee
productivity and reductions in employee turnover that
consistently result from minimum wage increases.
The minimum wage is one of the most studied subjects in the
field of economics. Since the early 1990s, economists--armed
with richer data than previously available and the
computational power to analyze it--have conducted scores of
studies in an effort to better understand the employment
effects of raising the minimum wage. Many of these studies,
often referred to as the ``new minimum wage research,'' have
used sophisticated methodologies that control for variables
unrelated to the minimum wage--such as regional employment
trends not driven by minimum wage changes--that otherwise may
bias a study's findings. The results overwhelmingly suggest
that raising the minimum wage has very little effect on
employment.
Most prominently, two leading ``meta-studies'' survey and
pool the data from over four decades of research. The meta-
studies represent the most reliable and sophisticated
approaches to studying the employment impact of raising the
minimum wage, as they aggregate data from dozens of studies
containing thousands of different estimates of the employment
impacts of minimum wage increases.
The first meta-study, by Hristos Doucouliagos and T.D.
Stanley (2009), shows that there is ``little or no
significant impact of minimum wage increases on employment,''
as noted by the Center for Economic and Policy Research in
its review of the minimum wage literature. This is
illustrated in Figure 1, which arrays 1,492 different
findings from 64 different studies, mapping their conclusions
on employment impacts against the statistical precision of
the findings. As economist Jared Bernstein summarizes, ``the
strong clumping around zero [impact on jobs] provides a
useful summary of decades of research on this question [of
whether minimum wage increases cost jobs].
Drawing on the methodological insights of Doucouliagos and
Stanley, the second meta-study by Dale Belman and Paul
Wolfson (2014) reviews more than 70 studies and 439 distinct
estimates to come to a very similar conclusion: ``[i]t
appears that if negative effects on employment are present,
they are too small to be statistically detectable. Such
effects would be too modest to have meaningful consequences
in the dynamically changing labor markets of the United
States,'' and too small to merit policy or political
controversy.
In addition to these meta-studies, state-of-the-art
individual studies have developed new research methods to
enable economists to better isolate and analyze the actual
impact of minimum wage increases--and have confirmed that
raising the minimum wage does not reduce employment. Two of
these leading individual studies are:
``Minimum Wage Effects Across State Borders,'' in which
economists Arindrajit Dube, T. William Lester and Michael
Reich (2010) apply innovative new research methods to examine
the real-world impact of state minimum wage increases on
employment. In order to completely isolate other factors
influencing state job growth trends, the study compares
employment trends in neighboring
[[Page H2100]]
counties that are economically similar except for having
different minimum wages (by virtue of being on different
sides of a state border). The study looks at employment
levels among every pair of neighboring U.S. counties that had
differing minimum wage levels at any time between 1990 and
2006--and finds that higher minimum wages did not lead
business in those states to reduce their hiring or shift
their hiring to neighboring counties with lower minimum wage
rates.
``Do Minimum Wages Really Reduce Teen Employment?,'' in
which economists Sylvia Allegretto, Arindrajit Dube and
Michael Reich (2011) demonstrate that neglecting to control
for regional employment trends leads observers to erroneously
attribute reductions in employment in certain states to an
increase in the minimum wage. They find that, after
controlling for regional trends, the negative effects on teen
employment in regions with higher minimum wages not only
disappeared, but turned slightly positive, and that these
observations hold true whether the economy is growing or in a
downturn. The fact that there is no evidence that past U.S.
minimum wage increases have reduced teen employment is
significant since, if there were any adverse effects
associated with minimum wage increases, one might expect to
see them among teens who are new entrants to the labor
market.
The innovative approach used by Dube, Lester and Reich in
the 2010 study has won praise from leading labor economists
at top universities, such as Harvard economist Lawrence Katz
and Massachusetts Institute of Technology economists David
Autor and Michael Greenstone. As Autor explained, ``The paper
presents a fairly irrefutable case that state minimum wage
laws do raise earnings in low wage jobs but do not reduce
employment to any meaningful degree. Beyond this substantive
contribution, the paper presents careful and compelling
reanalysis of earlier work in this literature, showing that
it appears biased by spatial correlation in employment
trends.''
The new body of research has led to a shift in the views of
mainstream economists on the employment impact of minimum
wage increases. Indicative is a February 2013 poll of leading
economists by the University of Chicago's Booth School of
Business, in which economists by a more than 3 to 1 margin
believe that the benefits of raising the minimum wage and
indexing it for inflation outweigh any costs. Similarly,
centrist economists, including Larry Summers and Robert
Rubin, have called for raising the minimum wage and
empowering workers as part of a strategy to help grow the
middle class and move the economy forward; and Goldman Sachs
released an analysis of minimum wage increases, which did not
mention disemployment at all--neither as an immediate effect,
nor as a forecast.
