Minimum Wage Fairness Act—Motion to Proceed—Continuedby Senator John Cornyn
Posted on 2014-04-30
CORNYN. Madam President, I think people listening to the debate
on the minimum wage issue may be a little bit confused, because we all
want to see hard-working American families work their way toward the
American dream, but we are not going to be able to do that with the
Federal Government setting wages for restaurants, small businesses, and
other people across the country.
I have no objection, obviously, if Massachusetts or Minnesota or some other State wants to raise the minimum wage. That is their choice. But what my colleagues are now asking for is the Federal Government, or the Nation, to set a minimum wage at a level which will destroy between \1/ 2\ and 1 million jobs. That is not just me talking, that is the Congressional Budget Office, which is the official scorecard for the Congress.
Think about this: You are a small business and your biggest expense is wages for the people who work there. Now the Federal Government comes in and says: Forget about your local conditions in North Dakota or in Texas. We are going to say, from Washington, DC, that everybody has to raise wages by 40 percent. I can't imagine there will be many businesses, small businesses in particular, that can absorb a 40- percent increase in their overhead.
This is going to hurt low-wage earners who are currently employed. That is what the Congressional Budget Office has said. And it is going to hurt the economy.
I heard the distinguished Senator from Minnesota say the economy is doing great. Well, I guess he must have missed the latest report on the first quarter of 2014. Because of the bad weather--we had an unseasonably cold first quarter--the economy grew at .1 percent. In other words, it almost went into what would be a negative growth or a recession. Of course, recession is defined as two quarters of negative growth, but my point is this strong growth he is talking about in the economy is a figment, it is not the fact, and we need to deal with the facts on the ground.
I wonder sometimes why public opinion holds Congress and Washington in such low esteem. Actually, I don't wonder why. My conclusion is they think we are out of touch. We are out of touch with regular American families--people who are working hard to make ends meet, getting the kids ready for school and living their version of the American dream. The latest statistic I saw says that 27 percent of the American people think we are on the right track. That is a shocking number. That means 73 percent think we are on the wrong track.
What is the old saying, that the definition of insanity is doing the same thing over and over again and expecting a different outcome? Well, let's not do the same thing over and over again--keep America on the wrong track and engage in a policy decision here on this minimum wage, this 40-percent increase in the minimum wage, which will actually hurt more people than it helps.
This is not just my view. There was a poll that came out yesterday which said, basically, once people understood that people would be put out of work by increasing the minimum wage, 58 percent said it is not worth it. So 58 percent of the respondents said it is not worth it.
You know, it would be nice--it would be great--if we lived in a world where Washington could dictate what wages will be and all of a sudden peace, love, and happiness would break out--the age of Aquarius-- because Washington is somehow distributing free money that didn't come from somewhere, that didn't come out of somebody's pocket or as part of someone's overhead or it didn't have any negative impact. But that is not the world we live in.
Again, this is not just public opinion, it is not just my opinion, it is not just the opinion of the Congressional Budget Office about the job-killing nature of this dramatic 40-percent increase proposed in the minimum wage. Back in 1998, President Clinton's economic adviser Gene Sperling--who just left the Obama administration--wrote a memo to President Clinton when a similar proposal was being made to raise the minimum wage 41 percent at that time. The Harkin bill we will vote on here shortly proposes to raise the minimum wage 40 percent. This was back in 1998 that Gene Sperling is writing to President Clinton on a proposed increase of the minimum wage by 41 percent, but for all practical purposes it is the same sort of proposal. This is what Mr. Sperling wrote to President Clinton: Your entire economic team believes that this approach is too aggressive and are concerned that Senator Kennedy's proposal could prove damaging to the employment prospects of low-skilled workers . . .
This was Senator Ted Kennedy's proposal back in 1998. Again, that is what the Congressional Budget Office has said about this bill. He goes on to say, ``as well as to the general macroeconomic performance of the economy.'' So what are our friends across the aisle proposing we do when the economy grew at .1 percent this last quarter? Well, administer a body blow to this anemic economic growth. And this is not just my opinion. It is deja vu all over again, as they say. I guess if you are around Washington long enough, you are going to see this movie replayed over and over.
The fact is that our economy is weaker today than it was in 1998. Sure, unemployment is coming down slowly, but the economy is growing too slowly and the number of people in the workforce is the lowest it has been for the last 30 years, the so-called labor participation rate.
So what did President Clinton do when his economic advisers said: Don't do it, Mr. President. While it is good politics, perhaps, it really will hurt the economy, and it will put people out of work.
[[Page S2536]] President Clinton, to his credit, decided not to pursue that particular 41-percent increase in the minimum wage.
I mention that as a sad contrast with the current situation where President Obama, seeing his favorability ratings at the lowest they have been since he became President, is trying to change the subject and basically make a political point when the fact is that making the political point will actually hurt a lot of hard-working Americans.
