GRADUALLY RAISING THE MINIMUM 

WAGE TO $15: GOOD FOR WORKERS, 

GOOD FOR BUSINESSES, AND GOOD 

FOR THE ECONOMY 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND LABOR 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, FEBRUARY 7, 2019 

Serial No. 116–2 

Printed for the use of the Committee on Education and Labor 

( 

Available via the World Wide Web: www.govinfo.gov 

or 

Committee address: https://edlabor.house.gov 


EDL-011-D with DISTILLER
GRADUALLY RAISING THE MINIMUM WAGE TO $15: GOOD FOR WORKERS, GOOD 

FOR BUSINESSES, AND GOOD FOR THE ECONOMY 


EDL-011-D with DISTILLER
U.S. GOVERNMENT PUBLISHING OFFICE

35–268 WASHINGTON : 2019

GRADUALLY RAISING THE MINIMUM 

WAGE TO $15: GOOD FOR WORKERS, 

GOOD FOR BUSINESSES, AND GOOD 

FOR THE ECONOMY 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND LABOR 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, FEBRUARY 7, 2019 

Serial No. 116–2 

Printed for the use of the Committee on Education and Labor 

( 

Available via the World Wide Web: www.govinfo.gov 

or 

Committee address: https://edlabor.house.gov 


EDL-011-D with DISTILLER
(II) 

COMMITTEE ON EDUCATION AND LABOR 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia, Chairman 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Mark Takano, California 

Alma S. Adams, North Carolina 

Mark DeSaulnier, California 

Donald Norcross, New Jersey 

Pramila Jayapal, Washington 

Joseph D. Morelle, New York 

Susan Wild, Pennsylvania 

Josh Harder, California 

Lucy McBath, Georgia 

Kim Schrier, Washington 

Lauren Underwood, Illinois 

Jahana Hayes, Connecticut 

Donna E. Shalala, Florida 

Andy Levin, Michigan* 

Ilhan Omar, Minnesota 

David J. Trone, Maryland 

Haley M. Stevens, Michigan 

Susie Lee, Nevada 

Lori Trahan, Massachusetts 

Joaquin Castro, Texas 

* Vice-Chair 

Virginia Foxx, North Carolina, 

Ranking Member 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Brett Guthrie, Kentucky 

Bradley Byrne, Alabama 

Glenn Grothman, Wisconsin 

Elise M. Stefanik, New York 

Rick W. Allen, Georgia 

Francis Rooney, Florida 

Lloyd Smucker, Pennsylvania 

Jim Banks, Indiana 

Mark Walker, North Carolina 

James Comer, Kentucky 

Ben Cline, Virginia 

Russ Fulcher, Idaho 

Van Taylor, Texas 

Steve Watkins, Kansas 

Ron Wright, Texas 

Daniel Meuser, Pennsylvania 

William R. Timmons, IV, South Carolina 

Dusty Johnson, South Dakota 

Ve ́ronique Pluviose, Staff Director 

Brandon Renz, Minority Staff Director 


EDL-011-D with DISTILLER
(III) 

C O N T E N T S 

Page 

Hearing held on February 7, 2019 ......................................................................... 1 

Statement of Members: 

Scott, Hon. Robert C. ‘‘Bobby’’, Chairman, Committee on Education and 

Labor .............................................................................................................. 1 

Prepared statement of ............................................................................... 4 

Foxx, Hon. Virginia, Ranking Member, Committee on Education and 

Labor .............................................................................................................. 6 

Prepared statement of ............................................................................... 8 

Statement of Witnesses: 

Barron, Ms. Simone, Seattle, WA ................................................................... 148 

Prepared statement of ............................................................................... 150 

Brodeur, Dr. Paul A., ESQ., State Representative, 32nd Middlesex District, Commonwealth of Massachusetts House of Representatives .......... 202 

Prepared statement of ............................................................................... 204 

Gupta, Ms. Vanita, President and CEO, The Leadership Conference on 

Civil and Human Rights .............................................................................. 135 

Prepared statement of ............................................................................... 138 

Eckhouse, Ms. Kathy, Owner, La Quercia, Norwalk, IA .............................. 153 

Prepared statement of ............................................................................... 155 

Holtz-Eakin, Dr. Douglas, President, American Action Forum, Washington, DC ..................................................................................................... 36 

Prepared statement of ............................................................................... 38 

Reich, Dr. Michael, PH.D., Professor, University of California, Berkley, 

CA ................................................................................................................... 169 

Prepared statement of ............................................................................... 172 

Spriggs, Dr. William E., Professor, Department of Economics, and Chief 

Economist, Howard University and AFL-CIO, Washington, DC .............. 9 

Prepared statement of ............................................................................... 12 

Strain, Dr. Michael R., PH.D. Director of Economic Policy Studies,, and 

Resident John G. Searle Scholar, American Enterprise Institute, Washington, DC ..................................................................................................... 158 

Prepared statement of ............................................................................... 160 

Wise, Mr. Terrence, Shift Manager, McDonald’s, Independence, MO ......... 31 

Prepared statement of ............................................................................... 33 

Zipperer, Dr. Ben, Economist Policy Institute, Washington, DC ................. 48 

Prepared statement of ............................................................................... 50 

Additional Submissions: 

Adams, Hon. Alma S., a Representative in Congress from the State 

of North Carolina: 

Letter dated February 5, 2019 from the Economic Policy Institute ..... 210 

Letter dated February 6, 2019 from the Economic Policy Institute ..... 211 

Article: House Health Bill Would Lead to Less Coverage, Higher 

Patient Costs .......................................................................................... 263 

Statement from Rowe-Finkbeiner, Kristin, Executive Director and 

CEO of MomsRising.org ........................................................................ 265 

Statement from the National Disability Rights Network Opposes 

American Health Care Act .................................................................... 267 

Bonamici, Hon. Suzanne, a Representative in Congress from the State 

of Oregon: 

Letter dated February 5, 2019 from the Women’s Coalition ................. 81 

Courtney, Hon. Joe, a Representative in Congress from the State of 

Connecticut: 

Letter dated February 1, 2019 from OXFAM ......................................... 72 


EDL-011-D with DISTILLER
Page

IV 

Additional Submissions—Continued 

Courtney, Hon. Joe, a Representative in Congress from the State of 

Connecticut—Continued 

Article: Hartford HealthCare to Raise Minimum Wage to $15 Across 

Health Network ..................................................................................... 269 

Davis, Hon. Susan A., a Representative in Congress from the State of 

California: 

Letter dated February 6, 2019 from AAUW ........................................... 273 

Mrs. Foxx: 

Article: Seattle Small Businesswoman .................................................... 276 

Letter dated February 5, 2019 from the National Restaurant Association .......................................................................................................... 278 

Letter dated February 5, 2019 from NFIB .............................................. 280 

Replacing Employer-Sponsored Health Insurance with GovernmentFinanced Coverage ................................................................................ 282 

Grijalva, Hon. Rau ́l M., a Representative in Congress from the State 

of Arizona: 

Report: Minimum Wages and the Distribution of Family Incomes 

in the United States .............................................................................. 60 

Jayapal, Hon. Pramila, a Representative in Congress from the State 

of Washington: 

Prepared statement from Asian and Pacific Islander American 

Health Forum (APIAHF) ....................................................................... 318 

Lee, Hon. Susie, a Representative in Congress from the State of Nevada: 

Letter date January 28, 2019 from First Focus Campaign for Children ......................................................................................................... 114 

Levin, Hon. Andy, a Representative in Congress from the State of Michigan: 

Letter date January 31, 2019 from AFL-CIO ......................................... 102 

Letter date January 15, 2019 from Disability Groups ........................... 223 

Morelle, Hon. Joseph D., a Representative in Congress from the State 

of New York: 

Link: National Council on Disability ....................................................... 229 

Norcross, Hon. Donald, a Representative in Congress from the State 

of New Jersey: 

Letter dated February 6, 2019 for Communications Workers of America ............................................................................................................ 323 

Chairman Scott: 

Fact Sheet: National Employment Law Project ...................................... 132 

Business For A Fair Minimum Wage ...................................................... 250 

Link: (Economic Policy Institute) ............................................................. 249 

Letter from The Episcopal Church .......................................................... 324 

Undersigned Organizations ...................................................................... 325 

Tipped Wage Effects on Earnings and Employment in Full-Service 

Restaurants ............................................................................................ 339 

Faith-based Organizations Support The Raise the Wage Act of 2019 .. 365 

Letter dated January 15, 2019, from the National Disability Rights 

Network .................................................................................................. 367 

Letter dated February 4, 2019 from the National Urban League ......... 369 

Article: Leaked Documents Show Strong Business Support for Raising the Minimum Wage ......................................................................... 371 

Link: Center on Wage and Employment Dynamics (CWED) ................ 373 

Link: NBER Working Paper Series ......................................................... 373 

Takano, Hon. Mark, a Representative in Congress from the State of 

California: 

Statement from the Center for American Progress ................................ 88 

Underwood, Hon. Lauren, a Representative in Congress from the State 

of Illinois: 

Letter dated February 7, 2019 from Advocate Aurora Health .............. 245 

Questions submitted for the record by: 

Davis, Hon. Susan A., a Representative in Congress from the State 

of California ............................................................................................ 379 

Fudge, Hon. Marcia L., a Representative in Congress from the State 

of Ohio ................................................................................ 377, 379, 381, 383 

Hayes, Hon. Jahana, a Representative in Congress from the State 

of Connecticut ........................................................................................ 379 


EDL-011-D with DISTILLER
Page

V 

Additional Submissions—Continued 

Questions submitted for the record by—Continued 

Lee, Hon. Susie, a Representative in Congress from the State of 

Nevada .................................................................................................... 383 

Chairman Scott.............................................................................. 379, 381, 383 

Trahan, Hon. Lori, a Representative in Congress from the State 

of Massachusetts .................................................................................... 375 

Responses to questions submitted for the record: 

Mr. Brodeur ............................................................................................... 384 

Ms. Eckhouse ............................................................................................. 386 

Dr. Reich .................................................................................................... 387 

Mr. Spriggs ................................................................................................ 393 

Dr. Zipperer ............................................................................................... 396 


EDL-011-D with DISTILLER

EDL-011-D with DISTILLER
(1) 

GRADUALLY RAISING THE MINIMUM WAGE 

TO $15: GOOD FOR WORKERS, GOOD FOR 

BUSINESSES, AND GOOD FOR THE ECONOMY 

Thursday, February 7, 2019 

House of Representatives, 

Committee on Education and Labor, 

Washington, DC. 

The committee met, pursuant to notice, at 10:17 a.m., in room 

2175, Rayburn House Office Building, Hon. Robert C. ‘‘Bobby’’ Scott 

(chairman of the committee) presiding. 

Present: Representatives Scott, Davis, Grijalva, Courtney, Fudge, 

Sablan, Bonamici, Takano, Adams, DeSaulnier, Norcross, Jayapal, 

Morelle, Wild, Harder, McBath, Schrier, Underwood, Hayes, 

Shalala, Levin, Omar, Trone, Stevens, Lee, Trahan, Castro, Foxx, 

Roe, Thompson, Walberg, Guthrie, Grothman, Stefanik, Allen, 

Smucker, Banks, Walker, Comer, Cline, Fulcher, Taylor, Watkins, 

Wright, Meuser, Timmons, and Johnson. 

Staff present: Tylease Alli, Chief Clerk; Nekea Brown, Deputy 

Clerk; Ilana Brunner, General Counsel; David Dailey, Senior Counsel; Emma Eatman, Press Aide; Mishawn Freeman, Staff Assistant; 

Carrie Hughes, Director of Health and Human Services; Eli 

Hovland, Staff Assistant; Eunice Ikene, Labor Policy Advisor; Ariel 

Jona, Staff Assistant; Kimberly Knackstedt, Disability and Education Policy Advisor; Stephanie Lalle, Deputy Communications Director; Bertram Lee, Policy Counsel; Andre Lindsay, Staff Assistant; Richard Miller, Director of Labor Policy; Max Moore, Office 

Aide; Udochi Onwubiko, Labor Policy Counsel; Veronique Pluviose, 

Staff Director; Carolyn Ronis, Civil Rights Counsel; Dianna 

Ruskowsky, Finance and Personnel Advisor; Banyon Vassar, Deputy Director of Information Technology; Cyrus Artz, Minority Parliamentarian; Marty Boughton, Minority Press Secretary; Courtney 

Butcher, Minority Coalitions and Members Services Coordinator; 

Akash Chougule, Minority Professional Staff Member; Rob Green, 

Minority Director of Workforce Policy; John Martin, Minority 

Workforce Policy Counsel; Sarah Martin, Minority Professional 

Staff Member; Hannah Matesic, Minority Legislative Operations 

Manager; Kelley McNabb, Minority Communications Director; 

Alexis Murray, Minority Professional Staff Member; Brandon Renz, 

Minority Staff Director; Ben Ridder, Minority Legislative Assistant; 

Meredith Schellin, Minority Deputy Press Secretary and Digital 


EDL-011-D with DISTILLER
2 

Advisor; Heather Wadyka, Minority Staff Assistant; and Lauren 

Williams, Minority Professional Staff Member. 

Chairman SCOTT. The Committee on Education and Labor will 

come to order. I want to welcome everyone today and note that a 

quorum is present. The committee meeting today is a legislative 

hearing on testimony on ‘‘Gradually Raising the Minimum Wage to 

$15: Good for Workers, Good for Businesses, and Good for the 

Economy.’’ 

Pursuant to committee rule 7(c), opening statements are limited 

to the chair and ranking member. This allows us more time to hear 

from our witnesses and provides members more time to ask questions. I recognize myself now for the purpose of making an opening 

statement. 

Today we are here for a legislative hearing on the Raise the 

Wage Act, H.R. 582, a proposal to gradually raise the minimum 

wage to $15 an hour. I want to welcome and thank our distinguished witnesses for being with us today and for agreeing to testify. 

Raising the minimum wage is one of the most hotly contested 

and intensely studied of all labor practices. All the time and research dedicated to this topic has produced a clear consensus: 

Gradually raising the minimum wage is good for workers, who experience a better standard of living; good for businesses, which benefit from having more customers and less turnover; and good for 

the economy, which is strongest when we lift working people out 

of poverty and build a thriving middle class. 

Before we discuss where we are going, it is important to reflect 

on where we are today. After 10 years of no increase in the Federal 

minimum wage, minimum wage workers have suffered a 17 percent pay cut due to inflation. Today’s minimum wage workers making $7.25 an hour have less buying power than the minimum wage 

worker had in the 1960’s. 

The result is that the Federal minimum wage is no longer serving its purpose. According to a recent study, there is no place in 

America where a full-time worker who is paid the current Federal 

minimum wage can afford a modest two-bedroom apartment. One 

in nine American workers are paid wages that leave them in poverty even if they worked full time year-round. An individual earning the current minimum wage working full time earns only about 

$15,080 a year, less than the Federal poverty level for a family of 

two. 

Do we have a chart? 

This shows the poverty level and it shows the median wage and 

where the minimum wage has been. 

My Republican colleagues are eager to warn the so-called consequences of raising the minimum wage to $15, but they ignore the 

consequences of inaction over the last 10 years. 

If Congress fails to raise the minimum wage by mid-June it will 

be longest period of time without an increase since the Federal 

minimum wage was created 80 years ago. During that time, millions of workers working full time have been forced to live in poverty. The only radical thing about the bill is it is so long overdue. 

By several standards, the proposal is a reasonable approach in 

restoring the value of the minimum wage. First, the erosion of the 


EDL-011-D with DISTILLER
3 

minimum wage after adjustments for inflation has meant that over 

the last five decades workers at the low end of the scale have drifted further away from the middle class. 

As the chart on the screen indicates, in 1968—back to the same 

chart—the inflation-adjusted minimum wage used to be a little 

over 50 percent of the median hourly worker’s wages for an individual working full time. Now, at $7.25 an hour, it is just a third 

of the median wage. 

Had the 1968 minimum wage simply grown with the rate of increases in average wages, it would be $12 and 6 million fewer people would be living in poverty. 

Second, the minimum wage has not kept up with increases in 

productivity. Between 1973 and 2017, workers’ productivity grew 

by 77 percent while their wages grew by 12 percent. The widening 

gap in how much workers produce and how much they are paid is 

one major factor contributing to the historic income inequality we 

experience today. 

If the minimum wage had kept up with worker productivity, it 

would be about $20 an hour today. Workers do not just deserve 

higher pay, they have earned that higher pay. 

Finally, by the time the minimum wage reaches $15 an hour in 

2024, an individual working full time with a family, including two 

children, will finally be able to earn enough to exceed the poverty 

threshold for a family of four. 

We now have an opportunity—and a responsibility—to restore 

the value of the minimum wage, lifting millions of hardworking 

people out of poverty, and grow the economy in Main Street America. 

The Raise the Wage Act does three things. First, it gradually increases the minimum wage in six steps to $15 by 2024. Second, it 

ensures every worker covered by the law is paid at least the full 

minimum wage by creating one fair wage for all workers. Third, by 

tying future increases to median wages, the bill ensures that future 

increases in the Federal minimum wage are determined by economics and not politics. 

A report published this week by the Economic Policy Institute 

details the sweeping benefits this bill will have for workers across 

the country. For example, if we pass the Raise the Wage Act, close 

to 40 million workers will receive a raise, including two-thirds of 

America’s working poor and parents of over 14 million children. 

This bill will stimulate the local economy across the country. 

Whereas the Republican tax bill gave the largest benefits to those 

who needed it the least, this puts money directly in the hands of 

those who are most likely to spend it in their communities. Over 

the 6-year phase-in period, the increase in the minimum wage 

should generate about $120 billion in additional wages, which will 

flow back into local businesses. 

Every time we propose raising the minimum wage, unfortunately, opponents repeat a similar set of talking points that have 

been repeated and contradicted by evidence and research. 

Today, I am confident that we will hear dire predictions about 

job losses that will result from gradually raising the minimum 

wage, but the overwhelming majority of research from both left-and 


EDL-011-D with DISTILLER
4 

right-leaning labor economists find few, if any, job loss when we 

gradually raise the minimum wage. 

For example, a widely acclaimed study published by the National 

Bureau of Economic Research and coauthored by one of our witnesses examined 138 minimum wage increases between 1979 and 

2016. This study found that the overall number of low wage jobs 

remained essentially unchanged over 5 years following the increase, and there was no evidence of disemployment when considering higher levels of minimum wage. 

The evidence clearly demonstrates that the Raise the Wage Act 

is a reasonable proposal and will lift millions of workers out of poverty. 

We now hear calls for a regional minimum wage, but, unfortu- nately, the reality is, by 2024, $15 an hour is the least a person 

would need to afford the basic essentials anyplace in America. According to the MIT Living Wage Calculator, single working parents 

today, even in the poorest counties in the country, need at least 

$20 an hour to cover basic costs. 

Workers should not be forced to work at poverty level wages regardless of where they live. A low-cost region should not be forced 

to continue to lag behind the rest of our economy. 

H.R. 582 will begin to restore the original intent of the Fair 

Labor Standards Act, to ensure that all workers have a minimum 

living standard. And as President Roosevelt stated: ‘‘Our Nation, so 

richly endowed with natural resources and with a capable and industrious population, should be able to devise ways and means of 

ensuring to all of our working men and women a fair day’s pay for 

a fair day’s work.’’ 

Today’s hearing is an opportunity to examine facts and evidence. Raising the minimum wage to $15 an hour by 2024 in all regions 

is good for workers, good for businesses, and good for the economy. 

This hearing is a first step toward passing a bill that reflects our 

shared belief that no one working full time should be living in poverty. 

And I thank you. 

And does the Ranking Member want to speak now or in a 

minute? I can introduce the witnesses. 

[The statement of Chairman Scott follows:] 

Prepared Statement of Hon. Robert C. ‘‘Bobby’’ Scott, Chairman, Committee 

on Education and Labor 

Today, we are here for a legislative hearing on the Raise the Wage Act, H.R. 582, a proposal to gradually raise the minimum wage to $15. I want to welcome and 

thank our distinguished witnesses for agreeing to testify here today. 

Raising the minimum wage is one of the most hotly debated and intensely studied 

labor policies. All the time and research dedicated to this topic has produced a clear 

consensus: Gradually raising the minimum wage is good for workers who experience 

a better standard of living; good for businesses which benefit from having more customers and less turnover, and good for the economy which is strongest when we lift 

working people out of poverty and build a thriving middle class. 

But before we discuss where we are going, it’s important to reflect on where we 

are today. After 10 years with no increase in the Federal minimum wage, minimum 

wage workers have suffered a 17 percent pay cut due to inflation. Today’s minimum 

wage worker making $7.25 an hour has less buying power than a minimum wage 

worker had in the 1960’s. 

The result is that the Federal minimum wage is no longer serving its purpose. 

There is no place in America where a full-time worker who is paid the current Federal minimum wage can afford the basic essentials. One in nine American workers 


EDL-011-D with DISTILLER
5 

are paid wages that leave them in poverty, even if they worked full-time and yearround. An individual earning the current Federal minimum wage of $7.25 an hour 

and working full-time earns only $15,080 annually, less than the Federal poverty 

level for a family of two. 

My Republican colleagues are eager to warn of the so-called consequences of gradually raising the minimum wage to $15, but they ignore the consequences of 

inaction over the last 10 years. If Congress fails to raise the Federal minimum wage 

by mid-June, it will be the longest period of time without an increase since the Federal minimum wage was created 80 years ago. 

During that time, millions of people working full-time have been forced to live in 

poverty. The only thing radical about this bill is that it is so long overdue. 

By several standards, this proposal is a reasonable approach to restoring the 

value of the minimum wage. 

First, the erosion of the value of the minimum wage after adjustments for inflation has meant that, over the last five decades, workers at the low-end of the wage 

scale have drifted farther away from the middle class. 

As the chart on the screen illustrates, in 1968, the inflation-adjusted minimum 

wage was a little over 50 percent of the median hourly workers’ wages for an individual working full time. Today, at $7.25 per hour it is just a third of the median 

hourly wage of $22.36. Had the 1968 minimum wage simply grown with the rate 

of increases in average wages, it would be nearly $12 today and 6 million fewer 

Americans would be living in poverty. 

Second, the minimum wage has not kept up with increases in productivity. Between 1973 to 2017, workers’ productivity grew by 77 percent, while their hourly 

wages grew by just 12 percent. The widening gap between how much workers 

produce and how much they are paid is one major factor contributing to the historic 

income inequality we experience today. If the minimum wage had kept up with 

worker productivity, it would be about $20 an hour today. Workers do not just deserve higher pay, they have earned higher pay. Finally, by the time the minimum wage reaches $15 in 2024, an individual working full time with a family and two children will finally be able to earn enough to 

exceed the poverty threshold for a family of four. 

We now have an opportunity and a responsibility to restore the value of the minimum wage, lift millions of hardworking people out of poverty and grow the economy in Main Street America. 

The Raise the Wage Act achieve three key goals: 

First, it gradually increases the minimum wage in six steps to $15 by 2024. 

Second, it ensures that every worker covered under the law is paid at least the 

full Federal minimum wage by creating one fair wage for all workers. 

And third, by tying future increases to median wages, this bill ensures that future 

increases to the Federal minimum wage are determined by economics, and not politics. 

A report published this week by the Economic Policy Institute details the sweeping benefits this bill would have for workers across the country. 

If we pass the Raise the Age Act, close to 40 million workers would receive a 

raise. This includes: 

* Twenty-three million women, 

* Thirty-eight percent of Black workers and 33 percent of Hispanic workers, 

* Two-thirds of America’s working poor, and 

* The parents of over 14 million children. 

This bill will also stimulate local economies across the country. Whereas the Republican tax bill gave the largest benefits to those who needed it the least, this bill 

puts money directly into the hands of those who are most likely to spend it in their 

communities. Over the 6-year phase in period, the increase in the minimum wage 

would generate $120 billion in additional wages, which will flow back into local 

businesses. 

Every time we propose raising the minimum wage, opponents repeat a familiar 

set of taking points that have been repeatedly contradicted by evidence and research. 

Today, I am confident we will hear dire projections about job losses that would 

result from gradually raising the minimum. But the overwhelming majority of research from both left-and right-leaning labor economists find few, if any jobs are lost 

when gradually raising the minimum wage. For example, a widely acclaimed study 

published by the National Bureau of Economic Research, and co-authored by one of 

our witnesses, examined 138 minimum wage increases since 1979 and 2016. This 

study found that the overall number of low-wage jobs remained essentially unchanged over 5 years following the increase, and there was no evidence of 

disemployment when considering higher levels of minimum wages. 


EDL-011-D with DISTILLER
6 

The evidence clearly demonstrates the Raise the Wage Act is a reasonable proposal that would lift millions of workers out of poverty. 

We will also hear calls today for a regional minimum wage. 

But unfortunately, the reality is that by 2024 $15 an hour is the least a person 

would need to afford the basic essentials in anyplace in the country. According to 

the MIT living wage calculator, single working parents today, even in the poorest 

counties in the country, need at least $20 an hour to cover basic costs. Workers 

should not be forced to work for poverty-level wages, regardless of where they live. 

And lower-cost regions should not be forced to continue to lag behind the rest of our 

economy.’’ 

H.R. 582 will begin to restore the original intent of the Fair Labor Standards Act: 

to ensure all workers have a minimum living standard. As President Roosevelt Stated, ‘‘Our nation so richly endowed with natural resources and with a capable and 

industrious population should be able to devise ways and means of insuring to all 

our working men and women a fair day’s pay for a fair day’s work’’ 

Today’s hearing is an opportunity to examine the facts and evidence. Raising the minimum wage to $15 by 2024 in all regions is good for workers, good for businesses, and good for the economy. This hearing is the first step toward passing a 

bill that reflects our shared belief that no one working full-time should be living in 

poverty. 

Thank you and I now yield to the Ranking Member, Dr. Foxx. 

Ms. FOXX. That would be wonderful, Mr. Chairman. Thank you. 

Chairman SCOTT. Thank you. 

I will recognize the Ranking Member in just a second, but first 

I will introduce our witnesses for the first panel. 

The Honorable Dr. William Spriggs serves as chief economist for 

the AFL–CIO and is a professor in and formerly chair of the Department of Economics at Howard University. Formerly, he served 

as Assistant Secretary for the Office of Policy at the U.S. Department of Labor. 

Mr. Terrence Wise is a father of three who works for McDonald’s. 

He has been fighting for $15 and a union for over 3 years and has 

become a voice for the movement, an inspiration for other low-wage 

workers. Mr. Wise has worked in the fast food industry since he 

was 16 years old and he hails from Kansas City, Missouri. 

Mr. Douglas Holtz-Eakin is the president of American Action 

Forum. From 2003 to 2005, he was the sixth Director of the Congressional Budget Office. He has conducted extensive research in 

areas of applied economic policy, econometric methods, and entrepreneurship. 

Dr. Ben Zipperer is an economist with the nonpartisan Economic 

Policy Institute. His areas of expertise include the minimum wage, 

inequality, and low-wage labor markets. He has published research 

in widely respected publications, including the Industrial and 

Labor Relations Review and the National Bureau of Economic Research. 

I appreciate all of the witnesses for being here and look forward 

to your testimony. Let me remind the witnesses that we have read 

your testimony and they will appear in full in the record. 

Pursuant to committee rule 7(d) and the committee practice, each 

of you is asked to limit your oral presentation to 5 minutes. Let me 

remind the witnesses that pursuant to Title 18 of U.S. Code Section 1001, it is illegal to knowingly and willfully falsify any Statement, representation, writing, document, or material fact presented 

to Congress or otherwise conceal or cover up a material fact. 

Before you begin your testimony, please remember to press the 

button on your microphone in front of you so that the light will 


EDL-011-D with DISTILLER
7 

turn on and the members can hear you. As you speak, the light in 

front of you will turn green. After 4 minutes, it will turn yellow, 

indicating that you have 1 minute remaining. When it turns red, 

I would ask you to please wrap up your testimony. 

We will let the entire panel make presentations before we move 

to member questions. When answering a question, please remember, once again, to turn your microphone on. 

And before the witnesses, do you want to speak now? 

Ms. FOXX. Yes. 

Chairman SCOTT. Before the witnesses speak, I will recognize the 

distinguished Ranking Member, Dr. Foxx. 

Ms. FOXX. Thank you, Mr. Chairman. And I apologize for being 

a little late. Many of us went to the National Prayer Breakfast this 

morning, and it went a little longer than usual. So we were a little 

slow in getting back. And I apologize. I promise you, I would not 

be late for a less worthy cause. 

Over the last several years, the far left has begun to call for extreme social policies that were until recently considered too radical 

for the mainstream. But as the far left has become more frenetic, 

they have begun to demand headline-grabbing but unworkable policies, like free college, universal health care, and a more than doubling of the Federal minimum wage from $7.25 an hour to $15 an 

hour. 

Liberal activists are trying to sell a radical minimum wage hike 

as a benefit to working-class Americans. They claim it will redistribute wealth and provide poor Americans with a, quote, ‘‘living 

wage,’’ end quote. This is an empty promise, the likes of which we 

have not heard since the famous health care sales job of 2009: If 

you like the plan you have, you can keep it. 

Raising the Federal minimum wage to $15 will not help anyone 

make ends meet. It will redistribute poverty, eliminate jobs, and 

deeply harm American workers, businesses, and the U.S. economy 

at large. 

When the comparatively less extreme proposal of a Federal minimum wage hike to $10.10 was on the table in 2014, the nonpartisan Congressional Budget Office estimated that the difference, 

$2.85, would cost 500,000 jobs and could have destroyed up to a 

million jobs. 

The CBO has yet to determine what the $7.75 hike under discussion today would do, but logic follows that the consequences for 

workers and small businesses would be even more severe. 

Economists, including those who have graciously given us so 

much of their time today, can provide the numbers and projections 

and graphs we all need to see to have an informed discussion. 

But we must keep in mind that we are talking about people. We 

are talking about the very people that Members of Congress on 

both sides of the aisle claim they want to serve. Workers in entry 

level jobs, workers without a GED or skill certificate, and tipped 

employees would bear the brunt of job losses caused by this mandate. 

A recent study by the National Federation of Independent Busi- ness found that raising the minimum wage to $15 would destroy 

1.6 million jobs and 615,000 able-bodied individuals would be 

pushed out of the work force by the year 2029. This is not the fuVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

EDL-011-D with DISTILLER
8 

ture Americans want, and they deserve to know the truth behind 

the talking point. 

More than half of the private sector work force goes to work each 

day at a small business, and these are the workplaces that would 

struggle the most under this mandate. Many job creators would be 

forced to reduce workers’ hours, let employees go, or close their 

doors for good. It would also lead to accelerated workplace automation, something many Democrats oppose. 

The NFIB study also found that raising the minimum wage to 

$15 an hour would result in a $2 trillion reduction in real economic 

output, a $980 billion reduction in real GDP, and a $103 billion reduction in personal disposable income. 

The title of this hearing aims to focus this discussion on the impact this mandate would have on workers, businesses, and the 

economy. It conveniently leaves out students—and with good reason. Eighty-three percent of economists agree that raising the minimum wage to $15 an hour would have a negative impact on youth 

employment. 

According to the Bureau of Labor Statistics, 2.3 percent of hourly 

workers are paid at or below minimum wage—2.3 percent of hourly 

workers are paid at or below minimum wage. Almost half of those 

workers are under the age of 25. These are individuals at the start 

of their careers or filling part-time or summer jobs. 

With the Democrats’ proposal, we run the risk of seeing these 

types of jobs eliminated altogether. That means even fewer young 

Americans will leave educational institutions or join the work force 

with minimal work experience. 

Not every kid is lucky enough to have a parent who pays for his 

or her cell phone and other expenses. We need to give them a 

chance to build their skills, build a life, and hope that someday 

very soon they run for Congress. 

Since January 2017, the number of job opportunities available 

across the country has swelled from 5.6 million to more than 7 million. And thanks to the Republican Tax Cuts and Jobs Act, wages 

are up and experiencing sustainable, organic growth. 

We want that strong economic growth to continue. Mandating a 

$15 minimum wage would have serious negative consequences for 

students, workers, and small businesses. 

I yield back, Mr. Chairman, and thank you again for your patience. 

[The statement of Mrs. Foxx follows:] 

Prepared Statement of Hon. Virginia Foxx, Ranking Member, Committee on 

Education and Labor 

Over the last several years, the far-left has begun to call for extreme social policies that were, until recently, considered too radical for the mainstream. But as the 

far-left has become more frenetic, they have begun to demand headline-grabbing but 

unworkable policies like free college, universal health care, and a more than doubling of the Federal minimum wage from $7.25 an hour to $15 an hour. 

Liberal activists are trying to sell a radical minimum wage hike as a benefit to 

working class Americans. They claim that it will redistribute wealth and provide 

poor Americans with a ‘‘living wage.’’ This is an empty promise the likes of which 

we have not heard since the famous healthcare sales job of 2009: ‘‘if you like the 

plan you have, you can keep it.’’ Raising the Federal minimum wage to $15 will not 

help anyone make ends meet. It will redistribute poverty, eliminate jobs, and deeply 

harm American workers, businesses, and the U.S. economy at large. 


EDL-011-D with DISTILLER
9 

When the comparatively less-extreme proposal of a Federal minimum wage hike 

to $10.10 was on the table in 2014, the nonpartisan Congressional Budget Office estimated that the difference—$2.85—would cost 500,000 jobs and could have destroyed up to 1 million jobs. The CBO has yet to determine what the $7.75 hike 

under discussion today would do, but logic follows that the consequences for workers 

and small businesses would be even more severe. 

Economists, including those who have graciously given us so much of their time 

today, can provide the numbers and projections and graphs we all need to see to 

have an informed discussion. But we must keep in mind that we’re talking about 

people. We’re talking about the very people that Members of Congress on both sides 

of the aisle claim they want to serve. Workers in entry-level jobs, workers without 

a GED or skills certificate, and tipped employees would bear the brunt of job losses 

caused by this mandate. 

A recent study by the National Federation of Independent Business found that 

raising the minimum wage to $15 would destroy 1.6 million jobs, and 615,000 ablebodied individuals would be pushed out of the work force by the year 2029. This 

is not the future Americans want, and they deserve to know the truth behind the 

talking point. 

More than half of the private sector work force goes to work each day at a small 

business, and these are the workplaces that would struggle the most under this 

mandate. Many job creators would be forced to reduce workers’ hours, let employees 

go, or close their doors for good. It would also lead to accelerated workplace automation, something that many Democrats oppose. 

The NFIB study also found that raising the minimum wage to $15 an hour would 

result in a $2 trillion reduction in real economic output, a $980 billion reduction in 

real GDP, and a $103 billion reduction in personal disposable income. 

The title of this hearing aims to focus this discussion on the impact this mandate 

would have on workers, businesses, and the economy. It conveniently leaves out students, and with good reason. Eighty-three percent of economists agree that raising 

the minimum wage to $15 an hour would have a negative impact on youth employment. 

According to the Bureau of Labor Statistics, 2.3 percent of hourly workers are 

paid at or below minimum wage. Almost half of those workers are under the age 

of 25. These are individuals at the start of their careers or filling part-time or summer jobs. With the Democrats’ proposal, we run the risk of seeing these types of 

jobs eliminated altogether. That means even fewer young Americans will leave educational institutions or join the work force with minimal work experience. 

Not every kid is lucky enough to have a parent who pays for his or her cell phone 

and other expenses. We need to give them the chance to build their skills, build a 

life, and hope that someday very soon, they run for Congress. 

Since January 2017, the number of job opportunities available across the country 

has swelled from 5.6 million to more than 7 million. And thanks to the Republican 

Tax Cuts and Jobs Act, wages are up and experiencing sustainable, organic growth. 

We want that strong economic growth to continue. Mandating a $15 minimum 

wage would have serious negative consequences for students, workers, and small 

businesses. 

Chairman SCOTT. Thank you very much. 

We will now hear from Dr. Spriggs. 

STATEMENT OF THE HONORABLE WILLIAM E. SPRIGGS, PROFESSOR, DEPARTMENT OF ECONOMICS, AND CHIEF ECONOMIST, HOWARD UNIVERSITY AND AFL–CIO, WASHINGTON, DC 

Dr. SPRIGGS. Thank you, Chair and Ranking Member Foxx and 

members of the committee, for the opportunity to testify before the 

committee today on gradually raising the Federal minimum wage. 

I am pleased to offer this testimony on behalf of the AFL–CIO, 

America’s house of labor, representing the working people of the 

United States, and based on my expertise as a professor in Howard 

University’s Department of Economics and as a former Assistant 

Secretary for Policy in the Department of Labor. 


EDL-011-D with DISTILLER
10 

I want to start by stating clearly that the AFL–CIO endorses this 

legislation. 

The response of American policymakers from the Great Depression was more than stopping the economic slide. The policy concern 

was that the Great Depression launched a downward spiral in 

wages and prices, a deflation that stunted economic recovery. 

Many of the policies that were put in place back then assured the 

Great Recession would not repeat the Great Depression. Unemployment insurance and Social Security proved essential stopgaps to 

the slide in household incomes in 2008 and 2009. 

Today, despite record job growth over a record period, the response of wages has been stingy. Productivity continues to grow, 

but wages have struggled to stay ahead of very modest inflation. 