The shrinking body of economic research that continues to
argue that increases in the minimum wage cost jobs emanates
in large part from a single source: University of California-
Irvine economist David Neumark. Neumark is the author of both
a survey that claims that the weight of minimum wage research
points towards evidence of job losses, and of several studies
that claim to show the same. However, both Neumark's survey
and the methodology he uses in his individual studies have
been shown to be skewed and inaccurate.
Neumark's 2006 survey (coauthored with William Wascher),
``Minimum Wages and Employment: A Review of Evidence from the
New Minimum Wage Research,'' maintains that 85 percent of the
``most credible'' research on the impact of raising the
minimum wage finds job losses as a result. However, other
economists have pointed out that this survey--which is not a
true meta-study--was conducted in a highly subjective manner,
generating its unrepresentative conclusions. Specifically,
Neumark's survey:
1. Fails to comprehensively review the economic research on
the impact of raising the minimum wage, and instead selects
just 33 studies that the author subjectively designates as
the ``most credible;''
2. Omits several of the most important recent studies on
the impact of minimum wage increases in the United States,
with the result that half of the studies analyzed by Neumark
focus on foreign labor markets, rendering their conclusions
less relevant to the U.S.; and
3. Is skewed towards Neumark's own research, which makes up
a full 26 percent of the U.S.-based studies that he elects to
include.
Neumark's research, as well as the few other studies which
continue to maintain that minimum wage increases cost jobs,
have used variants on a single approach: comparing job growth
in states with higher minimum wages against job growth in
states with lower minimum wages.
However, as demonstrated by Dube, Lester and Reich (2010)
and Allegretto, Dube and Reich (2011), Neumark's simplistic
approach cannot accurately assess the impact of a higher
minimum wage since It does not adequately control for the
wide range of varying local economic conditions--such as
regional trends in manufacturing jobs losses, population
shifts to the sun belt, and the local severity of economic
shocks such as the housing bubble collapse--that affect job
growth in state labor markets. As a result of these
inadequate controls, Neumark and other conservative
economists erroneously attribute differences in regional job
growth levels to minimum wage differences.
More recent and sophisticated research does a better job of
controlling for those regional economic differences. The 2010
study by Dube, Lester and Reich, for example, uses a
methodology similar to Neumark's. But rather than comparing
job growth rates among all states nationwide, it focuses on
comparisons among states in the same region of the country
that have differing minimum wages. Dube, Lester and Reich
show that when one uses a regional focus to control for
extraneous economic trends, any evidence of job losses
disappear.
The strength of the new research has led major business
publications to endorse its findings and methodologies--and
to reject opposition research as faulty and inaccurate. In
2012, Bloomberg News, for example, called for increasing the
minimum wage and indexing it for inflation, writing that,
``[a] wave of new economic research is disproving those
arguments about job losses and youth employment. Previous
studies tended not to control for regional economic trends
that were already affecting employment levels, such as a
manufacturing-dependent state that was shedding jobs. The new
research looks at micro-level employment patterns for a more
accurate employment picture. The studies find minimum-wage
increases even provide an economic boost, albeit a small one,
as strapped workers immediately spend their raises.''
Despite the advances made in new research on the minimum
wage, in 2014 the Congressional Budget Office (CBO) published
a report, based partially on older research, suggesting that
an increase in the minimum wage would reduce total U.S.
employment by about 500,000 workers--though it acknowledged
the possibility of an impact ranging from near-zero to one
million jobs lost. Economists who have studied the minimum
wage, however, have criticized the report for a major flaw in
its analysis: Despite acknowledging the greater accuracy of
newer methodologies, in its synthesis of minimum wage studies
the CBO gave equal weight to older methodologies as to new,
without explaining its reason for doing so.
Michael Reich--one of the critics of the report and
coauthor of two of the studies discussed above--notes the CBO
erred when it took the findings of research by Neumark/
Wascher and Reich/Dube and averaged them, as if those studies
were similar enough in methodology, time and data sets used
to justify doing so. He writes, ``We conclude, and many other
labor economists agree, that our studies invalidate the
previous approach used in many studies by Neumark and Wascher
and others. It makes no sense to take an average between a
rigorous study and one that has been shown to be flawed.''
Giving equal weight to these studies likely biased the CBO's
conclusions.
Goldman Sachs analysts also reviewed the CBO report and
concluded that its job loss estimates are overstated. The
analysts cite the findings of the new minimum wage research,
which find little to no effects on employment (see the first
section of this brief); a boost in demand from higher
earnings; a concentration of employment impacts on only two
industries (retail and leisure & hospitality); and the fact
that states and localities have taken the lead in increasing
the minimum wage in the face of congressional inaction, as
reasons the CBO estimates are likely too high.