So the majority leader has decided that rather than spend the week debating legislation that would actually create jobs, we should spend it debating a proposal that would destroy jobs.
We all know that a massive minimum wage increase such as this can be a job killer. So it really wasn't surprising when we saw that quantification by the Congressional Budget Office saying this proposal could destroy up to 1 million jobs. Yet, when I was listening here, I didn't hear the distinguished Senators from Massachusetts or from Minnesota talk at all about the Congressional Budget Office report. They want to ignore that. They want us to believe that this increase in the minimum wage would have little or no effect on employment and that maybe it would have a positive effect. I heard the Senator from Massachusetts make that claim, but the people who actually run America's businesses know better.
I had dinner the other night with some folks in the restaurant business, and I will mention some examples in a moment. Most of these folks I happened to have dinner with are pretty successful, but they started out washing dishes or bussing tables or waiting on tables. They started at the bottom and worked their way up because they could find a job, get their hand on the first rung of the economic ladder and then put the other hand on the next one and work their way up to where now they are very successful businesspeople. But they understand how businesses work. They understand the negative consequences of this bad policy coming from Washington, DC.
Just ask Robert Mayfield from Austin, TX, where I live. Mr. Mayfield has been in business for 35 years now, and he is pretty successful. He also knows a thing or two about the consequences of rising labor costs. This is what we are talking about. For a business, this is the overhead. This is the labor costs they have to pay out of their income.
Mr. Mayfield wants Members of Congress to know that he strongly opposes this proposal because it will cost people jobs. Here is how he describes it: What's most devastating about an increase in the minimum wage is that costs go up, and as a business owner, I have to raise prices-- So if we think we can pay somebody $10.10 an hour to work in a McDonalds and it won't have an impact on the cost of a Big Mac, well, we are living in a fantasy world. And that is what Mr. Mayfield says.
I have to raise prices, and sometimes the market [won't bear it]. In the end, jobs will be lost and service will suffer . . . The people in Congress wanting to pass a minimum wage bill don't know any more about how a business works than a hog knows about Sunday School. What makes it worse is Obamacare hanging over our heads. It's a job killer.
I heard this again today from a friend of mine from San Antonio. Louis Barrios, whose family has run Mexican restaurants in San Antonio for many years, talked about the combination of ObamaCare and now this proposed minimum wage increase.
He said: Right now, we would like to pay a single mom who is working in our restaurants to take orders. If Congress lifts the minimum wage to $10.10 an hour, we will have no choice but to replace that server, that waitress, with an iPad.
That is what is happening in a lot of fast food restaurants these days.
Again, Congress shouldn't operate in a vacuum without knowledge or an awareness of what the consequences might be.
I am not suggesting that any of our friends who are advocating this minimum wage increase want to put that single mom out of work, but if we embrace that policy, that is what Louis Barrios told me this morning would likely happen. And people like Robert Mayfield and Louis Barrios are supported by countless economists.
So we have folks who are actually doing the work, and then we have the big thinkers like the economists who studied this issue and concluded that this size minimum wage increase is a really bad idea in terms of the economy. More than 500 of those economists, including several Nobel Laureates, recently signed an open letter to several policymakers expressing their opposition to this 40-percent minimum wage hike. Their letter said: Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance.
That is also what Robert Mayfield said: I can't absorb it without passing it along to customers, increasing the prices they have to pay or I may have to lay some people off or I may just have to close my business altogether.
They are operating on tight profit margins.
When so many economists and so many folks who are working across America are telling us the same thing--and the truth is that it makes perfect common sense--it would be the height of arrogance for us to ignore their concerns. But that is what President Obama and Majority Leader Reid are asking us to do today.
I made this point at the beginning. I fully share our colleagues' concerns about the stagnant wages being earned by American workers all across America. Indeed, since the Obama economic recovery--that was after the recession of 2008, but after the Obama economic recovery started kicking in in June 2009, the median household income in this country has gone down by $1,800. So I understand the concern, but I find it a little depressing that Congress's only answer is to raise the minimum wage by 40 percent, which will put people out of work and shut down small businesses, when there are a lot better ways for us to address it, and I will talk about that in a moment. Raising the minimum wage by 40 percent will not grow the economy and it will not create jobs. It will do the opposite.
Of course, the truth is--and we read this in newspapers a couple of weeks ago--we all know what is happening here, so let's talk about the 800-pound gorilla here in the Senate Chamber. The truth is that the President and Majority Leader Reid don't expect this bill to pass because they actually are very intelligent people and they know the facts as I have just described them here on the floor of the Senate. This is all about politics. This is about trying to make this side of the aisle look bad and hard-hearted to try to rescue this midterm election coming up in November. They see the President's approval rating going down, they see a number of midterm races for the Senate in play, and they have to do something. They are desperate. ObamaCare didn't work out the way they thought it would. You can't keep what you have if you like it. Your premiums didn't go down $2,500 if you are an average family of four. And, no, you can't keep your doctor in too many cases under the health insurance exchanges. So they are desperate.