The result is labor’s share of income continues to slide. America 

needs a raise. 

What Congress and President Roosevelt did in the face of the 

Great Depression was to reforge and perfect our Union, just as 

Abraham Lincoln and the Republican Party perfected the American 

Union by ending slavery. A New Deal was struck to ensure that 

a government of the people could be for the people. Going forward, 

a new American value would be enshrined: Work would have dignity and working hard would pay. 

It is a little over 9 years since Congress has raised the minimum 

wage, as the chair mentioned. It is time for a raise. 

Since 1938, Congress expanded coverage and improved standards 

of the original bill. It created a healthy and expanding economy. 

Those original components in the 1938 bill had exemptions that, 

however, were not benign. They have had long-lasting effects in 

creating substantial racial and gender inequalities. 

The reason for those initial exclusions of agricultural workers 

and domestics was so specific to the South in the 1930’s and 1940’s 

because 57 percent of America’s farm population lived in the South 

and 51 percent of its agricultural workers were African American. 

The reason the exclusion was so devastating to African Americans is that from 1930 to 1940, 40 percent of Southern Blacks were 

in agriculture. Because many Latino workers at the time in the 

Southwest were agricultural workers, this also hurt Latino workers. 

This same Southern exceptionalism argument was raised in the 

fight for the Fair Labor Standards Act, except in the guise of a regional wage variation. 

The Fair Labor Standards Act passed in 1938 under President 

Roosevelt established a minimum wage of $0.25 an hour effective 

October 24, 1938. The act called for minimum wage to increase to 

$0.40 an hour October 1945. Raises since then have required 

amendments to the act. 

Early votes on raising the minimum wage showed the national 

consensus on raising the wage and the importance of maintaining 

a decent floor of wages. That first increase, the biggest increase in 

the raise of the minimum wage of 87 percent, was approved by 90 

percent—90 percent—of House Republicans. 

To fix the gap that was caused by excluding agricultural workers 

and domestic workers, in 1966 House Republicans voted 60 percent 

to close that gap and raise the wage. That was the biggest raise 


EDL-011-D with DISTILLER
11 

when you look at the workers who have been excluded, agricultural 

workers who predominantly lived in the rural South. 

Congress’ purpose was to prevent competition based on lowering 

wage cost. It was to ensure that we would do this based on competition, on rising productivity. 

You have a chance here to live up to the legacy of Congresswoman Mary Norton, the first Democrat woman in Congress who 

chaired this committee, the first woman to chair this committee, 

who forged ahead on this legislation, to make sure that all workers 

would rise, there would not be a regional differentiation. 

You have the chance to live up to the legacy of Adam Clayton 

Powell, the first African American to chair this committee, to extend the coverage to agricultural and domestic workers. 

You have the opportunity to live up to the legacy of Congresswoman Shirley Chisholm, the first African American woman to 

serve in Congress, who made sure that domestic workers would see 

coverage. 

You have a chance to return the minimum wage to a decent 

wage that enshrines American values that work will pay, that all 

workers will have dignity. This act gives you that opportunity to 

fulfill that legacy. 

[The statement of Dr. Spriggs follows:] 


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Statement of William E. Spriggs 

"The Recurring Struggle of the Minimum Wage" 

testimony prepared for the 

U.S. House of Representatives Education and Labor Committee 

116'h Congress, First Session 

Hearing on 

Gradually Raising the Minimum Wage to $15: Goodfor Workers, Good for Businesses, and 

GoodfiJr the Economy 

February 7, 2019 

Thank you for the invitation to testify before your committee regarding the Raise the Wage Act 

(H.R. 582), legislation to raise the federal minimum wage. I am pleased to offer this testimony 

on behalf of the AFL-ClO, America's house of labor, representing the working people of the 

United States; and based on my expertise as a professor in Howard University's Department of 

Economics and as a former Assistant Secretary for Policy in the Department of Labor. I want to 

state clearly that the AFL-CIO endorses this legislation. 

It is a little over nine and one-half years since Congress raised the federal minimum 

wage--the second longest period since the Fair Labor Standards Act of 1938 became law. If by 

June 15, Congress does not act, the record will be broken. Today, my testimony will recall the 

history of the passage of the Federal Labor Standards Act. I will draw particular attention to the 

lengthy debates driven by racial animus from Southern Democrats to understand disparities 

created by the compromises made to pass that legislation in 1938. In addition, I discuss why the 

Civil Rights community of that era objected to regional minimum wages. Since then, Congress 

has expanded coverage and improved standards, and those improvements helped create a healthy 

expanding economy. The erosion of those standards on wages, overtime protection and the right 

to collective bargaining have made it harder for the U.S. economy to deliver rising living 

standards for all Americans. 

Those original compromises, however, were not benign. They have had long lasting 

impacts in creating substantial racial and gender inequalities. Before the FLSA became law, 

many of those compromises had already become the framework of labor law protections; first in 

the passage of the National Labor Relations Act and the Social Security Act in 1935. One of 
13 


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those compromises, fought ardently by the Civil Rights movement of that era, was the exclusion 

of agricultural and most service workers, especially domestics, from labor law protections. 

Those exclusions, argued for by Southern Democrats with heightened animus toward African 

Americans, lowered labor standards in the South by excluding a large share of its workforce; and 

of course, reinforced the ugly racial nonns of the South by locking out African American 

workers from protections under these federal laws. The reason this exclusion was so specific to 

the South is that during the 1930 to 1940 period, 57 percent of America's farm population lived 

in the South, and 51 percent of its agricultural workers were African American. The reason the 

exclusion was so devastating to African Americans is that from 1930 to 1940, the share of 

Southern Blacks in agriculture and domestic service was over 40 percent; during a period many 

Blacks migrated out of the South. 1 Because many Latino workers were agricultural workers at 

the time, this also hurt Latino workers. This same Southern exceptional ism argument was raised 

in the fight for the FLSA, but instead in the guise of regional wage variations that had been 

promoted within a predecessor law--the National Industrial Recovery Act. But, on the issue of 

regional minimum wages, the Civil Rights community would prevail, and single federal 

minimum wage became law. It is one of the victories that made the New Deal an equalizing 

force. 

I. Understanding the Context of the FLSA 

The Great Depression put downward pressure on wages and prices, and the continued 

threat of deflation was understood as a problem in creating a sustained recovery. An early 

attempt to boost wages, the National Industrial Recovery Act, passed in 1933 was ruled 

unconstitutional in 1935. That Act included a wage setting mechanism to prevent the continued 

downward spiral in wages, and demand. Originally Southern Democrats argued for racially 

disparate wage standards but compromised to instead have regional and occupational standards 

that could have the effect of maintaining racial disparities. The Fair Labor Standards Act of 

1938 was successful in addressing the Constitutional issues raised by the National Recovery 

Administration, establishing a floor for wages, establishing a regular work week by mandating 

over-time wage rates and prohibited the use of child labor. 

1 Sean Farhang and Ira Katz nelson, "The Southern Imposition: Congress and Labor in the New Deal and Fair Deal," 

Studies in Amer. Political Dev. 19 (Spring 2005), 15. 

2 
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The Fair Labor Standards Act (FLSA), passed in June 1938 under President Roosevelt, 

established a minimum wage of $0.25 an hour, effective October 24, 1938. The Act called for 

the minimum wage to reach $0.40 an hour by October 25, 1945. Raises since then have required 

amendments to the Act. Raising the minimum wage is not something Congress has done lightly. 

Since June 1938, Congress has voted only nine times to raise the minimum wage. Yet, the early 

votes on raising the minimum wage showed the national consensus on the importance of the 

minimum wage and the need to maintain a decent floor for wages. 

Congressional Votes to Raise the Minimum Wage 

House Pet. Increase in Republicans' Minimum Wage Year President Pet. Yeas 

2007 George W. Bush 41.41% 40.78% 

1996 Bill Clinton 40.26% 21.18% 

1989 George H. W. Bush 79.40% 26.90% 

1977 Jimmy Carter 12.10% 45.70% 

1974 Richard Nixon 85.60% 43.80% 

1966 Lyndon Johnson 60.50% 28.00% 

1961 John Kennedy 19.30% 25.00% 

1955 Dwight Eisenhower 87.20% 33.30% 

1949 !larry Truman 91.40% 87.50% 

Except for the minimum wage raises under Presidents Kennedy and Jimmy Carter, in its 

first 51 years raising the minimum wage was viewed as a bi-partisan matter-receiving strong 

support from House Republicans and Democrats. Most notably, in 1949, the first update to the 

FLSA, over 90 percent of the House Republicans voted for the largest percent increase in the 

minimum wage Congress has passed. Republicans and Democrats as President have signed laws 

increasing the minimum wage. 

3 
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It would be just as easy to suggest that since 1977, the minimum wage has become a 

contentious issue, and the old bi-partisan coalition aimed at insuring a decent wage for all 

workers has faded into a partisan battle. The Post World War II view of protecting the 

purchasing power of workers on a bipartisan basis, both through meaningful labor standards and 

protecting unions has been lost. An economy that use to deliver rising wages based on rising 

productivity has given way to stagnant wages and a growing gap between wages and 

productivity (Figure I) and higher levels of unemployment (Figure 2). 

The gap between productivity and a typical worker's 

compensation has increased dramatically since 1973 

Productivity growth and hourly compensation growth, 1948-2017 

300% 

"' ... 246.3% g! 250 w 

v 

c 

·~ 

"' 200 g> 

"' .<: 

v 

" 150 w 

~ 

"' 0. 100 "' 

~ 3 

E 

" 50 

u 

0 

Notes: Data are for compensation {wages and benefits} of production/nonsupervisory workers in the 

private sector and net productivity of the total economy. ·'Net productivity» is the growth of output of 

goods and services less depredation per hour worked. 

Source: EPI analysis of unpublished Tot<.~ I Economy Productivity data from Bureau of Labor Statistics 

(BLS) Labor Productivity and Costs program, wage data from the BLS Current Employment Statistics, 

BLS Employment Cost Trends, BLS Consumer Price Index, and Bureau of Economlc Analysis National 

Income and Product Accounts 

Updated from Figure A in Raising AmericaS Pay: Why It's Our Cenlraf Economic Policy ChoJJeng(' 

4 
16 


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Mean=s.a 

Months below 6.0% • 72.5% 

Std Dev = 1.42 

In revisiting how the minimum wage in the FLSA took shape, the preamble to the FLSA 

of 1938 tells us how Congress viewed the economic problem: 

(a) The Congress hereby finds that the existence, in industries engaged in 

commerce or in the production of goods for commerce, of labor conditions detrimental to 

the maintenance of the minimum standard of living necessary for health, efficiency, and 

general wellbeing of workers (I) causes commerce and the channels and instrumentalities 

of commerce to be used to spread and perpetuate such labor conditions among the 

workers of the several States; (2) burdens commerce and the free flow of goods in 

commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to 

labor disputes burdening and obstructing commerce and the free flow of goods in 

commerce; and (5) interferes with the orderly and fair marketing of goods in commerce. 

(b) It is hereby declared to be the policy of this Act, through the exercise by 

Congress of its power to regulate commerce among the several States, to correct and as 

rapidly as practicable, to eliminate the conditions above referred to in such industries 

without substantially curtailing employment or earning power.2 

2 Act of June 25, !938 (Fair Labor Standards Act), Pub. L. 75-718, 52 Stat 1060, June 25, 1938, p. 1060 

]1t t ps :i/vVYvw .Joe. go vilaw/hc ip/stat u tes-at ~ largc/7 5 th~congressl~>:~sion~ 3ic 7 5s3 ch6 76 .JlQ.f 

5 
17 


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Congress' purpose was to prevent competition based on lowering wage costs, based on 

the understanding that the uneven bargaining power between workers and employers could lead 

to workers accepting wages too low to maintain a decent standard of living. Testimony heard by 

Congress, including from business owners, argued that such competition hurt the economy by 

lowering purchasing power, and let firms profit by increasing demand for government relief. 

Lengthy testimony was given by Isadore Lubin, Commissioner of the U.S. Bureau of Labor 

Statistics on an extensive study of lower wage working American families to understand their 

living conditions. Special focus was given to whether the wages of the workers allowed them to 

buy the minimal recommended diet, and to access basic needs like indoor plumbing and 

electricity. Here, is one of Commisioncr Lubin's key findings: 

'"Food is the most indispensable factor in the family budget. The average family spends 

about one-third of its income on food. This means about $8 a week for an average family 

of four persons. Now, what can the worker's family get for its $8? We find that the 

market basket is heavily weighted with flour, potatoes, bread, and pork. It is only as 

family incomes increase that they can enjoy the luxury of green vegetables and fresh 

fruits, a greater variety of meats and larger quantities of milk and eggs. Despite the 

importance of milk to the health of our youngsters, let us not forget that 4 out of every l 0 

families consume less than 2 quarts of milk per person per week. The fact is that when we 

compare the amount of money spent for food by families of employed workers, with the 

retail cost of the items that are necessary to maintain a minimum adequate diet, we find 

that in some cities a third of the employed workers' families do not have enough money 

to buy the foods that arc necessary for minimum adequate diet." 

The study also pointed to understanding how a boost in the wages of those workers would 

translate into increased demand for clothing, and thus demand for textile workers 3 The close 

attention to wages that would boost workers to a standard of living to meet basic needs, explains 

why during the Post World War II consensus the federal minimum wage could support a family 

above poverty. It is only when the minimum wage became a partisan issue in the 1980s that the 

minimum wage lost its relationship to living standards (Figure 3). Since 1980, the once strong 

relationship between an expanding economy, falling unemployment and lower poverty levels 

became weak. Improvements in the living standards of lower income working families no longer 

comes from work, but from transfers, primarily through Medicaid and Medicare. The expansion 

of the 1980s made little progress on lowering poverty, as did the expansion from 200 l to 2008. 

3 Statement of Isadore Lubin, Fair Labor Standards Act of 1937: Joint Hearings Committee on Education and Labor, 

United States Senate, and the Committee on Labor, House of Representatives, Seventy-Fifth Congress First Session, on S. 2475 And H. R.7200, Bills To Provide For the Establishment of Labor Standards in Employments in and Affecting Interstate Commerce and for Other Purposes (Part I of3), June 2 To June 5, 1937. Pages 309-363. 

6 
18 


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The notable exception was the 1990s. The expansion since the Great Recession has only 

lowered poverty rates since record months of job growth were first reached in 2015 and five 

states raised their state minimum wage laws so for the first time ever, over half the states were 

above the federal $7.25 an hour minimum wage (Figure 4). 

Economic research suggests a significant portion of wage inequality that grew in the 

1980s between earners at the bottom ten percent of the wage distribution and median wage 

earners was because the federal minimum wage was unchanged between 1981 and 1990.4 

Further, declines in the purchasing power of the minimum wage are also significant in explaining 

the growth in overall income inequality, as measured by the Gini coefficient, a broad measure of 

income inequality.5 

Figure 3 

The federal minimum wage is currently a poverty wage 

Annual wage income for a full-time federal minimum wage worker compared 

with various poverty thresholds (2017$), 1964-2017 

$27.500 

25,000 

22,500 

$20,604 in 1968 

20,000 

17,500 

15.000 

12,500 Full-time federal minimum wage income 

10,000 ,, 1970 1980 1990 2000 2010 S<l<Jt>.•" fcp,.,(mlk Poii~y ln~tltute htt{>s;/ "'''''"'·!!fll.Ng/puhlkano,.fthe-ero•l<m-<>f·!hJ>·fede!'").minlmvm-wag'l!"·ha~-ine•"~'"~>""~"rlY·"soedaily-fm·bhoc~·a'ld-hi'>P»"icfamllieo/ 

4. David H. Autor, Alan Manning & Christopher L. Smith, The Contribution of the Minimum Wage to US Wage Ine'luality over Three Decades: A Reassessment, 8 Am. Econ. J. Applied Econ. 58 (20 16); John DiNardo, Nicole M. 

Fortm & Thomas Lemieux, Labor Market Institutions and the Distribution of Wages, 197 J-!992: A Semiparametric Approach, 64 Econometrica I 001 (20 16); DavidS. Lee, Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?, 114 Q.J. ofEcon. 977 (1999). 5. FLORENCE JAUMOTIE & CAROLINA OSORIO BUITRON, !NT'L MONETARY FUND, lNEQ. AND LAB. MKT. INST. 

(2015), https://www.imf.org/external/pubs/ft!sdn!2015/sdnl514.pdf; Evelyn Lamb, Ask Gini: How to Measure 

Inequality, Scr. AM. (Nov. 12, 2012), littps://www.scientificamencan.com/article/ask-gini/. 

7 
19 


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Figure 4 

20.0 

l.S.O 

16.0 

14.0 

fE 

E 12.0 

~ 

d; 

] 10.0 

] 

~ 0 8.0 

~ 

4.0 

2.0 

0.0 

Pet All Families Below Poverty 

II. Issues in Passing the Federal Labor Standards Act 

A key issue argued in the hearings in 1937, was to address the proposal of regional 

variation in the minimum wage. The careful testimony of Robert Johnson, the president of 

Johnson & Johnson was very telling. His company, the maker of surgical dressings like 

bandages and gauze, owned and operated textile mills in the North and the South. This gave 

Johnson a clear knowledge of the implication of letting the minimum wage be lower in the 

South. Yet, he was clear that the wage needed to be a federal wage. First, it is important to note 

that this corporate president understood the fallacy of wages designed to lower costs and the 

needs of the economy to have a vibrant market place gained through well paid workers could not 

be aligned. 

"The prosperity of all American industry and commerce rests in the final analysis of the 

buying power of the masses and therefore we have a direct and selfish interest in the 

welfare of these people. Of course, it is difficult for men who are devoting every hour of 

their lives to the development of a private business to see clearly the relation between the 

prosperity of their own business and the prosperity of the Nation as a whole ..... Liberal8 
20 


EDL-011-D with DISTILLERInsert offset folio 9 here 35268.009

minded business leaders throughout the country believe in the principle of shorter hours 

and higher wages and while some years ago the number of such men was unfortunately 

too few, today their ranks are being augmented each week. "6 

Johnson, as did others, questioned whether we had areas of low cost living, or areas of 

low wages. His view was the nation's economy could only be healthy by raising the wages and 

the living standards everywhere. His testimony was explicit about differences in his mills in the 

South and the North and how overall costs varied because of the quality of machines and the 

efficiency of management. 

Yet, a subtext in the discussion arguing for regional cost of living adjustments was open 

discussion of whether costs of living differed by race, as the concept of sub-minimums confused 

being low-income with low costs-ot~living. Here was an exchange between BLS Commissioner 

Lubin and Congressman Ramspeck (D-GA): 

"Representative Ram speck: What is the idea of this comparison of the white and colored 

wages here in your chart? 

Mr. Lubin: Those are not wages. They are actual family income. In making a study of the 

cost of living in those areas where the colored population was an important part of the 

population we made studies of both the black families and the white families. 

Representative Ram speck: Did you find any difference in the cost of living? 

Mr. Lubin: The actual cost of living? 

Representative Ramspeck: Yes. 

Mr. Lubin. Well, they both pay about the same price for a loaf of bread, they both pay the 

same price for the same suit of clothes, they both pay the same price for the same pair of 

shoes. In terms of the prices they paid for the things they bought they had to pay the same 

prices as the white people. 

Representative Ram speck. What about the rents? 

Mr. Lubin. For the same kind of a house that the white families got they had to pay the 

same rent."7 

6 Statement of Robert Johnson, President of Johnson & Johnson, FAIR LABOR STANDARDS ACT OF 1937: JOINT 

HEARINGS COMMITIEE ON EDUCATION AND LABOR UNITED STATES SENATE AND THE COMMITIEE ON LABOR 

HOUSE OF REPRESENTATIVES SEVENTY-FIFTH CONGRESS FIRST SESSION BEFORE THE ON S. 24.75 and H. R. 7200 

BILLS TO PROVIDE FOR THE ESTABLISHMEN LABOR STANDARDS IN EMPLOYMENTS IN AND AFFECTING INTERSTATE 

COMMERCECE AND FOR OTHER PURPOSES (PART 1 to 3) JUNE 2 to June 5, 1937. Pages 91-125 7 FAIR LABOR STANDARDS ACT JOINT HEARINGS, P. 349 

9 
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In the floor debate, Southern Democrats were clear on their fear that equal treatment of 

white and African American workers would threaten the subordinate role of African Americans 

in the South. Representative Edward Cox (D-GA) stated: 

" ... organized Negro groups of the country arc supporting [the FLSA] because it will .. . 

render easier the elimination and disappearance of racial and social distinctions, and .. . 

throw into the political field the determination of the standards and the customs which 

shall determine the relationship of our various groups of people in the South."8 

The initial proposal for the Fair Labor Standards Act followed the framework established 

by the NIRA. The NIRA allowed for wages to be set by occupation and region. The Civil 

Rights community feared the FLSA continuing that pattern by including regional and 

occupation, because the NRA wage codes repeatedly pushed back wages for Black workers. 

The frustration with the New Deal and protections for African American workers came 

from battles over the NLRA and Social Security.9 Southern firms lobbied to pay different wages 

by race under the NIRA. 10 While encoding a racial wage difference was rejected in drafting 

language for NIRA, the Act did adopt occupation and regional categories for wages that netted a 

disproportionate effect similar to that of the racial categories. 1 1 The experience ofNIRA showed 

that Southern Democrats would cooperate with the New Deal if it did not threaten racial order in 

the South. 12 The compromise reached with the Social Security Act to create a new federal 

income insurance program at the price of excluding a disproportionate share of African 

American workers was one that had already been reached with the passage ofNIRAD 

Yet, African American leaders voiced strong opposition to the disparate impacts of the 

Social Security Act and other provisions of the New Deal. 14 Ira De A. Reid, of the National 

8 Congressional Record, 75th Cong., 2nd sess., 1937,82:442 (appendix) as quoted by Farhang and Katznelson, 

supra at note I. 

9. Editorial. Social Security--For IVhite Folk, 42 CRISIS 80 ( 1935; Juan F. Perea, The Fchoes of Slave1y: 

Recognizing the Racist Origins of the Agricultural and Domestic Worker Exclusion from the National Labor Relations 

Act, 72 01110 ST. L.J. 104-105 (2011). 

10. /d. 

11. /d. at 104...{)6. 

12. Id. at 99. 

J:l. !d. at 125; see also Ira Katznelson, Kim Geiger & Daniel Kryder, Limiting Liberalism: The Southern Veto in Congress. l9H:I950, 108 POL. SCI. Q. 283, 284-85 (1993) (mapping the political compromises made by Democrats through leg1slat1ve veto). R1chard Rod ems & H. Luke Shaefer, Lefi Out: Policy D[(ji1sion and the Exclusion of Black Workers from Unemployment insurance, 40 Soc. Sci. Hist. 385,388 (2016); Larry DeWitt, The Decision to Exclude Agricultural and Dome.~tic Workers from the /935 Social Securi(v Act, 70 Soc. Security Bull. 49. 52 (2010); Gareth Dav1es & Martha Derth1ck, Race and Social Welfare Policv: The Social Security Act of 1935, 112 Pol. Sci. Q. 217 217 (1997). . • 

14. Raymond Wolters, The New Deal and the Negro, in THE NEW DEAL I 75 (John Braeman, Robert I!. Bremmer 

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Urban League, doubted the willingness of the National Recovery Administration to break the 

Southern "code" or racial wage disparities. 15 George Edmund Haynes, who had helped cofound the National Urban League, testified to the United States Senate and House on the Social 

Security Act, pointing to the disparate impact of giving states responsibility for administering 

unemployment insurance and Aid to Families with Dependent Children provisions and to the 

disparate impact of the exclusion of agricultural and domestic workers from Social Security's 

bcnefits. 16 His piece, Lily-White Social Security, for the NAACP's magazine Crisis, clearly 

showed his view about these exclusions. 17 Charles Hamilton Houston, head of the NAACP 

Legal Defense Fund (LDF), testified before the United States House on behalf of the NAACP 

LDF and the NAACP, making points about the disparate share of African Americans who would 

be excluded because they were either sharecroppers, and therefore not employees under the Act, 

agricultural workers, or domestics. 18 He further argued that the low pay earned by African 

Americans made tying benefits to wages a double penalty for African American workers who 

faced wage discrimination on the job. 19 The NAACP's editorial on the Act, put it simply as 

Social Security---for White Folk. 20 

The Joint Hearings on the Fair Labor Standards Act heard testimony from John P. Davis, 

of the National Negro Congress, explaining how the NRA occupation titles and geographic 

divisions were drawn arbitrarily to create racial wage gaps. Here is what Davis testified: 

"I have had a deal of experience with theN. R. A. I have carefully studied its several 

hundred codes. I appeared at more than a hundred of its code hearings. I studied in the 

field the effects of scores of these codes on Negro workers; and I wish now briefly to 

give to this committee the benefit of that experience. In the period ofN. R. A. code 

hearings Negro workers were helpless to defend themselves against demands made, 

especially by representatives of southern industry, for longer hours and lower wages for 

those occupations, industries, and geographical divisions of industries in which the 

predominant, labor supply was Negro. Unorganized and without perceptible collectivebargaining power, the Negro worker was soon singled out by pressure groups of 

employers as the legitimate victim for all manner of various differentials. 

& David Brody eds., 1975) (discussing criticism of the New Deal and several of its programs by the NAACP and other African American leaders). 15 Ira De A. Reid, "Black Wages for Black Men," OPPORTUNITY 12 (March 1934) 78. 

16. Economic Security Act: Hearings on H.R. 4120 Before the H. Comm. on Ways and Means, 74th Con g. I 08 (1935). 

17. George Edmund Haynes, Lily-White Social Security, 42 CRISIS 85 ( 1935). 

18. Perea. supra, note 9 at 112-13. 

19. ld 

20. Editorial, Social Security~ For White f'(J/k, 42 CRISIS 80 ( 1935). 

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In some 670 N. R. A. codes four major types of differentials were created. The first was 

the occupational differential established in the cotton textile code. Outside crews and 

cleaners were first denied the benefits of a minimum-wage or maximum-hours provision 

and later, after much pressure, granted a wage of $3 a week less than the $12 a week 

minimum wage for the South. This differential bore no relationship to previously existing 

wage scales for the industry between this group of workers and other textile workers. The 

only reason for it was that most of the workers in this occupation were Negro and were 

unorganized. The occupational differential was used as a device to discriminate against 

scores of thousands of Negro workers in some 60 industries. 

The next type of differential adopted inN. R. A. codes was that of the geographical 

differential. The fallacious reasoning was that it cost less to live in the South. But an 

examination of N. R. A. codes reveals the blunt fact that this differential was used 

primarily to deny benefits of minimum wages to Negro workers. First of all, the dividing 

line between the North and South varied from code to code, depending on the 

geographical location of the industry and the number of Negro workers employed in any 

particular area. In the fertilizer industry 94 percent of the labor supply is Negro. The State 

of Delaware was defined in this code to be in the South, where it was said it cost less to 

live and where, therefore, lower wages could be paid. But in 669 other codes Delaware 

was said to be in the North and subject to higher wage minima .... 

You referred, Congressman Dunn, to the steel industry, and to the Jones-Laughlin plant. 

Now, that the workers have collective bargaining, with Negro members in the union, 

collective bargaining will take care of the wage scales, without the aid of legislation. The 

organized workers will see to that. But in theN. R. A. code, in the steel industry, you had 

precisely this situation: Some 81 percent of the workers in the steel industry in Jefferson 

County, Ala., are Negro, and the percentages are rapidly, decreasing as you go further 

north. If you study the steel code which was adopted and which was in force during the 

N. R. A., you will see that a wage differential was directed against Jefferson County, Ala. 

They had some 12 or 16 of such geographical divisions graded precisely on the basis of 

the number of Negro workers in the several areas .... 

In these facts there rests a warning. Poverty is a highly contagious disease. Once you 

permit employer-pressure groups to secure exemptions and differentials affecting half a 

million Negro workers, you will find that the very exploitative conditions you hope to 

cure by this bill will not be cured. Instead, the growing impoverishment of Negro workers 

will be the ugly cancer preventing the improvement of the lot of a much larger number of 

white workers."' 21 

Davis feared the lobbying power of those who relied on Black labor to extend 

exemptions. Perhaps the most blatant were the several voices heard by the Joint Committee 

Hearing on the Fair Labor Standards Act from the turpentine industry. From the 1880s, the 

turpentine industry was notorious for its use of forced labor and the violation of peonage laws. 

Several federal investigations led to convictions of turpentine mill camp owners for violation of 

21 FAIR LABOR STANDARDS ACT JOINT HEARING, p. 571-574. 

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peonage laws.22 Of course, all members of the committee were not na'ive to the reputation of that 

industry as we can see from this exchange: 

"Representative Wood: Do you know anything about the turpentine business in Florida? 

Do you represent them too? 

Mr. Langdale: Yes; I represent them through the belt. 

Representative Wood: I understood they took the Negroes off the train there and arrested 

them for vagrancy and forced them to work on the turpentine farm. Do you know 

anything about that? 

Mr. Langdale: No, sir; I do not know that. As I say, my association represents the 

producers over the entire belt. 

Representative Wood: Do you know of any practice like that? 

Mr. Langdale: No, sir 

Representative Wood: Do you know of it ever having been done? 

Mr. Langdale: In Florida? 

Representative Wood: Take the Negro and white men sometimes off the train, arrest them 

for vagrancy, and force them to work on the turpentine farm? 

Mr. Langdale: I am sure that is not done, because if they are convicted they would be sent 

to the penitentiary, or some place, and they would have to work on the roads. 

Representative Wood: This is just vagrancy, they are not going to the penitentiary for 

vagrancy. 

Mr. Langdale: No, sir; they could not do that in Florida. I know that is not done in 

Florida. 

Representative Wood: You do not know anything about that? 

Mr. Langdale: I am sure that is not done, though." 23 

Davis echoed sentiments from the Black community overall, that too much of the New 

Deal efforts excluded protections for Black workers. H.J. Ford, who also testified to the Joint 

Committee Hearing on the Fair Labor Standards Act, also felt the NRA ended up with racial 

wage differences. Ford would conclude his remarks to the Hearing: 

22 Jerrell H. Shofner, Forced Labor in the Florida Forests I 880-I 950, JOURNAL OF FOREST HISTORY 25 (January 

1981): 14-25. Aaron Kyle Reynolds, A LONG QUAVERING CHANT: PEONAGE LABOR CAMPS IN THE RURALINDUSTRIAl. SOUTH I 905-1965, Ph.D. Dissertation, University of Texas-Austin, (May 20 13). Robert N. Lauriault, 

From Can't to Can't: The North Florida Turpentine Camp. 1900-1950, THE FLORIDA HISTORICAL QUARTERLY 67 

(January I 989): 310-328. 

"FAIR LABOR STANDARDS JOINT HEARING, p. 1036·1037. 

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··we suggest that there be no geographical or sectional wage differentials or no employee 

class differentials based on race or color."24 

In the final version of the bill, the AFL pushed for a single federal standard, aligning it 

with the Civil Rights community on that point. David Dubinsky, head of the International 

Ladies' Garment Workers' Union, commenting on proposals for lower regional wages for the 

South famously quipped that Southern congressman should therefore be paid less, too. 

In June 1937, when the chair of the House Labor Committee, William Connery (D-MA) 

died, Representative Mary Norton (D-NJ), the first woman member of the Democratic Caucus in 

the House became the chair. As the first woman to chair this committee, she led the fight for the 

passage of the Fair Labor Standards Act of 1938, with no regional minimum wages-a single 

federal minimum wage. Despite earlier defeats, the Civil Rights community won on that point in 

the FLSA. But, the Southern Democrats did not give up that easily. The bill was held up twice 

in the House Rules Committee, which Southern Democrats controlled. The Rules Committee 

refused to get the bill to the House floor for a vote. Ever persistent, Representative Norton 

fought her male colleagues and worked to get the needed signatures of a majority of House 

members through a discharge petition to force the bi lis release to the House floor for a vote. Her 

tenacity insured that the FLSA would protect the whole country. 

III. A Lasting Impact of Disparate Racial Impact from lack of Labor Protection 

Those who argue that the issue of excluding agricultural workers should not be viewed from 

a racial lens point to the fact that while roughly 65% of African Americans were excluded by the 

Social Security Act, African Americans actually comprised only about 23% of the agricultural and 

domestic workforce that was excluded from benefits.25 The odd issue here is that more Whites 

had to suffer a loss of Social Security benefits to achieve the elimination of African Americans 

from the program. In the end, this exclusion affected 27% of Whitcs. 26 The lack of coverage 

meant the potential loss of about $143 billion (in 2016 dollars) in Social Security Benefits to 

African American families, and close to $15 billion to Latino families. The elderly who continued 

to work most likely absorbed these losses as diminished health and quality of life; reduced 

24 FAIR LABOR STANDARDS ACT JOINT HEARING, p. 865 

25. DeWitt, supra note 13, at 53. 

2G. ld 

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consumption for those unable to work; or lost education by children who worked to help support 

the elderly. 27 

When Congress amended the Fair Labor Standards Act in 1966 to expand coverage to 

agricultural, restaurant, nursing home and other service sector workers, one of the largest concerns 

raised in 1938 by Black witnesses to the committee was finally addressed. The vote in Congress 

was bi-partisan, 60.5 percent of House Republicans voted for its passage. This was a major 

accomplishment of this Committee and was done while Congressman Adam Clayton Powell 

served as chair, the first African American to chair the Committee. 

The impact of closing that gap was swift and significant. There were close to 9.1 million 

Americans who gained protection under the FLSA by the 1966 Amendment, about 21 percent of 

the American workforce.28 Under the 1966 amendments, nearly one third of Black workers finally 

gained protection from the FLSA, compared to 18 percent of whites. Because a disproportionate 

share of African American workers remained in those excluded industries, the impact of the 

increases in the minimum wage helped to level the playing field for African American workers. 

The size of the minimum wage increase, and finally protecting a larger share of African Americans 

alone closed 20 percent of the Black-White earnings and income gap. 

Estimates based on the differential impact of the 1966 Amendments by industry and wage 

levels within industry done by economists Ellora Derenoncourt and Claire Montialoux give a clear 

indication of bow important the minimum wage protection was in setting wage floors. 29 They point 

to the large disadvantage that especially Black workers bad in the industries that were not protected 

by the FLSA; their wages were significantly below the minimum wage that would protect them. 

As a result, the workers received an average 34 percent wage hike; and despite that substantial 

increase, Derencourt and Montialoux found modest to positive job gains in the industries that came 

under FLSA protection. Further, wage increases in all FLSA protected industries after the 

inclusion of the newly expanded 1966 covered industries were are similar through the 1970s. The 

researchers further tested their results, comparing those states that did not have state minimum 

wage laws with those that did when the 1966 Amendments expanded coverage. Again, they found 

27. David Stoesz, The Fxcluded: An Estimate of the Consequences of Denying Social Securitv to Agricultural and Domestic Workers 9 (Ctr. for Soc. Dev., Working Paper No. 16-17, 20f 6). · 28 Expansion of Minimum Wage Law Approved, CQ ALMANAC, !966, 

llt!J.?.}.;:J i.tmJXl.c.~m~~~~.:~;otJ.L~.m~Jnnm!J"~,;J~hlc;ttJ.lJ.f;JJJJ2lm1li1_s.mil92_::J _:,Bm~JU. 29 ELLORA DERENONCO!JRT and CLAIRE MONTIAl.Ol!X, Minimum fl'{zges and Racial Inequality (:-;ovember 20 18) 

hHQ;~~£htirsmQniliti.Ql!i_,_£QU.llll10illl011!iill.QJ1.;iJxnR 20! 8.pd1. 

15 
27 


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that thought the wage effect was most binding where states did not have their own state minimum 

wage law, there were still no significant decreases in employment. Perhaps Derencourt and 

Montialoux's most interesting finding is that the FLSA coverage greatly reduced pay differences 

between whites and African Americans in the newly covered industries. In fact, 80 percent of the 

proportion of the racial wage gap that closed because of the expansion of the FLSA came within 

the newly protected industries. 

In practical terms, the poverty rate for African American children in families fell from a 

staggering 65.6 percent in 1965 to 39.6 percent in 1969 after the minimum wage expansion in 

coverage and increase to its highest value in real terms. That caused the most rapid decline in 

childhood poverty experienced by African Americans. It would set a benchmark for African 

American child poverty that would not be broken until 1996. 

As with the estimate of the gaps in Social Security coverage, examining the expansion of 

FLSA coverage in 1966 allows for a clear understanding of how costly the racial disparities can 

be to racial justice. For almost 28 years, the black-white wage gap was 20 percent larger than need 

be, simply from the compromise of which industries were protected under the FLSA of 1938. 

IV. The Work Ahead 

We can consider the initial disparities, perhaps as the price paid to move the policies forward. 

In the end, Social Security and the FLSA closed their coverage gaps. Still, work was needed to be 

done. It took Congresswoman Shirley Chisholm, the first African American woman to serve in 

Congress, to close an important gap in the 1970s, by fighting to expand coverage for domestic 

workers.30 So, in the long run, the policies now are much fairer. 

But, there is remaining the compromise made in the 1966 Amendments to extend coverage 

to restaurant workers that enshrined a lower and separate minimum wage for "tipped" workers. 

