Minimum Wage

Floor Speech

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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 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 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.

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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).

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Mr. DeSAULNIER. Mr. Speaker, I thank my colleague from California.

DeLauro).

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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.

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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 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.

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