We know from reporting in the New York Times and elsewhere that this minimum wage bill--this show vote we are going to have here shortly--is part of a larger messaging package created in collaboration with the Democratic Senatorial Campaign Committee. That is not me talking; that is the admission by the leadership on the other side of the aisle. This is not about actually solving the problem; this is about political theater, courtesy of Majority Leader Reid.
The real tragedy is that millions of Americans don't have any time or any patience for this sort of political theater and partisan gamesmanship because the numbers are very troubling. The Obama recovery is 5 years old. Yet 10.5 million people are still unemployed--including 3.7 million people who have been unemployed for more than 6 months-- with an additional 7.4 million people working part-time because they can't find full-time work or, because of ObamaCare, their employers have taken them off full-time work and put them on part-time work in order to avoid the employer penalties.
It is true that the hard-working American family needs some help, but the truth is that this remedy being offered today--this medicine--to try to supposedly solve the problem will just make things worse. So I have a proposition to make to our friends across the aisle. If they would work with us, if they would leave these games by the [[Page S2537]] wayside, and if they would focus for a minute on trying to work with us to engage in solutions that would help grow the economy and help reduce unemployment and help raise wages across the Nation, then we would gladly embrace that, and we have introduced a number of bills that would do exactly that.
I know the distinguished Senator who is presiding comes from an energy-producing State like mine, and this is no mystery to her, but in Texas, like North Dakota, there are a lot of really good jobs, but people don't have the skills necessary to qualify for those good jobs.
I was in Fredericksburg, TX, recently, where they are training welders at the community college. A welder can make $100,000 or more a year. In the Permian Basin in Midland and Odessa, TX, truckdrivers can make $100,000 a year. It is unbelievable what this renaissance in American energy has done to our economy and job creation.
One thing we could do that would be a heck of a lot more constructive than this kind of show vote and partisan gamesmanship would be to improve our workforce training programs, the Pell grant program, and try to find ways to get people the training they need in order to qualify for these good, high-paying jobs being created by this wonderful renaissance in American energy.
We could do some other things. We could try to rein in some of the regulations that I hear about day in and day out from my constituents are constraining businesses. We could approve the Keystone XL Pipeline, which makes a lot of sense and would create about 42,000 jobs. It would give us a safe source of energy from a friendly country such as Canada. We could do something else constructive. We could provide some relief for those people who have had full-time jobs turned into part-time jobs because of ObamaCare. Senator Collins from Maine and Senator Scott from South Carolina have a bill that would do exactly that.
Unfortunately, while I am an optimistic person, I am not particularly optimistic about the majority leader and the President changing their tactics in this election year. So that is why, tragically, under these circumstances we find ourselves here today debating a jobs bill that will actually kill jobs rather than one that would create jobs. What a terrible lost opportunity that is.
I see my friend from Maryland is here ready to speak.
I ask unanimous consent that several letters that have been provided to us by organizations such as the American Hotel & Lodging Association, the Wholesale Marketers Association, among other business organizations, including the U.S. Chamber of Commerce, be printed in the Record at the conclusion of my comments. All of these letters are opposing this 40-percent minimum wage increase.
I would finally ask unanimous consent to make as part of the record a column written by a gentleman by the name of Michael Saltsman in the IndyStar newspaper entitled ``Wage hike cost is no myth.'' This is the source for the information we got about the Clinton archives and this memo that Gene Sperling wrote to President Clinton advising him that even though it might be good temporary politics, it would actually hurt a lot of low-wage workers. I ask unanimous consent that they be made part of the Record.
There being no objection, the material was ordered to be printed in the Record, as follows: [From the Indy Star, Apr. 26, 2014] Wage Hike Cost Is No Myth (By Michael Saltsman) President Obama and Democrats in Congress have made a 40 percent increase in the minimum wage their signature election-year initiative. Supporters of the policy have dismissed concerns that the policy will hurt jobs as a ``myth'' (Indiana University's Fran Quigley made the claim in his April 15 column). But the ``myth'' argument has become increasingly difficult to defend. Not only has the nonpartisan Congressional Budget Office validated opponents' worst fears about a higher minimum wage and job loss, but the release of new papers from President Clinton's archives shows that his own economic team had misgivings about a 40 percent wage hike.
In 1998, the U.S. economy was relatively strong: Business was booming, unemployment was at 4.6 percent, and just under 14 percent of teens were unemployed. (That's a relatively low figure for this demographic group.) The late Democratic Sen. Ted Kennedy had proposed a 40 percent increase in the federal minimum wage, from $5.15 an hour to $7.25.