While concerns over racial fairness defeated regional wage differences in 1938, it came at the cost 

of excluding large numbers of African American agricultural and service workers; the compromise 

to finally protect restaurant workers lost an important protection-particularly for women-- by 

cementing a lower tipped wage. The origins of paying service workers with tips, rather than wages, 

30 Premilla Nadasen Citizenship Rights, Domestic Work, and the Fair Labor Standard' Act J. OF POl.ICY HIST. 24 

(February 20 12) 74-94. 

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is not innocuous. Like so many arguments for substandard working regulations. it too has a history 

tied to racism and the weak bargaining power of Black workers. 3

' 

Congress has a chance, after such a long period, to return American labor institutions to those 

that correlated rising productivity with rising wages and improved family incomes. In doing so, it 

has a chance to insure it does not repeat past errors, making compromises that exacerbate racial 

and gender wage gaps. Many economists now seriously consider the phenomena of monopsony 

wage behavior to be a growing problem. 32 Firms can extend their market power by creating noncompete agreements to limit worker mobility, or by constantly changing working hours to prevent 

workers from getting another job.33 The minimum wage continues to be vital for workers who do 

not benefit from the strength to bargain collectively for wages. 

The American people have sensed the unjust nature of firms paying lowing wages. 

Americans have spoken loudly. Some have done so through ballot initiatives to boost their state 

or local minimum wage, and others have done so through their state legislators and city councils. 

Most states have now set their minimum wages above the federal minimum wage, acting ahead of 

Washington, DC gridlock. 

Unfortunately, an ugly reality remains. Because just about half of African American workers 

live in those states where the minimum wage remains the federal minimum wage of$7.25 an hour 

a regional minimum wage would undoubtedly repeat a lower level of protection for African 

American workers. The gender wage gap would close from an increase in the minimum wage, 

and because the majority of African American workers are women, this is also a vital component 

in closing the black-white household income gap. Consequently, a sub-$15 an hour regional wage 

based on a false sense of differences in costs of living, would exacerbate racial wage differences 

by having lower minimum wages for a disproportionately high share of African American workers. 

These states are also states with so-called "Right-to-Work" provisions that weaken collective 

'' Saru Jayaraman, Forked: a New Standard for American Dining (Oxford University Press: New York, 20I6) 32 Alan Manning, 1\fonopsony in ,Hotion: lmperjf::ct Competition in Labor Afarkels (Princeton University Press: 

Princeton, NJ, 2005) 33 Jose Azar, loan a Marinescu and Marshall Steinbaum, "Labor Market Concentration" (December 20 I 7) NBER 

Working Paper No. 24I47. Niki Dickerson Von Lockette and William E. Spriggs, "Wage Dynamics and Racial and 

Ethnic Occupational Segregation among Less-Educated Men in Metropolitan Labor Markets," THE REV. OF BLACK 

POL. ECONOMY. 43 (Issue 1): 35-56. Alan Kreuger and Eric Posner, A Proposa/for Protecting Low-Income 

Workersfrom Monopsony and Collusion, Policy Proposai20I8-05 (The Hamilton Project: Washington, DC. 

February 20 18) 

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bargaining and so provide less protection for workers' voice. The same states have lower 

replacement rates for unemployment insurance and lower shares of unemployed workers who have 

access to unemployment benefits. Further, these are states with the fewest state inspectors to 

enforce labor standards. A victory that the Civil Rights community of 1938 thought it won by 

beating back regional wage differences, could suddenly be taken back by those now promoting a 

regional sub-minimum wage. 

New research has shown that the computer age and Amazon and ushered in a swift movement 

to national pricing. The effect of online shopping is that Walmart and Amazon compete in 

cyberspace and move prices quickly to be competitive with each other. But, most notably, 

Walmart does not have different prices for different regions of the country. And, the prices shown 

online reflect in-store pricing. There is little justification going forward for the case of regional 

living conditions justifying low wages34 

As in 1966, raising the minimum wage to reach $15 an hour would have a disparate benefit 

to African Americans and go a long way to close racial wage and income gaps. Equally important, 

raising the minimum wage to reach $15 an hour and finally equalizing the minimum for "tipped" 

workers would go a long way in closing the gender wage gap. 

A large part of what is tearing America apart is a lack of understanding amongst us. When 

policies make the playing field uneven, unfortunately workers cannot always sec why outcomes 

from hard work are so different. People who make less can be demonized to appear lazy. The 

inability of some workers to "play by the rules" and work hard to get ahead sets those who do 

succeed against those who fail. Yet, the disturbing truth is that not everyone plays by the same 

rules. At this time, it is important for Congress to seriously repair divisions; and, that requires 

looking to sec whether rules exacerbate disparities. The other Black witness before the Joint 

Committee Hearing on the Fair Labor Standards Act in 1937 was Edgar G. Brown, who 

championed the legislation, but wanted enshrined several times in the Act language to ensure that 

the provisions of the act protect workers "regardless of race, creed, color or previous condition." 

Brown further argued that, as the original bill proposed a board to review the wages, that the 

34 ALBERTO CAVALLO, "More Amazon Effect: Online Competition and Pricing Behaviors," presented at the Kansas 

City Federal Reserve Economic Jackson Hole, WY I 0, 20 18) 

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language explicitly call for diversity on the board to insure representation of women and African 

Americans. 35 

The call for fairness remains valid. The need to return to our broader shared values that 

work must pay, and workers be rewarded for their efforts must be lifted. The Raise the Wage Act 

(H.R. 582) is legislation that puts America back on its path that playing by the rules and working 

hard is what we champion. So, this legislation, ending the tipped wage differential and without a 

sub-$15 an hour regional minimum is something the AFL-CIO heartedly endorses as supporting 

American workers. 

35 Statement of Edgar G. Brown, President, United Government Employees, Inc., FAIR LABOR STANDARDS 

ACT JOINT HEARNING, p. 986-988. 

19 
31 

Chairman SCOTT. Thank you. 

Mr. WISE. 

STATEMENT OF MR. TERRENCE WISE, SHIFT MANAGER, 

MCDONALD’S, INDEPENDENCE, MO 

Mr. WISE. Thank you, Chairman Scott and Ranking Member 

Foxx and members of the committee. Thank you for the opportunity to testify today. 

My name is Terrence Wise, and I am a 39-year-old second-generation fast food worker from Kansas City, Missouri, and I am honored to speak with you today about the Raise the Wage Act. 

I began fighting for $15 an hour and a union 6 years ago, because I knew just asking my boss for a raise and benefits wouldn’t 

do. I felt the struggle of raising a family on low wages my whole 

life. 

It began in South Carolina. I grew up in government housing 

with my two brothers and sister. My mother worked full time at 

Hardee’s for 30 years, and my dad served as a cook in the military. 

My mom would wake me up at 4 a.m. early before she left for 

Hardee’s, and it was my job to get my siblings up and ready to go 

to school. It was also my job to be home when the mailman arrived 

to sign for the food stamps. 

Even with two full-time incomes and food stamps, my family still 

had to skip meals. One winter, I didn’t even have a coat until my 

guidance counselor at school gave me one from the lost and found. 

Hardworking people with two full-time incomes shouldn’t live like 

this in the richest Nation on earth. 

I was a great student, and by the eighth grade I was in all advanced placement classes. My teachers were saying things like, 

‘‘Terrence, you are going to be great. You are going to do good 

things.’’ I wanted to be a Gamecock at the University of South 

Carolina. I was going to be a writer. But I went to work at the age 

of 16 to try to help my family survive. 

One day I came home from school, there were no lights, no food 

in the fridge. So I got my first job at Taco Bell, making $4.25 an 

hour, but I knew my family needed the money desperately. My first 

paycheck was 150 bucks, and it all went on the light bill. One job 

wasn’t enough, so I got a second job at Wendy’s. 

I tried to balance both work and school. I had all A’s in my classes. But I started falling asleep in classes. And now teachers were 

asking me, ‘‘Terrence, what is wrong?’’ I told them I was working 

two jobs, had to survive. I didn’t need AP Calculus to run the numbers at home. It wasn’t enough to survive. It wasn’t even enough 

for basic necessities. 

I had left school and my dream of college, and at 17 I dropped 

out and became a full-time worker, and I have been working in fast 

food ever since. 

Now I have a family of my own. I have three daughters, ages 17, 

15, and 13, and my fiancee is a home healthcare provider. Neither 

one of us make enough money to make ends meet, and I have 

worked two jobs most of my life. I would leave for Burger King at 

2 o’clock, then leave from there and arrive at McDonald’s and work 

the overnight shift, 10 p.m. to 6 a.m. I couldn’t get my jobs to line 


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32 

up with my off days, so sometimes I would work weeks without a 

day off. 

My family has been homeless, despite my two incomes and my 

fiancee’s. We have endured cold winters in Kansas City, homeless 

in our purple minivan. I would see my daughters in the back tossing and turning. 

Try waking up in the morning and getting ready for school and 

work in the parking lot. That is a memory I can never take away 

from my children and something a parent should never have to go 

through. You should not have multiple jobs in the United States 

and nowhere to sleep. 

I work for McDonald’s, the second largest employer in America, 

and I still rely on food stamps and Medicaid. Like other working 

people in America fighting for $15 and a union, I want to stand on 

my own. I want to provide my girls with three meals a day and 

give them the opportunities I didn’t have. 

This movement has changed our entire country. Many people 

didn’t believe $15 an hour was possible, but it has become a reality 

for 22 million workers across the country. 

Seventy-five percent of voters in Kansas City voted for a $15 

minimum wage in 2017. Workers won that victory by taking big, 

bold action, like going on strike. We even slept on the steps of city 

hall for a week in our Fast for $15. 

It was a huge victory for us until the State legislature preempted 

the minimum wage, returning it to $7.65. Missouri voters increased 

the minimum wage in 2018, but we are still not achieving $15 an 

hour, the minimum we need to support our families. That is why 

we need Congress to take action to raise the Federal minimum 

wage. 

I often imagine what $15 an hour would mean for me and my 

family. It would mean I could keep food on the table, we wouldn’t 

have to worry about doing homework in the dark, and I could get 

the girls school supplies whenever they needed them. 

But what would $15 an hour really mean? It means that my 

daughters could meet their grandmother for the first time. She 

lives in South Carolina and we just have never been able to afford 

to travel to meet her. 

Low-wage workers like me will continue to organize and fight for 

economic justice. My coworkers and I have lifted our voices from 

the steps of city hall in Kansas City, at the White House, and now 

here today on Capitol Hill. 

Everyone who works in this country deserves access to the promise that America made to each and every one of us—life, liberty, 

and the pursuit of happiness—and $15 an hour brings us closer to 

living out our values as a Nation. The Raise the Wage Act will do 

just that, and I urge members of this committee to raise the wage, 

you know. Act quickly to pass this bill. 

Thank you, and I look forward to answering any questions. 

[The statement of Mr. Wise follows:] 


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"Gradually Raising the Minimum Wage to $15: Good for Workers, Good for Businesses, 

and Good for the Economy." 

Testimony of Terrence Wise presented to the Education and Labor Committee, U.S. 

House of Representatives, February 7, 2019 

Chairman Scott, Ranking Member Foxx, and Members of the Committee, thank you for the 

opporlunity to testify. My name is Terrence Wise. I'm a 39 year old, second generation fast food 

worker from Kansas City, Missouri. I am honored to speak with you about the Raise the Wage 

Act (H.R.582), the bill to raise the federal minimum wage to $15. 

I began fighting for $15 and a Union six years ago, because I knew that just asking the boss for 

a raise and benefits wasn't enough. I felt the struggle of raising a family on low wages my whole 

life. It all began in South Carolina. I grew up in government housing with my two brothers and a 

sister. My mother worked full time at Hardee's for 30 years. My dad also served in the military 

as a cook. 

My mom would wake me up at 4am when she left for Hardee's. I had to get my siblings off to 

schooL It was also my job to get the mail and sign for food stamps from the postman. Even with 

two full-time incomes and food stamps, our family had to skip meals. One winter I didn't even 

have a coat until my guidance counselor gave me one from the lost and found. Hardworking 

people with two full-time incomes shouldn't live like this, in the richest nation on earth. 

I was a great student and by the eighth grade was in advanced placement classes. My teachers 

said, 'Terrence you're going to do great things. You can be anything." I wanted to be a 

Gamecock at the University of South Carolina. I was going to be a writer. 

But I went to work at age 16 to try to help my family survive. One day I came home from school, 

there were no lights or food in the fridge and I couldn't do homework without food and lights. 

So I went and got my first job at Taco Bell. I only made $4.25 an hour, which I believe was the 

minimum wage at the time1 but I knew my family needed the money-- desperately. My first 

paycheck was $150. It went to the light bilL One job wasn't enough. So I got a second job at 

Wendy's to bring in more money for my family. 

I tried to balance both work and schooL I had As in AP History, English, Science, and Math. 

started falling asleep in class. My teachers asked, "Terrence, what's wrong?" I told them I was 

working two jobs. 

I didn't need my AP Calculus to run the numbers at home. There simply wasn't enough money 

for basic necessities. I had left school and my dream of college behind. At 17, I became a fulltime worker and was left with no other choice but to dropout of school. 

1 Tax Policy Center. State Minimum Wage Rates. 1983-2014. 

https IIWWN. taxpol icycenter. erg/sites/ defaultlfiles/legacy/taxfacts/contentlpdf/state min wage,J?df 
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I've been working in fast food ever since. 

Now, I have a family of my own. My fiancee is a home health care provider and we have three 

daughters--ages 17, 15, and 13. She takes care of some of the most vulnerable people in our 

society. Neither of us make enough money to make ends meet. I've worked two jobs most of my 

life. 

I'd leave for work at Burger King at 2pm and then work the overnight shift at McDonald's from 

10pm until 6am. Working 70 hours was a normal work week for me. I couldn't get my two jobs to 

line up with my off days. Sometimes I'd work for weeks without a day off. 

Working for poverty wages doesn't just harm me. They hurt my whole family when I would only 

get to see my children when they were asleep. 

My family has been homeless despite two incomes. We've endured freezing temperatures in 

our purple minivan. I'd see my daughters' eyes wide open, tossing and turning, in the back seat. 

Try waking up in the morning and getting ready for work and school in a parking lot with your 

family of five. That's something a parent can never forget and a memory you can never take 

away from your children. You should never have multiple jobs in the United States and nowhere 

to sleep. 

I work for McDonald's, the second largest private employer in the world2 and still rely on food 

stamps and Medicaid. Like other working people in America fighting for $15 and a Union, I want 

to stand on my own. I want to provide my girls with three meals a day and give them the 

opportunities I didn't have. 

This is what generational poverty in America looks like. It's what our movement is fighting to 

end. It's why I joined the Fight for $15 and a Union six years ago. I'm fighting to ensure my 

mother's past and my present is not my daughters' future. 

This movement has changed my life and empowered my entire family. My daughters march on 

the front lines with me during strikes and rallies in the Fight for $15 and a Union. They 

understand what it means to fight for justice and do whatever it takes. 

This movement has also changed our city, state and country. Many people didn't believe that 

$15 was possible. But $15 an hour has become a reality for 22 million workers across the 

country. 3 

2 McCarthy, Niall. 2015. Forbes. "The World's Employers." 

3 Lathrop, Yannet. 2018. "Impact of the Fight for $15: $68 billion in Raises, 22 million Workers." 

https/lwww nelp orglpublicatronlrmpact-ftght-for-15-20181 
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75% of voters in Kansas City voted for a $15 minimum wage in 20174 Workers won that victory 

by taking big, bold, and dramatic actions like going on strike, marching, and sleeping on the 

steps of City Hall for a week in our "Fast for $15." It was a huge victory for us until the state 

legislature pre-empted the minimum wage, returning it to $7.65. 5 Missouri voters increased the 

minimum wage in 2018 but we're still not achieving $15 per hour-- the minimum we need to 

support our families. 6 That's why we need Congress to take action immediately to raise the 

federal minimum wage. 

I often imagine what $15 an hour would mean for me and my family. I wouldn't have to worry 

about providing the basic necessities for my family. We could keep food on the table. No one 

would have to worry about doing homework in the dark. I could get them the school supplies 

whenever they need them. 

With a $15 living wage, I could afford to take them out to do something fun. Honestly, the last 

time I went on a date with my fiancee, was to see the movie 'Matrix'. That was in 1999.7 

Valentine's Day is next week and I want to buy each of the women in my life some flowers. I'm 

afraid that I won't be able to afford a single rose. 

But what would $15 really mean? It would mean my daughters could meet their grandmother for 

the very first time, because we could afford to travel to South Carolina to visit her. 

We know that there is more work to do. Low wage workers like me, will continue to organize and 

fight so all working people have economic justice. My coworkers and I have lifted our voices 

from the steps of City Hall in Kansas City to the White House, and right here on Capitol Hill 

today. 

Everyone who wakes up and works in our country deserves access to the promise that America 

made to each and every one of us: "life, liberty, and the pursuit of happiness." $15 brings us 

closer to living out our values as a nation. The Raise the Wage Act will do just that. 

I urge the members of this Committee to support the Raise the Wage Act and act quickly to 

pass this bill. 

Thank you and I look forward to your questions. 

4 City of Kansas City, MO. Election Summary Report August 8, 2017. 

!lttpsliw.M>Y kceb org/useruoloads/8817/Eiection Summary Offrcral 8-17 pdf 5 Smith, Aaron. 2017. CNN Money. "Kansas City wants a higher minimum wage. Missouri is blocking it" 

https: I /money. en n corn/20 17 /08109/news/kansas-city-m in 1m um-waqe!Jr:!Q.?X. htrn l 

6 Collins, Leslie. 2018. Kansas City Business Journal. "Minimum wage increase will put Missouri among top 10 

states." https·llwww bi'lli'urnals com/kan?ascrty/news/2018111107/minrmum-wage-increase-will-put-mrssoun-amonq-

!2!L'ltml 

7 IMDb. The Matrix. 1999. https/lwww.imdb com/title/tt01330931 
36 

Chairman SCOTT. Thank you. 

Dr. Holtz-Eakin, good to see you. 

STATEMENT OF DR. DOUGLAS HOLTZ-EAKIN, PRESIDENT, 

AMERICAN ACTION FORUM, WASHINGTON, DC 

Mr. Holtz-Eakin. Good to see you, Chairman Scott, Ranking 

Member Foxx, members of the Committee. It is a privilege to be 

here today. I am going to make three very simple points and then 

I look forward to your questions. 

The first point is that the labor market is working very well 

right now, with increased work, especially for those with low skills 

and marginal attachment to the labor force, and rising real wages. 

The second is that increasing the minimum wage to $15 would 

damage these employment prospects, and the preponderance of the 

research evidence comes down on that side. 

Then the third point is that, for those who deservedly would like 

to help those in poverty while working, the minimum wage is very 

poorly targeted to solve that problem. 

Let me go through those. 

The U.S. labor market is working very well right now. There 

were 304,000 jobs created in January. There have been over 13 million jobs created in the past 5 years. The unemployment rate is 

down to 4 percent and has been even lower recently. At the moment, there are more job openings, 6.9 million, than there are unemployed people, 6 million, and that has been true since March 

2018. 

The U.S. labor market has been able to create that many jobs by 

the miracle of pulling into the labor market and into productive 

work people who had not been participating. The overall labor force 

participation rate has jumped from its low of 62.4 percent to 63.2. 

For prime age workers, it has rebounded by two full percentage 

points and is up to 82.6 percent. 

I think most importantly, the number of discouraged workers, 

those who have just given up looking, has dropped in half over the 

past 5 years, from nearly 900,000 to 420,000. 

At the same time, we are seeing real wages grow. There is a 

flood of people into the labor market. Real wages are now growing 

at 3 percent a year. That is a very successful story and one that 

I think that members of the committee should be proud of. 

Going forward, if we are to raise the minimum wage to $15, the 

preponderance of the research evidence that I go through in my 

written testimony, and I will be happy to elaborate in the Q&A, it 

would indicate that it would hurt the employment prospects, especially of those people you care about the most, those with little 

skills, little experience, least attachment to the labor market. This 

is often not taking the form of the caricature of throwing someone 

out of their job, but simply denying the employment growth that 

would give people an opportunity in the future. 

I think it is important to note that the nonpartisan Congressional Budget Office reaches the conclusion that raising the minimum wage hurts employment prospects. It is their job to present 

to you, as the Members of Congress, the consensus of the research 

literature, and that is exactly the consensus that they find. 


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37 

I think it is important as well to note that more than doubling 

the minimum wage is an enormous change, and previous research 

will probably give us little guidance as to the magnitude of the impact. That is outside of the range of historical experience. Its damage is likely to be much, much greater than previous studies have 

shown. 

And the combination of the large increase and then indexing the 

minimum wage to the median wage sends a strong signal to employers that these jobs, the ones for those with low skills, marginal 

attachment to the labor force, little education, are jobs that they 

are going to be unable to have going forward. They are going to replace them with automation and other means. So, the employment 

prospects are probably even more damaging than previous indications. 

The last point is that, if you care about those in poverty who are 

working, as you should, the minimum wage is a poor instrument 

to address that problem. Eighty percent of minimum wage workers 

are not in poverty, and one-third of the young who earn the minimum wage are living with their parents and are in households 

that make more than $100,000. 

Knowing the wage a person makes does not tell you about the 

characteristics of their household, and as a result, only 6.7 percent 

of the benefits of a $15 minimum wage would go to those who are 

in poverty. This is not a good instrument for solving that problem. 

And the key economic fact that it is important for the Committee 

to remember when they discuss this is that passing a law to make 

the minimum wage $15 doesn’t mean there is any more money. 

You have to go get that money from somebody else. 

So, to get the money for someone who has a job, you are going 

to have to deny someone else a job and effectively take money from 

people who are looking for work and give it to people who have 

work. That seems like an incredibly perverse redistribution, one I 

would encourage the Committee not to take. 

Thank you. 

[The statement of Mr. Holtz-Eakin follows:] 


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Employment and Earnings Effects of Raising the Federal Minimum Wage to $15 per Hour 

Testimony presented to the 

U.S. House of Representatives 

Committee on Education and Labor 

Douglas Holtz-Eakin, President* 

American Action Forum 

February 7, 2019 

*The views expressed here are my own and do not represent the position of the American 

Action Forum. I thank Ben Gitis for his tremendous assistance in preparing this testimony. 
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Introduction 

Chairman Scott, Ranking Member Foxx and members of the Committee, I am pleased to 

have the opportunity to appear today to discuss the employment and earnings implications 

of raising the federal minimum wage to $15 per hour. My testimony will focus on three key 

points: 

• In recent years, the U.S. labor market has experienced profound growth: Businesses 

are continuing to create jobs at a strong pace, the unemployment rate is at the 

lowest levels in decades, wages are rising, and millions of workers are returning to 

the labor force. 

• More than doubling the federal minimum wage to $15 per hour would threaten to 

undermine this progress by putting millions of jobs at risk. 

• A $15 per hour minimum wage would impose such job loss while, at best, providing 

minimal assistance to low-income workers. At worst, however, reductions in jobs 

and work hours could be so severe that earnings among low-income workers could, 

on net, decline. 

I will discuss each of these points in additional detail. 

The Labor Market Today 

Today's discussion of the minimum wage is occurring while the labor market continues to 

improve in remarkable ways. just last week, the Bureau of Labor Statistics (BLS) 

announced that the economy added 304,000 jobs in January.! After years of anemic growth 

following the Great Recession, the labor market finally began to strengthen in 2014 and has 

been adding jobs at a strong pace ever since. In total, since the end of 2013, the U.S. 

economy has added 13.2 million jobs.2 

In just the past two years, the economy has added over 5.1 million jobs. Remarkably, this 

strong pace of job creation has continued even as the unemployment rate fell below 4 

percent to the lowest rates in decades.3 Starting in 2018, there have even been more job 

openings than unemployed workers. The number of job openings rose to 6.6 million in 

March 2018,4 surpassing the 6.5 million unemployed workers in the country.s job openings 

then continued to rise, peaking at 7.1 million in October 2018. The latest data indicate that 

in November 2018, there were 900,000 more job openings than unemployed workers, at 

6.9 million and 6 million, respectively. 

With unemployment so low, how have employers still been able to add jobs at such a 

strong rate? After years of declining labor force participation, Americans are finally 

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reentering the labor force. Following the Great Recession, the U.S. labor force participation 

rate declined substantially. In particular, the participation rate fell from 66 percent in 

December 2007, the beginning of the recession, to a low of 62.4 percent in September 

2015. 6 Much of this decline has been attributed to demographics, as the Baby Boomer 

generation enters retirement/ The participation rate among 25-to-54-year-olds, however, 

had also been in decline for nearly two decades. Specifically, the prime-age labor force 

participation rate fell by 4 percentage points from 84.6 percent in january 1999 to 80.6 

percent in September 2015. 8 

Starting in 2015, however, labor force participation began to rebound. As of january 2019, 

the total U.S. labor force participation rate stands at 63.2 percent, the highest rate since 

2013. With Baby Boomers retiring, labor force participation is on the rise because millions 

of younger workers are finally returning to work. As of january 2019, the labor force 

participation rate of prime-age workers has increased to 82.6 percent, the highest in nearly 

a decade.9 

Discouraged workers are also reentering the workforce and finding jobs. Discouraged 

workers are those who wish to work, but are not in the labor force because they have given 

up on looking for a job. There were 861,000 discouraged workers in 2013.1° By 2018, that 

number was slashed in half to 423,000.11 

Finally, wages are starting to grow again. The best measure of earnings is the BLS's 

Employment Cost Index (ECI). According to the ECI, annual growth in private sector total 

compensation has accelerated over the past two years. At the end of 2018, total 

compensation increased 3 percent over the previous year, the largest rise since 2008. The 

rise in total compensation was largely driven by an increase in wages and salaries, which at 

the end of 2018 were up 3.1 percent over the prior year.12 

The Damage from a $15 per Hour Federal Minimum Wage 

While the intentions of raising the minimum wage are honorable, half a century of 

economic research concludes that minimum wage hikes come at significant costs to the 

very low-wage workers the policy is intended to help, in the form of job loss or slower job 

creation. In 1981, the Minimum Wage Study Commission, a commission Congress created 

to examine closely the benefits and consequences of the federal minimum wage, published 

a comprehensive review of academic research from 1959 to the early 1980s.13 The 

commission concluded, "time-series studies typically find that a 10 percent increase in the 

minimum wage reduces teenage employment by one to three percent."14 

In their 2008 book, David Neumark and William Wascher performed a comprehensive 

review of over 100 minimum wage studies published since the early 1990s. Although the 

studies they reviewed have a wide range of estimates, the economists found that almost 

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two-thirds indicate that increasing the minimum wage negatively effects employment, 

especially among low-skill workers. Meanwhile, less than 8 percent of the studies found 

that raising the minimum wage boosts employment. The economists took their review a 

step further by evaluating the strategies used in each study and highlighting the research 

with the most credible empirical methods. Among the studies with the most credible 

evidence, 85 percent indicate that minimum wage hikes reduce employment.15 

Since the publication of that book in 2008, more research has emerged demonstrating that 

minimum wage hikes harm low-income workers in a variety of other ways, such as job 

loss,l6,17, 18,19 a slowdown in hiring,zo increasing prices,Zl firms replacing low-skilled 

workers with more productive workers,zz and firms shutting down all together.23 

Yet, few studies have gauged the effects of the far more dramatic policy under 

consideration by this committee. The Raise the Wage Act would more than double the 

minimum wage from $7.25 to $15 per hour by 2024.24 The federal government has never 

implemented a minimum wage hike of this magnitude and only a few cities are beginning 

to implement $15 per hour minimum wages. It cannot be understated, however, that a 

minimum wage increase this large (over 100 percent) poses a major disruption to the U.S. 

labor market. Unfortunately, the low-wage workers the policy is intended to help would be 

the very ones who would most suffer these consequences. 

In 2015, the American Action Forum (AAF), in collaboration with the Manhattan Institute, 

performed a Congressional Budget Office-style analysis of raising the federal minimum 

wage to $15 per hour by 2020,25 as proposed by the Pay Workers a Living Wage Act.26 

Using the most recent academic literature, the study found that a $15 per hour federal 

minimum wage would result in a loss of 3.3 million to 16.8 million jobs, with a middle 

estimate of 6.6 million jobs lost. 

The middle estimate is based on a study by jonathan Meer and jeremy West, which found 

that minimum wage increases substantially slow job growth,27 Since the 2015 AAFManhattan Institute study, however, Meer and West revised their study for publication in 

an academic, peer-reviewed journal. The revisions indicate that the negative labor market 

effects are significantly larger than the AAF-Manhattan Institute study reported. 

Additionally, since the 2015 publication, several states implemented their own minimum 

wage increases above the federal minimum wage of $7.25 per hour. 

Updating the middle estimate so that it accounts for the revision in the Meer and West 

study and does not count the job losses associated with all recent state minimum wage 

increases, reveals that the Raise the Wage Act ($15 per hour by 2024) would result in a loss 

of9.6 million jobs. For perspective, the U.S. economy has added 10.2 million jobs since the 

end of2014. Thus, raising the federal minimum wage to $15 per hour by 2024 could 

eliminate nearly all jobs created over the past four years. 

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The job losses associated with minimum wage increases are also apparent at the state and 

local level. As previously mentioned, in recent years a number of states have enacted laws 

raising the minimum wage. In 2018, for instance, 12 states and the District of Columbia 

implemented new laws to raise the minimum wage. Like the Raise the Wage Act, a number 

of the state wage laws are quite dramatic. In California, for instance, the minimum wage is 

rising 50 percent, from $10 to $15 per hour, by 2022. In Maine, the minimum wage will 

have increased by 60 percent once the new law is fully implemented in 2020. And for most 

of New York's population, the minimum wage will have increased by 66.7 percent once 

fully implemented. 

A 2018 AAF report estimated that the incremental minimum wage increases implemented 

in 2018 alone could cost 261,000 jobs.zs Once these laws are fully phased in, the state 

minimum wage increases could result in a loss of 1. 7 million jobs. The job losses range from 

3,000 in Vermont to nearly 700,000 in California. 

Additionally, accounting for all recent minimum wage increases in these states since 2012 

results in even larger labor market consequences. California, the District of Columbia, New 

York, and Rhode Island each began phasing in their current minimum wage laws soon after 

they finished phasing in separate minimum wage increases, effectively extending previous 

minimum wage raises even further. Accounting for the entire minimum wage increases 

occurring in these states since 2012 leads to even larger estimated job losses, totaling 2.6 

million. Over 75 percent of the lost jobs will occur in California and New York, which are 

the most populous states and are mandating the largest minimum wage increases. 

Negative labor market effects of minimum wage hikes are also apparent at the local level. A 

2016 AAF study found that restaurant employment suffered in the major metropolitan 

areas that increased the minimum wage in 2015.29 Not only did restaurant employment 

grow slower in these metropolitan areas than in the rest of their respective states, growth 

rates actually decelerated in the metropolitan areas while in the rest of their states they 

accelerated. Table 1 summarizes the results. 

Table 1: Change in Restaurant Employment Growth in Metro Areas with Minimum Wage 

Increase in 2015 

Metro Area with Minimum Rest of 

Year Wage Increase in 2015 State 

2014 4.2% 3.4% 

2015 1.6% 4.0% 

Percentage Point Change -2.7 0.6 

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In 2014, before the minimum wage increases, overall restaurant employment in these 

metropolitan areas grew 4.2 percent, while jobs grew 3.4 percent in the rest of their 

respective states. In direct contrast, in 2015, after these cities raised their minimum wages, 

restaurant employment grew consistently slower than in the rest of the states in which the 

cities are located. Restaurant employment in these metropolitan areas only grew 1.6 

percent in 2015, while it grew 4.0 percent in the rest of the states. Overall, in 2015 

restaurant employment in all of these metropolitan areas combined grew 2.7 percentage 

points slower than in 2014. Meanwhile in the rest of their states it grew 0.6 percentage 

point faster. This shift indicates that despite restaurant job growth accelerating in the 

states where these metropolitan areas are located, restaurant employment growth in the 

metropolitan areas with minimum wage hikes still suffered. 

Likely worsening the effect on job growth, a number of these cities boosted the "tipped" 

minimum wage by eliminating the tip credit. While intended to boost pay for tipped 

workers, eliminating the tip credit does not make the most vulnerable better off. Under all 

labor laws, between cash wages and tips, tipped workers are already guaranteed at least 

the same minimum wage as everyone else. If the combination of a worker's tips and the 

cash wages received by the employer is less than the entire minimum wage, the employer 

must make up the difference, guaranteeing that all tipped workers make at least the full 

minimum wage. For the lowest earning tipped workers, eliminating the tip credit makes 

little difference in their take-home pay. Thus, removing the tip credit only places another 

burden on restaurant businesses without improving the livelihoods of low-income 

workers. This likely leads businesses to further cut hours, jobs, or hiring.30 

Finally, independent research on Seattle's $15 per hour minimum wage demonstrates that 

the new law has been destructive for the city's low-wage workers. University of 

Washington (UW) researchers-hired by the Seattle City Council to analyze the new lawfound that the minimum wage increase caused 6.8 percent of low-wage workers to lose 

their jobs, meaning that 10,000 workers in Seattle have lost their jobs.31Jn a follow up 

study, the UW researchers found that Seattle also experienced an 8 percent reduction in job 

turnover and a significant decline in hiring.32 

A $15 per Hour Minimum Wage Would Do Little to Help Low-Income Workers, and 

May Even Make Them Worse Off 

Evidence on the federal and local level indicates that raising the minimum wage is an 

ineffective way to assist low-income workers. Hourly wages do not effectively identify 

economic well-being, as minimum wage workers are from families across the income 

distribution. While some minimum wage workers are in poverty, the vast majority are not. 

For instance, 80 percent of those who make the federal minimum wage of $7.25 per hour 

are not in poverty. Meanwhile, over one-third of minimum wage workers are young adults 

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who still live with their parents. The incomes of those families average more than 

$100,000.33 

Thus, raising the federal minimum wage to $15 per hour would result in significant job loss 

in order to provide minimal benefits to low-income workers. When examining the effect of 

raising the federal minimum wage to $15 per hour, the AAF-Manhattan Institute study 

found that only 6.7 percent of the net change in wage earnings would go to workers in 

poverty, according to the middle estimate. Twice as much, 14.7 percent, would go to 

workers with family incomes over six-times the poverty threshold.34 Consequently, at best, 

a $15 per hour minimum wage will only marginally help low-income workers. 

At worst, however, evidence indicates that the job losses from increasing the federal 

minimum wage, particularly all the way to $15 per hour, could cause low-wage workers' 

earnings, on net, to decline. For instance, a 2014 study by jeffrey Clemens and Michael 

Wither examined what happened to low-wage workers the last time the federal 

government raised its minimum wage-from $5.15 per hour in 2007 to $7.25 per hour in 

2009.35 Using data from the Survey of Income and Program Participation, they focused on 

how the minimum-wage hike affected employment and income among those whom the 

minimum wage hike affected most: low-wage workers earning below $7.50 per hour. 

Clemens and Wither found that the job losses among these low-wage workers were so 

severe that their earnings, on net, declined. From 2006 to 2012, employment in this group 

fell by 8 percent, translating to about 1.7 million jobs. The minimum-wage hike also 

increased the probability of working without pay (e.g., unpaid internships) by 2 percentage 

points. Most important, the reduction in employment and paid work caused net average 

monthly incomes for low-wage workers to fall by $100 during the first year after the 

minimum wage increase and by an additional $50 in the following two years. 

Evidence also indicates that in addition to costing 10,000 low-wage workers their jobs, 

Seattle's $15 per hour minimum wage caused work hours among low-wage workers to fall 

by so much that their monthly earnings declined. In particular, the 2017 UW study 

concluded that Seattle's minimum wage increase boosted the average wage rate among 

low-wage workers by just 3.1 percent or $0.44 per hour. Unfortunately, this modest wage 

increase was entirely offset by declines in work hours. The UW researchers find that 

Seattle's minimum wage law has caused low-wage work hours to decline by 9.4 

percent. Consequently, even among the low-wage workers who are still employed and earn 

slightly higher wages, their average monthly earnings, on net, declined by $125 per month 

because they lost so many work hours. When combining the lost work hours with the 

10,000 lost jobs, the 2017 UW study concluded that Seattle's $15 minimum wage law 

reduced total income paid to the city's low-wage workers by $120 million per year.36, 37 

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UW's 2018 follow up study on Seattle further highlights just how little the city's $15 per 

hour minimum wage law helped workers.38 The 2018 study found that among the workers 

who were are already employed before the city's minimum wage rose, earnings rose by 

only $8 to $12 per week. Sadly, one-quarter of those additional earnings came from Seattle 

workers finding additional jobs outside the city. Finally, the entirety of those wage 

increases went to workers with the most experience. Those with "below median" 

experience saw no increase in earnings. This latest UW study highlights that the workers 

who fa ired the best through Seattle's minimum wage increase experienced marginal 

benefits at best. 

Conclusion 

With strong job creation, workers coming back to the labor force, and wages rising, the U.S. 

labor market is in the midst of a period of profound growth. More than doubling the federal 

minimum wage to $15 per hour, however, could impose job loss so severe that it sets the 

labor market back several years. At best, a $15 per hour federal minimum wage would 

provide minimal assistance to low-income workers. At worst, however, the labor market 

consequences could be so severe that earnings among low-wage workers could, on net, 

decline. 