Even with its flawed analysis, taken as a whole the CBO
report nonetheless demonstrates that the benefits of raising
the minimum wage far outweigh any drawbacks. Among its
positive findings, the report concluded that 24.5 million
workers would benefit from a wage increase to $10.10, and
nearly one million would be lifted out of poverty.
In January 2014, House of Representatives Speaker John
Boehner made the following claim in explaining his opposition
to raising the minimum wage: ``When you raise the cost of
something, you get less of it.'' This idea seems intuitive to
many who learned about supply and demand in an introductory
economics class. But in fact, both research and real life
experiences show that, rather than automatically raising
costs and forcing layoffs, higher wages can lead to
significant savings for businesses, offsetting a large
portion of the higher payroll costs. Among the leading
factors explaining this seemingly counter-intuitive
observation are two related concepts: employee turnover and
productivity.
Low wages are associated with high levels of employee
turnover. Workers earning low wages tend to be less committed
to their jobs than better paid workers and are less likely to
stay at their jobs for long. Unsurprisingly, the
accommodations and food services sector--one of the lowest-
paying sectors--has an annual turnover rate of nearly 63
percent, while ``limited service restaurants''--a subsector
which includes fast food restaurants like McDonald's and
Burger King--have a turnover rate of well over 100 percent
each year. The retail trade, which employs cashiers, customer
service representatives, stock clerks and other low-wage
workers, has a turnover rate of nearly 50 percent.
Employee turnover forces businesses to constantly find and
train new workers, costing firms significant amounts of money
and time. In the fast food industry, the cost of turnover is
approximately $4,700 each time a worker leaves his or her
job. Studies show that higher wages can substantially reduce
turnover and the costs associated with replacing lost
workers. In the fast food industry, increasing the minimum
wage could lead to as much as $5.2 billion in cost savings to
businesses and as many as 1.1 million
[[Page H2101]]
fewer separations. Overall, savings from reduced turnover
alone can offset as much as 30 percent of the cost of a
minimum wage increase--even to $15 per hour.
Low pay also impacts productivity. While experienced
workers tend to be more productive, new workers may not be as
optimally efficient during their training period, and this
can incur indirect costs to businesses from lost sales and
imperfect customer service as new workers learn on the job.
While the savings from greater productivity and lower
turnover may not fully pay for a minimum wage increase, these
savings can nonetheless substantially offset the higher labor
costs associated with an increase.
The benefits from higher productivity and lower turnover
helps explain why large companies as well as many small
businesses have chosen to invest in higher wages as part of a
highly competitive business strategy. As MIT business school
professor Zeynep Ton explains, ``Highly successful retail
chains--such as QuikTrip convenience stores, Mercadona and
Trader Joe's supermarkets, and Costco wholesale clubs--not
only invest heavily in store employees but also have the
lowest prices in their industries, solid financial
performance, and better customer service than their
competitors. They have demonstrated that, even in the lowest-
price segment of retail, bad jobs are not a cost-driven
necessity but a choice. And they have proven that the key to
breaking the trade-off is a combination of investment in the
workforce and operational practices that benefit employees,
customers, and the company.''
Many employers can afford to pay better wages. The vast
majority of small businesses (89 percent) already pay their
employees more than the federal minimum wage, a strong
majority (60 percent) support raising the minimum wage to $12
and adjusting it for inflation each year, and a growing
number of employers see $15 as a fair minimum wage. Many also
believe that higher wages level the playing field by
preventing larger or less scrupulous firms from gaining a
competitive advantage through very low labor costs. Large
businesses, in particular, are in the position to improve
their wages. Corporations like Walmart, T.J. Maxx, Gap and
Ikea, which employ the majority of low-wage workers, have
been enjoying record profits for years. According to the St.
Louis Federal Reserve Bank, in the second quarter of 2015,
corporate profits amounted to $1.8 trillion--the highest
since the late 1940s.
Conclusion
``When employers stop thinking about employees as costs to
cut, but instead as customers, they see it is in their self-
interest to raise the minimum wage. We need to change their
concept of self-interest.''--Nick Hanauer, entrepreneur and
venture capitalist.
The most recent and sophisticated research--as well as the
experiences of leading employers like Trader Joe's, Costco
and thousands of small businesses--strongly suggest that
higher wages increase incomes for low-wage workers without
reducing overall employment or hurting businesses. Not only
do employers benefit from the savings they accrue from lower
turnover and higher productivity; they also benefit from an
increase in demand for the goods and services they offer. As
observers from Nick Hanauer to Larry Summers point out,
workers are customers--and the better a worker's ability to
participate in the economy as a consumer, the better off will
be both individual businesses and the economy as a whole.
Ms. DeLAURO. This document examined 64 minimum wage studies measuring
the effect of minimum wages on teenage employment in the United States
published between 1972 and 2007. While these studies estimated a range
of employment effects, Mr. Stanley and Mr. Doucouliagos found the most
precise estimates in the studies were around zero or near zero
employment effects.