But in a memo to President Clinton, chief economic adviser Gene Sperling warned against supporting the senator's plans: ``Your entire economic team believes that this [40 percent increase] approach is too aggressive . . . and could prove damaging to the employment prospects of low-skilled workers.'' Clinton took his team's advice. Flash forward 16 years: The U.S. economy today is dramatically weaker than it was in the late 1990s. Unemployment stands at 6.8 percent, and the unemployment rate for young adults is 20.6 percent. (The jobless rate for this young age group has been above 20 percent for 66 months, a historical record.) If President Clinton's economic team was concerned about enacting a 40 percent wage hike in 1998, they'd be scared to death of doing it now.
And with good reason: The CBO analyzed the minimum wage proposal on the table, and estimated that as many as 1 million jobs would be lost if it was passed. A recent national survey of affected employers indicates that nearly 40 percent would be forced to cut staff to adapt to the higher labor costs. Even the Obama White House, in private conversations in 2013, was uneasy with a dramatic wage increase in this environment: According to the Washington Post, the president's team ``rejected a figure so high, worried that it could destroy jobs.'' What explains this year's lapse of economic judgment, then? One explanation, supported by reporting in The New York Times, is that the push for $10.10 is an election-year ploy to boost enthusiasm among the party's base. It's also a useful tactic to change the conversation away from the deeply unpopular health-care law--even if it comes with collateral damage for the least skilled in America. We won't know for certain if President Obama endorsed this cynical strategy until his own records and papers are released--perhaps 10 or 15 years from now. What we can say for certain today is that supporters of a higher minimum wage are flat-out wrong when they dismiss the employment consequences of a 40 percent hike. If claiming that a minimum wage hike will harm jobs truly is a ``right-wing myth,'' it's the only such myth that both the Obama and Clinton White Houses believed in.
____ April 28, 2014.
Dear Senator: The undersigned associations, representing a broad cross section of the U.S. economy, urge you to reject current proposals to raise the Federal minimum wage. One such proposal is S. 2223, the Minimum Wage Fairness Act, which will increase the minimum wage to $10.10 per hour for non- tipped employees and tie future minimum wage increases to inflation.
For many businesses, this 39 percent increase could truly be the difference between continuing to operate and going out of business. For the employees it attempts to help, it may be the difference between a job and unemployment.
As the Congressional Budget Office recently confirmed, raising the minimum wage will be detrimental to job creation and low-skilled workers trying to get started on the economic ladder. Traditional economic theory and modeling holds that the more expensive something is, the less of it one can afford. This is exactly what will happen if the minimum wage is increased--there will be fewer low-skilled workers hired, other workers will lose hours, and employers will have more incentive to find other ways to be productive, such as using technology or automation where they would previously have hired someone. When Congress' own economists say increasing the minimum wage will reduce employment, Congress should listen.
Any discussion about raising the minimum wage needs to recognize that many businesses run under very slim operating margins and will have the hardest time absorbing these higher labor costs. They will have to find more revenues or trim costs to make up the difference. Furthermore, indexing the minimum wage to inflation means that employers will likely be faced with automatically increasing labor costs without an automatic increase in revenues or profits.
Further, while the legislative package may contain benefits intended to help small businesses, these are insufficient to mitigate the negative impact the wage increase will surely have on businesses.
We respectfully ask that you oppose S. 1737 and other similar proposals to raise the minimum wage. The best way to help low-skilled and low-income workers is to favor more comprehensive, pro-growth solutions to our nation's most pressing economic issues.
Sincerely, American Hotel and Lodging Association, American Wholesale Marketers Association, Asian American Hotel Owners Association, Association of Kentucky Fried Chicken Franchisees, International Franchise Association, International Warehouse Logistics Association, National Association of Manufacturers, National Association of Theatre Owners, National Association of Wholesaler-Distributors, National Council of Chain Restaurants, National Federation of Independent Business, National Franchisee Association, National Grocers Association, National Office Products Alliance, National Restaurant Association, National Retail Federation, NATSO, representing America's Travel Plazas and Truckstops, Petroleum [[Page S2538]] Marketers Association of America, Professional Landcare Network, Society of American Florists, U.S. Chamber of Commerce.
____ American Farm Bureau Federation, Washington, DC, April 29, 2014.
Re: American Farm Bureau Federation Opposition of S. 2223 U.S. Senate, Washington DC.
Dear Senator: For agricultural producers across America, remaining economically competitive on fruits, vegetables and other commodities that are labor intensive is a continual struggle. Particularly over the last few decades, the American market has seen tremendous increases in the importation of foreign-grown produce, especially from nations where labor costs are substantially lower than those in the United States. Nevertheless, hired labor (including contract labor) remains an important input to U.S. agricultural production, accounting for about 17 percent of variable production expenses and about 40 percent of such expenses for fruits, vegetables, and nursery products.