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Notes 

1 Douglas Holtz-Eakin, "The Labor Market Strikes Back," American Action Forum, February 1, 2019, 

h ttps· I I wv,n.v .a me rica nacti on foru m.o rg I u 6-fix /t h c-Ia ho r-markct -stri kc s-bac kL 

2 Author's analysis of Current Employment Statistics, Bureau of Labor Statistics, https://www.bls.~ov ices/. 3 Author's analysis of Current Employment Statistics, Bureau of Labor Statistics, https://www.hls.~<w ices/. 4 job Openings and Labor Turnover Survey, Bureau of Labor Statistics, https: /!www.b~. 

5 Current Population Survey, Bureau of Labor Statistics, https: //www.bls.~ov /cps/tilblc•s.htm. 6 Current Population Survey, Bureau of Labor Statistics, https: f/www.bls.wov /cps/tables.htm. 7 Labor Force Participation Dynamics, Center for Human Capital Studies, Federal Reserve Bank of Atlanta, 

h ttps: I I wwvv. frha tlanta.o rg I c hcs /Ia bo r-force- partici pation:.U..£n ami cs.11spx. 

s Current Population Survey, Bureau of Labor Statistics, lJJ;j;psj /www.bl:;.,gov /cps/t<1blcs.htm. 

° Current Population Survey, Bureau of Labor Statistics, https:/ /www.bls.,.gov /cps/tables hUn. 1° Current Population Survey, 2014, Bureau ofLabor Statistics, 

https: //www.bls.gov /qx;Laa20 14/ cpsaat35Jl\m. 11 Current Population Survey, 2018, Bureau of Labor Statistics, !lll;u.:i;JJ.IDY.ll',.ill.54lill!:t.£llSL.Ql>ili!Li2JlllJll· 

1' Author's calculations of the Employment Cost Index, Bureau 

https://ww\v.hls.oov /ncs/ect /#tables. 

"David Neumark and William Wascher, "Minimum Wages and Employment: A Review of Evidence from the 

New Minimum Wage Research," NBER Working Paper Series, November 2006, 

hl.!:Jl;LLwww.nber.org/papl'rs/w 12663. 14 Charles Brown, Curtis Gilroy, and Andrew Kohen, "The Effect of the Minimum Wage on Employment and 

Unemployment," journal of Economic Literature, Volume 20, Issue 2,1982, 

lm.!d.!;nnv,s.tilll1unJ&0l!Ld.;;£ti/£mnlQ_l!J.r±1'hl£J•df. 

15 David Neumark and William Wascher, "Minimum Wages and Employment: A Review of Evidence from the 

New Minimum Wage Research," NBER Working Paper Series, November 2006, 

http: I /www.llbt>r.oro I paplTS /w1266J. 

16 David Neumark, ).M. Ian Salas, & William Wascher, "Revisiting the Minimum Wage-Employment Debate: 

Throwing Out the Baby with the Bathwater?" NBER Working Paper, january 

2013, ~y}'{w.nber,vra/J'ilR~L"bl'l.H.f!li!.. 

17 "The Effects of a Minimum-Wage Increase on Employment and Family Income," Congressional Budget 

Office, February 2014, https:l/www.cbo.gov/publication/449'!5. 18 jeffrey Clemens and Michael Wither, "The Minimum Wage and the Great Recession: Evidence of Effects on 

the Employment and Income Trajectories of Low-Skilled Workers," National Bureau of Economic Research, 

December 2014, h.tmilY£W_\:Y,J}]l_eGJln;/_p_;mcrs/w207£1. 19 Ekatrina )ardim, Mark C. Long, Robert Plotnick, Emma van lnwegen, jacob Vigdor, & Hilary Wething, 

"Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle," Nber Working Paper 

No. 23532, National Bureau of Economic Research, june 2017, http:f/www.nber.or~/papers/w£3532. 

20 Jonathan Meer & Jeremy West, "Effects of the Minimum Wage on Employment Dynamics," Journal of Human 

Resources, August 2015, h!,.tp_;j/peopie.tarnu.edu/-imrer/Meer ';Vest MinimurnWage JHR-final.pdf. 21 Thomas MaCurdy, "How Effective Is the Minimum at Supporting the Poor?" journal of Political Economy, 

Vol. 123, No.2, April2015, pp. 497-

545, ll!.Ul.J.Lwww.jstor.ol·~/st;J.blell 0.1086/(i 7%2(1?&seq= lltllill:!' scan. tab CQlltQil\;;i. 

22 John J. Horton, "Evidence form a Minimum Wage Experiment," New York University, January 

2017, .http: //john-josc:phwhorton.com/papers/minimum wage.pdf. 23 Daniel Aaronson, Eric French, and Isaac Sorkin, "Firm Dynamics and the Minimum Wage: A Putty-Clay 

Approach," Federal Reserve Bank of Chicago, November 

2013, !JljJ~.D'i'\l'lYJJll@g!J.J.lithQ.lU!lill2l'!£ill!Qll;iJ.Yi.ll.ffil.llll::Jl.ilJ!£DWJJ..;Lffi'J:t:bi!· 

Douglas Holtz-Eakin & Ben Gitis, "Counterproductive: The Employment and Income Effects of Raising 

America's Minimum Wage to $12 and to $15 per Hour," American Action Forum & Manhattan Institute, july 

27, 2015, illlr.?.s.JiW."\V\v.american~lCtiunfonnn .org /rest\an:h /cuuntt.:rprod uctive~the-emplo.rmen t-andinco mc-etlcct.s-of-raisini~·arnericas-m in/, 

9 
47 


EDL-011-D with DISTILLERInsert offset folio 29 here 35268.029

26 See http: I I www.sanders.scnate.gov /download /mw-workcrs-a-1 iying-wage-act?inll ne-file. 27 jonathan Meer & jeremy West, "Effects of the Minimum Wage on Employment Dynamics," journal of Human 

Resources, August 2015, http'(/people.tamu edu/-jmeer/Meer West MjnimumWage lHR·finaLpdf. 

28 Ben Gitis, "The job Implications of State Minimum Wage Increases in 2018 and Beyond," American Action 

Forum, February 7, 2018, https:/lwww americanactionforum,org/research/job-implications-stateminimum-wage-incrcascs-20 18-heyond/. 

29 Ben Gitis, "Update: 2015 Local Minimum Wage Increases and Restaurant Employment Trends," American 

Action Forum, March 16, 2016, https· /lwww americanactionforum.org/research/update·2015-local· 

minimum-wage~increases-restaurant-empJoyment-trends/. 

30 Ben Gitis, "Setting the Record Straight on the Minimum Wage for Tipped Employees," American Action 

Forum, june 22, 2016, https://www.americanactionforum,org!insight/setting-record-straight-minimumwage-tipped-employees/, 

31 Ekatrina )ardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, jacob Vigdor, & Hilary Wething, 

"Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle," NBER Working 

Paper No, 23532, National Bureau of Economic Research, june 2017, http:/lwww.nher.org/papers/w23532. 32 Ekatrina )ardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, jacob Vigdor, & Hilary Wething, 

"'Minimum Wage Increases and Individual Employment Trajectories," NBER Working Paper No. 25182, 

National Bureau of Economic Research, October 2018, 

https;//www.nber.org/papers/w25l82?utm campaign-ntw&utm medium=email&utm source=ntwg3. 33 Douglas Holtz-Eakin, "What Obama Doesn't Get About the Minimum Wage," U.S. News, january 30, 2014, 

htt:ps: 1/www,u snews.com /opinion /Mtjcles /2 0 11/01/3 0 /what -obama-does nt -get-about· th e·mini mum-

~· 34 Douglas Holtz-Eakin & Ben Gitis, "Counterproductive: The Employment and Income Effects of Raising 

America's Minimum Wage to $12 and to $15 per Hour," American Action Forum & Manhattan Institute, july 

27, 2015, https://www.americanactionforum orglresearch/counterproductive-the-employment-andinconw"effects-ot:.raising-americas~min/. 

35 jeffrey Clemens and Michael Wither, "The Minimum Wage and the Great Recession: Evidence of Effects on 

the Employment and Income Trajectories of Low-Skilled Workers," National Bureau of Economic Research, 

December 2014, http://www.nber.org/papers/w20724·. 36 Ekatrina )ardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, jacob Vigdor, & Hilary Wething, 

"Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle," NBER Working 

Paper No. 23532, National Bureau of Economic Research, june 2017, http://www.nber.org/papers/w23532. 37 Ben Gitis, "Dueling Studies of Seattle's Minimum Wage Hike: A Reader's Guide," American Action Forum, 

july 6, 2017, https: I /www.americanactjonforum erg/research /dueling-studjes-seattles-mjnjmum-wagehikc-readers-guide /, 

38 Ekatrina )ardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, jacob Vigdor, & Hilary Wething, 

"Minimum Wage Increases and Individual Employment Trajectories," NBER Working Paper No. 25182, 

National Bureau of Economic Research, October 2018, 

htt:ps://www.nber.org/papers/w251827utm campaign=ntw&utm medium-email&utm source=ntwg3. 

10 
48 

Chairman SCOTT. Thank you. 

Dr. ZIPPERER. 

STATEMENT OF DR. BEN ZIPPERER, ECONOMIST, ECONOMIC 

POLICY INSTITUTE, WASHINGTON, DC 

Mr. ZIPPERER. Chairman Scott, Ranking Member Foxx, and 

members of the committee, thank you for the opportunity to testify 

on the importance and necessity of increasing the minimum wage 

to $15 per hour. 

Raising the national minimum wage is well overdue. Workers 

paid today’s Federal minimum wage are, after adjusting for inflation, paid 29 percent less than their counterparts 50 years ago. 

This is despite the fact that, as the figure on the monitor shows, 

the Nation’s productivity has doubled over that time period. Had 

the minimum wage kept pace with labor productivity over that 

time period, the minimum wage today would be worth more than 

$20 per hour instead of the $7.25 it is today. 

Gradually increasing the national minimum wage to $15 by 

2024, as proposed by the Raise the Wage Act of 2019, is an important corrective to our failure to raise the minimum wage. The proposal automatically indexes future minimum wage increases to median wage growth, so that low-wage workers will share a common 

trajectory of wage growth with a broader labor market. 

Finally, gradually phasing out the separate lower wage for tipped 

workers will help to eliminate disparities in labor protections between tipped workers and the rest of the labor force. 

My colleague David Cooper at the Economic Policy Institute has 

estimated that raising the minimum wage to $15 by 2024 would lift 

the pay of about 40 million workers. Affected workers who work 

year-round would receive a raise on the order of about $3,000 per 

year. This is enough to make a tremendous difference in the life 

of a preschool teacher, a bank teller, a fast food worker, more than 

half of whom earn less than $15 per hour today. 

Minimum wages are one of the most well-studied topics in economics. Although there sometimes appears to be much controversy 

over the size of the employment effects of the minimum wage, the 

weight of recent evidence shows that minimum wages have worked 

exactly as intended, by raising wages without substantial negative 

consequences on employment. 

In a review of all research published in the 15 years since 2001, 

the economists Paul Wolfson and Dale Belman found that the average estimated employment effect was very small. 

In addition, in research I coauthored with Sylvia Allegretto, 

Arindrajit Dube, and Michael Reich, we found that studies using 

the most high-quality, credible research designs also found small to 

no employment effects. 

These findings, taken together, suggest that both the average 

study, as well as the best research, show that there has been little 

downside to raising minimum wages. 

Current research also suggests that even the highest minimum 

wages our country has experienced have helped raise wages without reductions in employment. In new research on 138 State-level 

minimum wage increases I coauthored with Doruk Cengiz, 


EDL-011-D with DISTILLER
49 

Arindrajit Dube, and Attila Lindner, we found that the highest 

minimum wages we studied did not adversely affect employment. 

Important new scholarship by Ellora Derenoncourt and Claire 

Montialoux also demonstrates that the highest national minimum 

wages the United States has experienced significantly raised wages 

without reducing the employment of low-wage workers. 

Because the evidence shows that there has been little downside 

to both minimum wages in general and also even to minimum 

wages at their highest points in U.S. history, larger increases in 

the minimum wage are economically justified. 

Larger increases are also necessary because workers in every region of the country will soon need at least $15 per hour in wage 

income in order to pay for basic necessities. My colleagues at the 

EPI have developed a concept of family budgets to delineate how 

much a family will need to earn every year in order to pay for basic 

necessities. 

By 2024, in all areas across the United States, even a single 

adult with no children will need to be earning more than $15 per 

hour in order to achieve a modest but adequate standard of living, 

according to their family budget. 

As a result, anything less than a $15 minimum wage by 2024 

will not adequately carry out this key purpose of the Fair Labor 

Standards Act, which is to, and I quote, ‘‘to protect the Nation from 

the evils and dangers resulting from wages too low to buy the bare 

necessities of life.’’ 

Minimum wages have long been an effective tool for maintaining 

adequate pay, but the failure to adequately raise the Federal minimum wage has denied American workers significant improvements 

in their standard of living. 

By raising the Federal minimum wage to $15 by 2024, we will 

finally deliver a much-needed boost in wage income and increase 

the value of the minimum wage to a level that ensures the lowest 

wages we pay workers are not poverty wages. 

[The statement of Mr. Zipperer follows:] 


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Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good fm· the Economy 

Dr. Ben Zipperer 

Economic Policy Institute 

February 7, 2019 

Testimony before the 

U.S. House of Representatives 

Committee on Education and Labor 

Chairman Scott, Ranking Member Foxx and members of the committee, thank you for the 

opportunity to testify today on the importance and necessity of increasing the minimum 

wage to $15 per hour. 

My name is Ben Zipperer and I am an economist at the Economic Policy Institute (EPI) in 

Washington, D.C. EPI is a nonprofit, nonpartisan think tank that believes every working 

person deserves a good job with fair pay, affordable health care, and retirement security. 

To achieve this goal, EPI conducts research and analysis on the economic status of 

working America. 

I am an economist, with particular expertise in the minimum wage and low-wage labor 

markets. My testimony establishes that 

• A national $15 minimum wage by 2024 is an important corrective to ensure that 

low-wage workers share the benefits of economic growth. 

• The bulk of recent economic research on the minimum wage, as well as the best 

scholarship, establishes that prior increases have had little-to-no negative 

consequences and instead have meaningfully raised the pay of the low-wage 

workforce. 

• Minimum wage workers and low-wage workers generally are mostly adults, and 

are also disproportionately women and people of color. 

• Workers in every region of the country will soon need $15 per hour to maintain a 

modest but adequate standard of living. 
51 


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We can afford to pay the lowest paid workers more 

than they were paid 50 years ago 

Raising the national minimum wage is well overdue. Workers today paid the federal 

minimum wage of $7.25 an hour are. after adjusting for inflation, paid 29 percent less 

than their counterparts fifty years ago. This is despite the fact, the economy's capacity to 

deliver higher wages has doubled in the last 50 years. as measured by labor productivity, 

or the amount of output produced by workers. As Figure 1 shows, had the minimum wage 

kept pace with labor productivity growth since 1968, this year it would be more than $20 

per hour. Today, however, a single parent earning the current federal minimum wage 

does not earn enough through full-time work to be above the federal poverty line.1 

Figure 1 - Historical real and nominal value of the federal minimum wage, projected 

values under the Raise the Wage Act of 2019, and real value if the minimum rose with 

total economy productivity, 1938-2024 

$25 

20 

15 

5 

0 

-5 

Real federal minimum wage (2018$) 

- At the pace of productivity growth 

- Nominal minimum wage 

I 

1940 1960 1980 2000 

2024: 

$22.19 

.,.,. 

2020 

Source: The productivity series is total economy productivity net depreciation, indexed to the 1968 real 

value of the minimum wage. Real minimum wage values are in 2018 dollars deflated by the CPI-U-RS (1978-

2017). chained to the CPI-U-X1 (1967-1977) and CPI-U (1938-1966). Projections for productivity growth and 

1 With an hourly wage of $7.25 per hour working 40 hours of work every week. a single parent would earn 

$15,080 annually, less than the 2017 non elderly poverty threshold of $16,895 (see Current Population 

Survey Time-Series Tables, Historical Poverty Thresholds, "Poverty Thre§_bolds for 201z_ty_~.~e.o1J:a_rnilv 

i"Jl_Q Nu_mber of_~[i'l_~,<;LChiJQJ:<:>_n_I,LnQeJ:.1ll..Yeil.L~" (online Excel file), Nov. 2018. 
52 


EDL-011-D with DISTILLERInsert offset folio 60 here 35268.060

inflation use Congressional Budget Office, An Update to the Economic Outlook: 2018 to 2028, "10-Year 

Economic Projections," August 2018. 

Increasing the national minimum wage to a $15 minimum wage by 2024, as proposed in 

the Raise the Wage Act of 2019 (H.R. 582), is an important corrective to our failure to 

raise the minimum wage. A $15 minimum wage by 2024 would ensure that a portion of 

the country's labor productivity gains are translated into higher living standards for lowwage workers. At the same time, the proposal does not raise the minimum wage to $15 

immediately, but instead gradually phases in the increase over a period of six years so 

that employers can adjust to the new standard. 

My colleague David Cooper has estimated that raising the minimum wage to $15 by 

2024 would lift the pay of about 40 million workers, or 27 percent of the eligible 

workforce. Affected workers who work year-round would receive a raise on the order of 

$3,000 a year. This is enough to make a tremendous difference in the life of a preschool 

teacher, bank teller, or fast-food worker-more than half of those working in each of these 

occupations earns less than $15 per hour today. More broadly, low-wage workers today 

constitute a large portion of the workforce. About about 25 percent of all workers earned 

$13 or less per hour in 2018 and the vast majority of them would benefit from a minimum 

wage increase to $15 by 2024.2 

Were it enacted, for the first time the lowest-wage workers would make more than they 

did in 1968, the last high point of the minimum wage. While this would be a bold step, the 

resulting pay increase would be relatively modest compared with the economy's capacity 

to deliver improvements in living standards. A $15 minimum wage in 2024 would have 28 

percent more purchasing power than the minimum wage did at its 1968 high point, but 

over that time period, the economy's potential for higher living standards, as reflected in 

labor productivity, will have grown by 119 percent. Moreover, because of the gradual 

phase-in, a $15 minimum wage in 2024 is not the same as $15 per hour today, but 

equivalent to about $13 per hour in 2018 dollars, after adjusting for projected inflation. 3 

2 David Cooper, Raising the Minimum Wage to $15 by 2024 Would Lift Wages for 40 Million American 

Workers, Economic Policy Institute, Forthcoming, February 2019. May 2017 _National Occupational 

£rnPJo)l_rTJ_tntaJlcLWage_Eetimi'lt\'s from the Bureau of Labor Statistics report median annual salaries and 

median hourly wages of preschool teachers ($28,990 annually: $13.94/hour): tellers ($28,110 annually: 

$13.52/hour), and fast-food and counter workers ($20.240 annually: $9.73/hour). According to the author's 

analysis of CPS-ORG data, 25 percent of the employed earned less than $13.00 per hour in 2018. 

3 Projected inflation is from the CPI-U series published by the Congressional Budget Office. See 

Congressional Budget Office, An Update to the Economic Outlook: 2018 to 2028, "10-Year EconQrni<:_ 

f'roje<;ti()ns" (Excel file supplement), August 2018. 
53 


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The proposed legislation also indexes the minimum wage to median wages so that lowwage workers will share a common trajectory of wage growth with the broader labor 

market. By establishing regular, predictable increases to the minimum wage that are 

linked to overall wage growth, the proposed legislation improves the ablility of the 

minimum wage to reduce inequality. A rise to $15 an hour would reverse decades of 

growing pay inequality between the lowest-paid workers and the middle class, and 

indexing future increases prevents any future growth in that gap. 

The proposed legislation also gradually phases out the outdated subminimum wage for 

tipped workers, which Congress has frozen at a meager $2.13 per hour since 1991. 

Establishing a single wage for tipped and nontipped workers alike is long overdue and 

will help raise the total take-home pay for workers in tipped occupations. Indeed, Sylvia 

Allegretto and David Cooper have found that in states where tipped workers receive the 

full regular minimum wage, tipped workers earn a higher median wage, inclusive of tips. 

As a result, poverty rates are lower for tipped workers in states with a single, equal 

minimum wage. Because under current policy they are not paid a an adequate regular 

wage, tipped workers' economic security is precarious given that they are especially 

vulnerable to wage theft. Additionally, the current, separate subminimum wage for tipped 

workers is likely to increase their income volatility and also perpetuate racial 

discrimination.4 

I~conomic research justifies bold minimum wage 

increases 

Minimum wages are one of the most well-studied topics in economics. Although there 

sometimes appears to be much controversy about size of the employment effects of the 

minimum wage, the weight of recent evidence shows that minimum wages have worked 

exactly as intended, by raising wages without substantial negative consequences on 

employment. Paul Wolfson and Dale Belman reviewed 15 years of research published 

since 2001-which comprised 37 studies and 739 estimates-and found that the average 

estimated employment effect was very small.5 In addition, Wolfson and Belman, as well 

4 Allegretto, Sylvia and David Cooper, Lwent)l-:_[hree_j'~CQ~QIJd Stijl WaitingJgr Chgng_<c:_WJJ:LLDi_]]!Jle._!Q 

@.1'~--DP~d W.s>.If<ers the Regular _Minimum Wagg, Economic Policy Institute, July 2014 .. 

5 Wolfson and Belman's sample of employment elasticities with respect to the minimum wage had mean 

and median estimates of -0.06 and -0.03, respectively. See Paul J. Wolfson and Dale T. Belman,"12.Y_ear;; 
54 


EDL-011-D with DISTILLERInsert offset folio 62 here 35268.062

as Isaiah Andrews and Maximilian Kasy in a new review, found statistical evidence that 

there is a bias toward publishing findings showing a statistically significant negative 

employment effect. 6 Finally, Sylvia Allegretto, Arindrajit Dube, Michael Reich, and I found 

that studies using the most high-quality, credible research designs also found small-to-no 

employment effects7 These findings taken together suggest that both the average study 

as well as the best research show that there has been little downside to raising minimum 

wages. 

While much of this research concentrates on the effects of the average or typical 

minimum wage increase in the United States, current research also suggests that even 

higher minimum wages have helped raise wages without reductions in employment. In 

co-authored research with Doruk Cengiz, Arindrajit Dube, and Attila Lindner, we studied 

all major state-level minimum wage increases between 1979 and 2016 and found they 

significantly raised wages without reducing the employment of low-wage workers. 

Notably, we also found the same positive outcomes for even the highest minimum wages 

in our study.8 Separately, important new scholarship by Ellora Derenoncourt and Claire 

Montialoux found that the highest minimum wages the United States has ever 

experienced-the minimum wages of the late 1960s-significantly raised wages without 

reducing the employment of low-wage workers.9 

Because the evidence shows there has been little downside both to minimum wages in 

general and also to even minimum wages at their highest points in U.S. history, larger 

increases are economically justified. Modest and infrequent increases to the minimum 

wage leave money on the table that otherwise could have been earned by low-wage 

workers. In other words, by failing to enact bold increases in the minimum wage, we will 

of Researci:LQn_l!~£mP.IoJ'illeDUmd .. tbeJ;:tinl!Jlu!JL\()@g."'.," Tuck School of Business Working Paper No. 

2705499, December 2016. 

6 1saiah Andrews and Maximilian Kasy, IQ.<mii.U<:.!l!.io.oQJQDg_<;;oJI"'.~!LoD.cWE'IJPJiC:!'l!jQil.B.lil~. Mimeograph, 

October 10, 2018. 

7 Sylvia Allegretto, Arindrajit Dube, Michael Reich, and Ben Zipperer. "<;;n~dibi"-_Research Designs for 

lv1ioimu.m \/\ia9e .. SWs1Le_s:AJ~e.sll.oilse.to_l·:l.eu_matb.!:i<:llfls, a.o9_W9~<:b_<;.r." ILR Review 70, no. 3 (May 2017): 

559-592. https:/ldoi.org/10.117710019793917692788. 

8 Doruk Cengiz. Arindrajit Dube. Attila Lindner, and Ben Zipperer. "The Effect of Minimum Wf!ges on Low· 

Y'J.i!Q.f'>_lo.t:>s:_E_\ILc!"'.o.cel!:o..m.J.h.e. l!ni1.<W...S!JJ_\.e.;;1J~LQ9..f!_!:lllD_c;biQg_l;.s!Lmil.tor." N B ER Working Paper No. 

25434, January, 2019. 

9 Ellora Derenoncourt and Claire Montialoux. "lv1inimurn..W.fl.fl§and Racial Inequality," Mimeograph, 

November 30, 2018. , 
55 


EDL-011-D with DISTILLERInsert offset folio 63 here 35268.063

have deprived low-wage workers of wage increases they could have had without costing 

them much in terms of reduced employment.10 

The benefits of a $15 minimum wage in 2024 for workers, their families, and their 

communities will far outweigh any potential costs of the policy. To gain a sense of the 

large improvements a $15 minimum wage by 2024 will make in the lives of low-income 

communities, we can turn to research by Arindrajit Dube on how minimum wages raise 

incomes for the poorest families. In a new article soon to be published in the American 

Economic Journal: Applied Economics, Dube demonstrates that the income-raising 

effects of the minimum wage significantly reduce the number of Americans in families 

below the poverty line. 11 1n particular, if the U.S. had a $12 national minimum wage in 

place last year, there would be 6.2 million fewer individuals living in poverty. The 

resulting income gains and poverty reductions would be especially large for Black and 

Hispanic families, and for single mothers. We should expect similarly sized povertyreducing effects of a $15 minimum wage in 2024, given that such a policy is equivalent to 

about $13 per hour in 2018 dollars, after adjusting for projected inflation. 

Workers in every region of the country will soon 

need at least $15 an hour 

By 2024, in areas all across the United States, even a single adult with no children will 

need to be earning more than $15 per hour on a full-time, full-year basis in order to 

achieve a modest but adequate standard of living. My colleagues at EPI have developed 

the Family Budget Calculator to delineate how much a family will need to earn every year 

in order to pay for housing, food, transportation, child care, health care, taxes, and other 

necessitiesY 

Earning at least $15 per hour will be a necessity for parents who wish to raise families. 

Two adults working 40 hours a week at $15 per hour will earn $62,400 per year. If these 

two adults have two children to care for, by 2024 there will be no area in the country 

1

° For a broader version of this argument, see David Cooper, Lawrence Mishel, and Ben Zipperer, Bold 

increases in tile minimum wage should be evaluated for the benefits of raising low-wage workers' total 

earnings, Economic Policy Institute, April 2018. 

11 Arindrajit Dube. "MinLrnJJmWJl.Qg$.iJ.rl<:J.th_!'l_Qistribu]Q!LQ[f<!rnllyJJJS:QOl\;~." National Bureau of Economic 

Research, working paper no. 25240, November 2018 (to be published in the American Economic JournalApplied Economics). 

12 Economic Policy Institute, F§Qlily:_B_u_(J_g<;'.\ .CalcJJiil,t.QL. March, 2018. 
56 


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where they can live and meet the basic requirements of their family budget with wage 

income alone.n 

While the Family Budget identifies what we call "adequate standard of living," I should 

note that the budgets are very conservative. In particular, they do not include any amount 

for saving for retirement or buying a home, or even for emergencies. They simply 

describe the minimum amount of money a family needs in wage income in order to pay 

for a limited number of necessities. 

As an economist, it is striking to me that we, as a country, tolerate a federal minimum 

wage as low as $7.25 per hour, given the needs documented in EPI's Family Budget 

Calculator. The Fair Labor Standards Act was enacted in 1938 "to protect this Nation from 

the evils and dangers resulting from wages too low to buy the bare necessities of life."14 

Anything less than a $15 minimum wage by 2024 will not adequately carry out this 

purpose. 

lVIost low-wage workers are adults, and they are 

disproportionately women and people of color 

While minimum wage workers are frequently characterized as mostly teenagers or 

younger workers, this stereotype is false. Among workers who would benefit from a 

minimum wage increase to $15 in 2024, the average age is 35 years old. Most low-wage 

workers are not very young primarily because so few teenagers work at all to begin 

with. 15 For a minimum wage increase to $15 by 2024, about 91 percent of the workers 

receiving wage increases would be age 20 and older, and 68 percent would be at least 

the age of 25. The typical worker in a family who will benefit from this minimum wage 

increase is actually the family breadwinner, earning on average about 52 percent of their 

family's total income. 

13 Areas here refer to all counties and metro areas. Family budgets here are projected using projected 

infiation from the CPI-U series published by the Congressional Budget Office. See Congressional Budget 

Office. An Update to the Economic Outlook: 2018 to 2028, "JQ:Y<e_qr_.!;m.n_o.m.~.P~.£.\iQ_n_>." (Excel file 

supplement), August 2018. 

14 S. Rep. No. 75-884, at 4 (1937). 

15 In November 2018, the employed share of the teenage population was 31.1 percent (see Bureau of Labor 

Statistics, Labor Force Statistics from the Current Population Survey Series LNS12300012, "EmploymentE'.QP_ill(ltion_R13!!~1§::-1.9 __ '([~.") and only 50.5 percent of all16 to 24 year-olds were employed (see Bureau of 

Labor Statistics, Labor Force Statistics from the Current Population Survey Series_!Ji~l£;).24881, 

"£mpJ.Qv.m~n\::P.s?Q!Jla.!lon.Batio 16:.l.'LYrs. "J 
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In addition to being older, low-wage workers are much more likely to be female and 

people of color than the average worker. As a result, our current national minimum wage 

of $7.25 hurts women as well as black and Hispanic workers the most. 

Nearly 56 percent of those who would benefit from a $15 minimum wage in 2024 are 

women, despite women only making up 48 percent of the total U.S. workforce. 

Furthermore, because our economy pays women disproportionately low wages, our 

failure to maintain higher minimum wages has greatly worsened hourly wage inequality 

between women. In an important study, David Autor, Alan Manning, and Christopher 

Smith found that the failure to adequately increase the minimum wage has accounted for 

48 percent of the increase in inequality between women at the middle and bottom of the 

wage distribution since 1979.16 

About 40 percent of all black workers would receive a wage increase, as would about 34 

percent of Hispanic workers. Just as the minimum wage can be an important tool for 

reducing inequality among women, increases in the minimum wage have led to large 

reductions in earnings inequality between black and white workers. The same research 

cited earlier by Derenoncourt and Montialoux found that the increases and coverage 

expansions of the late 1960s were responsible for more than 20 percent of the fall in the 

black-white income gap during the Civil Rights Era. 

Conclusion 

Minimum wages have long been an effective tool for maintaining adequate pay, but the 

failure to adequately raise the federal minimum wage has denied American workers 

significant improvements in their standard of living. As a result, the lowest-wage workers 

today earn significantly Jess than what their counterparts did five decades ago, after 

adjusting for inflation. 

By raising the federal minimum wage to $15 by 2024, we will finally deliver a muchneeded boost in wage income and increase the value of the minimum wage to a level 

that ensures the lowest wages we pay workers are not poverty wages. In addition, by 

automatically indexing future minimum wage increases to median wage growth, lowwage workers will share a common trajectory of wage growth with the broader labor 

16 David H. Autor, Alan Manning, and Christopher L. Smith, "The Contribution of the Minimum Wage to US 

Wage Inequality over Three Decades: A Reassessment," American Economic Journal: Applied Economics, 

vol. 8, no. 1, 58-99, https://dol.org/10.12571ilpp,2014007:3. 
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market. Finally, gradually phasing out the separate lower wage for tipped workers will 

help to eliminate disparities in labor protections between tipped workers and the rest of 

the labor force. 
59 

Chairman SCOTT. Thank you. 

We will now recognize members for questions, and they are subject to the 5-minute rule, beginning with the gentleman from Arizona, Mr. Grijalva. 

Mr. GRIJALVA. Thank you very much, Mr. Chairman. 

And if there is no objection, Mr. Chairman, I would like to enter 

this report into the committee record. And that is from the Washington Center for Equitable Growth, entitled ‘‘Minimum Wages and 

the Distribution of Family Incomes in the United States.’’ In essence, this report States that if the minimum wage had been $12 

in 2016, over 6 million fewer people would be living in poverty 

today. 

If there is no objection, Mr. Chairman? 

Chairman SCOTT. Without objection. 

[The information follows:] 


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Minimum wages and the 

distribution of family incomes in 

the United States 

The ability of minimum-wage policies in the United States to aid lower-income families 

depends on how they affect wage gains, potential job losses, and other sources of family 

income, including public assistance. In contrast to a large body of research on the effects of 

minimum wages on employment,1 there are relatively fewer studies that empirically estimate 

the impact of minimum wage policies on family incomes. 

In my new paper, I use individual-level data between 1984 and 2013 from the Current 

Population Survey by the U.S. Census Bureau to provide a thorough assessment of how U.S. 

minimum wage policies have affected the distribution of family incomes2 Similar to existing 

work, I consider how minimum wages influence the poverty rate. Going beyond most existing 

research, however, I also calculate the effect of the policies for each income percentile, 

adjusting for family size. This highlights the types of families that arc helped or hurt by wage 

increases. I also calculate the effect on a broader measure of income that includes tax credits 

and noncash transfers. I quantify the offset effect of higher wages on the use of transfer 

programs and the gains net of the offsets by income percentiles, painting a fuller picture of 

how minimum-wage policies affect the U.S. income distribution and the overall welt-being of 

U.S. families. 

New.W.Qrl<jng .Pi! per 

Miflinrum W'lgt's and tbg __ dl:>.trihution of family incornes 

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Overall, I find robust evidence that higher minimum wages lead to increases in incomes 

among families at the bottom of the income distribution and that these wages reduce the 

poverty rate. A 10 percent increase in the minimum wage reduces the nonelderly poverty rate 

by about 5 percent. At the same time, I find evidence for some substitution of government 

transfers with earnings, as evidenced by the somewhat smaller income increases after 

accounting for tax credits such as the Earned Income Tax Credit and noncash transfers such as 

the Supplemental Nutrition Assistance Program. The overall increase in post-tax income is 

about 70 percent as large as the increase in pretax income. 

Effect of minimum wages on poverty 

I use individual level data from the UN ICON extract of the March Current Population Survey 

between 1984 and 2013. I focus on the nonelderly population under 65 years of age. I define 

family income following the official poverty measurement, using (pretax) cash income, and 

adjust for family size and composition using Census Bureau guidelines. 

I find that a 10 percent increase in the minimum wage reduces poverty among the nonelderly 

population by 2.1 percent and 5.3 percent across the range of specifications in the long run 

(three or more years after the policy change). There are also reductions in shares earning 

below 125 percent and below 75 percent of the poverty threshold. For my preferred model 

with the richest set of controls, the falls in shares below 75 percent, 100 percent, and 125 

percent of the poverty threshold are 5.6 percent, 5.3 percent, and 3.4 percent, respectively, 

from a 10 percent increase in the minimum wage. (See Table L) 

Table 1 

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A new analysis of the effects of raising the U.S. federal minimum wage 

Impact of a 10 percent increase in the minimum wage on shares with cash Income below multiples 

of federal poverty threshold, averaged across all family types 

Share-with income less than: 

COntrol sets: 

Since minimum wage policies are not randomly assigned across states, it is important to 

account for any bias that may arise from differences across states raising the minimum wage 

as compared to those which do not. For instance, there is a strong regional clustering of 

minimum wage policies.4 Economists disagree, however, on the best way to account for such 

biases. For this reason, I report results using eight different specifications with alternative 

controls for state-level controls that subsumes most of the approaches used in the current 

economics literature on minimum wages. Starting with the classic model that assumes all 

states are on parallel trends (known as the two-way fixed effects model), I progressively add 

regional controls (division-period effects), state-specific linear trends, and state-specific 

business cycle effects. This exercise allows the evolution of family income distribution to differ 

across states in many different ways. 

Moreover, all of these controls have been shown to be important in the existing minimumwage literature.5 1mportantly, all of these specifications find that increases in the minimum 

wage reduce the nonelderly poverty rate6 At the same time, as I show in the paper, the 

specification with all three sets of controls (the last column in Table 1) performs the best in a 

variety of falsification tests, meaning they do not spuriously suggest an effect much earlier 

than the policy change or suggest effects much higher up in the income distribution. This is 

why I consider it the preferred specification. 

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Effect of minimum wages on family-income distribution 

In my paper, I use the shift in the cumulative distribution of family income to calculate income 

changes by percentiles. I find that the largest increases occur between the bottom lOth and 

15th percentiles. A 10 percent increase in the minimum wage raises pretax cash incomes in this 

range anywhere between 1.5 percent and 4.9 percent depending on control sets. (See Table 2.) 

Table 2 

The effect of raising the federal minimum wage on the distribution of 

incomes among U.S. families 

Impact of a 10 percent increase in the minimum wage on pre· tax cash income by percentile 

Control sets: 

:Ollll$b:lll;~ri~~j;;£ 

State trends 

· stati!;'i«<l'~r!>n:.~'': 

Source~ Arindraj!t Dube, wMinlmum wages and the distributiQh of family iOCQmes," Washington Center for Equitable 

Growth Working Paper (Washington Center for EQultabte Orriwth. 2017}, TabJe 7. http://equftablegrowth.org/ 

working¥papei'S/mlnimum·WJ.geswaod~famlly~lncomes/. 