{time} 1600
The second is from Paul Wolfson and Dale Belman. It examined studies
published since 2007 on the employment effect on minimum wage
increases. This meta-analysis also found that the best estimates in the
compiled studies revealed no statistically significant negative
employment effects.
We all have listened over many years that any increase in the minimum
wage would, my gosh, send the U.S. economy into a tailspin, and every
time it has proven false. It was false then; it is false now. Let us
raise the minimum wage, and let us support the Raise the Wage Act.
I thank my colleague from California for including me in this Special
Order.
Mr. DeSAULNIER. My pleasure. I thank my colleague from Connecticut
for her passionate advocacy on this issue and on others around wage
inequality.
Mr. Speaker, I include in the Record a letter sent to President Obama
and signed by over 600 economists, including seven Nobel Prize winners,
stating that the most recent economic research shows that increases in
the minimum wage have little or no negative effect on the employment of
minimum wage workers. In fact, the letter goes on to read that a
minimum wage increase could have a stimulative effect on the economy as
low-wage workers spend their additional earnings, thus increasing
consumer demand and leading companies to hire additional workers.
Over 600 Economists Sign Letter In Support of $10.10 Minimum Wage:
Economist Statement on the Federal Minimum Wage
Dear Mr. President, Speaker Boehner, Majority Leader Reid,
Congressman Cantor, Senator McConnell, and Congresswoman
Pelosi: July will mark five years since the federal minimum
wage was last raised. We urge you to act now and enact a
three-step raise of 95 cents a year for three years--which
would mean a minimum wage of $10.10 by 2016--and then index
it to protect against inflation. Senator Tom Harkin and
Representative George Miller have introduced legislation to
accomplish this. The increase to $10.10 would mean that
minimum-wage workers who work full time, full year would see
a raise from their current salary of roughly $15,000 to
roughly $21,000. These proposals also usefully raise the
tipped minimum wage to 70% of the regular minimum.
This policy would directly provide higher wages for close
to 17 million workers by 2016. Furthermore, another 11
million workers whose wages are just above the new minimum
would likely see a wage increase through ``spillover''
effects, as employers adjust their internal wage ladders. The
vast majority of employees who would benefit are adults in
working families, disproportionately women, who work at least
20 hours a week and depend on these earnings to make ends
meet. At a time when persistent high unemployment is putting
enormous downward pressure on wages, such a minimum-wage
increase would provide a much-needed boost to the earnings of
low-wage workers.
In recent years there have been important developments in
the academic literature on the effect of increases in the
minimum wage on employment, with the weight of evidence now
showing that increases in the minimum wage have had little or
no negative effect on the employment of minimum-wage workers,
even during times of weakness in the labor market. Research
suggests that a minimum-wage increase could have a small
stimulative effect on the economy as low-wage workers spend
their additional earnings, raising demand and job growth, and
providing some help on the jobs front.
Mr. DeSAULNIER. Mr. Speaker, I stand here as a fervent believer in
what we have advocated for and as someone who has spent 35 years owning
and managing restaurants in an area of the country in which the economy
is growing more rapidly than anywhere else in the country right now,
which is the San Francisco Bay Area.
With that background, I also speak to this as somebody who has a good
deal of empathy for small-business owners, particularly restaurant
owners, who are looking at monthly and quarterly business reports and
are wondering how they would accommodate the increase in the minimum
wage. In California, of course, we are much higher than in the U.S.,
and many cities, including San Francisco, have gone to $15 with an
indexed minimum wage.
I believe firmly in the research that shows that one of the biggest
challenges to small businesses, particularly in the restaurant field,
is not the challenge of minimum wage workers, but the fact that there
is less disposable income in middle-income households to be able to
have the discretion to go out and spend that disposable income in
restaurants and on hospitality events. While I understand the angst,
these are the kinds of things, once we take that step--from my
experience and the experience in California and in high-cost areas like
New York and San Francisco, which have gone ahead with raising the
minimum wage--that would indicate the overall benefit to the economy
and to everyone.
Lastly, I think the challenge of this time for us domestically is, as
I said, the inequality in the country. In a country in which the
economy is based on 70 percent consumer investments, having more
disposable income is a good thing. As President Lincoln once famously
said: In order for this democracy to thrive, there must always be a
balance between capital and labor; and if there is ever an imbalance
towards capital, we have, in effect, lost democracy.
There is no question that, at this point in time, capital investment
is doing many great things, including in the bay area and in our
venture capital community and in our innovation community. In having
said that, one does not have to read Thomas Piketty to
[[Page H2102]]
understand that we have a huge imbalance between wages and labor and
capital, which Lincoln warned about.
I ask the majority party to work with us to raise the minimum wage in
order to help the economy.
Mr. Speaker, I yield back the balance of my time.
____________________