As the Congressional Budget Office recently confirmed, raising the minimum wage will be detrimental to job creation and low-skilled workers trying to get started on the economic ladder. As the minimum wage is increased, workers risk losing hours and employers will have more incentive to invest in technology rather than hiring the low-skilled worker. Additionally, in the agricultural sector, where margins are historically slim, any proposal that escalates labor costs can put growers in a precarious position. S. 2223, the Minimum Wage Fairness Act, proposes to increase the federal minimum wage by nearly 40 percent, making it even more difficult for growers to remain competitive. Growers will have to find more revenues or trim costs to make up the difference. The increased pressure from higher labor costs would only make it harder for farmers, particularly small- and medium-sized growers, to compete or even stay in business.
S. 2223 threatens the economic well-being of many agricultural producers in labor-intensive crops. Farm Bureau urges you to vote ``no'' on this bill when it is taken up on the Senate floor.
Sincerely, Bob Stallman, President.
____ Chamber of Commerce of the United States of America, Washington, DC, April 29, 2014.
To the Members of the United States Senate: The U.S. Chamber of Commerce, the world's largest business federation representing the interests of more than three million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations, and dedicated to promoting, protecting, and defending America's free enterprise system, urges you to vote against S. 2223, the ``Minimum Wage Fairness Act,'' which would ultimately increase the federal minimum wage by $2.85 per hour, and index it to inflation.
The proposed increase--almost 40 %--would cause small business employers who have very tight operating margins and are least able to absorb higher costs to eliminate entry- level jobs, reduce hours and benefits for current employees, and possibly dismiss current employees. Furthermore, indexing the minimum wage to inflation means labor costs would continue to increase even though employer revenues and profits may not.
Many economists, including those used by Congress, have concluded that raising the minimum wage would be detrimental to job creation and low-skilled workers trying to get started on the economic ladder. The Congressional Budget Office recently determined that as many as 500,000 jobs could be lost by late 2016 if this increase is passed. This determination was later endorsed by Chairman of the Federal Reserve Janet Yellen--if the minimum wage is increased there would be fewer low skilled workers hired, other workers would lose hours, and employers would have more incentive to replace employees with technology or automation.
The economics columnist Robert Samuelson summed it up well: ``Many studies find negative job effects. The CBO didn't make them up. Hiking the minimum wage is more compelling as politics than as social policy . . . weak labor markets still reflect the Great Recession's hangover.'' Additionally, the temporary tax breaks included in this bill to soften the impact would not offset the harm of the additional labor costs. The push for this increase in the minimum wage comes against the backdrop of employers struggling to recover from the recession and to figure out the impact of Obamacare on their operations. The last thing they need is for the cost of their labor to go up as well.
Increasing the minimum wage would be a further drag on the economy and Chamber members trying to be part of the recovery, both big and small. The Chamber strongly opposes S. 2223, the ``Minimum Wage Fairness Act.'' The Chamber may consider including votes on, or in relation to, S. 2223-- including votes on the motion to proceed--in our annual How They Voted scorecard.
Sincerely, R. Bruce Josten, Executive Vice President, Government Affairs.
____ International Foodservice Distributors Association, McLean, VA, April 29, 2014.
Dear Senator: On behalf of the International Foodservice Distributors Association, I am writing to urge you to oppose legislation to raise the minimum wage. As our economy continues to struggle amid uncertainty around issues such as healthcare, now is not the time for government to impose additional new costs on American businesses.
IFDA is the non-profit trade association that represents businesses in the foodservice distribution industry throughout the United States and internationally. IFDA members include broadline, systems, and specialty foodservice distributors that supply food and related products to professional kitchens from restaurants, colleges and universities, to hospitals and care facilities, hotels and resorts, and other foodservice operations. Our members operate more than 800 distribution facilities with more than $125 billion in annual sales.
Increasing the minimum wage at this time makes little sense, especially with our foodservice operator customers continuing to face tremendous headwinds from a wide variety of factors. As employers struggle to create jobs, the nation's job participation rate remains at historically low levels. This has resulted in severe reductions in consumer's disposable income, a critical element in the growth of food away from home.
Other challenges have come from additional government requirements. The employer mandate in the Affordable Care Act will result in dramatic cost increases as operators must provide healthcare for their employees or move their workforce away from full time employment. The continued diversion of corn to the fuel supply created by the Renewable Fuel Standard has increased costs by as much as $18,000 per year to individual restaurant operators.
Increasing the minimum wage now will do nothing to solve what continues to be the most critical issue facing our nation today, the stagnant economy and continuing high unemployment rate. I strongly urge you to oppose any effort to increase the minimum wage.
With best wishes, Jonathan Eisen, Senior Vice President, Government Relations.
____ International Franchise Association, Washington, DC, April 29, 2014.
Dear Senator: On behalf of the nation's 825,000 franchise small businesses and the nearly 18 million workers they support, I write today to urge you to vote against legislation to raise the federal minimum wage. One such proposal is S. 2223, the Minimum Wage Fairness Act, which will increase the minimum wage to $10.10 per hour and tie future minimum wage increases to inflation. For the many franchise businesses that are labor-intensive and already operate on thin profit margins, this legislation could be the difference between continuing to operate and going out of business--between maintaining employees or shedding more jobs.