Some of the increase in pretax cash incomes among these families at or near the bottom of the 

income distribution is offset by reduced tax credits and noncash transfers. Losses in tax credits 

(such as the Earned Income Tax Credit and the Child Tax Credit) and noncash transfers (such 

as the Supplemental Nutrition Assistance Program) offset some of these gains. For the bottom 

quartile, the income gains are approximately $370 after accounting for these offsets due to 

reduced tax credits and noncash transfers-or around 70 percent as large as the pretax cash 

income gains. The offsets appearto be particularly pronounced between the 13th and 17th 

percentiles oft he income distribution. 

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These findings are consistent with some individuals losing eligibility for benefits as a result of 

increased income. Typically, eligibility for supplemental nutrition assistance, for example, 

requires income to be less than 130 percent of the federal poverty threshold, which for this 

population binds just under the 15th percentile. On average, those in the bottom quartile of 

the income distribution can expect an approximately $525 increase in annual income from the 

minimum-wage policy; the gains are largest around the 15th percentile. (See Figure 1.) 

Figure 1 

Change in family Income by percentiles from a 10% increase in minimum wage 

$1.000 

Cash income 

Cash income + tax credits + non~cash transfers 

"' -"' 0 

""' 

~ 

(i:l 500 .s 

" 

~ .£ 

.s 250 

gj, 

c 

2' 

u 0 

0 5 15 20 40 

Family income percentile-adjusted for family size 

Source: Arindrajit Dube, "Minimum wages and the distribution of family Incomes ... Washington Center for Equitable 

Growth Working Paper iWashlngton Center for Equitable Growth. 2017), Figure 7, http:#equitablegrowth.org/ working-papers/minlmum-wages-and+family·incomes:/, 

Policy implications 

To put the policy implications of these estimates in perspective, I calculate the impact from an 

increase in the federal minimum wage from the current $7.25 per hour to $12 per hour. One 

could use the same estimates in this paper to project the impact of alternative policies-such 

as raising the minimum wage to $10 per hour or $15 per hour. The caveat is that when 

considering inflation-adjusted minimum-wage levels much larger than those used in the 

study, the projections may be less reliable. 

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Taking into account the state minimum wages as of January 2017, an increase in the federal 

minimum wage to $12 (in 2017 dollars) would raise the effective minimum wage-meaning the 

maximum federal or state standard-by 41 percent. The long-run estimates from the paper 

and a 13.5 percent poverty rate among the nonelderly population in 2016 suggests a 2.45 

percentage point reduction in the poverty rate from this minimum wage increase. Given the 

roughly 270 million nonelderly Americans in 2016, this translates into 6.6 million fewer 

individuals living in poverty. 

We can also expect the same minimum-wage increase to raise family incomes by 14.5 percent 

at the lOth percentile of the family-income distribution in the long run. For the average family 

near the lOth percentile in 2016, this translates into an annual increase of $2,538, and after 

accounting for the offset due to reduced tax credits and noncash transfers, this amounts to an 

increase of $2,140.1f we take the range of estimates from all specifications, the proposed 

minimum wage changes can be expected to reduce the poverty rate among the non-elderly 

population by 1.00 and 2.53 percentage points, hence reducing the number of non-elderly 

individuals living in poverty by somewhere between 2.7 and 6.8 million. For the lOth percentile 

of family incomes, this translates to an annual income increase ranging between 5.2 and 16.8 

percent, or between $905 and $2,937. After accounting for offsets due to lost public assistance, 

the income increases would range between $657 and $2,790. 

To put these changes in context, the Earned Income Tax Credit reduces the nonelderly poverty 

rate by around 1.7 percentage points, and cash transfers (means tested and non means tested) 

reduce it by around 3.8 percentage points, while noncash transfers (other than Medicaid) 

reduce it by around 0.9 percentage points. In other words, a substantial increase in the 

minimum wage would likely have a positive impact on the nonelderly poverty rate comparable 

to means-tested public assistance programs. 

These calculations did not factor in how minimum-wage increases may affect overall 

consumer prices, though such price increases are very small compared to the income gains for 

those in the bottom of the income distribution. The expected price increase from raising the 

federal minimum wage to $12 per hour would be less than 1 percent 7 Therefore, netting out 

any price increases does not substantially affect the real income gains for the bottom quarter 

of the income distribution. Price increases do mean, however, that a sizeable portion of these 

income gains at the bottom are likely to be borne by middle- and upper-income consumers 

through small increases in prices. 

Conclusion 

A substantial increase in the federal minimum wage can play an important role in reducing 

poverty and raising family incomes in the United States at the bottom of the income ladder 

while reducing the use of public assistance. The loss in cash and noncash transfers and tax 

credits among those who would benefit the most from minimum-wage increases is likely to 

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dan1pen some of the benefits, especially among those around the poverty line, yet the 

resulting public savings could be ploughed back into further shoring up the safety net-in turn 

increasing the complementarity between minimum wages and income support for raising the 

incomes of families at the bottom of the income ladder. 

-Arindrajit Dube is an associate professor of economics at the University of Massachusetts, 

Amherst 

APRIL 26, 2017 

AUTHORS: 

Arinc!rajit Ou~bc; 

TOPICS 

ECONOMIC WELLBEING 

MINIMUM WAGE 

POVERTY 

END NOTES 

Dowr:iocd Hie 

MINIMUM WAGES AND THE 

DISTRIBUTION OF FAMILY INCOMES 

IN THE UNITED STATES 

R(\1d th_f' fui!J:!)F 1n ynur hrO\ySN 

1 Dale Belman and Paul J Wolfson, "What does the minimum wage do?" (Kalamazoo, fvll: WE Upjohn 

Institute, 2014)~ 

2 Arindrajit Dube, "Minimum Wages and the Distribution of Family Incomes~" Washington Center for 

Equitable Growth Working Paper (Washington Center for Equitable Growth, 2017). 

3 At the same time, I assess the validity of various specifications using a host of falsification tests, 

Including estimating effects higher up in the income distribution, as well as analyzing leading effects 

(pre-existing trends) across specifications~ I find that the model with all three of these control sets 

https:/!eqUJtablegrowth.org/minimum-wages-and-the-d!Stribution-of-famlly-incomes-in-the-usl 718 
67 


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2!712019 M•nimum wages and the d1stnbut1on of family mcomes m the United States + Equitable Growth 

tends to have the best performance on falsification tests, in the sense of showing no spurious 

changes in the shares earning below various thresholds prior to the actual minimum-wage increase, 

and no spurious changes in shares earning less than three or four times the federal poverty 

threshold, where there are few minimum-wage workers. Therefore, the model with the full set of 

controls is my preferred specification, but the paper shows the key results with the full range of 

specifications. 

4 See Sylvia A. Allegretto and others, "Credible Research De- signs for Minimum Wage Studies: A 

Response to Neumark, Salas and Wascher." In Industrial & Labor Relations Review (forthcoming). 

5 See Sylvia A. Allegretto and others, "Credible Research Designs for Minimum Wage Studies: A 

Response to Neumark, Salas and Wascher." In Industrial & Labor Relations Review (forthcoming); 

Ben Zipperer, "Did the minimum wage or the Great Recession reduce low-wage employment? 

Comments on Clemens and Wither," Washington Center for Equitable Growth Working Paper 

(Washington Center for Equitable Growth, 2016). 

6 There is disagreement among economists about how best to construct the "counterfactuat;' or 

what would have happened if minimum wages had not risen in a particular state. I use a variety of 

approaches, including using regional comparisons, and controls for differences in income trends 

and variability in how business cycles affect incomes-some of these approaches are appropriateand show the key estimates using a wide set of models. At the same time, I find that the model with 

a rich set of controls tends to perform best in the sense of avoiding spurious conclusions-such as a 

minimum-wage increase causing a supposed impact substantially prior to the policy change or 

supposed effects higher up in the distribution where there are few minimum-wage workers. 

7 Thomas MaCurdy, "How Effective is the Minimum Wage at Supporting the Poor?" Journal of 

Political Economy 123 (2) (2015): 497-545. MaCurdy calculated that the bottom quintile faced a 0.5 

percent increase in prices from the 21 percent increase in the minimum wage in 1996. 

(c) Equitable Growth 

Equitable Growth is a registered 50l(c)3 organization 

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68 

Mr. GRIJALVA. Thank you, sir. 

In strong support of the $15 minimum wage. And I do want to 

thank Mr. Wise and Dr. Spriggs for your testimony. It was excellent and kind of left me without too many questions, to be honest 

with you. 

And with the chair’s indulgence, I think that it is way past time 

that we move forward to raise the minimum wage. And as we do 

that, Mr. Chairman, I think it is important that the members understand that it is important to tackle other inequities that are in 

our basic minimum wage protections. 

It is long past time for Congress to end discrimination against 

agricultural workers in the Fair Labor Standards Act, period. So 

today, I introduced the Fairness for Farm Workers Act; and in 

doing so, simultaneously, Senator Harris has introduced the identical piece of legislation in the Senate. And this act, basically, the 

Fairness for Farm Workers Act would extend overtime protections 

to farm workers and eliminate some remaining exclusions for farm 

workers from minimum wage protections. 

These protections were first enacted, as Dr. Spriggs so eloquently 

gave us the history of it, and surmised at the end, I believe very 

accurately, that those exceptions were made out of political expediency and racism, and that needs to be addressed. 

That inequity that exists, Mr. Chairman, as you well know, it is 

a discrimination issue. We have to end this discrimination against 

farm workers. The treatment of farm workers in this country has 

been and continues to be unjust, unreasonable, and unsustainable. 

My legislation, the Fairness for Farm Workers, would eliminate 

the minimum wage and overtime discrimination farm workers face 

in the act. 

So I know I will be working with you on that. Your leadership 

on this is not only welcome but, as you have offered your support, 

thank you very much, Mr. Chairman. I look forward to working 

this out. And I think it is important that we deal with raising the 

minimum wage, but also have an opportunity to reform the whole 

package as we move along. 

With that, Mr. Chairman, like I said to the two witnesses, you 

left me with no questions, and I yield back. 

Chairman SCOTT. Thank you. 

The gentlelady from New York, Ms. Stefanik. 

Ms. STEFANIK. Thank you, Mr. Chairman. 

And thank you to our witnesses for being here today. 

We agree on this committee of the importance of economic opportunity for American workers and American families. We agree that 

we need to focus on real wage growth. We agree on the pathway 

out of poverty. What we don’t agree with is how to get there. We 

have different solutions about how to achieve those goals. 

We are living in a dynamic, growing economy today, and we 

must start talking about the future of work. What do I mean by 

that? As we have seen over the last decade, the composition of our 

work force is rapidly changing, as is the type of work Americans, 

especially young Americans, are engaging in. We are increasingly 

seeing a rejection of traditional employee-employer relationships 

for nontraditional, dynamic career paths, like the gig economy or 

side hustles or self-employment. 


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In my district, I represent 40 percent of the geography of New 

York State. It is a very rural region, and we are very familiar with 

this discussion. Our economy in UpState New York is very distinct 

from the economy in Manhattan and DownState New York. 

My question to Mr. Holtz-Eakin is, on the future of work, how 

does this proposal not embrace opportunities in the gig economy in 

the 21st century? And how does this proposal also not take into account the differences between rural parts of this country and urban 

parts of this country, in terms of cost of living, other issues, challenges small businesses are facing? 

Mr. Holtz-Eakin. Congresswoman, you have heard a lot of discussion about the history, but the only real question facing the committee is, do you want to raise the minimum wage going forward, 

and to do it nationally and for all workers, tipped and nontipped? 

That is a very different proposal than even some of the things 

we have evidence from in the research. This would hit all labor 

markets, rural labor markets and urban identically. It would hit 

tight labor markets and loose labor markets. 

One of the striking characteristics of the recovery has been a 

very unevenness across the geography of the United States, and it 

would not recognize that. It would not recognize the need for businesses in those areas to have a cost structure they can afford. It 

would hurt the entrepreneurship in places that are struggling. It 

is a very blunt instrument, and, as I said, that blunt instrument 

does not land on those who need it the most, working poor. 

And so I think that is one of the things that jumps out of the 

literature. And I worry a lot about a proposal that is not tailored 

to the circumstances of the labor market and doesn’t target those 

who need the help the most, especially at a time when the labor 

market is actually, on the whole, doing remarkably well. 

And I think the thing I would emphasize is we are seeing people 

entering work who we just did not think would come back. No one 

thought we could continue to create 200,000 jobs a year in 2018, 

and the economy has. That is a remarkable accomplishment. Those 

families will forever be better from having that opportunity. 

Ms. STEFANIK. My next question is, one problematic aspect of 

this legislation, one of the many problematic aspects is the elimination of the tip wage and tip credit. 

I have a local assemblyman who is a Democrat who represents 

Plattsburgh, which is in my district, and he recently highlighted 

why this is problematic. He included a local restaurant employee 

on his website who would have been greatly harmed by the elimination of the wage tip credit. 

I quote: ‘‘Generally has relied on tips to supplement her wages. 

She makes $7.50 an hour, but often with tips this salary is doubled 

or even tripled because of tipping. This not only provides her with 

money in her pocket each day, but it helps to stabilize and even 

augment her income to provide food, formula, and diapers for her 

children. Each of her fellow servers has different life situations, but 

what they all seem to agree on is that they definitely make more 

money as a server than if they had taken a more restrictive set 

wage position.’’ 


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Can you talk about why the elimination of the wage tip credit 

is problematic and does not allow this dynamism that we are seeing in the current economy? 

Mr. Holtz-Eakin. Certainly. As you know, those who are tipped 

workers are guaranteed to get the minimum wage. If they don’t receive tips that are sufficient to do that, the owner of their establishment will pay them the minimum wage. 

So forcing them to do that anyway raises the cost in the business, there is no way around it, and once again you have the problem, where does that money come from? As I said in my opening 

statement, they have to go take it from someone else, and that 

might be someone they choose not to hire. 

And that is the definition of lack of dynamism. I am not going 

to take advantage of opportunities to expand my employment base, 

offer new services, grow as a business. This has exactly that characteristic. 

And I would point out that in D.C., which we watched carefully, 

there was a ballot referendum that said we are going to raise this 

minimum wage for tipped workers. It was overturned by the D.C. 

Council because the tipped workers themselves said, no, this is bad 

for us. 

Ms. STEFANIK. And that was a similar experience in New York. 

Tipped workers were vehemently opposed to this policy and organized very effectively. 

Thank you. I yield back. 

Chairman SCOTT. Thank you. 

The gentleman from Connecticut, Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman. 

And, again, I applaud the fact that week No. 1 of this committee 

we are taking up an issue which, again, I think restores the legacy 

of this committee in the past, as Dr. Spriggs so powerfully described. 

You and I and a couple of us were around in 2007, the last time 

the Federal minimum wage was increased, from $5.15 to $7.25. 

Again, it was done gradually over a period of about 3 or 4 years. 

I remember the Republican votes that reported that bill out of the 

committee, and I remember it was in May 2007, after the new Congress or the 110th Congress, that President Bush signed that into 

law. 

And, again, Dr. Spriggs, thank you again for sort of reminding 

us of the forensics of the minimum wage, that it really historically 

has been really a very strong bipartisan issue, and it is far too long 

that Congress has not revisited that standard. 

And, again, Mr. Wise, I want to thank you for your incredibly 

powerful testimony here today, bringing this down to real life and 

also talking about sort of the grassroots organic support that is out 

there, and we have seen that in referendums. And the $15 benchmark has really started to happen, again, without Congress necessarily doing it yet, but certainly showing that it is not going to 

wreck the U.S. economy for employers to do the right thing. 

I would like, Mr. Chairman, to just enter a statement that Hartford HealthCare, which is one of the largest employers in the State 

of Connecticut, just announced about a few weeks ago, that they 

are going to raise the minimum wage for their work force, which 


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is about 2,500 strong, to $15 an hour this spring. They are not 

waiting until 2024. And, again, they have entry level staff folks 

that are there. That is a really important decision that the employer made to do that. 

And, again, I think it is because of the work that folks like Mr. 

Wise and some of the others out in the audience here with red 

shirts, tee shirts here today, have really raised this issue, so that 

it is making its way into the corporate boardrooms that this is 

something important to do. 

So, again, I would like to ask Dr. Zipperer just a question about 

what has been happening to wage rates since the Great Recession 

and the fact that, again, we finally are starting to see an uptick 

in terms of wage, but this is 10 years after the Great Recession. 

As you point out, this job market has been in a trajectory that certainly precedes this administration, although it is continuing to 

move forward, and I think we all, as Americans, support that. 

But, I mean, how would you explain, again, the fact that we have 

not seen the wage growth concurrent with the economic growth? 

And the recent uptick in wages, I mean, this is happening at the 

State level in terms of minimum wage increases. Is that a part of 

the story about why we are finally starting to see some wage 

growth? 

Mr. ZIPPERER. Thank you for the question. 

We are starting to see wage growth, as you noted and as Dr. 

Holtz-Eakin noted in his testimony, which, thankfully, is a good 

thing. At the same time, I think we are seeing that wage growth 

because the labor market is becoming tighter and employers are 

competing more for workers. 

At the same time, that wage growth is not actually sufficient or 

adequate enough for many workers, in the sense that the lowest 

wage workers in particular, what we are discussing at this hearing, 

need a much more substantial boost in wage income than they are 

going to see from tight labor markets alone. 

Mr. COURTNEY. Well, thank you. 

And to drive that point home, Mr. Chairman, I have correspondence from Oxfam America, which, again, shows an economic analysis that, again, we need that sort of push from the bottom, which 

a minimum wage increase has been bipartisanly supported in the 

past, and I would ask that be admitted into the record. 

Chairman SCOTT. Without objection. 

[The information follows:] 


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February 1, 2019 

The Honorable Bobby Scott 

2176 Rayburn House Office Building 

Washington DC 20515 

Dear Chairman Scott and Ranking Member Foxx: 

The Honorable Virginia Foxx 

2262 Rayburn House Office Building 

Washington, DC 20515 

On behalf of Oxfam America, I am writing to enthusiastically support the Raise the Wage Act of 

2019. The bill, introduced by Senators Bernie Sanders (VT) and Patty Murray (WA), 

Representatives Robert C. "Bobby" Scott (VA), Mark Pocan (WI) and Stephanie Murphy (Fl), 

would help lift millions of Americans out of poverty while simultaneously stimulating the 

economy. Oxfam America urges the House and Senate to quickly pass this legislation. 

Oxfam America is an international development and humanitarian relief agency committed to 

working for lasting solutions to poverty, hunger and social injustice. Although the US has a long 

history of prosperity, mobility, and justice, over fifty million Americans live on incomes below 

the federal poverty level, including 1 in 4 children. For over two decades, Oxfam has worked to 

help build pathways out of poverty for those most vulnerable in our country. 

A minimum wage increase is long overdue. Because the federal standard is not indexed to 

inflation, millions of Americans who earn it end up living in poverty. Indeed, stuck at $7.25 an 

hour since 2007, the federal minimum wage is now more than 25 percent below where it was in 

real terms half a century ago. Not surprising, according to the Economic Policy Institute, there is 

no state where an individual earning the minimum wage can afford the basic essentials. 

Furthermore, the failure to increase the minimum wage has exacerbated decades of growing 

pay inequality between the lowest-paid workers and the middle class. For instance, 48 percent 

of the increase in inequality between women at the middle and bottom of wage distribution 

can be attributed to a stagnant minimum wage. 

The Raise the Wage Act of 2019 would address this by gradually raising the federal minimum 

wage to $15 an hour by 2024. After 2024, the minimum wage would be indexed to median 

wage growth to ensure its value does not erode with time. Moreover, the outdated 

subminimum wage for tipped workers, which has been frozen at a meager $2.13 since 1991, 

would be phased out. Once fully enacted, nearly 40 million individuals would benefit-30 

percent of the workforce. These workers would see an average annual pay increase of $3,500, 

creating an additional $144 billion in higher wages. For the average fast-food worker or teacher 

struggling to get by on $20,000 a year, this would make a substantial difference. And because 
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low-income workers and their families would benefit the most from these income increases, 

the policy change would reduce poverty and income inequality. 

Working parents, women and people of color, in particular, would benefit from the increase. 

More than 27 percent of the minimum wage workforce are working parents with children, and 

women make up nearly 56 percent of the workers who would benefit from a $15 minimum 

wage. Raising the minimum wage to $15 would also significantly benefit workers of color, with 

38 percent of African American workers and 33 percent of Latinos seeing a pay increase once 

this law goes into effect. Notably, multiple studies show that all low-wage workers would 

benefit from minimum wage increases, not just teenagers or restaurant workers. 

Beyond those directly affected, the Raise the Wage Act of 2019 would generate positive 

spillover effects for the economy. Researchers suggest that a 10 percent increase in the 

minimum wage could yield an additional $2 billion in sales yearly. Because low-wage workers 

are more likely to spend additional earnings immediately, these extra dollars circulate in the 

economy, generating further demand and a virtuous cycle of growth. 

Finally, it would also save taxpayers money by reducing the need to rely on safety-net 

programs. Safety-net benefits for low-wage workers comprise more than half of spending on 

Medicaid, welfare, food stamps, and the Earned Income Tax Credit. Employers who pay low 

wages force their workers to rely on these programs for support, at significant cost to 

taxpayers. 

The time for the Raise the Wage Act is long overdue. A majority of Americans support raising 

the minimum wage to $1S per hour. It is time for the Congress to listen to the will of the people 

and act without delay. We call on Congress to enact this important piece of legislation as 

quickly as possible, and for President Trump to sign it when it comes to his desk. 

Sincerely, 

I 

t ) 

Minor Sinclair 

Director, US Domestic Program 
74 

Mr. COURTNEY. And I also just would like one last comment. You 

know some of us who serve on committees like Armed Services, as 

my friend from New York, you know we get a chance to interact 

with other countries, with codels and overseas. I am co-chairman 

of the Friends of Australia Caucus, which is a developed economy 

somewhat on par with the U.S. They have actually a minimum 

wage commission which raises the minimum wage outside of politics, on a yearly basis. It is $17.70, Australian dollars. If you convert that into U.S. dollars today, it is about $14. 

That is the one economy in the sort of developed world that actually did not take a hit during the Great Recession. Again, their 

banking system, frankly, was more regulated and I think withstood 

what was going on internationally there. 

But nonetheless, I mean, they are a growing economy. Their minimum wage, which has been automatically increased because of a 

nonpartisan commission, has shown that, in fact, it doesn’t hurt 

economic growth. It actually stabilizes a family’s income and increases their purchasing power. 

I yield back. 

Chairman SCOTT. Thank you very much. 

The gentleman from Kentucky, Mr. Comer. 

Mr. COMER. Thank you, Mr. Chairman. 

And I appreciate everyone being here. 

I think it is interesting that the panel will admit that we are finally having wage growth, which is something that I think both 

parties agree is needed in America. One reason, and the main reason we are having wage growth, is because there is a shortage of 

workers in America. It is basic supply and demand. 

In my district in Kentucky, I have Paducah, which is a headquarters for the regional office for U.S. Bank. They just recently 

raised their minimum wage to $15 per hour for all of their employees. They did that without legislation, without government intervention. Basically, it is the supply and demand as a result of having a strong economy. 

So my question is—and I want to make this Statement. While 

proponents of a $15 minimum wage foresee consumers absorbing 

the effects of this proposal through increased end cost, many smaller businesses in my district in Kentucky wouldn’t be able to sustain charging such radically increased prices. 

Dr. Holtz-Eakin, do you agree that raising prices is not always 

an option for many businesses in rural or low-income areas? And 

can you elaborate on the effects of such a bloated minimum wage 

would have on these entrepreneurs who are the backbone of our 

economy? 

Mr. Holtz-Eakin. As I said, if you pass a legislated increase in 

the minimum wage, not a voluntary one as U.S. Bank had, there 

is no more money at the moment that becomes law. So you have 

to go figure out where you are going to find it. 

One possibility is charge your customers more to get the money. 

If you are unable to do that, and a lot of people are not going to 

be able to do that, another possibility is you take the thinner nonexistent profit margins of an entrepreneurial business, a startup, 

and squeeze it down even further. They will likely fail, and thus 

those jobs would go away. Or you can take it out of your labor cost 


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somehow by not hiring additional workers when you otherwise 

might. 

And this is just like ‘‘Casablanca’’: You round up the usual suspects and figure out where you can do it, if at all. 

Mr. COMER. Dr. Holtz-Eakin, you make it clear that a minimum 

wage increase would not affect all areas the same. A recent study 

by the University of Kentucky suggests that for many families 

below the poverty line in Kentucky a lack of hours worked rather 

than a low wage or minimum wage is the primary challenge. 

Right now, the average worker in poor families in Kentucky are 

out of the work force more than 4 months out of the year. Won’t 

a higher minimum wage set up additional barriers to employment 

and risk more workers being out of the work force for longer periods of time? 

Mr. Holtz-Eakin. It is certainly a concern that I have tried to emphasize in my testimony. 

We do have some, for example, recent evidence out of the Seattle 

increase in the minimum wage which shows 10,000 jobs lost, but 

also diminished hours worked by those affected by the increase. 

That is another channel by which you squeeze down your costs, but 

that means less income for those individuals. 

And, again, my concern is that is something Seattle did. That is 

very different than doing it to the entire United States, including 

your district in Kentucky. 

Mr. COMER. Absolutely. 

Let me ask one last question. You also stated that 5.1 million 

jobs have been added over the past 2 years. How would this dramatic increase affect the progress created by recently enacted legislation, such as our tax reform bill of the last Congress? How would 

this impact that if we passed this proposed minimum wage increase? 

Mr. Holtz-Eakin. So, as I noted in my testimony, my colleague 

Ben Gitis and I used a published estimate of the impact of increases in the minimum wage on the growth in employment going 

forward, and it would more than offset those 5.2 million jobs. So, 

we would set back the progress we have made, the dramatic 

progress in getting Americans back to work, including those who 

previously didn’t work. I think that is a concern. 

Mr. COMER. I think we have seen last month, with record job 

growth, over 300,000 new jobs added to the economy, I believe as 

a direct result of, first of, the new administration and the last Congress focusing on reducing regulations; second, on reducing taxes. 

We have got the economy growing for the first time in a long time. 

We are starting to see wage growth. 

So I believe that we finally have America on the right track economically, and I think we need to think long and hard before we 

go back to a Congress of passing lots and lots of legislation, increasing regulations, more government, bigger government, because what we see now from an economic standpoint, in my opinion, is working. 

Thank you, Mr. Chairman. I yield back. 

Chairman SCOTT. Thank you. 

The gentleman from the Northern Mariana Islands, Mr. Sablan. 


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Mr. SABLAN. Thank you very much, Mr. Chairman, for having 

this hearing. 

Thank you, everyone, for coming and testifying. 

I wasn’t going to speak, but, Mr. Wise, please keep telling your 

story. You are sharing your life story. And I am sure you have 

heard it before, but if you haven’t, let me tell you, sir, that you are 

a good father. 

My only regret is that one of you sitting there as a witness probably couldn’t hear what you were saying. And you are telling a real 

life story, and someone is saying, no, according to the literature on 

economics and all of these things. 

We are not creating big government here. We are trying to create 

increased wages for those like you, and I am very proud to do so. 

Mr. Chairman, I would like to yield my time to the gentleman 

from Virginia, Mr. Bobby Scott. 

Chairman SCOTT. Thank you, and I appreciate the time. 

Dr. Spriggs and Dr. Holtz-Eakin, I talked about the reasonableness of the tipped minimum wage because a tipped worker would 

be made whole if the tips don’t amount to the minimum wage. That 

sounds reasonable, but how often is the deficiency actually in practice made up? 

Dr. SPRIGGS. My experience at the Department of Labor was this 

is one of the more troubling areas for us to figure out the proper 

regulation of what to do with tips, and for those who think that it 

is clear cut, that is because they haven’t tried to solve this problem. 

We know this is the major portion of wage theft that takes place. 

It puts the women, and there are disproportionately women who 

rely on tip wages, at a huge disadvantage because they are, by necessity, having to deal with ugly customers, and they need the tip, 

and it opens up a huge window for misconduct and sexual harassment that is hard to close. 

If you set the minimum wage higher and you don’t move the tip, 

then you create a bigger regulatory issue of how do we collect the 

information to know whether the workers got the tip money? Many 

restaurants want to pool the tips and then dole it out so that the 

workers sometimes don’t even get the tips. It is all well and good 

if you are in a high, fancy restaurant, and it is mostly men who 

work there do well, but for the overwhelming majority of women 

who have this job, it is not the historical record. This is the biggest 

area of wage theft to try and get the owners of the restaurant to 

actually pay the tipped workers the gap. And as that gap gets bigger, the vulnerability of those workers is going to increase. 

Chairman SCOTT. Dr. Zipperer, do you know how often the tipped 

workers are actually made whole? Have you done studies on that? 

Mr. ZIPPERER. There is research about the preponderance of 

wage theft, and that especially falls on tipped workers because, like 

the other witness pointed out, regulation and oversight of this issue 

is really difficult. In addition, the Department of Labor, under a recent set of investigations, found that of the restaurants they investigated, about 84 percent of investigations resulted in wage and 

hour violations, and a substantial fraction of those were due to failures in enforcing the tips standard that we are talking about. 

Workers in the food, and drink, and restaurant industry are much 

more likely to experience wage violations than in other industries. 


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Chairman SCOTT. So although it may be reasonable in theory, 

the workers never get the deficiency made up. Is that right? 

Mr. ZIPPERER. I think it is very difficult to enforce in practice 

which is one reason why you see those kind of disparities. You also 

see that in states that have adopted a single minimum wage for 

tipped workers and non-tipped workers alike that wages inclusive 

of tips are about 14 percent higher in those states, and poverty 

rates for tipped workers are significantly lower in those States with 

a single minimum wage. 

Chairman SCOTT. Does the gentleman yield back? Do you yield 

back? 

Thank you. The gentleman from Kansas, Mr. Watkins. 

Mr. WATKINS. Thank you, Mr. Chairman. Thank you all very 

much for being here. I especially want to say thank you to Mr. 

Wise. Your testimony was very moving. It is not easy putting yourself and your struggles out there, and doing so is very impactful, 

and it touches on why we do what we do to try and make the country a better place. 

Now, that being said, I am right down the road on I–70. I live 

in Topeka, and so if you need to join a support group for the Chiefs 

AFC championship loss, then hit me up. 

But sir, we disagree. I think this is a classic example of legislation that feels good but doesn’t do good. It feels good when you pit 

up employer versus employee. But I have helped create hundreds 

of jobs, respectfully, before this, and I would move heaven and 

earth to find and keep good employees. And that comes at a cost, 

a cost I am more than willing to pay when I find good employees. 

So listen. The CBO published in a 2014 study that a 10 percent 

or a $10 minimum wage would cost a half a million jobs. Harvard 

Business School said every dollar increase would result in a 4 to 

10 percent increased likelihood of a restaurant closure. So my question is to you, Dr. Holtz-Eakin. So I represent a lot of poor communities throughout southeast Kansas. I am going to share with you 

some thoughts they shared with me. I just want you to reflect on 

them, and some of them will be things that were written up in your 

testimony, but bear with me. 

A $15 minimum wage will attract more qualified applicants, and 

I won’t hire entry level people. Another entrepreneur said I would 

have to pay everybody more. If I have to pay the dishwasher $15 

an hour, then I have got to pay the cooks more than that. I will 

just replace H.R. with automation. Prices for everything go up. 

So my question is simply to reflect on that so I know what to tell 

my constituents. 

Mr. Holtz-Eakin. I want to just echo your observation that the 

issue here is not about the depth of compassion for people who are 

working and poor. The issue is what are the outcomes of the proposed legislation. And my concern is that the outcomes include 

worsened conditions for exactly those people and the possibility of 

reduced employment for them, reduced hours if they are working, 

the loss of the establishments that have traditionally employed 

them, and all of those things you are seeing when you say well, I 

am going to have to pay other people, you are going to get wage 

compression. And that is going to say well, we will cutoff a certain 

category, whether they are teens or folks who never finished comVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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munity college. We are just not going to look at those guys. We can 

get the other ones. We will do that because we are paying everybody more. 

And those are just people who are running the numbers and by 

necessity trying to keep their business going. It is not an act of 

anything other than necessity, and I worry about those acts being 

played out across the country. 

Mr. WATKINS. Thank you, Doctor. Thank you all, and Mr. Chairman, I yield my time. 

Chairman SCOTT. Thank you. The gentlelady from Oregon, Ms. 

Bonamici. 

Ms. BONAMICI. Thank you very much, Chairman Scott, and 

thank you for introducing the Raise the Wage Act which I am 

proudly cosponsoring because this is a long overdue conversation 

about gradually increasing the Federal minimum wage to $15 an 

hour. And as you pointed out, Mr. Chairman, in your opening remarks today, an individual working 40 hours a week and earning 

the Federal minimum wage earns $15,080 annually. Annually. Putting a family of two below the Federal poverty level, and that is 

unacceptable that someone working full time is living below the 

Federal poverty level. 

And as Mr. Wise’s testimony so poignantly showed, when workers are paid wages that leave them in poverty, they struggle. They 

struggle to pay for rent, essentials like food, transportation, skyrocketing child care costs. So the Federal minimum wage has been 

stagnant for too long. It has contributed to income inequality, and 

I am glad we are having this conversation today. 

So I am from Oregon, and I have to tell you that years ago, I 

was kind of surprised to learn that there was actually such a thing 

as the subminimum wage for tipped workers because we don’t have 

that in Oregon. We have a thriving restaurant industry. People 

come to Oregon for restaurants. So I was really actually shocked 

to learn that people could be paid less than minimum wage. It was 

really surprising. 

In Oregon, more than 100 years ago, even before the Fair Labor 

Standards Act was enacted, Oregon became one of the first States 

to enact a minimum wage. It was intended to address gender disparities for workers, yet still today the majority of workers earning 

minimum wage are women and people of color, according to data 

from the Bureau of Labor Statistics. 

So Dr. Spriggs, in your testimony you talked about the history 

of the Fair Labor Standards Act and some of the compromises that 

were made to pass the bill, and I know Representative Grijalva 

mentioned this, but those compromises later exacerbated racial and 

gender wage gaps. So how have women and people of color been 

disproportionately affected by a low Federal minimum wage, and 

how will the Raise the Wage Act address these persistent wage 

gaps? 

Dr. SPRIGGS. Thank you very much, Congresswoman, for the 

question and thank you for your comments. 

Yes. I think we need to look back at 1966 when 60 percent of Republicans agreed to expand coverage and get rid of the exemption 

for agriculture and many service sector workers which included 

restaurant workers. Unfortunately, the restaurant workers were 


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subject to this creation of a subminimum for tip. The tip wage itself 

has a very racist origin. It was originally because the servants happened to be black, and it was the habit not to think about you have 

to pay them, and the tip was meant in lieu of wages. 

When we closed the gap in 1966 in terms of coverage, we have 

to remember that many of those workers, because they were agriculture workers, lived in the south, in the rural south, and they 

lived in States that did not have State minimum wages. There was 

nothing below them. So the studies that have been cited by Ellora 

Derenoncourt and by Claire Montialoux highlight that when that 

was closed, first, these workers didn’t get paid a dollar an hour, so 

the initial expansion of coverage to include these rural workers was 

to get them to $1 which was a 34 percent raise. In other words, 

they were getting close to $0.80 an hour, and then because they 

were included, they went to $1.60. We doubled their wages. 

Ms. BONAMICI. Thank you. And I want to get another question 

in. 

Dr. SPRIGGS. Yes. I want to tell you really quickly the punch line. 

The punch line is that black child poverty in this country went 

from nearly 70 percent to 40 percent in that 3 years simply by covering 30 percent of African Americans who had been denied that 

coverage— 

Ms. BONAMICI. Right. 

Dr. SPRIGGS [continuing]. and raising their wages. So that was 

the biggest effect we have ever had in lowering poverty from any 

program. It took us until 1990 to break that record, to get black 

child poverty back below 39 percent. 

Ms. BONAMICI. Long past time to complete the work. I also wanted to talk about or also point out that when low wage workers— 

they spend their earnings. They go right back into the economy. 

In Washington County, Oregon, which is just west of Portland, 

the Portland metro region, the minimum wage there is $10.75 an 

hour currently. Someone making minimum wage would have to 

work 73 hours a week to afford a one-bedroom apartment, and that 

is what we are seeing in other areas as well. A full-time worker 

should be able to afford basic needs like housing. And Dr. Zipperer, 

you mentioned a family budget calculator, and I liked your quote 

about protecting the Nation from the evils and dangers resulting 

from wages too low to buy the bare necessities of life. So who benefits from this gradual increase to $15 by 2024, and why is it important to establish that as a Federal floor rather than leaving the 

issue up to States? 

Mr. ZIPPERER. Thank you for your question. It is important to establish a Federal floor because many States don’t actually increase 

their minimum wage or increase it adequately, and Federal action 

is the only way that we are going to actually achieve a national 

minimum wage that would provide a wage standard high enough 

so that all people in all areas of the country will be able to afford 

the basic necessities for their families. 