Businesses should be able to determine the most competitive starting wage and subsequent raises for their employees within their industry and local economy. A drastic minimum wage increase would ripple throughout the fragile American economy and undermine employer's desires to reward hard work with wage increases. This effect will be even more pronounced when combined with the full implementation of the Affordable Care Act's employer mandate. According to the Congressional Budget Office, raising the minimum wage will be detrimental to job creation and low-skilled workers trying to get started on the economic ladder. When Congress' own economists say increasing the minimum wage will reduce employment, Congress should listen.
Although this legislation contains other benefits for small businesses that the International Franchise Association (IFA) fully supports, they are insufficient to mitigate the negative impact of a drastic increase in the minimum wage. On their own, tax incentives for purchasing or hiring are a significant boon for franchise business owners, and they should be considered along with other business tax extenders that will help the nation's small businesses grow and thrive. Including important pro-growth initiatives as a sweetener for the bitter pill of an artificial wage floor that disrupts the labor market is the type of public policy that holds our nation's franchise owners back from fully contributing to the nation's economic recovery.
I urge you to vote ``NO'' on this measure. The IFA will consider all votes on, or in relation to, this issue among our annual list of ``Key Votes.'' Sincerely, Stephen J. Caldeira, President & Chief Executive Officer, International Franchise Association.
____ National Council of Chain Restaurants, Washington, DC, April 28, 2014.
Hon. Lamar Alexander, U.S. Senate, Washington, DC.
Dear Senator Alexander: The U.S. Senate is expected to consider S. 2223, legislation seeking to increase the federal minimum wage from its current level of $7.25 an hour to $10.10 an hour, an increase of 40 percent. On behalf of the National Council of Chain Restaurants, I am writing to express our strong opposition to this ill-timed and flawed proposal.
At this key juncture in the country's economic recovery, the last thing that the Senate should be considering is a scheme to [[Page S2539]] raise labor costs on many local businesses across the United States. As you may know, the vast majority of workers earning the minimum wage are teens living with their parents, adults living alone, or second household earners. Moreover, as minimum wage workers gain important skills, they receive significant raises. As such, the legislation before the Senate fails to recognize that the federal minimum wage is a starting wage, and that most employees don't stay on this starting wage for very long.
In addition, S. 2223 would increase the cash wage for tipped employees by almost 240 percent. This provision is included even though current law already requires employers to pay eligible employees the statutory wage rate in the uncommon instance that tipped income doesn't reach the starting wage rate (on a national level, the median hourly wage for tipped employees is $16-$22/hour). Finally, the proposal links future wage hikes to the consumer price index, injecting an unnecessary degree of uncertainty and volatility into labor cost calculations for chain restaurant businesses.
Chain restaurants are employers of opportunity in local communities around the country, whether it is a first job for individuals with limited work skills to long-term careers in a fast-paced, competitive and innovative industry. Rather than considering legislation which raises the cost of staying in business for labor-intensive small establishments while limiting needed job opportunities, the Senate should advance policies proven to foster broad-based economic growth and to address the historically low labor participation rate and the nation's persistently high unemployment rate (including a teen unemployment rate of over 20 percent).
We urge you to oppose S. 2223, or related legislation, when it is considered by the U.S. Senate.
Sincerely, Robert J. Green, Executive Director.
____ National Federation of Independent Business, Washington, DC, April 29, 2014.
Dear Senator: On behalf of the National Federation of Independent Business (NFIB), the nation's leading small business advocacy organization, I am writing in strong opposition to S. 2223, the Minimum Wage Fairness Act, a bill to increase the minimum wage to $10.10 and permanently index it to inflation. NFIB opposes any effort to increase the federal minimum wage, and a vote on S. 2223 will be considered an NFIB KEY VOTE for the 113th Congress.
Like most government mandates on business, raising the minimum wage will have a deep and disproportionate impact on the small-business sector because small businesses are the least able to absorb such a dramatic increase in their labor costs. The small-business sector has historically created two-thirds of net new private jobs in the U.S. economy, but has failed to recover in recent years because of a series of policies that increase the burden on small-business owners-- increases to healthcare costs, higher taxes, more costly regulations, and now the minimum wage increase proposal.
The minimum wage directly affects small businesses because a large amount of their earnings go directly to pay for operating expenses, such as equipment, supplies, property costs, inventory and employee wages and benefits. Increasing labor costs does not incentivize growth or hiring--they make it nearly impossible. Permanently indexing the minimum wage, like S. 2223 proposes, would ensure that it would rise every year, further adding to the burden placed on employers and placing them at a competitive disadvantage. S. 2223 also increases the minimum cash wage for tipped employees until it reaches 70 percent of the federal minimum wage. Raising the cost of labor creates incentives for employers to find ways to use less labor.
The latest Congressional Budget Office (CBO) report supports NFIB's Research Foundation findings: significant job loss as a result of increasing the minimum wage. NFIB's Research Foundation analyzed the potential economic impact of raising the California, Illinois, New Jersey and New York minimum wages, and the results were telling. An increase of California's minimum wage to $9.25 per hour would cost the state 68,000 jobs--63 percent of which are in the small business sector--and a $5.7 billion reduction in real economic output. Illinois would lose 21,000 jobs (67 percent in small businesses) and $4.5 billion in economic output from an increase to $10.65 per hour. A New Jersey proposal to increase the minimum wage to $8.25 would cut 31,000 jobs from the state (59 percent in small businesses) and $17.4 billion in lost economic output. The New York study concluded a loss of 68,000 jobs (more than 70 percent in small businesses) and $2.5 billion in lost economic output.
The job killing effects of this minimum wage hike are obvious. Small business cannot afford another economically devastating mandate from the federal government. NFIB urges you to vote NO on S. 2223 and will consider it an NFIB KEY VOTE for the 113th Congress.
Sincerely, Susan Eckerly, Senior Vice President, Public Policy.
____ National Grocers Association, April 28, 2014.
Hon. Senator Harry Reid, Senate Majority Leader, Hart Senate Office Building, Washington, DC.
Hon. Senator Mitch McConnell, Senate Republican Leader, Russell Senate Office Building, Washington, DC.
Dear Senator Reid and Senator McConnell: The National Grocers Association (NGA) strongly urges a NO VOTE on the Minimum Wage Fairness Act (S. 2223) as it comes to the floor for a vote. NGA Independent retail and wholesale grocers have a significant economic impact across nearly every community in America. Our industry is accountable for close to 1 percent of the nation's overall economy and is responsible for generating $131 billion in sales, 944,000 jobs, $30 billion in wages, and $27 billion in tax revenue. We are proud that the communities we serve are also the neighborhoods we live in.
The Minimum Wage Fairness Act, if enacted would increase the federal minimum wage to $10.10 per hour over a 2 year period and tie future minimum wage increases to inflation. While the independent grocery industry welcomes any focus on the improving economy and creating jobs, a minimum wage increase during a time when our economy continues to recover runs counter to that goal. A recent Congressional Budget Office (CBO) supports this claim noting that increasing the minimum wage to $10.10 an hour could reduce total employment by 500,000 workers by the second half of 2016.
According to the U.S. Bureau of Labor Statistics in 2012, cashiers in the grocery industry made an hourly mean wage of $10.24, nearly 2 dollars more than the current federal minimum wage and higher than any of the other retail industries including department stores, convenience stores, and restaurants. Grocers are proud of the jobs that we provide and the wide array of career opportunities we offer to our employees. We are often the first job for many teens and offer diverse opportunities for employees of many skill sets, some of which have age restrictions such as meat cutters, bailers, and fork lift operators who must be at least 18 years of age.
Because this is a critical issue to our member companies, NGA will be key voting the Minimum Wage Fairness Act (S. 2223) and including it on our 2014 Legislative Scorecard. Thank you for your consideration. Independent grocers look forward to your support on this very important issue by VOTING NO on S. 2223.
Sincerely, Peter J. Larkin, President and CEO.
____ National Association of Manufacturers, Washington, DC, April 29, 2014.
U.S. Senate, Washington, DC.
Dear Senators: The National Association of Manufacturers (NAM), the largest manufacturing association in the United States, representing manufacturers in every industrial sector and in all 50 states, urges you to oppose the Motion to Proceed to S. 2223, the Minimum Wage Fairness Act introduced by Senator Tom Harkin (D-IA).
The NAM supports labor policies promoting job creation and manufacturers are committed to compensating employees at a competitive wage for their work. High levels of job performance and employee satisfaction are encouraged by relating compensation that is both internally equitable and externally competitive to performance on the job.
The Congressional Budget Office (CBO) recently reported raising the minimum wage from $7.25 to $10.10 an hour will be detrimental to job creation. In fact, CBO estimates that an increase in the minimum wage to $10.10 an hour could result in a loss of employment of 500,000 by the second half of 2016.
The NAM's Key Vote Advisory Committee has indicated that votes on S. 2223, including procedural motions such as a Motion to Proceed, may be considered for designation as Key Manufacturing Votes in the 113th Congress. Thank you for your consideration.
Sincerely, Aric Newhouse, Senior Vice President, Policy and Government Relations.
____ National Restaurant Association, Washington, DC, April 28, 2014.
Dear Senator: On behalf of the nation's restaurant and foodservice industry, we urge you to oppose the Minimum Wage Fairness Act (S. 2223). The National Restaurant Association may consider any votes on, or related to, this legislation in our annual ``How They Voted'' legislative scorecard.
The Minimum Wage Fairness Act, would increase the federal minimum wage to $10.10 an hour and raise the minimum cash wage for tipped employees to 70 percent of the minimum wage for non-tipped employees. This represents a nearly 40 percent increase in the current federal wage, and a tripling of the cash wage for employees who receive tips.