At the Economic Policy Institute, we have developed what we call 

family budgets to delineate how much a given family type in a 

given area of the country needs every year to pay for housing, food, 

transportation, child care, and other necessities. These are extremely conservative amounts. They don’t allow for any saving 


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whatsoever, no saving for retirement, no saving for buying a home, 

no saving for emergencies. And even with these conservative 

amounts, we find that in every city and in every county of the 

country, by 2024, workers will need $15 per hour working full time 

in order to meet their family budget. Two adults working 40 hours 

a week, 52 hours—52 weeks a year at $15 per hour each, will earn 

less than their family budget in every area of the country. 

Ms. BONAMICI. Thank you very much. And Mr. Chairman, I request unanimous consent to enter into the record a letter from the 

Women’s Coalition outlining the importance of passing the Raise 

the Wage Act to help address wage gaps for women. 

Chairman SCOTT. Thank you without objection. 

[The information follows:] 


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Co-Sponsor and Support Swift Passage of the Raise the Wage Aet 

February 5, 2019 

Dear Members of Congress: 

As members of a broad coalition of organizations that promote economic security and equity for 

women, we strongly urge you to co-sponsor and push for swift passage of the Raise the Wage 

Act as a top priority of the !16th Congress. 

The Raise the Wage Act will raise the federal minimum wage from $7.25 to $15 an hour by 

2024, then index the minimum wage so that it continues to rise along with wages overalL It will 

also end unfair exclusions for tipped workers, people with disabilities, and youth so that they, 

too, can benefit from a decent minimum wage. 

Women across the country--especially women of color-continue to experience a pay gap and a 

higher risk of poverty than men. Women working full time, year round typically make only 80 

percent of what their male counterparts make, leaving a wage gap of20 cents on the dollar. This 

wage gap varies by race and is larger for women of color: Black women working full time, year 

round typically make only 61 cents, Native women only 58 cents, and Latinas only 53 cents, for 

every dollar paid to their white, non-Hispanic male counterparts. While Asian American and 

Pacific Islander (AAPI) women make 85 cents for every dollar paid to white, non-Hispanic men, 

many AAPI communities experience drastically wider pay gaps. 

Women's overrepresentation in low-wage jobs is a driving force behind the gender pay gap. 

Women are close to two-thirds of the workforce in jobs that pay the minimum wage or just a few 

dollars above it, as well as two-thirds of workers in tipped jobs. Women of color are particularly 

overrepresented among tipped workers and other low-wage workers. They are particularly 

harmed by the $7.25 federal minimum wage that has not gone up in a decade and by the $2.13 

tipped minimum cash wage that has been frozen for an astonishing 28 years. 

Poverty-level wages heighten women's economic vulnerability, which in turn heightens their 

vulnerability to sexual harassment on the job. Women who rely on tips to survive often feel 

compelled to tolerate inappropriate behavior from customers so as not to jeopardize their income 

and employers arc often unwilling to protect their employees for fear of upsetting a paying 

customer. Women's lack of economic power in these workplaces perpetuates the already 

pervasive culture of sexual harassment in industries that employ large numbers of tipped 

workers. 

The Raise the Wage Act is critically needed to advance women's economic security and dignity 

in the workplace. The Economic Policy Institute estimates that increasing the federal minimum 

wage to $15 by 2024 would give nearly one in three working women a raise, including 41 

percent of Black working women, 38 percent of working Latinas, 29 percent of white working 

women, and 18 percent of Asian working women. 
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Women and people of color have been left behind by our economy and our policies far too often, 

for far too long. Adopting the Raise the Wage Act would mark a crucial step toward ensuring 

they can work with equity, dignity, and safety. There is no more fitting way to begin this historic 

Congress than by making real, concrete progress in ensuring all women receive adequate pay. 

We urge you to prioritize the Raise the Wage Act in the !16th Congress by cosponsoring and 

urging swift passage of this legislation. If you have any questions, please do not hesitate to 

contact Emily Martin, Vice President for Education & Workplace Justice at the National 

Women's Law Center, at (202) 588-5180. 

Sincerely, 

9to5, National Association of Working Women 

9to5 Georgia 

A Better Balance 

ACCESS 

African American Health Alliance 

American Association of University Women (AAUW) 

AAUW Texas 

American Federation of Teachers (AFT), AFL-CIO 

AFT Local 1766 (Union of Rutgers Administrators) 

American Psychological Association 

Americans for Democratic Action (ADA) 

Arizona Coalition to End Sexual & Domestic Violence 

Asian Pacific American Labor Alliance 

Cambridge Committee to Raise the Minimum Wage 

Caring Across Generations 

Center for American Progress 

Center for Frontline Retail 

Center for Popular Democracy 

Chelsea Collaborative 

Coalition of Labor Union Women 

California Capital Chapter, Coalition of Labor Union Women 

Capital Area Chapter, Coalition of Labor Union Women 

Chesapeake Bay Chapter, Coalition of Labor Union Women 

Chicago Chapter, Coalition of Labor Union Women 

Cleveland Chapter, Coalition of Labor Union Women 

Florida Chapter, Coalition of Labor Union Women 

Genesee County Chapter, Coalition of Labor Union Women 

Grand Prairie Arlington Chapter, Coalition of Labor Union Women 

2 
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Greater Kansas City Chapter, Coalition of Labor Union Women 

Greater New Jersey Chapter, Coalition of Labor Union Women 

Greater Oklahoma City Chapter, Coalition of Labor Union Women 

Houston Chapter, Coalition of Labor Union Women 

Kate Mullany Chapter, Coalition of Labor Union Women 

King County Chapter, Coalition of Labor Union Women 

Lorain County Chapter, Coalition of Labor Union Women 

Los Angeles Chapter, Coalition of Labor Union Women 

Metropolitan District of Columbia Chapter, Coalition of Labor Union Women 

Missouri Chapter, Coalition of Labor Union Women 

Northeast Cleveland Chapter, Coalition of Labor Union Women 

Pennsylvania Chapter, Coalition of Labor Union Women 

Philadelphia Chapter, Coalition of Labor Union Women 

Rhode Island Chapter, Coalition of Labor Union Women 

San Diego Chapter, Coalition of Labor Union Women 

San Francisco Chapter, Coalition of Labor Union Women 

Southwestern Pennsylvania Chapter, Coalition of Labor Union Women 

St. Louis Chapter, Coalition of Labor Union Women 

Western New York Chapter, Coalition of Labor Union Women 

Western Virginia Chapter, Coalition of Labor Union Women 

Color Of Change 

Connecticut Women's Education and Legal Fund (CWEALF) 

Day One 

Equal Rights Advocates 

Equality North Carolina 

Equality Ohio 

Family Values@ Work 

Federally Employed Women 

Found Objects Transformed 

Futures Without Violence 

Gender Justice 

Health Care for America Now 

Illinois Coalition Against Sexual Assault 

In Our Own Voice: National Black Women's Reproductive Justice Agenda 

Innovation Ohio Education Fund 

Jewish Alliance for Law and Social Action 

Jobs With Justice 

Cleveland Jobs with Justice 

Justice for Migrant Women 

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Kentucky Equal .Justice Center 

Labor Project for Working Families 

Legal Momentum, The Women's Legal Defense and Education Fund 

Maine Women's Lobby 

Massachusetts Voter Table 

MNCASA 

Moms Demand Action - Triad NC 

MS Black Women's Roundtable 

National Alliance to End Sexual Violence 

National Asian Pacific American Women's Forum (NAPA WF) 

National Association of Social Workers, Massachusetts Chapter 

National Center for Lesbian Rights 

National Coalition for the Homeless 

National Coalition of I 00 Black Women, Central Ohio Chapter 

National Committee on Pay Equity 

National Council of Jewish Women 

National Domestic Workers Alliance 

National Organization for Women 

North Carolina NOW 

Raleigh NOW 

Southwest Pennsylvania NOW 

Triad NOW 

National Partnership for Women & Families 

National Women's Law Center 

NETWORK Lobby for Catholic Social Justice 

Nevada Coalition to End Domestic and Sexual Violence 

New Mexico Coalition of Sexual Assault Programs 

New Voices for Reproductive Justice 

Ohio Alliance to End Sexual Violence 

Ohio Domestic Violence Network 

Ohio Religious Coalition for Reproductive Choice 

Oklahoma Women's Coalition 

Organization United for Respect 

Oxfam America 

People For the American Way 

PHENOM (Public Higher Education Network of Massachusetts) 

Pow Her New York 

Project IRENE 

PWN-USA 

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Racial and Ethnic Health Disparities Coalition 

Restaurant Opportunities Centers United 

Restaurant Opportunities Center of Pennsylvania 

Sargent Shriver National Center on Poverty Law 

Sexual Assault Services of Northwest New Mexico 

Solace Crisis Treatment Center 

Tewa Women United 

Union for Reform Judaism 

Unitarian Universalist Mass Action Network 

United Church of Christ, Justice and Witness Ministries 

United Democratic Women of MD, Inc. 

V.I. Domestic Violence & Sexual Assault Council 

Valencia Shelter Services 

Vermont Network Against Domestic and Sexual Violence 

Voices for Progress 

Washington State Coalition of Sexual Assault Programs 

West Virginia Center on Budget and Policy 

Western Center on Law and Poverty 

Women & Girls Foundation of Southwest Pennsylvania 

Women Employed 

Women of Reform Judaism 

Women's Law Project 

Women's Rights and Empowerment Network 

Working Washington/Fair Work Center 

YWCA USA 

YWCA Dayton 

5 
86 

Ms. BONAMICI. And I yield back. 

Chairman SCOTT. Thank you. 

The gentleman from Texas, Mr. Taylor. 

Mr. TAYLOR. Thank you, Mr. Chairman. I appreciate the opportunity to be here. Dr. Holtz-Eakin, just a question for you. I was 

going over your testimony last night, and something that really 

struck me was the study that you did in 2015, and in that study 

you determined—and I will just read your testimony back to you, 

but using the most recent academic literature, the study found that 

a $15 per hour Federal minimum wage resulted in the loss of 3.3 

million to 16.8 million jobs with a middle estimate of 6.6 million 

jobs lost, and I just wanted to understand. So that is a range, and 

clearly it is all bad. I don’t think anybody here wants to lose a job, 

right? We want to create jobs. I think everybody here agrees on 

that basic premise. But can you explain why there is a range in 

estimates and sort of—if you don’t mind? 

Mr. Holtz-Eakin. So there is a range from analyzing the data, 

and the imprecision with which statistics delivers the truth, right, 

it doesn’t say literally this is exactly what will happen. 

Mr. TAYLOR. Sure. 

Mr. Holtz-Eakin. It says, you know, given the variation in the 

data, it can go from here to here, and we want to acknowledge that 

you can’t know with great certainty. 

Mr. TAYLOR. Ok. 

Mr. Holtz-Eakin. And I just want to emphasize that says if we 

look historically at changes in the minimum wage, we have limited 

ability to say precisely what will happen. That gives you a range. 

We have even less ability to say what will happen if we go forward 

in a fashion that is much more dramatic, more than doubling and 

then indexing permanently the minimum wage. This is an unprecedented experiment, and I think we know very little about what will 

actually happen. 

Mr. TAYLOR. And then just as a policymaker, where are these 

losses? I mean, are these happening in high-income areas? Are they 

happening in—you know, high cost of living areas like New York 

City? Are they happening in low-cost areas like, say, Kansas? Are 

they happening in suburban areas like where I represent in Plano, 

Texas? Are they happening in urban areas, rural areas? Where are 

we losing jobs? So you are estimating millions of jobs being lost. 

Where are they lost? 

Mr. Holtz-Eakin. So you can split the economy in a variety of 

ways. I would say the most important way to split it is to look in 

the labor force and say let’s look at the whole labor force. It is hard 

to discern an impact. Let’s look more closely at those people who 

have little education, little skill, little experience, say, a teenager. 

They are going to be priced out of the labor market. You are not 

going to find—I will speak from experience. I never found $30,000 

worth of productivity in my kids. So they are just not going to get 

hired. And so, you know, that will show up right away. 

If you look further at the places they are most likely to be employed, that is going to be retail. That is going to be restaurants 

and bars, and that is where you are going to find the employment 

losses. And then across geography, you can just see places where 


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87 

you have concentration of low-wage workers as the labor force base, 

and that is where you are going to see the losses. 

Mr. TAYLOR. Ok. And then just shifting over to another piece of 

your testimony I was reading last night, and I will just read this 

sentence to you. Seattle’s minimum wage law, so we are going to 

Seattle now, has caused low wage work hours to decline by 9.4 percent. Consequently, even among low-wage workers who were still 

employed and earned slightly higher wages, their average monthly 

earnings on net declined $125 per month. 

So in addition to Seattle losing 10,000 jobs which is what your 

testimony was, what your written testimony is, you watched the 

people that still managed to keep their jobs, their hours declined, 

and so their incomes also declined, right? 

Mr. Holtz-Eakin. Yes. 

Mr. TAYLOR. So you have lost jobs. 

Mr. Holtz-Eakin. Yes. 

Mr. TAYLOR. You have lost income. My question is what has happened to those workers? Are those workers leaving the labor force? 

Are they moving somewhere else where they can get a job? Are 

they going into the welfare system? What happens to these people 

that lose their jobs? What happens to the families that lose income 

as a result of the policy, the $15 policy that was implemented in 

Seattle? 

Mr. Holtz-Eakin. So Seattle is of interest because No. 1, it is the 

top line number, $15, that has focused a lot of attention. No. 2, it 

came along with the city deciding to have a policy violation built 

in and had the University of Washington study this closely using 

a research design that is the gold standard for those who think 

that minimum wage doesn’t hurt workers. And so these findings 

are troubling for that reason. 

The thing it doesn’t include is a followup for where everyone 

goes, but the logical conclusion is we have seen a little bit of them 

moving outside the city to get work. That is actual in the study. 

You can see people trying to work outside the municipal limits, but 

also you would expect people to simply leave Seattle. If there is not 

going to be a work opportunity, they are going to try elsewhere. 

Mr. TAYLOR. Ok. Thank you. Mr. Chairman. I yield back. 

Chairman SCOTT. Thank you. 

The gentleman from California, Mr. Takano. 

Mr. TAKANO. Mr. Chairman, thank you. I would like to begin my 

questioning by asking unanimous consent to submit a Statement 

into the record from the Center for American Progress dated January 16th, 2019 which praises the Raise the Wage Act. 

Chairman SCOTT. Without objection. 

[The information follows:] 


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STATEMENT: CAP's Neera Tanden Praises the Raise the Wage Act, Which Would Establish a $15 

Minimum Wage by 2024 

Date: January 16, 2019 

Contact: Allison Preiss 

Email: apreiss@americanprogress.org 

Washington, D.C. -Today, Democrats in the U.S. House and Senate introduced the Raise the Wage Act, 

which would gradually increase the minimum wage to $15 per hour by 2024 and give roughly 40 million 

Americans a raise. Neera Tanden, president and CEO of the Center for American Progress, released the 

following statement in response: 

The introduction of the Raise the Wage Act in both houses of Congress-and the commitment from 

leaders in the U.S. House to advance this legislation without delay-is a clear sign that we have turned 

the page in Washington. Unlike the House majority from the previous Congress, which spent its time 

passing tax cuts for the wealthy and doling out favors to its corporate friends, this new majority is laserfocused on boosting workers' wages and building an economy that works for everyone. The Raise the 

Wage Act will do exactly that by gradually boosting the federal minimum wage to $15 by 2024. Critically, 

this legislation will also promote equity by eliminating discriminatory subminimum wages for tipped 

workers and for workers with disabilities. 

Enactment of the Raise the Wage Act is long overdue; Congress has failed to take action to raise the 

minimum wage for nearly 12 years. And raising the minimum wage is not only good for workers but also 

good for the economy: More money in workers' pockets means more dollars to be spent at 

neighborhood retailers and restaurants. Raising the minimum wage is also a key component of closing 

the pay gap for women, particularly for women of color who experience the largest pay gaps. Nearly 

two-thirds of workers who are paid the federal minimum wage are women, and women are increasingly 

the sole or primary breadwinners in their households. 

The momentum for this legislation would not have been possible without the workers and on-theground leaders of the Fight for $15 movement who have led the charge on successful minimum wage 

ballot initiatives in cities and states across the United States. Now it's time for Congress to do its job and 

show American workers that it is committed to economic prosperity for all workers, not just those at the 

top. 
89 


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In 2018, a worker earning $7.25 per hour needed an extra 41 working days-more than eight weeksjust to take home the same pay that he or she did in a single year when the federal minimum wage was 

last increased. As a result, a full-time minimum wage earner lost $2,370 in purchasing power last year, 

according to a CAP analysis. That is more than 47 times greater than the average tax cut the same 

worker can expect from congressional Republicans' Tax Cuts and Jobs Act enacted at the end of 2017. 

For more information or to speak with an expert, contact Allison Preiss at 

apreiss@americanprogress.org or 202-478-6331. 
90 

Mr. TAKANO. Mr. Zipperer, Mr. Holtz-Eakin cites, you know, a 

Seattle study showing harm being done. I would like to know what 

the impacts of the minimum wage increases in places like Seattle, 

San Francisco, and New York have been? 

Mr. ZIPPERER. All right. Thank you for the question. Regarding 

Seattle and the study that Dr. Holtz-Eakin cited, that study is 

based on a completely flawed comparison of Seattle where wages 

are rising extremely fast during the study period with other areas 

of Washington State that do not look like Seattle or are not comparable to Seattle and not a good point of comparison. And so that 

is why I don’t think that study coming from the University of 

Washington is informative in any way about the consequences of 

the Seattle minimum wage increase. 

At the same time, there are also studies that use a variety of 

case studies and not just focus on a single city but that focus on 

six cities including Seattle, also Chicago and a couple of cities in 

California like San Francisco, and they studied the effects of the 

minimum wage increases there on restaurant employment and 

workers’ earnings in restaurants. That study conducted by Sylvia 

Allegreto, Anna Godoy, Carl Nadler, and Michael Reich and others 

at the University of California Berkeley found that those minimum 

wage increases in those cities, in all of those cities, raised the 

wages of restaurant workers without any negative consequences for 

employment. 

Mr. TAKANO. Thank you. I appreciate that. 

I appreciate my Republican colleagues inviting, you know, Mr. 

Holtz-Eakin to give us, you know, the conservative point of view. 

I imagine that my colleagues on the other side of the aisle respect 

your hard headed analysis of our economy. And we Democrats are 

advocating for the minimum wage at $2.15 or at $15 an hour. Of 

course, we are interested in trying to raise the incomes, and I am 

curious. I want to know, you know, in some of your past writings, 

especially on immigration reform. Do you still hold to your beliefs 

that immigration reform and welcoming immigrants into our economy ultimately will raise the wages of American workers? 

Mr. Holtz-Eakin. Absolutely. 

Mr. TAKANO. Can you expound on that a little bit more? 

Mr. Holtz-Eakin. Sure. If you look at the research on the impact 

of immigration on native born workers, you find that immigrants 

are, on average, complements to those native born workers meaning in economic terms when they arrive, they raise the wages of 

the native born workers. Immigrants are disproportionately entrepreneurial. They start businesses at a higher rate. They bring capital at a higher—workers at a rate above the native born. They 

work longer. They retire later. They are a source of enormous vitality to the U.S. economy, and no one should misunderstand that. 

Mr. TAKANO. So you would counsel, you know, my Republican 

colleagues to push for immigration reform and to welcome immigrants into our economy? 

Mr. Holtz-Eakin. I have for my entire career, and you have seen 

my success. 

Mr. TAKANO. And you maintain that immigrants do not depress 

wages, but they actually have either no effect on wages but actuVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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ally ultimately increase those wages because our productivity goes 

up as an Nation. 

Mr. Holtz-Eakin. I am convinced that the blanket statement no 

one’s wages ever go down is probably wrong. Blanket statements 

are always wrong in economics. But I think the vast amount of evidence is that they are beneficial to the wages of native born workers. 

Mr. TAKANO. Of course, I believe that we need a strong, you 

know, baseline of a minimum wage. We need immigration reform 

to reduce the effect of the shadow economy so that people, you 

know, are not being exploited by employers who are taking advantage of their undocumented status. 

I mean, we can argue about where that minimum wage should 

be set, but do you also believe that as well, that a shadow economy 

is not good for us? 

Mr. Holtz-Eakin. I think it is terrible if we have circumstances 

that permit people to be exploited by the workers, and that is a 

real issue, and it ought to be taken seriously by everyone in this 

committee. The place where we disagree is on the minimum wage, 

and what I would say to you is it is not that you don’t want to try 

to do something. This is the wrong thing to do. We have a lot of 

evidence in the earned income tax credit that it promotes work and 

helps these people. Try the noncustodial tax credit. There are a variety of alternatives. This is just the single worst way to try to help 

these people. 

Mr. TAKANO. Fair enough. Fair enough. We simply disagree on 

the level of the minimum wage, but you know, we do agree on immigration reform and the value of immigrants in our economy. 

Thank you. 

Chairman SCOTT. Thank you. 

The gentleman from Georgia, Mr. Allen. 

Mr. ALLEN. Thank you, Mr. Chairman, and thank you for holding 

this hearing and talking about, you know, the creation of jobs and 

the opportunities available out there. 

I am from the State of Georgia. We have a little fast food company down there. Mr. Wise, your testimony was very impressive, 

but I can tell you. If you had gone to work for Chick-fil-A, you 

would probably own your own restaurant by now. It is an amazing 

story. You need to check them out, you know. Obviously you have 

a passion for that business, and you have remained in it, and in 

fact, they will actually put you through college. Amazing company. 

And in fact, we have had enormous job creation in Georgia. The 

wage situation is—I mean, for example, with truck drivers. I mean, 

they are making in excess of $80,000 a year, full benefits, full medical, and there are also companies working with the drivers to 

make sure they are not out of town more than maybe two nights 

a week. So we are trying to address this booming economy. Georgia 

has created over 800,000 jobs in the last four or 5 years, and frankly, everywhere I go, everybody needs workers. 

So Dr. Holtz-Eakin, how would increasing the minimum wage to $15—I guess I have two questions. One, how in the world do you 

live off $15 in Washington D.C.? I mean, I spend 36 weeks up here. 

This is the most expensive place to live I have ever lived in my life. 

I mean, you look at Georgia and the cost of living in Georgia. I 


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mean, it is maybe a third of Washington, DC. based on my experience. 

So how can you just blanket the country with, say, you know, 

like in Washington, DC, maybe the minimum wage should be $30 

an hour. Who knows? I mean, why stop at 15? I mean, if you are 

talking about a living wage based on, in my experience, the cost 

of living up here. So No. 1, what do you think it will do to a State 

like Georgia with an incredible economy, and No. 2, how do you, 

like, divide up the country and say Ok, this is the blanket policy? 

Can you answer those questions? 

Mr. Holtz-Eakin. Well, first of all, I am not an expert on Georgia, 

but I will say that your characterization matches the data for the 

U.S. as a whole where we do have more openings than unemployed 

as I mentioned in my opening Statement. That is the market’s way 

of raising wages, and wages are rising. Our best measure of real 

wage growth is the employment cost index, kind of a nerdy thing 

you don’t need to know. But if you look at that, it was growing 

about 1 and a half percent a couple years ago. It is now up to 

three. It is doubled. 

And so we are seeing real wage growth, wages above inflation 

start to move, and that is a valuable thing. That happens at different rates across the country because we have different economic 

labor markets. There are hundreds of local labor markets in the 

United States. Tailoring a policy to Washington, DC. will destroy 

the State of Georgia, and we shouldn’t do it that way, and I think 

that is one of my biggest concerns about this is it is a dramatic increase, and it is nationwide. 

Mr. ALLEN. It is like, you want do level the playing field across 

the country and penalize a State like Georgia, you know, like I 

said. And like I said, there is no way you can live off $15 an hour, 

and my only experience is here in Washington. I don’t know what 

it would be like, say, in other large cities, but— 

Mr. Holtz-Eakin. You do want to level the playing field in the 

sense of giving everyone the same opportunity. 

Mr. ALLEN. Right. 

Mr. Holtz-Eakin. The trouble is having the same minimum wage 

makes sure that is not level, and that is what I am concerned 

about. 

Mr. ALLEN. Well, I ran a small business for 35 years, and of 

course, right now we are looking for people. We have no one on our 

payroll that is making less than $15 an hour. And of course, we 

are recruiting the best and the brightest, and we don’t mind paying 

more for the best and brightest because they are more productive 

and tend to be more passionate about their work and that sort of 

thing, so— 

Well, thank you again. You know, I don’t think this one size government program fits all is the answer. I think we have got to look 

at it city by city, but again, we have got to keep the economy growing. Thank you very much, and I yield back. 

Chairman SCOTT. Thank you. The gentlelady from North Carolina, Dr. Adams. 

Ms. ADAMS. Thank you, Mr. Chairman, and to the Ranking Member as well. Let me thank all of the witnesses for your testimony 

today, and Mr. Wise, thank you for sharing your story. 


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A couple of months ago we were scheduled to have a hearing on 

how terrible it would be to have a $15 minimum wage. I sort of 

agree with my colleague, Mr. Allen. I would go for the 30. It was 

fortunate—it was unfortunate, though, that hearing was canceled 

because we had hard-working folks from many of our service industries in Washington that day, all fighting for $15 because they 

know that $15 is the bare minimum an individual must earn to 

raise a family today. 

And I was able to meet with many of them that day, and I met 

many of them throughout my legislative career, and these workers, 

as Mr. Wise has said, work two and three jobs to feed their families 

and still, it is not enough. Working hard is not enough if you don’t 

make enough, and on 7.25, you can’t survive. 

I remember in 2006 when I fought for the minimum wage to be 

raised from $5.15 to $6.15 in the North Carolina General Assembly. I fought 9 years to get that done, and it is pretty shameful 

today that 12 years later, the Federal minimum wage and the 

State minimum wage in North Carolina has only increased a mere 

$1.10. 

The question is not does it make sense to increase the minimum 

wage to $15. The question is who in their right mind would disagree? You know, Dr. Spriggs, I have a question for you. I am interested in why generally wage increases no longer seem to be tied 

to worker productivity, and if you can just briefly describe how the 

key labor market institutions are functioning today, I would appreciate that. 

Dr. SPRIGGS. Thank you very much, Congresswoman. We have 

tried this experiment over the last 40 years that you don’t need a 

minimum wage, you don’t need unions, you don’t need any of the 

labor market safeguards and institutions we put in place at the 

time of the Great Depression where we learned that real wages can 

fall. 

The problem today is we are now 10 years into the—almost 10 

years into the recovery. It is been 9 years since the labor market 

started this string of consecutive job growth, and yet it is only now, 

only now that real wages are rising and really only because inflation was negative at the end of the quarter. So the lack of a floor 

affects workers because increasingly economists have come to understand that competitive firms don’t really face a flat wage curve. 

The belief that employers can hire as many workers as they wish 

at a flat wage is not true. They face an upward sloping demand 

curve which means, and from an economist perspective, they act 

like a term that you might be familiar with, the monopsony which 

means that the market wage should be higher in order to be closer 

to what the clearing wage would be. 

And those firms are, in fact, hiring fewer workers than we would 

expect in a competitive environment. That is why when we do experiment after experiment and we analyze this, we simply don’t see 

the negative wages. And workers who are unionized simply run 

into a stonewall because firms know that the respect is not there 

for bargaining for higher wages, and so we have not been able to 

see wages rise that much even in the bargaining sector. 


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Ms. ADAMS. Can you speak briefly to the importance of indexing 

wage increases and elimination of subminimum wages in addressing weakened labor market institutions? 

Dr. SPRIGGS. In the past, when you look at the increases in the 

minimum wage, it was one of the charts that was put up before. 

You saw that even though Congress wasn’t consciously doing it, it 

was raising the minimum wage in line with productivity and in 

line with the median wage and in line with the poverty level. When 

that consensus broke in 1969, you saw these things move in all 

sorts of different directions. 

And so the purpose of indexing is because it has become increasingly difficult now that everyone does not agree that work pays and 

all work is dignity. It has become such a political item that it is 

necessary to put in the indexing because before this was not partisan. Republicans overwhelming agreed with Democrats. The 

whole country agreed work has to have dignity, and work must 

pay. That is an American value. 

Ms. ADAMS. Absolutely. Dr. Zipperer, just quickly. If the wage 

had kept pace with how productive workers are on the whole, how 

much would it be today? 

Mr. ZIPPERER. If the wage had kept pace with labor productivity 

over the last 50 years? If the minimum wage had kept pace with 

labor productivity over the last 50 years, the minimum wage today 

would be closer to $20 an hour. 

Ms. ADAMS. Thank you, sir. 

I yield back, Mr. Chair. 

Chairman SCOTT. Thank you. The gentleman from Michigan, Mr. 

Walberg. 

Mr. WALBERG. Thank you, Mr. Chairman, and thanks to the 

panel for being here. 

Recently my office received a letter from Daniel, a constituent in 

my Michigan district, who has worked in the restaurant industry 

as a bartender for over 20 years. He described how he has the potential to make well above the minimum wage with the tips and 

appreciates the freedom that the restaurant industry provides to 

move to different restaurants at significant increases and security 

that can best meet his personal needs. 

Dr. Holtz-Eakin, this Raise the Wage Act would eliminate tip 

credit, as I read it, requiring all employers such as these restaurants where Daniel works to pay cash wages equal to that of 

the full minimum wage. What effect do you believe this policy will 

have on the take-home wages of Americans like Daniel who work 

in the restaurant industry? 

Mr. Holtz-Eakin. So it is a good question. I think there are two 

possibilities that jump out. The first would be by forcing the equalized the minimum wage. You are raising the cost of labor for that 

establishment, and the worst-case scenario is that Daniel no longer 

gets to tend bar, and if he can’t find another job, that his take 

home pay is undeniably diminished. He might have to take another 

job somewhere else and hopefully be Ok. But that is one channel. 

The second is that the tip—you know, if it becomes known that 

he is being paid, people stop tipping, and to the extent that happens, he may not come out ahead. He may come out behind, but 

those are the two channels that would be in play. 


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Mr. WALBERG. It takes away that flexibility and security to a 

great degree of being able to know that if I go to another restaurant that has a larger clientele or whatever else, it could impact 

me at the tip credit as well. 

Mr. HOLTZ-EAKIN. It is in a small way a little labor market 

where, you know, there is a return to his skills, his service, his productivity, and the better he is, the more tips he will get, and this 

breaks that link as well. 

Mr. WALBERG. In looking at what has happened to restaurants 

and other businesses in cities that have eliminated the tip credit, 

what has been the outcome? 

Mr. HOLTZ-EAKIN. I will have to get back to you on the tip credit, 

per se. I don’t have that at my fingertips. I will just note that I 

think the restaurant industry is the one that jumps out as a concern in the Raise the Wage Act. You know, in my testimony I 

showed some of the historical evidence from 2014 and 2015 where 

we looked at what happened to restaurant employment in those 

municipalities that raised their minimum wages versus those that 

did not, and it is right in the data. 

The employment growth just slows down, and this is at a time 

when we are starting to see the economy finally ramp up. But I am 

afraid this act would repeat that in a much bigger way for the Nation as a whole. 

Mr. WALBERG. Does any data show that the tip credit really allows workers to earn less than the minimum wage? 

Mr. HOLTZ-EAKIN. The law says they can’t earn less than the 

minimum wage. I am sympathetic to Dr. Spriggs’ observation that 

compliance is an issue. I am not a compliance expert, but I would 

take those comments seriously and make sure that we have things 

that are—effective laws that can be monitored and enforced. 

Mr. WALBERG. Ok. Thank you. I yield back. 

Chairman SCOTT. Thank you. The gentleman from New Jersey, 

Mr. Norcross. 

Mr. NORCROSS. Thank you, Chairman, Ranking Member, and I 

am here proud to cosponsor along with the chairman the Raise the 

Wage Act, but I want to start out by thanking the witnesses, but 

particularly those behind you who are the real faces of minimum 

wage, and certainly that is the reality. 

So let’s talk about myth versus reality. 1950. Minimum wage was 

increased by 88 percent. Unemployment decreased. The stock market went up. Thirty years ago the CEO made 30 times the average 

worker. Today, the CEO makes 347 times. That is the reality of 

what is going on. 

Mr. Chairman, this is America. You work hard, you play by the 

rules, you are supposed to be able to make it. Right now, that is 

not the case. It has been 11 years since we voted, 10 years since 

that raise went to the minimum wage. We do need to raise the 

wage, and I reach across the aisle because what happened last 

time, 348 votes in the house, that was Republicans and Democrats. 

Eighty votes in the Senate to raise the minimum wage. We can 

do this because you know it is the right thing to do. It is predictability. It is not $15 an hour tomorrow. This is over years that this 

comes in. I worked for minimum wage. I was a single dad trying 

to raise my kid. I know it was tough. Today, it is impossible, but 


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I will tell you that if the minimum wage kept up with inflation and 

productivity, it would be $18 an hour. That is the path that we follow that if you work hard, you play by the rules, that the boss 

doesn’t keep everything, and that is what we have seen happen. 

But the real surprise is not that you can’t make it, but you don’t 

even come close, do you, Mr. Wise? You don’t even come close. 

But the remarkable thing, to my colleagues, raising the minimum wage to $12 would reduce government spending on entitlement programs by $17 billion. People want to work. They want to 

be able to provide their family. They want the dignity of going to 

work each day, but they need to be able to make it in this country. 

I am so proud to say my Governor signed in the $15 an hour wage 

predictability over the next 6 years. It is not happening overnight. 

Let’s think about it. If it has been 10 years and it is going to take 

us another 6 years, that is 16 years to raise the wage to $15 an 

hour. It is not this overnight crisis that they are trying to build. 

My friends here in Washington, please. It is time to wake up. We 

took care of the CEOs for you who voted for that tax, 1.3 trillion 

to that top 1 percent. It is time to help these people, the ones that 

vote in your districts, the ones who need it. 

Mr. Wise, why are you here today advocating on behalf of the 

minimum wage? Why is this important to you? 

Mr. WISE. Well, you know, it is like you said, and that is what 

my mom told me. She told me work hard, be a good citizen, and 

everything will be Ok. That is what Mom told me, and I thought 

that would be the case. I worked hard, doubly hard, two jobs to try 

to provide for my three girls. When I had to start skipping meals, 

you know, substituting sanitary products for my daughters, making 

them use tissue, just doing anything to survive and get by even 

though I was doing everything right, everything Mom said, but it 

was obviously something terribly wrong. 

And I know that my fight doesn’t end today here in this building. 

I have got to continue to fight in my city and all across the country 

until every worker is earning a living wage, and not only that, 

until we can work to get legislation to create an easier environment 

for us to have a union and be able to have collective bargaining, 

a seat at the table. So this fight is something that I have been 

waiting on my whole life. This is a way we have got to change this 

country. There is no individual solution to social, economic, and political problems. 

So I have been able to come together with my coworkers from not 

only Kansas City but across the country to change the narrative in 

this country. Before we organized 6 years ago, no one talked about 

wage inequality. Nobody talked about unions. I wasn’t taught this 

in school, but I have been able to learn through the movement that 

this is what it is going to take, me and my coworkers behind me 

continuing to stand together and tell our stories because it is real, 

and this is how we live every day. 

Mr. NORCROSS. Thank you, Mr. Wise. 

Please. Let’s work together. Let’s take care of all Americans. 

Let’s give them a chance to have the dignity of the American 

dream, of being able to make it because you are doing the right 

thing. I yield back. 


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Chairman SCOTT. Thank you. The gentleman from Texas, Mr. 

Wright. 

Mr. WRIGHT. Thank you, Mr. Chairman, and thank all four of 

you gentlemen for being here today. Dr. Holtz-Eakin, you made a 

point earlier that is worth repeating, and that is that this is not 

about compassion, and, indeed, it is not. In fact, what is before us 

today is a very poor measure of compassion because we have to be 

concerned about the unintended consequences of this bill just like 

we should be with every bill that we discuss and vote on. 

Raising the minimum wage is great for people who get to keep 

their jobs, and of course, that is the concern is the effect it will 

have on jobs because we are not talking about merely raising the 

minimum wage. We are talking about doubling it. That is a shock 

to the system of any small business, any small business owner, and 

they have to make that calculation. They have to balance whether 

they can keep all the jobs they have or eliminate jobs in order to 

accommodate a sudden, what, 100 percent spike in their wages 

they have to pay. 

So we have to be concerned what effect this is going to have, and 

we have already discussed—I had some questions about rural 

versus urban, and you have already discussed that because I have 

both in my district. What I am concerned about, though, and is the 

studies that show, what impact doubling the minimum wage would 

have in terms of business closings, not just employee reduction. Do 

you have any information on that? 

Mr. HOLTZ-EAKIN. I don’t have a specific estimate of that. I think 

again, one of the concerns is that this is an experiment that has 

never been run. We have never doubled the Federal minimum 

wage. We are trying to learn from other things that were far more 

modest. They happened in a locality or a State, smaller at the national level, so but there is no question that one of things you 

would expect to happen is for those firms with thin profit margins, 

that they in the end may just not be able to make it, you know, 

and they will close their doors. And I don’t—I have little question 

about the direction. I don’t know the magnitude. 

I think the other thing to think about with that this is different 

and important is that yes, it is over a number of years, and it is 

laid out in the act. That means that right now, those firms know, 

they can look forward with complete certainty that these low-skill, 

low-experience workers are really expensive, and they will stay expensive forever because it will be indexed at the end, and they will 

find ways to stop having counter service and automate things in 

ways that we have seen in other parts of the economy. It will just 

accelerate that. And so the jobs won’t just be lost for a moment. 