With over 13.5 million employees, the restaurant and foodservice industry is the second-largest private employer in the United States. As average pre-tax profit margins in the restaurant industry range from 4 to 6 percent, restaurateurs have little ability to absorb or offset higher labor costs, especially at this time of economic and operational uncertainty. Roughly 90 percent of the industry consists of small business owners, with only [[Page S2540]] 1 out of 10 restaurants in the U.S. owned and operated by chain corporations.
The nonpartisan Congressional Budget Office (CBO) officially concluded that raising the federal minimum wage to $10.10 would result in 500,000 job losses. Moreover, that's a conservative estimate, as CBO recognized in its analysis that the job losses could be as high as 1 million.
As the continued fiscal battles at the federal level have negatively affected consumer confidence, the unknown factors associated with potentially significant cost increases from implementation of the 2010 health care law have created an increasingly difficult business environment for Main Street businesses. While we understand the legislation is intended to help low-income families, U.S. Census data reveals that the average household income of restaurant employees who earn the federal minimum wage is $62,507. Moreover, according to U.S. Bureau of Labor Statistics, 71 percent of minimum wage restaurant workers are individuals under the age of 25, most of whom work part-time. These are critical positions for bringing people into the labor force.
Mandating such a dramatic increase in the starting wage at this time, when many businesses are already struggling in a difficult economic climate, will limit employment opportunities and slow economic growth in a sector of the economy that is undergoing a tremendous amount of change. We welcome a discussion about wages and economic factors, but we ask you to oppose this proposed wage increase and similar proposals and work with the small business community on a plan to strengthen the economy and create some sense of certainty going forward.
Sincerely, Scott DeFife, Executive Vice President, Policy and Government Affairs.
____ National Retail Federation, Washington, DC, April 29, 2014.
Hon. Mitch McConnell, Republican Leader, U.S. Senate, Washington, DC.
Dear Republican Leader McConnell: On behalf of the National Retail Federation (NRF) and the nation's retail industry, I am writing to urge you to oppose the proposed forty percent increase in the federal minimum wage that the Senate plans to consider this week. Our nation's economy is continuing to struggle to create jobs, and this legislation will likely make it worse, particularly among younger workers. Please note that we will consider votes on this measure among the Key Retail Votes for our annual voting scorecard.
NRF is the world's largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation's largest private sector employer, supporting one in four U.S. jobs--42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation's economy. NRF's This is Retail campaign highlights the industry's opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation.
Raising the standard of living for low-skill, low-wage workers is a valid goal, but there is clear evidence that mandated wage hikes undermine the job prospects for less skilled and part-time workers. Policymakers have other tools, such as increasing the earned income tax credit, fixing the tax code, education improvements, immigration reform, transportation funding, and strong trade alliances that will aid in achieving that goal without creating more unemployment. Finding more opportunities for those trying to start out is a better economic approach than restricting the amount of jobs for those seeking employment.
What we should be doing is talking about how we improve people's chances to move up. The minimum wage was designed to have young people get into the marketplace to get started. With a workforce of 155 million, a approximately 2 million are on minimum wage. To talk about raising the entry, or starting, wage is to admit we have failed on education and training.
Slow job growth is the most pressing issue facing the U.S. economy and our focus should be on the creation of jobs and increasing opportunities for the under-employed. For many businesses, particularly smaller employers, uncertainty is the dominant mood. Higher labor costs also loom in the future with the pending implementation of the Affordable Care Act. All of these factors suggest that now is the least opportune moment to engage in what is essentially an opportunity tax by raising the minimum wage.
Employers respond to higher labor costs by hiring fewer workers. A higher minimum wage eliminates entry-level positions that provide unskilled employees the opportunity to gain experience. Less experience makes it harder for workers to become more productive and earn higher wages. There is a domino effect: such an increase creates wage inflation by putting upward pressure on existing wages of those making more than the minimum. It would limit job growth and stunt that group of workers ability to advance. There would be a contraction of jobs instead of an increase in positions available. Lost jobs as a consequence of a higher minimum wage will inevitably make it harder for these individuals to learn new job skills than can create a path to a brighter future.
The retail sector has been a leading job creator throughout the recession and the recovery. For many Americans, the retail industry provides the chance to learn new job skills, to earn a living, to find a career, or to earn some extra money. Retail offers a wide range of career opportunities, the vast majority of which are above minimum wage, and supports one out of four U.S. jobs.
NRF encourages Congress to forgo sound-bite politics and instead focus on economic policies that find ways of putting people to work. This is not the time for yet another anti-job mandate for those employees that are looking for jobs and those companies who want to help grow the economy.
NRF looks forward to working with Congress as you seek to increase economic growth in this country.
Sincerely, David French, Senior Vice President, Government Relations.
Mr. CORNYN. Madam President, I yield the floor.
The PRESIDING OFFICER. The Senator from Maryland.