They will be gone. 

Mr. WRIGHT. Right. Well, I want to repeat what has been said 

before, and that is that all of us up here share the same goal in 

terms of wanting to increase the livelihood of Americans, expand 

economic opportunity and progress for Americans, but I don’t believe doubling the minimum wage is the right way to go. 

Thank you, Mr. Chairman, and thank you, Dr. Holtz-Eakin. 

Chairman SCOTT. Thank you. Thank you. Did you want to respond to that? Ok. Thank you. 

The gentlelady from Pennsylvania, Ms. Wild. 


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Ms. WILD. Thank you, Mr. Chairman. Thank you all for being 

here, and thank you to all of you who are here as witnesses to this. 

It is such an important issue, and it is one that I, as a freshman 

legislator, campaigned on, to raise the minimum wage, and I feel 

very deeply that we should. I am from Pennsylvania, one of the 22 

States that still has a minimum wage of $7.25 an hour. So as I understand it, Mr. Wise, you are a little bit ahead of us in Missouri. 

I guess you just raised it up to $8.60 an hour, is that correct, from 

$7.85 an hour last year? So Missouri was still ahead of Pennsylvania with our $7.25 an hour minimum wage. 

Mr. WISE. That is correct. 

Ms. WILD. Well, Mr. Wise, let me just say this, and I am going 

to talk kind of quickly because I have a lot of things I want to say 

or to ask and only a limited amount of time. I really appreciate 

your courage and your willingness to be here today and to talk so 

candidly about your own experience and your family’s experience. 

It is not an easy thing to do, and I recognize that. I also admire 

your fortitude and your commitment to your family. And I admire 

that you are engaging your daughters in activism and helping them 

to understand what it means to fight for social justice, so thank 

you for all of that. 

We just talked a minute ago about the minimum wage in Missouri which I understand is $8.60 an hour now, and if I may, how 

much are you now earning at McDonald’s? 

Mr. WISE. Well, after 20 years in the industry, I do make $11 

an hour at McDonald’s. 

Ms. WILD. Ok. Twenty years in the industry. And you know, my 

colleague, Mr. Allen, made a reference to your passion for the fast 

food industry. Would I be correct in assuming that it is not so 

much a passion for the fast food industry as it is the only job that 

you could get when you had to drop out of school to help support 

your family? 

Mr. WISE. Well, that was the opportunity I had at the chance, 

you know. All labor has dignity. My mom worked for the company 

Hardee’s for 30 years. She enjoyed her work. I enjoy my work. 

Ms. WILD. Good. I am glad to hear that. Now, there was also a 

reference made to tractor-trailer operators making $80,000 a year 

and so forth. Have you ever explored other opportunities such as 

driving a truck? 

Mr. WISE. Well, you know, when I worked—and many Americans 

work doubly hard. For example, I worked Monday 4 p.m. to 11 p.m. 

and had to be right back up Tuesday morning at 4 a.m. to return 

to work, so there is no flexibility in scheduling. I work very hard, 

and there is really not time, you know, to go back to school, to 

search that extra education. And the last I checked, it is really not 

free in this country. 

Ms. WILD. Well, and that is where I was going with that line of 

questioning, and it is as much a Statement as it is a question. For 

you to pursue something like a tractor-trailer position, aside from 

the fact that it would take you away from your family, it would require additional training and time that you don’t have, correct? 

I ask these questions not in any way intended to embarrass you. 

Do you and your family rely on any form of public assistance? 


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Mr. WISE. Well, currently, Medicaid. My daughters have and my 

fiancee did while she was pregnant with my last child, but she 

doesn’t any more. And we were receiving stamps up until a few 

years ago, but they said that we were making too much, and those 

got cut. But we still do rely on Medicaid, food pantries, any way 

to get by. 

Ms. WILD. And how many hours a week are you working? 

Mr. WISE. Me, right now, I work just at McDonald’s but I work 

over 50 hours a week, you know. 

Ms. WILD. And what about your fiancee? How many hours a 

week does she work? 

Mr. WISE. Well, she is a home healthcare, and she works four 

12s, so 48 a week. 

Ms. WILD. Ok. And you told us when was the last time you got 

a raise? 

Mr. WISE. Oh. Oh. Well, it has been a while. 

Ms. WILD. Ok. You have told us you have been in the business 

for 20 years. When is the last time you—ballpark it. When is the 

last time you got a raise? 

Mr. WISE. About 3 years ago. 

Ms. WILD. And you are at $11 an hour now. Ok. So I am going 

to turn the my attention to Dr. Holtz-Eakin in my last 30 seconds 

here. Dr. Holtz-Eakin, what would you propose to Mr. Wise as to 

what he should do to lift his family out of generational poverty? 

Mr. HOLTZ-EAKIN. I don’t have specific career advice for an individual. The decision in front of the committee is whether to do the 

Raise the Wage Act, and I would simply argue that it is more likely 

to damage his prospects and people like him than to help on average, and that seems unwise. This is a compelling story. It can be 

played out in even greater numbers if the wrong policies are put 

in place. That seems unwise to me. 

There are other things that we have done, earned income tax 

credit that I mentioned, that have both promoted work and targeted effectively on those in poverty who are working, clearly the 

case with Mr. Wise, and thus allowed people to work, allowed them 

to be above the poverty line that were very successful. Those would 

be the subject of attention, I would think, not this. 

Ms. WILD. But you would agree that Mr. Wise’s story is just one 

of hundreds of thousands across the country of people who are 

working more than full-time hours and are living in poverty? 

Mr. HOLTZ-EAKIN. Mr. Wise’s story is one of millions of labor 

market stories, and I guess it comes as a perception that somehow 

I don’t care about those stories when you look at the data. The data 

give voice to all those stories simultaneously. They tell us on average how things will work out. They will be worse, not better. I 

don’t want that. 

Ms. WILD. I am sure Mr. Wise will advise his children about that 

data. 

I yield back. 

Chairman SCOTT. The chair recognizes the gentleman from North 

Carolina, Mr. Walker. 

Mr. WALKER. Thank you, Mr. Chairman. 

Mr. Wise, I first want to say how much I respect the willingness 

to be vulnerable like this in a National forum. I also admire the 


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fact of how intricately involved you are in your daughter’s life. The 

line that jumped out at me, I believe that you said earlier, was all 

work has dignity, and I certainly agree with that, and thank you 

for your courage and being here today. 

Mr. Holtz-Eakin, I have a couple questions for you if I could get 

to that. I believe our colleagues have proposed—I think the number 

comes down to about a 107 percent increase in the minimum wage. 

What percentage was the minimum wage increased by the last 

time in 2007? Would you have those numbers? 

Mr. HOLTZ-EAKIN. I don’t have them in front of me, but it is 

much, much lower. I mean, it was about a $2 increase. 

Mr. WALKER. Ok. So percentage wise, it is about 40, 45 percent, 

somewhere in that range. Would you say there were some disruptions in the labor market immediately following the minimum wage 

increase, and could you take just a few seconds or a minute to describe those for us? 

Mr. HOLTZ-EAKIN. So that minimum wage increase was implemented during the depths of the Great Recession and the early 

parts of the recovery. If you look in the data, teen unemployment 

is markedly higher there. I think there is little reason to doubt that 

is, in part, attributed to the minimum wage increase, a weak economy, very, very few skills in that population. They didn’t get hired. 

Mr. WALKER. Back in my home area of Greensboro, I think of my 

friend who has a yogurt shop there in Northern Greensboro. It is 

not his primary source of income because they just kind of break 

even, but he has about six to eight individuals who make around 

$8 to $10 an hour. It is basically an after-school for some younger 

people to be able to have some time. I think he even has some of 

his family members just to cover some shifts there. I know this , 

and I have talked with him about this, if they were to go to $15 

an hour, he would be defunct. The place would no longer be in 

business. If we were to move forward on such standards that are 

suggested, do you think that there would be a drastic change to 

specifically the labor market if this was to be adopted? 

Mr. HOLTZ-EAKIN. This is, I think, a recipe for very few opportunities for the younger, less skilled, less experienced workers, and 

that first step on the job market ladder of success is an incredibly 

important one, and I think that is something to be deeply concerned about. As I mentioned in my opening, I think it has been 

underappreciated what went on in 2018. The fact that the economy, having already reached low levels of unemployment, could 

pull so many people into the labor market and into employment, 

over 200,000 jobs a month, means that we were taking people who 

had given up, who had no attachment to work, and now they have 

one. Anything that does that has great long-running success. This 

might do the reverse. 

Mr. WALKER. Well let’s speak, then, on the younger people. I remember my first job there in my small town in Milton, Florida. I 

worked at the Piggly Wiggly grocery store for $3.35 an hour. I did 

get wise to who might tip me $0.50 for carrying their bags out back 

when you could do that. To add or pad that a little bit. 

What kind of benefit is it to some of our younger people to be 

able to develop these entry-level skilled positions or even those 

skilled positions? Can you speak to the generalization of that? I 


EDL-011-D with DISTILLER
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know that is not a hard data point, but do you have any evidence 

supporting that? 

Mr. HOLTZ-EAKIN. We know that work is good for people. People 

want to work. They feel better when they work. There is an enormous amount of on-the-job skills that are learned, especially early, 

and those skills are general skills that transfer from job to job. So 

getting people in, acquiring those skills is a very important part of 

the labor market dynamics. 

Mr. WALKER. And one potential effect of more than doubling the 

Federal minimum wage is that small businesses will simply close 

the doors as I have mentioned. This is extremely concerning to me 

as we have over 890 small businesses in North Carolina alone employing about 1.6 million workers. 

Any evidence showing that increasing the minimum wage to $15 

could possibly lead to some of these businesses closing like the one 

that I mentioned. Do you have other evidence to support that? 

Mr. HOLTZ-EAKIN. I would be happy to get it back to you with 

as to estimates. That is an important dynamic. I think it is especially important right now. One of the characteristics of the U.S. 

economy is that we have seen fewer business startups than historically. Indeed, a couple years back, business startups fell for the 

first time below business closings. That lack of dynamism I think 

is troubling. We don’t want to get in the way of that. 

Mr. WALKER. And I think we all should be sensitive to some of 

the families and with Mr. Wise’s situation, people that there is a 

gap that cut through here, and our heart goes to out to them. The 

financial crisis, as a former pastor I can tell you I have witnessed 

it firsthand. But I worry about this one-size-fits-all where even 

some of these proposed minimum wages are even standard of living 

in places like New York and Boston and other places. 

And with that, I will yield back to you and I will close out. Yield 

back to the chairman. 

Mr. HOLTZ-EAKIN. I guess the one thing I would note for this 

committee, especially this Committee on Education and Labor, the 

troubling data point in my mind is the fact that if we look at our 

National Assessment of Education Progress, the NAPE scores, we 

have got somewhere between a quarter and a third of fourth and 

eighth graders who aren’t reading at grade. They are seriously deficient, and they can’t do math at grade. They are seriously deficient. 

If you want to have a recipe for a big problem going future, let that 

continue. That is a problem. 

Chairman SCOTT. The gentleman from Michigan, Mr. Levin. 

Mr. LEVIN. Thank you, Mr. Chairman. 

Dr. Holtz-Eakin, I am glad to hear you are in favor of a massive 

investment in public education. That would be great to raise those 

scores. 

Mr. Chairman, if it is all right, I would like to submit for the 

record a letter from the AFL–CIO legislative director, Bill Samuel, 

about our hearing topic today. 

Thank you. 

Chairman SCOTT. Without objection. 

[The information follows:] 


EDL-011-D with DISTILLER
102 


EDL-011-D with DISTILLERInsert offset folio 89 here 35268.089

AFL-CIO 

January 31, 2019 

Dear Representative: 

On behalf of the AFL-CIO, I am writing to urge you to cosponsor the Raise the Wage Act 

of2019 (H.R. 582), which would gradually raise the federal minimum wage to $15 an hour by 

the year 2024. 

Congress has not raised the minimum wage in more than I 0 years, and as a result 

millions of Americans who work full time live in poverty. 

Phasing in a $15 minimum wage would benefit 41 million workers and begin to address 

wage inequality that has been growing for decades. More than half of the workers who would 

benefit are adults between the ages of25 and 54, and nearly two-thirds work full time. More 

than half(56 percent) arc working women, and nearly 30 percent have children. 

Despite claims to the contrary, by 2024 a single adult without children will need at least 

$31,200 ($15 per hour annualized) to achieve an adequate standard of living in all parts of the 

country, according to the Economic Policy Institute (EPI). If the minimum wage had risen at the 

same pace as productivity growth since 1969, it would be over $20 an hour today. 

Multiple studies have shown that modest increases in the minimum wage have not 

resulted in significant job loss, and that low-income families benefit most from the increase in 

their income, reducing both poverty and income inequality. 

Raising the minimum \vage to $15 has the support of an overwhelming majority of 

Americans, and the benefits far exceed any potential cost. Every Member of Congress should go 

on record today in support of a $15 minimum wage. 

Sincerely, 

!!JILt 

William Samuel 

Government Affairs Department 

American Federation of Labor and Congress of Industrial Organizations 

81516th St. N W. ·Washington, D.C. 20006 • 202 637 5000. www.ilflcio.org 

RICHARD L TlWMKA EliZABETH H. SflutER THERE GEBRE 
103 

Mr. LEVIN. Thank you. 

So I appreciate all four of you coming. I have learned a lot listening to you. 

Dr. Holtz-Eakin, I wanted to ask you, you have been a professor 

and worked in government so many distinguished contributions, 

have you ever written in favor of raising the minimum wage at any 

level, written a paper, published a paper? 

Mr. HOLTZ-EAKIN. No. 

Mr. LEVIN. You have never supported raising the minimum 

wage? 

Mr. HOLTZ-EAKIN. I have never written a paper on that, no. 

Mr. LEVIN. Ok. What do you think the ideal minimum wage is, 

or should there be one at all? Perhaps—it is a perfectly legitimate 

position—just leave it to market forces, would that be your position? 

Mr. HOLTZ-EAKIN. I would prefer to have subnational minimum 

wages which are tailored to the labor market conditions where people are actually working. So I have lots of reservations about any 

number for the Federal minimum wage. It doesn’t match any labor 

market. 

Mr. LEVIN. Even $5 an hour, say, $2 an hour? 

Mr. HOLTZ-EAKIN. We are already at 7, so 5 would be fine. 

Mr. LEVIN. Were you opposed to going to 7? 

Mr. HOLTZ-EAKIN. I didn’t have an opinion on that debate, to be 

honest. 

Mr. LEVIN. You didn’t? 

Mr. HOLTZ-EAKIN. I was not at this table and was not asked. 

Mr. LEVIN. I know you weren’t at this table, but you are an important thinker on these. I am being, in all seriousness, I am just 

trying to understand. 

Mr. HOLTZ-EAKIN. I know. I am being serious too. I am not a fan 

of minimum wage increases for the reasons I explained at the outset. 

Mr. LEVIN. Thank you. That is what I thought. 

Mr. HOLTZ-EAKIN. And—no, it is this and this very particular 

thing: If you do it, the best possible outcome is no harm. The only 

debate we have is over how much harm. And the nature of that 

harm is to take money from people who don’t have a job and give 

it to people who do have a job. I don’t think that is right. 

Mr. LEVIN. I don’t think the data support that, but I appreciate 

your point of view. In fact, in 1949, according to Dr. Spriggs’ figures, we raised the minimum wage by 88 percent and 91.4 percent 

of Republicans voted in favor of that. So we have raised the minimum wage significantly before. 

In this case, we are talking about raising it over a 5-year period. 

So the notion that my friends, some of my friends on the other side 

of the aisle talking about a shock, this immediate thing of doubling 

the minimum wage, that is factually completely inaccurate. That is 

not what we are proposing. 

We are proposing raising it to get it back toward what it was, 

not toward what it was as a percentage of productivity, but at least 

toward what it was in dollar figures, close to what it was in earlier 

times. 


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Mr. Wise, I really was interested in something you said a couple 

of times about you are not just here advocating for a living wage 

for your family, but also for the freedom to form a union. Could you 

explain that a little further? 

Mr. WISE. Well, yes. It is kind of like, you know, you get more 

done together than you can alone, and that was evidenced in my 

life. Like I said, I have asked the boss for a raise in the nicest ways 

for years, tell him I need benefits for years, and it just falls on deaf 

ears. 

And not only that, but when you look back at American history, 

when we join a movement we learn about history. We know that 

for women to get voting rights, they had to come together collectively. Any labor laws that we want or any advances in the labor 

movement, we had to do it together. To end slavery, it took a movement, civil rights movement, to improve the lives of people in this 

country. 

And that is what it is all about. And that is what I like to instill 

in my daughters as well, that we get more done together than we 

can alone, and we can go so much farther as long as we stand together. And a union, you know, going to work every day now is like 

going into a dictatorship, you know. I have no voice, no opinion. 

I can remember the first job at Taco Bell, we at least had a comment box. Now those have all but been eliminated from the workplace. So to be able to come together and have a seat at the table 

with my employer where we can negotiate healthcare and wages. 

That is the benefits of a union. 

Mr. LEVIN. Thank you so much for coming today and for speaking the truth for your leadership on this national stage. The truth 

of the matter is that we need to raise our wages for everybody to 

a basic level of dignity, but unless workers have the power and the 

freedom to form unions in this country, which they don’t today, we 

are at 6 percent of the private sector being unionized, we will never 

raise the standard of living for the middle class in this country. 

And I just want to point out that people have this idea of a lot 

of workers in my area, auto workers, it is like, you know, they represent the sort of middle class of working class people getting a 

piece of the middle class. A hundred years ago, when auto workers 

were in the same fight you are now, my friend, they were poor 

workers in incredibly unsafe jobs, and it was only by coming together to form a union that they got their little piece of the middle 

class. So keep on speaking the truth, and thank you so much for 

your testimony. 

I yield back, Mr. Chairman. 

Chairman SCOTT. Thank you. 

The gentleman from Tennessee, Dr. Roe. 

Mr. ROE. Thank you, Mr. Chairman. And thank all the witnesses 

for being here, and I appreciate that. 

In our State of Tennessee, we recognize that we think the way 

out of poverty are skills. In our State, we provide free community 

college and free technical school. Anybody there. And if you have 

lost your job and you want to get educated, we have a Tennessee 

Reconnect, where you can go to community college or you can go 

to a technical school. We have 27 of them in the State for free. 


EDL-011-D with DISTILLER
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So that is one of the ways we are attacking this low wage. And 

what I have seen in my district is I think it is going away, the minimum wage issue and debate. Right now we have a lot more job 

openings than we do people filling those jobs even where we are. 

And there is a help wanted sign literally everywhere. 

And I just looked the other day for H2 workers around the country, H2A workers. The highest is $15.03. That is in Washington 

State. The national average is almost $13 an hour. And in my district, it is $11.74 an hour. That is now. Five years from now, it is 

going to be $15 an hour. There are fast food restaurants in my area 

that are paying $15 an hour today. 

I can get you a manufacturing job in my hometown today if you 

are willing to work and you can pass a drug test for $19 an hour. 

And the skills gap that Dr. Holtz-Eakin is talking about is where 

one of the biggest problems are, low-skill workers who don’t have 

those skills. 

I looked up a couple things. I think the minimum wage $15 an 

hour may be very appropriate. It could be even more if you lived 

in San Francisco. And I just did a few calculations while we are 

having this. The median price of a home in San Francisco is $1.4 

million. 

Let me run down where I live. I live in the wealthiest county in 

my district, and the median price of a home is $148,000. Seattle, 

$725. I have got a town I represent where $90,000 is a median 

price of a home. Fifteen dollars an hour there is totally different 

than $15 an hour in New York City or San Francisco or in Bend, 

Oregon, where it is $433,000 for a home, or Portland where it is 

$449,000 for a home. 

So I just looked those numbers up just a moment ago. In Kansas 

City, it is $147,000, a little cheaper place to live than Washington 

or these other places. 

And if my colleagues on the other side of the aisle are willing to 

do this, I am more than willing to look at a minimum wage if you 

will look at the Medicare Wage Index, where the Federal Government says it is Ok to pay me and my hospital where I live 73 cents 

on the dollar and pay people in California $1.50 to do exactly the 

same thing. 

The government is already making a difference in what they pay, 

depending on where you live. So it makes sense to let local communities decide those things, based on the economic conditions in that 

community. 

I would like to yield to Dr. Holtz-Eakin, if he could comment on 

that. 

Mr. HOLTZ-EAKIN. I would comment on two things: First, I commend you for your discussion about the community colleges. There 

is an enormous amount of evidence that is a relatively low-cost, 

very valuable way to go in getting workers new skills or skills to 

begin with. And I think that is something to think about more 

broadly for the U.S. 

And then I have said this many times today, I won’t belabor it, 

there are hundreds of local labor markets that are very, very different, and to just jack up a national average to $15 is going to dramatically impact some of them, because it is inappropriate. 


EDL-011-D with DISTILLER
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Mr. ROE. And I agree with that. And I think where we are, a 

wage, a minimum wage, there is no question, to hire qualified people, you have to pay more than $7.25 unless it is a high school student that is just entering the labor force. 

And I think the other thing that I took a little bit of offense at 

today is I have been an employer my entire life, and I didn’t keep 

everything. I provided health benefits and retirement benefits because why? The most valuable person in my business were my employees. They were the most valuable person I had. I value them. 

Right here in this U.S. Congress where I hire people, the most valuable people are my employees who work with me every day. 

So I certainly know if you have got a good employee, that is the 

most valuable person in there and you are going to pay them what 

you can afford to pay them to keep them in your business. And 

with a growing labor market, they have more options, and that is 

a good thing when a person can go from one job to another and 

transport and make more money, and that is what we are seeing 

right now and it is about time for middle class working people— 

and I grew up in that kind of family, my dad was a factory worker 

and my mother was a bank teller—to see wages going up for middle class people. 

I yield back. 

The Chairman. Thank you. The gentlelady from Washington, Ms. 

Jayapal. 

Ms. JAYAPAL. Thank you, Mr. Chairman. And thank you all for 

being here. 

I am from Seattle. I proudly represent the district that passed 

the highest minimum wage in the country. I was on the committee 

that wrote the legislation. I have heard testimony for years similar 

to some of the testimony we have heard here. And I want to start 

by saying none of that would be possible without the work of people 

like Mr. Wise and all of the people that are in the room that have 

been on the streets, that have been in your employer’s workplaces 

demanding a $15 minimum wage. That is where the energy has 

come from. 

I also want to say, Dr. Spriggs, that we are proud in Washington 

State to have one of the highest minimum wages in the country indexed to inflation, going all the way back to 1998. And from 2001 

onwards, we have indexed our minimum wage. And that was part 

of—that was really the product of a strong labor movement. 

So you articulated so beautifully why it is important to have collective bargaining, to have organizing, in order to really work with 

employers to make sure that workers who are driving profits—because let’s be clear about where profits come from, they come from 

workers who drive those profits—are rewarded for that. 

So, Mr. Wise, I just wanted to give you a little bit more of a 

chance to talk also about your colleagues. You have spoken so 

beautifully about your own situation. Tell me if that experience reflects what your colleagues are also feeling at McDonald’s? 

Mr. WISE. It has. And I can tell you even before this moment and 

before the movement, you know, I would work every day with my 

colleagues and we would share the same stories of how we struggle 

to pay bills, come to work depressed because the gas is up, you 

know, skipping meals, the same thing. Whether it was Suzy, my 


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107 

Hispanic coworker, Ellen, my white coworker, me myself, we all 

were going through the same trials and dilemmas. And we all did 

what? Woke up every day and went to work. It is not like we 

weren’t working hard. 

And another thing I looked around, the myth of this being jobs 

for teenagers. These are McDonald’s workers with me here today. 

We are hardworking adults raising families, you know what I am 

saying? So it was no way, no individual way to fix the problem by 

ourself. We would just soak in it and go to work and take it. But 

we figured out quickly that when you can organize, come together 

and amplify your voice, you know, act like a union even before we 

win our union, we were able to get things done. We were able to 

change the narrative in this country. 

Like I said, 6 years ago we started hearing about 15. That number 15, Amazon and everyone else you hear, it just didn’t come out 

of thin air. These employers didn’t wake up oneS day, you know 

what, let’s go 15. That is because of what workers in this room and 

myself have been doing to change the narrative around the country. 

Ms. JAYAPAL. Thank you so much, Mr. Wise. And I would just 

say that the argument around youth employment has been proven 

false over and over again. When we have the debate in Washington 

State, the reality is the majority of minimum wage workers today 

are not teenagers, and I think it is exactly what you said. 

I wanted to just say to Dr. Holtz-Eakin that you quoted a study 

on Seattle and the effects of the minimum wage increase. Are you 

aware, Dr. Wise that study—I assume you are quoting the study 

from 2017. Are you aware that the exact same researchers put out 

a study a year later that countered everything that they said, almost every everything that they said in the 2017 study? And just 

a yes or no or is fine, because I want to go to Dr. Zipperer. 

Mr. HOLTZ-EAKIN. I would disagree they countered everything. I 

know there is another study. 

Ms. JAYAPAL. Ok. So there was another study done by the same 

researchers that had substantially different results than that first 

study. So, Dr. Zipperer, can you speak to what the research shows 

around the effects of the Seattle increase in the minimum wage? 

Mr. ZIPPERER. I think there is a study that you are referring to 

or a set of studies by the researchers at the University of Washington. And, like I mentioned earlier, I find both sets of those studies to be completely uninformative about the consequences of the 

Seattle minimum wage. Those studies find that there are large 

negative consequences to employment of certain groups of workers 

and— 

Ms. JAYAPAL. You are talking about the 2017 study? 

Mr. ZIPPERER. About the 2017 study. 

Ms. JAYAPAL. But can you speak about the most recent research 

that actually counters that and shows that our minimum wage in 

Seattle has actually increased wages for people that were earning 

the minimum wage? 

Mr. ZIPPERER. The second study that you referred to put out by 

those researchers found that workers who had jobs prior to the 

minimum wage increase benefited tremendously from the minVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00115 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

EDL-011-D with DISTILLER
108 

imum wage increase, and that they saw higher earnings overall 

and did not see increased chances of disemployment. 

Ms. JAYAPAL. Thank you. Let me just mention that we talked 

about the tip penalty. That is what I call it, the tip penalty, because part of what happens is that workers who are under a tip, 

as Dr. Spriggs said, are subject to all kinds of issues; but in addition to that, it is front-of-the-house workers versus back-of-thehouse workers when you talk about tips. 

And so I think we are going to talk about this on the next panel, 

and I have many more questions and things to say, but I see that 

my time has expired, Mr. Chairman, so I will yield back. 

Chairman SCOTT. Thank you. 

Mr. Meuser from Pennsylvania. 

Mr. MEUSER. Thank you, Mr. Chairman. Thank you, Dr. Foxx. 

Thank you all for testifying. We appreciate it. 

The former Governor of Indiana, Mitch Daniels, had a saying, 

and it was: My job is to grow the disposable income of Hoosiers. 

Governor Daniels had that quote put up actually on the door of 

each of his Cabinet Secretaries’ offices. When I served as Revenue 

Secretary for the Commonwealth of Pennsylvania, I truly shared 

this vision, and spoke to my department and other Cabinet members about the importance of that role. 

Government does have a responsibility to help competitive businesses and their families flourish by creating an environment for 

opportunities for all Americans to achieve economic prosperity and 

help improve family sustaining wages. However, history shows and 

data that I review proves that when government takes an overreaching posture, there are, unfortunately, unintended consequences. 

So I will start with Mr. Eakin. A $15 minimum wage would have 

the largest impact on small businesses and on young people entering the job market, 2.6 percent of employees at small businesses 

earn the minimum wage. Large businesses, it is a little bit less, 1.5 

percent. 

I represent a rural, hardworking district in Pennsylvania with 

thousands of small family businesses. I fear that these small businesses in my district would be negatively affected in the event that 

a $15 minimum wage was implemented. 

As someone who helped myself grow a small business into a 

large business that has, well, a minimum wage much higher than 

the minimum, I think as most companies do, an implementation of 

a $15 minimum wage would put tremendous pressure on small 

business owners. I would think that the business would first attempt to raise prices, which is very difficult to do in competitive 

markets, global markets. 

Next, the company would be forced to cut staff, letting go of 

workers who had done nothing wrong. And when that still wouldn’t 

be enough, business owners would be forced to take away raises 

historically given to employees who had worked with the business 

for a longer period of time. And then after that, just be concerned 

with survival. 

Can you outline, Mr. Eakin, how historically small businesses 

have dealt with government-mandated minimum wage increases? 


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Mr. HOLTZ-EAKIN. You have walked through the logic. It is the 

same logic I discussed earlier. There aren’t many places to go. You 

raise prices, lay people off, don’t hire new people, don’t give raises, 

squeeze your payrolls wherever you can because you must. And 

small businesses have the least capability to survive that, and so, 

you know, you worry about the impact on them. 

That is part of the cost of this policy. The emphasis has been on 

the benefits, but what I wanted to emphasize was if you have a job 

and you get this raise, that is the good news. The bad news is only 

under 7% of those benefits go to people in poverty. 

And so the notion that this is an effective way to provide the 

benefit of poverty alleviation is vastly overstated. It is a poor instrument for that, and it has significant costs to sectors of the economy like the small business and sectors of the labor force who are 

young and unskilled or least educated. And that is the unintended 

consequence that I think has to be focused on. 

Mr. MEUSER. Regarding the Seattle study, and it is certainly 

quoted often, but not only were there job losses but even the workers who kept their jobs had their hours cut, reduced, which more 

than offset any pay increase. 

As a result, my information says the earnings went down $125 

per month for those workers who kept their jobs. Are these the 

kind of tradeoffs Congress should keep in mind when considering 

an increase in the minimum wage? 

Mr. HOLTZ-EAKIN. Yes, absolutely. I do want to say I admire Seattle because they decided to check on the success of their policy. 

I think they are to be lauded for that. And these are very carefully 

done series of studies. There are other studies which can test results. I mean, that is the way you learn. I applaud that entire effort. 

But there is a big difference between Seattle deciding to do that, 

praying that I am wrong, those impacts happen to Seattle and that 

is their decision. It is very different to do it at the national level, 

and that is what is being proposed. 

Mr. MEUSER. And as well on a national level, the economies of 

scale clearly are different from one area to the cost of living in a 

city. So that in itself answers doing such a mandate nationally. 

Mr. HOLTZ-EAKIN. I agree. 

Mr. MEUSER. Thank you. 

I yield back my time, Mr. Chairman. 

Chairman SCOTT. Thank you. 

The gentlelady from Minnesota, Ms. Omar. 

Ms. OMAR. Thank you, Chair, and thank you, Ranking Member, 

for this important conversation. Thank you to our expert panelists 

for having this really important conversation. 

As a union member, I fought to make sure that for dignified 

work there was dignified pay. And so I wanted to have a little conversation with you all about what that looks like here and the 

moral imperative that we have to make sure that happens. 

So, Mr. Wise, thank you so much for your brave testimony and 

thank you for sharing your story. I wanted to get on the record if 

you knew what the yearly pay for the CEO of McDonald’s was? 

Mr. WISE. Yes. He makes over $30 million a year, the CEO. 


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Ms. OMAR. So the CEO of McDonald’s gets paid $21.8 million. 

Can you share with us what someone in your position at McDonald’s gets paid annually? 

Mr. WISE. Not that much. Not even a fraction of that. But I 

make $11 an hour at my job currently. 

Ms. OMAR. So the median pay for a McDonald’s worker was 

$7,000 in 2017. And that is the pay gap between the CEO that is 

making 21.8 to the 7,000 that a worker who has put in 40 hours 

a day gets paid. And to me, that just morally does not sit well. 

Dr. Spriggs, I wanted to see if we can talk a little bit about the 

type of work. I know my colleague earlier from New York said 

something about different types of work and why it wasn’t valuable 

for everyone to be paid a minimum wage of $15. 

Can you walk us through the different kinds of jobs and if there 

have been places like Minnesota or Minneapolis, Minnesota, that 

has increased the minimum wage or places like Seattle, if there 

have been types of work that have shifted out of that city or that 

State because of the increase of that minimum wage. 

Dr. SPRIGGS. Thank you, Congresswoman. I mean, one of the interesting things about Seattle is that their wage distribution totally 

shifted up. And one of the surprises for the researchers was they 

anticipated that the way that the wage would move that nothing 

would appear above $20 an hour, and certainly those types of jobs 

mushroomed. And I think that is the point. When we raise wages 

from the bottom, we really change the way in which the labor market functions to really allocate workers more fairly. 

A large share of the minimum people who would be affected by 

this wage have associate’s degrees. It is very hard to understand 

the pressures that keep those wages down. So this is an important 

change in the labor market. 

A lot of people have been saying that, well, you know, the cost 

of living is different. They are looking as if you make $174,000 a 

year and have health insurance. Yes, it is a different cost of living 

and maybe you might want to address someone like that. But if 

you are a low-wage worker in Alabama, you don’t have Medicaid. 

If you are a low-wage worker in rural parts of Alabama, you have 

to have a means of transportation to get to a job. If you are in a 

city like Washington, DC, you have Medicaid and you have public 

transportation. 

So you can’t really look at the differences in the cost of living in 

the way that people want to propose it here, because of the barriers 

that face workers in these low-wage communities. Their communities appear to be, quote/unquote, ‘‘low cost,’’ but they are very 

high cost. They get low wages. And this was in the debate originally in 1937, where people from low-wage areas wanted to argue 

about low cost. They just haven’t lived the life of a low-wage person. 

Ms. OMAR. Yes. And, Doctor, thank you so much for mentioning 

that, because I want to draw attention to testimony that we have 

here in written. I don’t think the owners of La Quercia are here 

from Norwalk, Iowa. They are in a city that has 8,000 people and 

they have decided to pay minimum wage and they are still able to 

operate. 


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So when we are talking about paying people a minimum wage, 

we are talking about making sure that there is value in the work 

that they are doing, and that uplifts workers. It makes sure that 

they continue to do the hard work. It uplifts that community. It uplifts that city. It uplifts that State because, in return, you also get 

people who are paying more taxes and it creates an economy that 

is thriving. So it is not only morally just for us to raise the minimum wage; it is economically feasible and necessary. 

Thank you so much. I yield back my time. 

Chairman SCOTT. Thank you. 

The gentleman from Wisconsin, Mr. Grothman. 

Mr. GROTHMAN. Thank you. Mr. Holtz or Dr. Holtz-Eakin, I am 

going to give you some questions. As I understand it, this bill, if 

you were going to increase the minimum wage from about 7 and 

a half to $15 an hour the amount you are paying somebody for 1 

week of full-time wages—and it is beyond just wages, right, because you have social security, employer’s social security taxes and 

workers’ comp. I get your increase, your cost goes up from about 

325 to 650 bucks a week per employee. Is that true? 

Mr. HOLTZ-EAKIN. That sounds right. 

Mr. GROTHMAN. Ok. Over time—we have kind of covered this 

area before, but if your cost of anything in life goes up from 325 

to 650 bucks per week, do you try to make adjustments if you are 

writing that much bigger of a check? 

Mr. HOLTZ-EAKIN. Certainly. You will try to use less of whatever 

is more expensive. 

Mr. GROTHMAN. Anywhere in life? 

Mr. HOLTZ-EAKIN. Yes. 

Mr. GROTHMAN. Ok. I am looking at something that was found, 

a Brookings Institution study, Pathways to Higher Quality Jobs for 

Young Adults. It points out even later in life people have a tendency to make more money if they were working when they were 16 

or 18 years old. Is that true? 

Mr. HOLTZ-EAKIN. Yes. 

Mr. GROTHMAN. Is it important, therefore, in life that we have 

young people get jobs? 

Mr. HOLTZ-EAKIN. I believe so, yes. 

Mr. GROTHMAN. Ok. And as you mentioned, if we increase the 

cost of hiring somebody or if we double the cost, somehow you are 

going to scramble to write less of those checks, whether you put 

in—I am told from McDonald’s, my local McDonald’s owners they 

can put in a lot of equipment that causes you to hire less people. 

Maybe you could cut hours, Ok. Maybe some marginal restaurants 

will close. Who is most likely to get laid off when those things happen? 

Mr. HOLTZ-EAKIN. The people with the least skills, the least education, the least experience, the least ability to contribute to the 

enterprise. 

Mr. GROTHMAN. I will even ask Dr. Zipperer, is there any doubt 

that if you double the check you are writing that you are going to 

somehow try to scramble to write all those checks? Do you believe 

that? 

Mr. ZIPPERER. I think that we have heard these kinds of scare 

stories about almost every— 


EDL-011-D with DISTILLER
112 

Mr. GROTHMAN. If you owned a restaurant—I will put it this 

way: If you owned a restaurant, because we are talking about a 

restaurant worker here, and you were told—and I think right now 

the vast majority of people in our society, at least restaurants in 

my area, judging from the signs out front, are paying more than 

minimum wage. 

But let’s say you had to jump how much you were paying somebody from $325 to $650 a week, you know, don’t you think you 

would try to hire less people or it would affect the way you run the 

business? Just like anywhere else in life, if the cost of something 

doubles, you maybe want to use less of it, not use it at all. Do you 

think that is true? 

Mr. ZIPPERER. I think what the research shows on restaurants 

and their responses to minimum wage increases is that restaurants 

don’t employ fewer workers after a minimum wage increase, but 

they do change how they operate. In particular, the two channels 

by which they adjust to a minimum wage increase are, one, it 

makes it easier for them to hire workers and so worker turnover 

falls. That is actually a large cost saving for low-wage businesses 

like restaurants and helps them absorb the minimum wage increase. 

Mr. GROTHMAN. I will give you one more question, because they 

only give us 5 minutes. 

I will ask Mr. Wise a question, because I have only got a minute 

left. Have you told us here you have been working for your business or for where you work now for 20 years? 

Mr. WISE. I have been in the fast food industry for 20 years and 

McDonald’s for the last six. 

Mr. GROTHMAN. For 6 years, Ok, and you are making 11 bucks 

an hour right now? 

Mr. WISE. Oh, yes. 

Mr. GROTHMAN. Have you applied to work anywhere else? 

Mr. WISE. Well, when you look across my city and across many 

cities in the country, these are the fastest growing jobs, servicebased jobs. 

Mr. GROTHMAN. I know. I am just saying like in my area we got 

manufacturing. Sometimes people shift from that sort of thing to 

manufacturing. Maybe they look for fast food where you have a 

chance to move up and become a shift manager, or whatnot. I am 

just saying, have you done anything in the last 6 years to try to 

look for a job that pays more than 11 bucks an hour? 

Mr. WISE. Well, I am a manager. I have been to management 

training classes. I have been to Safe Serve. I have been certified. 

Mr. GROTHMAN. Have you looked for any other jobs anywhere 

else that pay more than 11 bucks an hour? 

Mr. WISE. Less than half of my city makes less than $15 an 

hour. There aren’t jobs readily available. 

Mr. GROTHMAN. Have you applied for any other jobs? 

Mr. WISE. Oh, definitely. I have looked for jobs in my city, you 

know. They are all low-wage jobs. They are paying poverty wages. 

Mr. GROTHMAN. Somebody else talked about drive trucks. Have 

you ever tried to do that sort of thing? 

Mr. WISE. No, I never tried driving tractor-trailers or anything 

like that. 


EDL-011-D with DISTILLER
113 

Mr. GROTHMAN. Not even tractor-trailer, just delivery truck, that 

sort of thing. 

Mr. WISE. No. 

Mr. GROTHMAN. Ok, thanks. 

Chairman SCOTT. Thank you. 

The gentlelady from Nevada, Ms. Lee. 

Mrs. LEE. Thank you, Mr. Chairman. 

For much of my career, I have focused on helping young children 

graduate from high school, some of the most at risk students in Nevada. And poverty is the most significant barrier to educational 

success. And I would like to say that a story like Mr. Wise’s is the 

exception, not the rule. 

But when you think about the stress that you as a young man 

and your family went under, having to work two and three jobs to 

make ends meet, then you having to pitch in and, thus, dropping 

out of high school, to me that depicts that not only are we talking 

about minimum wage, but we are talking about a lost opportunity 

cost. 

And the Congressman Grothman who asked you about did you 

apply for another job, well, a lot of jobs that are higher paying require additional training. And if I recall, you basically said there 

were weeks on end where you had days where you did not have a 

day off. Is that correct? 

Mr. WISE. Yes. 

Mrs. LEE. So I think we need to take note of the lost opportunity 

cost of not increasing a minimum wage here. 

So I want to thank you for the courage that you had in giving 

that testimony. I think it was incredibly important. And, again, I 

wish it were one that isn’t as common as it is. 

And I now want to ask Dr. Zipperer a question with respect to 

that. Looking at these barriers in youth, I am hoping that you can 

inform us what the impact of increasing the minimum wage will 

have on children in our country. 

Mr. ZIPPERER. Thank you for the question. My colleague David 

Cooper at the Economic Policy Institute has recently conducted an 

analysis showing the benefits of raising the minimum wage to $15 

by 2024. And in particular, raising the minimum wage to that level 

by 2024 would raise the wages of parents of nearly 14 million children. That is nearly one-fifth of all U.S. children would have a parent that experienced a minimum wage increase. 

Mrs. LEE. Thank you. 

Mr. Chairman, I request unanimous consent to offer this letter 

into the record from First Focus Campaign for Children, explaining 

the economic impact of increasing the minimum wage on children 

in our country. 

Chairman SCOTT. Without objection. 

[The information follows:] 


EDL-011-D with DISTILLER
114 


EDL-011-D with DISTILLERInsert offset folio 90 here 35268.090

• 1400 Eye Street NW I Suite 650 I Washington, DC 20005 

p: 202.657.0670 1 f: 202.657.0671 

FIRST FOCUS , CAMPAIGN FOR CHILDREN ---------------------------------

January 28, 2D19 

The f-lonorablc Bernie Sanders 

L' S_ Senate 

\\'ashington, DC 20510 

The I fonorabk· Patty \fumry 

C.S. Senate 

\\'ashington, DC 20510 

The Honorable Robert "Bobby" Scott 

U.S. House 

The I fonnrable \lark Pocan 

U.S. I rouse 

The I Ionorablc Stephame \brphy 

U.S. flouse 

Dear Senator Sanders, Senator :\[urray, Congressman Scott, Congressman Pocan, and Congresswoman :'\huphy: 

On behalf of First Focus 

_\san organization committed to 

efforts to ratse the minimum 

tncomes bclO\v the line. 

for Children, a b1part1san advoocy organization dedtc<Hcd 

decisions, I would like to express our support for the Raise the 

and families 

.-\ct of2019 (S. 

and families in the United States, we applaud 

nearly ltn 5 clnldren are liYmg in families wtth 

and working full~ttme cannot earn enough 

di<•nmnoc<in<Uk'l" affected by these low 

to the Economtc Policy Institute, the ne"\V wage proposed would gi-ve to 41 million workers, 28 percent 

cluldrcn to support. Thts would mean the parents of over 11 million would be to support 

thctr chtld',; healthy de\·elopment wlth critical re:-;ourccs such as nutritious food, health care, ade~1uate 

and educational matenals 

Parents who live m a constant st11te of financtal instability and to prO\·ide 

suffer from stress, anxiety, and depression, makmg it more to respond to emotional needs. Increased 

income therefore finanCial stability, unproves the physical ;md mental health of children and families and !n turn, 

reduces cluld malt<e,;tment nHcs. 

Incre;~scd income has posirin· effects on children's health. Research from the Center on the Developing Child at f Iar\·r~rd 

shows finanetal instability lS shmvn to i1Krease levels of "toxiC" stress in vmmvdHkhoH 

and inneasing the risk of longer-term health issues 11nd 

dtabctes 

The Ratsc the \'\'11gc . \ct of 2U 19 is both an important step towards improving economic stability for 11 million chtldrm and a 

\'!tal mvcstmcnt in the future of our country 

and we look fonvard to workmg with 

~inccrcly, 

Bruce Lesley, Pres1dcnt 

www.campaignfonhildren.org 
115 

Mrs. LEE. Mr. Zipperer or Dr. Zipperer, I have another question. 

There is this fear-mongering about the notion of workers losing 

their jobs because of an increase. Can you tell us how or why this 

notion of job loss is misleading, and is it possible that workers 

would be able to work fewer hours but still earn a stronger income, 

thus having the time to pursue, perhaps, education that would put 

them in a position to achieve a higher-paying job? 

Mr. ZIPPERER. Thank you for the question. Yes, I think there are 

three ways in which this phrase ‘‘job loss’’ is misleading when we 

are talking about the minimum wage. First is that the vast body 

of research published in the last 15 years or at least since 2001 establishes very clearly that the employment effects of the minimum 

wage are small to zero. That is the average study in that literature. 

And I would argue, in my judgment, the best studies also 

strengthen that conclusion, finding little negative employment effects of the minimum wage. So that is the first way in which job 

loss is misleadingly characterized as the consequences to the minimum wage. 

The second reason is that even studies that either find or assume 

that there is going to be job loss, typically the benefits to workers 

outweigh the job loss that those workers experience. So just looking 

at it from terms of cost and benefits, raising the minimum wage 

still has benefits that outweigh the cost. 

The third point and the reason why job loss is a misleading 

phrase applied to the minimum wage, is that, just as you indicated 

at the end of your question, if there is some reduction in the number of hours worked by workers, which I don’t necessarily subscribe 

to, but if that is the case, workers can still earn more over the 

course of the year because they are earning a higher wage and, 

therefore, would be better off. 

Mrs. LEE. And perhaps spend time with their family as well. 

One final thing. Oh, I am sorry, I think I am going to run out 

of time, so I will yield the floor. Thanks. 

Chairman SCOTT. The gentleman from Pennsylvania, Mr. 

Thompson. 

Mr. THOMPSON. Thank you, Chairman. Thanks for hosting this 

hearing. It is a very important topic. 

You know, I don’t want anyone who is a primary earner in their 

home, you know, responsible to provide for their family to earn just 

minimum wage. You know, and I don’t care what that minimum 

wage level is, to tell you the truth. You know, it will always be the 

minimum wage. 

And some of the consequences that we have seen is that we will 

see that raising minimum wage, you know, raises the cost of many 

basic necessities. We also see that more times than not minimum 

wage increases results in the Federal income threshold for what 

qualifies as poverty to go up, sweeping more families technically 

into poverty. And if it is done technically, it is done for good reasons, because the value of that earned dollar lessens. 

But, again, I want to say I don’t want to see anyone who is supporting a family who is the primary earner earn minimum wage. 

That is why I work so hard to support restoring ladders, rungs on 

a ladder of opportunity. And this committee did great work in that 

area with the Career and Technical Education bill President 


EDL-011-D with DISTILLER
116 

Trump signed. I believe it was on July 31st we were at the White 

House. 

We put an additional billion dollars on top of what we already 

invest in career and technical education training. And we know 

there are 7 million jobs that are out there today, and that number 

is climbing. It is compounded and getting larger because of the retirement of the baby boomers, but it is also growing because of the 

growth of the economy and the jobs that are being created. 

So I am not saying those opportunities are equal. I mean, sometimes communities and cities, places, for whatever, based on whatever is going on there, perhaps they don’t have as many opportunities; but nationwide, that is the scenario that we are seeing. And 

that is why I, when it comes to better wages, especially for those 

who are primary providers for their families, I want them on those 

ladders of opportunity. And I think this committee did some really 

good work to restore that with resources and reforms to that program. 

I also get the point—and, unfortunately, she left. I appreciated 

the passion of the gentlelady from Seattle. You know, it is situational. It is geographical. And just to share a couple numbers. I am 

from Pennsylvania. In Pennsylvania, the average, the median home 

value in Pennsylvania is $172,000. In our largest city—I tried to 

pick a big city that compared to Seattle, you know—it is $158,500 

right now, and that was after a 12.7 percent increase in value this 

past year. Washington State, it is $379,500. And in Seattle, the median home value is over $725,000. I get it. But that is a geographical issue. That is not a one-size-fits-all solution of a Federal 

minimum wage. 

And so I appreciate her passion and I appreciate her local leadership of serving the folks in Seattle who are incurring such a—I 

mean, it is just a—what a terrible situation for folks who are living 

paycheck to paycheck and struggling. 

And so, Dr. Holtz-Eakin, great to see you again. A real quick 

question here: Your testimony cites a 2014 study by Jeffrey 

Clemens and Michael Wither that shows a hike in the minimum 

wage is likely to increase the occurrence of unpaid internships. 

Would a 107 percent increase in the Federal minimum wage hurt 

students and young adults who are trying to enter into that work 

force and to get that basic experience, you know, to be able to 

launch successful careers that hopefully eventually will be with 

family sustaining wages? 

Mr. HOLTZ-EAKIN. I have an intern program. I don’t know if I 

would if you doubled the minimum wage. They are paid minimum 

wage. And that is an issue. And that is the starting rung, and everything I have said earlier today applies to the intern programs 

across this country as well as the full-time employees. 

Mr. THOMPSON. Thank you. 

I know we have another panel, so in the effort of efficiency I will 

yield back, Mr. Chairman. 

Chairman SCOTT. Thank you. Thank you. 

The gentlelady from Georgia, Mrs. McBath. 

Mrs. MCBATH. Thank you, Mr. Chairman. And I want to thank 

you for holding this hearing today. And I would like to thank the 


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witnesses who are here to discuss the importance of raising the 

Federal minimum wage for Americans. 

It is time for us to raise the minimum wage and to have these 

very, very important conversations. Too many in our Nation are 

working hard, but are definitely not seeing their wages budge. The 

Federal minimum wage has been stuck at $7.25 per hour since 

2009. And in that time, costs have gone up significantly. 

In my home State of Georgia, the minimum wage workers make 

only $7.25, and even for those who work 40 hours per week, it is 

nearly impossible for them to make a living. Now, this translates 

into lost value and lost purchasing power for the American worker, 

not just for those that are earning the minimum wage, but also for 

those that make more that have not seen wage growth in a resurgent economy. 

We need to raise the minimum wage to help families make ends 

meet, but we also need to do it in a way that protects jobs and 

small businesses in our communities. Our country is made up of 

many different regional economies, but only one Federal minimum 

wage across the board. 

This is an old model that truly ignores the basic reality of cost 

of living differences. The cost of everything from rent to a carton 

of milk to a haircut is different from one part of the United States 

to another, and our minimum wage should account for those differences. $1 in Macon, Georgia, is different than $1 in Roswell, 

Georgia. And $1 in Roswell is different than a dollar in San Francisco and New York City. We need a Federal minimum wage policy 

that works for rural, suburban, as well as urban Americans. A $15 

minimum wage might be right for San Francisco, but what about 

Birmingham? What about Cleveland? What about Houston and Raleigh? 

Jared Bernstein, who served as a member of President Obama’s 

Economic team and he also held the post of Deputy Chief Economist at the U.S. Department of Labor between 1995 and 1996, he 

discussed this very topic in an article that he wrote for the New 

York Times, when the Obama Administration proposed to raise the 

national minimum wage to $10.10. He wrote: When we adjust the 

national minimum wage of $10.10 for regional differences, these 

are the amounts you would need to have the same buying power: 

$11.94 in Washington, DC. and $11.40 in California, but only $8.90 

in Alabama and $9.08 in Kansas. 

My goal is truly to make sure that folks in rural communities, 

communities of color, and distressed communities are not adversely 

affected by well-intentioned minimum wage policies that raise the 

minimum wage to a higher point or to a point that is higher than 

the local economies can handle. 

Now, we are all in agreement that the minimum wage needs to 

be raised to help Americans, but I would like to learn more about 

how this will be received in every part of the country. 

So, Mr. Zipperer, my question is for you, would the $15 minimum 

wage under this bill be applied with any consideration for differences in local cost of living or is it just one flat rate across the 

country? 

Mr. ZIPPERER. The $15 minimum wage bill of the Raise the Wage Act of 2019 is $15 across the country, but States, cities if they can, 


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and localities could raise their minimum wage above that if they 

desired. 

Mrs. MCBATH. So my followup question is, does the $15 minimum wage have the same purchasing power in Washington, DC, 

that it does in rural parts of the country? 

Mr. ZIPPERER. No, it has different purchasing power in different 

parts of the country. But in all parts of the country, including the 

cities you mentioned, Houston, Cleveland, Raleigh, and in rural 

parts of the country, rural counties in every State of the United 

States, workers will need at least $15 an hour in order to purchase 

basic necessities that attain them a modest yet adequate standard 

of living. 

Mrs. MCBATH. And, Dr. Zipperer, have you heard of the term ‘‘regional price parity?’’ 

Mr. ZIPPERER. Yes, I have. 

Mrs. MCBATH. Can you explain its meaning and why it exists? 

Mr. ZIPPERER. Regional price parities are a tool that we can use 

to calculate the differences in the cost of living across different 

areas of the country. 

Mrs. MCBATH. Last word: I believe that workers in every part of 

the country, they deserve a raise, most definitely. So I thank you 

for answering my questions. 

And I thank you, Mr. Chairman, for holding this hearing. I hope 

this is the beginning of what I believe will be very thoughtful and 

inclusive discussions about how we can raise the minimum wage 

to a living wage for all communities. And I yield back my time. 

Chairman SCOTT. Thank you. 

The gentlelady from Massachusetts, Mrs. Trahan. 

Mrs. TRAHAN. Thank you, Mr. Chairman, and thank you for holding these hearings. Thank you for hanging in with us today. I know 

it is a long day to sit on this panel. 

I grew up in a family that needed two incomes. My mother, she 

juggled multiple part-time jobs while I was growing up, working 

more than 40 hours a week and managing to raise us children. So 

sometimes, you know, when you are removed from that, it is easy 

to forget that it doesn’t leave a lot of time to look for another job. 

So, Mr. Wise, thank you. I appreciate your testimony. 

Dr. Zipperer, I want to talk about women and families and the 

impact that the minimum wage has. Women are nearly two-thirds 

of workers paid the Federal minimum wage of $7.25 per hour. 

Women are also two-thirds of tipped workers for whom the Federal 

minimum cash wage is just $2.13 per hour. 

Throughout my career, I have seen the pay gap in action time 

and again. Women’s overrepresentation in low-wage jobs is one factor driving the persistent wage gap. Women working full time yearround typically are paid just 80 cents for every dollar paid to their 

male counterparts, and this gap is even wider for women of color. 

Congress has raised the minimum wage only four times in the 

past 40 years and enacted the last increase a decade ago. A woman 

working full time at minimum wage earns just $14,500 annually, 

nearly $5,000 below the poverty line for a mother with two children. You know all this. 

Dr. Zipperer, what do we know about how the minimum wage 

would impact the gender pay gap, and what is the evidence from 


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States on how the minimum wage could impact the gender pay 

gap? 

Mr. ZIPPERER. That is a great question. It is true that the minimum wage disproportionately raises wages for women. It benefits 

women more than men, and that is because, as you outlined in 

your question, unfortunately, our country’s economy pays women 

excessively low wages. If we were to raise the minimum wage to 

$15 by 2024, the majority of workers that would benefit from that 

are women. Close to about 58 percent of the workers who would 

benefit from a minimum wage increase of that kind would be 

women. 

The minimum wage has long been an important tool to reduce 

gender wage gaps. In particular, the minimum wage has the 

strongest effects on reducing inequality for women, in that it brings 

up women at the bottom of the pay scale toward the middle much 

more strongly for women than it does for men. 

Mrs. TRAHAN. Terrific. Thank you. I appreciate that. 

You know, I know my colleague from Michigan asked about 

unions and the impact that the minimum wage will have on 

unions, but if I could just ask one followup question on his terrific 

inquiry. I do believe that unions have built the middle class. And 

what should we consider here in Congress—and if this is a better 

question for you, Dr. Spriggs, feel free to jump in. 

What should we consider here in Congress to better support men 

and women in labor so that all workers see improved conditions beyond increasing the minimum wage? 

Dr. SPRIGGS. Just as we are having this discussion to modernize 

the minimum wage, we need to have discussions to modernize our 

labor laws to restore the ability of American workers to organize. 

Today, the penalties for violating labor law are de minimus. It is 

far cheaper for a firm to fire workers, to intimidate them, then it 

is for them to let them have a voice. It is unfair to have employers 

engaged in closed conversations with employees to intimidate them 

out of their democratic right to vote about whether they want to 

be in a union. 

There are a number of other changes we need to make to make 

sure that workers will be at the table so that as productivity continues to increase, workers get to say, where is my share of the 

productivity increase, which hasn’t happened in the last 40 years. 

Mrs. TRAHAN. Thank you. Thanks so much for all your testimony, and I yield back. 

Chairman SCOTT. Thank you. The gentleman from New York, 

Mr. Morelle. 

Mr. MORELLE. Thank you, Mr. Chairman, for holding this valuable hearing to discuss gradually raising the minimum wage. And 

thank you to the panel and the witnesses for being here today to 

share their expertise. 

I do want to note, in my home State of New York we have one 

of the highest minimum wages in the nation. And I was proud to 

support gradually increasing the minimum wage to $15, which is 

what it is in the city of New York and other parts of New York. 

It is going to be $15 in just a few years, as we deal with some regional differences. And that happened, I had the privilege of being 

the majority leader in the assembly when we do that. And I look 


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forward to hopefully achieving that here in the Nation’s Capitol as 

well, to ensure that all Americans working full time can live safely 

and sustainably above the poverty line. 

If I might, Mr. Chair, I would like to ask Dr. Zipperer if you 

would just talk about the studies evaluating minimum wage increases. Is it your view that raising the minimum wage will result 

in negative economic consequences for low-wage workers, as some 

have suggested? 

Mr. ZIPPERER. No, it is not my view. I think that the best studies 

show that minimum wages have been very successful in raising the 

wages of low-wage workers without those negative employment effects, but you also don’t have to take my word for it. You can just 

look at the studies published over the last 15 years and that the 

average study and the typical study finds very small to no employment effects. 

Mr. MORELLE. If I might just followup with you, Dr. Zipperer, obviously, people have testified it is important that the Raise the 

Wage Act have a gradual increase, the cost adjustment over time, 

which obviously benefits so that, from a public policy point of view, 

10 years don’t go by, 6 years go by without an increase and you 

are essentially having to jump up a considerable degree in a single 

year. 

Have you calculated what the $15 minimum wage, if it were enacted today, what it would translate to in 5 or 6 years, in terms 

of what the adjustment would bring us to? 

Mr. ZIPPERER. Right. So under the Raise the Wage Act of 2019, 

a $15 minimum wage would be fully phased in by 2024. And if you 

account for projected increases in the cost of living over that time 

period, that is equivalent to about a $13 minimum wage today. 

Mr. MORELLE. Got you. So there obviously would be some erosion 

because of the impacts of inflation so $15, as we are thinking about 

it in 2024, isn’t the same as $15 today. It is $13. Is that what I 

understand? 

Mr. ZIPPERER. That is correct. 

Mr. MORELLE. Thank you. If I could just followup, relative to 

that in the purchasing power, I have given some thought to trying 

to understand what the historical high point was of the minimum 

wage relative to the median wage of the American worker and, in 

a sense, what is the $7.25 minimum wage compared now to that 

median or typical worker’s wages. Do you understand that question? Could you comment on that? 

Mr. ZIPPERER. Yes. Thanks for the question. So, at the highest 

point, the minimum wage in 1968 was close to about 53 percent of 

the full-time, full-year workers’ median wage at that time period. 

Now, the national minimum wage of $7.25 is about a third or about 

32, 33 percent of the full-time, full-year median wage. 

Mr. MORELLE. Which is obviously a dramatic, dramatic decline, 

more than half. In 1960—what year did you quote, the first— 

Mr. ZIPPERER. 1968 is the high point of the minimum wage. The 

minimum wage has fallen since 1968 over the last 50 years. It has 

fallen in real terms, terms adjusted for the increase of cost of living, by about 28, 29 percent. 

Mr. MORELLE. Obviously, dramatic. 


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If I might, Mr. Wise, and thank you for your testimony earlier 

today and for being a part of this. But could you just describe the 

challenges that your family would face in your situation during a 

family emergency when you had an unexpected expenditure of an 

essential? How do you and your family and others presumably in 

the same situation, how do you respond to that? How do you deal 

with that? 

Mr. WISE. Well, first and foremost, it is frightening, because we 

are truly one missed paycheck away from being homeless. So there 

is no such thing as being sick or having to call in or a family emergency. Refrigerator breaking down, car breaks, any of that going 

out is catastrophic, basically, for me and my family. So it is just— 

it is all pure luck, you know, hoping everything is Ok every day. 

Mr. MORELLE. And if I could also, Dr. Spriggs, what are, in your 

view, the lasting impacts to wage and wealth levels to regions of 

the country from the minimum wage coverage exclusions in the 

Fair Labor Standards Act of 1938? 

And just as a followup, would a regional minimum wage in 2019 

lock in income and wealth disparities that were born of that racially motivated exclusions to the FLSA? 

Dr. SPRIGGS. Thank you for the question. The only example I can 

give you of a proposal to do, quote/unquote, ‘‘parity pay’’ is from the 

Third Way. And when you look at the chart of what they think are 

the areas that have these wonderful lives at low wages because of 

pay parity, it looks exactly like a distribution of the Black population. 

If you agree to those regional pay ideas, which Congress debated 

extensively in 1937 and rejected, extensively in 1966 and rejected, 

you won’t be accepting a new idea, you will be cementing an old 

idea that got rejected twice and you will create a racial pay disparity. 

It will be, once again, America understands the problem, we are 

going to pass a labor law that improves the lives of American workers, and Black workers will be told, the bus is full when it pulls 

out. If you do that, that is what you will be doing. 

Mr. MORELLE. Thank you for the question. 

Just in closing, Mr. Chair and colleagues, I just do note that I 

represent a district in New York State, but many people when they 

hear the words ‘‘New York’’ assume it is metro New York and the 

city, where now the minimum wage is $15 an hour. Despite that, 

and I live in a community of about a million people in the Rochester, New York, metro area, Upstate New York, there were concerns about how the increase in the minimum wage would impact 

an economy that is the vestiges of a manufacturing economy and 

transitioning. 

And despite all the concerns that we heard from people about 

raising the minimum wage, it has really been something that has 

been greeted largely with support, certainly from the labor community and from people who are working very, very hard to make 

ends meet. And from what I can see, it has benefited our community greatly, and I certainly hope we pass this legislation in the 

Congress and make it the law of the land. So thank you. 

Thank you again, Mr. Chairman. I yield back my time. 

Chairman SCOTT. Thank you. 


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And next is the gentlelady from Washington, Dr. Schrier. 

Ms. SCHRIER. Hi. Good afternoon. Thank you, Mr. Chairman. 

And I want to thank all of you. I have really enjoyed your testimony today. 

I really appreciate, first of all, Dr. Spriggs, your comments in 

particular about tipping, because I was unaware of that history, 

and I think that was very eye-opening. 

I also wanted to thank you all, but I also appreciate the clarification about Washington State. That is where I am from. We are 

gradually increasing to a $15 minimum wage, and it has worked 

well for the State. 

The one study out of the University of Washington got a lot of 

eyes when that first came out, but it has become clear that is an 

outlier study and that for the most part we have done very well 

with this. Businesses are thriving, and people are thriving. 

I would also, for people up here who think that $15 is too much, 

I would just note that although my district starts in the suburbs 

of Seattle, in Seattle proper you need to have a salary of at least 

$70,000 a year to afford a one-bedroom apartment. 

And so I want to just remind everybody that we are talking 

about a minimum, and that $15, as we have heard many times, is 

a minimum for the whole country, and there are parts, like where 

I live, where you would need far more. 

I did have a question to just drill down a little bit on tips, because I want to make sure that we are taking care of everybody. 

The way that I am wrapping my head around this is I think 

about all of the workers in a restaurant, for example, and that if 

we have, for example, a $15 minimum wage for the wait staff, and 

they get generous tips on top of that, but the chef in the kitchen 

is not getting that added bonus and maybe isn’t getting tipped out 

enough from the wait staff or the host. And so I want to think 

through whether there might be unintended consequences in the 

social relationships at work. 

I also wanted to talk about the difference between when you 

have a subminimum wage, you know, $2 or whatever it is, and 

then workers are reliant on tips, which to me seems very tenuous, 

versus people who are guaranteed that if they don’t make at least 

15 an hour that they will have that as a floor and the tips would 

be over and the difference in poverty level between those two 

groups. 

Dr. Spriggs, maybe I will go to you. 

Dr. SPRIGGS. I would like to speak to that first. And thank you 

very much for the question because it gets to people who think this 

is easy to regulate. 

The way that many restaurants run, they either force pooling of 

the tips, so that the host who might get a bigger tip or the waiter 

who might get the bigger tip can then share it with busboys. 

Some restaurants violate the law because they consider some 

back workers who should get a minimum wage. They think they 

are supposed to get tipped. It is a nightmare. And when the wages 

are pooled, now, at some high-end restaurants, perhaps they let the 

staff control it, but many restaurants want to claim the pool tips 

are theirs, and then we dole them out to make sure we meet the 

minimum, it gets very complicated. 


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And, yes, the social relations are complicated because time and 

again, unfortunately, there is a difference between the race and 

gender of these different jobs, and inevitably that causes a friction 

in and of itself in terms of who will get what. 

So it is going to be a more fraught problem if the real minimum 

goes up and the tip minimum stays down, because the gap that has 

to be made up is going to be bigger and bigger and bigger. There 

is no assurance that will happen. 

And people need to remember that it is not the fancy restaurants 

that people in this room go to. The bulk of these workers are at 

low wage restaurants. They don’t work where the tip is going to be 

$25. They work where the tip is going to be $3. 

So it is far more complicated to regulate than people understand, 

and this is the true solution. It closes a gender inequality bigger 

than anything else we could do to close the gender inequality when 

it comes to wage theft sexual harassment. 

Ms. SCHRIER. Thank you. 

Chairman SCOTT. Thank you. 

The gentlelady from Ohio, Ms. Fudge. 

Ms. FUDGE. Thank you very much, Mr. Chairman. 

And thank you all so much for being here. Forgive me. I have 

had three committee hearings today, so I have been in and out. So 

if I ask you something that has already been asked, please forgive 

me. 

Dr. Holtz-Eakin, when I was in earlier I heard you talking about 

‘‘these people.’’ Who are ‘‘these people’’ that you—you have used the 

word ‘‘these people’’ at least three times while I was sitting in this 

room. Who would you describe as ‘‘these people’’? 

Mr. HOLTZ-EAKIN. I am not sure what the context was, Congresswoman. 

Ms. FUDGE. You were talking about that $15 wouldn’t help 

‘‘these people.’’ So who are ‘‘these people’’? 

Mr. HOLTZ-EAKIN. The workers that I am most concerned about 

are those with the least skills, education, and experience. 

Ms. FUDGE. So are they poor? Are they Black? Are they White? 

Who are ‘‘these people’’? I am just saying that you shouldn’t use it 

if you don’t know what you are talking about. 

Mr. HOLTZ-EAKIN. I know who I am worried about in the labor 

market, and those are the people. 

Ms. FUDGE. I think it is very insensitive. But neither here nor 

there. 

Dr. Spriggs, corporations are making more money today than 

they have ever made. They are making even more money this year 

as they have benefited from the Republican tax scam giveaway to 

the richest people in this country. We have also reduced what they 

would pay in estate taxes. So we have basically said to them: Rich 

people, we want you to get richer. 

It is ridiculous to me, knowing that the wage gap is getting bigger, the wealth gap is getting bigger, that someone would say to 

me that because someone makes $15 an hour, there is no money 

to pay them. I just don’t understand it. 

Dr. Holtz-Eakin, I am assuming you make more than $15. I don’t 

want to make an assumption, but do you make more than $15 an 

hour? 


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Mr. HOLTZ-EAKIN. I assume so. I am not paid by the hour. 

Ms. FUDGE. If you give me your salary for last year, I will tell 

you how much you make an hour. I am sure it is more than $15. 

And the sky is not falling. The sky is not falling because you make 

more than $15 an hour, and it will not fall if these people sitting 

in this room make $15 an hour. 

It is just not believable to me that you could say that if we pay 

people $15 an hour, everything is going to collapse. You know what 

I mean? You have to stop crying wolf. It is not true. There is no 

evidence to prove it is true. 

What we are doing today is saying that we have the ability to 

pay people a decent wage, but we refuse. We have the ability, but 

we have not the will. So it is Ok for rich people to get richer and 

poor people to get poorer. 

I just think it is ludicrous to say that the richest nation in the 

world cannot pay people a decent wage. It is unconscionable, it is 

mean, and it is cruel. 

And with that, Mr. Chairman, if someone would like to claim the 

balance of my time. Does someone need my time? 

Chairman SCOTT. You can yield to the gentlelady from Connecticut. 

Ms. FUDGE. I will. 

Mrs. HAYES. Good afternoon, everyone. I am sorry. I have been 

in and out as well, but I have been following the testimony on the 

TV screen. I had a couple committee hearings as well. 

First of all, thank you all for being here. Thank you all in the 

galley for coming out to support. 

Mr. Wise, I am particularly moved by your testimony. And I hope 

I can impress upon you that your work is not in vain, that your 

work has value. 

And what we hear people talk about is that minimum wage 

being attributed to people who have the least skill, the least education. But how about the least opportunity? One does not impact 

the other. 

I always excelled in school. I always did a good job. But then life 

happened. So if you don’t have access to those same opportunities. 

I heard one of my colleagues say that he could not imagine living 

on $15 in a city like Washington where the cost of living is so high. 

How about the reality of living on $7? And I think that is the conversation that we should be having. 

And people are always quick to pick out someone who has done 

it as if this is the rule instead of the exception. And, again, it is 

just that life happens, and maybe somebody got, you know, a good 

opportunity or caught a break. But that is not the rule. 

And then the other thing. I am just listening to all of you: Well, 

what have you done? My colleagues are always asking: Well, what 

have you done to lift yourself out of poverty? What have you done? 

You can go be a truck driver. What if you don’t want to be a truck 

driver? 

Shouldn’t you have the right to live out your best life, to live the 

future that you want for yourself and not this by-default position 

that you are placed in because you are attempting to survive? 

Has your housing cost increased over the last 10 years? 


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Chairman SCOTT. The time of the gentlelady from Ohio has expired. You will be recognized for your full 5 minutes shortly. 

The gentlelady from North Carolina, the Ranking Member. 

Mrs. HAYES. Mr. Wise, I am still talking to you. Has your housing cost— 

Chairman SCOTT. You will be recognized after Dr. Foxx. 

Mrs. HAYES. Oh, I am sorry. 

Ms. FOXX. Thank you, Mr. Chairman. 

Dr. Holtz-Eakin, I am interested in the workers who would be affected by a 107 percent increase in the Federal minimum wage. 

Individuals under 25 years old make up only one-fifth of hourly 

workers, but they account for about half of hourly workers making 

the minimum wage. Only 7 percent of workers earning wages between $7.25 and $15 live in poor households. 

In your view, is increasing the minimum wage to $15 an antipoverty policy? 

Mr. HOLTZ-EAKIN. I don’t think it is an effective anti-poverty policy. As I mentioned at the outset, it is fairly poorly targeted on poverty. And in those cases where it actually does affect the poverty 

population, the impact may be negative. 

Ms. FOXX. Thank you very much. 

Let me follow this train of questioning with you. We had what 

many are calling a surge in job creation in January, 304,000 new 

jobs, nearly doubling expectations. Over the last year, average 

hourly earnings rose by 3.2 percent, average weekly earnings rose 

by 3.5 percent. And with last month’s job surge, the labor force participation rate ticked up to 63.2 percent. 

There are more jobs than job openings, as you have said and we 

have said, more jobs at higher wages, and now people who have 

been the most discouraged and on the sidelines are reentering the 

work force. 

Based on your research and experience, are you concerned that 

more than doubling the Federal minimum wage would reverse 

these positive trends for workers and the economy? 

Mr. HOLTZ-EAKIN. I am very concerned about that. The research 

would indicate that is exactly the part of the labor market that 

would be most deeply affected. And we are finally making some 

progress. It would be a shame to go back the wrong way. 

Ms. FOXX. Great. 

You know, I have always emphasized making sound policy decisions based on evidence. But my husband told me a long time ago 

that too many people in elective office make decisions based on 

emotions and not on evidence. But as I told him, I am going to 

start with evidence always. I can get emotional if I have to, but evidence is the best way to go. 

When it comes to the radical proposal before us to increase the 

Federal minimum wage by 107 percent, however, it is hard to find 

convincing evidence because the proposed policy change is so extreme. 

Would Congress be making a sound policy decision from an evidence-based perspective if legislation were enacted to more than 

double the Federal minimum wage, impacting businesses and 

workers around the country? 


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Mr. HOLTZ-EAKIN. In my judgment, that would be a very unwise 

thing for the Congress to do. It is not just the 107 percent nationwide, which is unprecedented, and as a result, any of the research 

that we have that shows negative impacts doesn’t even come close 

to capturing the impact of that kind of a change. You also do the 

indexing at the end of that to the median wage. That is unprecedented and leads to permanent incentives to restructure businesses 

away from having jobs for that particular part of the labor market. 

Ms. FOXX. In your testimony, you note the large job losses in 

California and New York due to the recent increases in their State 

minimum wages. These job losses may surprise some people because these areas have a relatively high cost of living and are high 

average income States. 

What do these States’ experiments tell us about what would happen in other regions of the country if a mandate to impose a $15 

minimum wage around the country was enacted? 

Mr. HOLTZ-EAKIN. I think the lesson of these State-based minimum wage increases is that there are people who will be just fine. 

We do see that. 

But the people who are affected are the ones who are probably 

the least well-off in the labor market, for the reasons that I have 

outlined before; that not all of these changes come through the 

stereotype of someone getting kicked off their job. It is the raise 

you don’t get, the hours you don’t work, the person who doesn’t get 

hired. 

And a lot of this is not, you know, the bear at the door. It is the 

termites in the woodwork taking out the vitality of the economy. 

Ms. FOXX. Thank you very much. I yield back. 

Mrs. HAYES. Thank you, Mr. Chair. 

Mr. Wise, back to you. Back to my previous question. Has the 

cost of your housing increased? 

Mr. WISE. Yes. Yes, it has. 

Mrs. HAYES. I heard you talk about purchasing school supplies 

for your daughter. Has the cost of those supplies increased? 

Mr. WISE. Yes, they have, over the years. 

Mrs. HAYES. Has the cost of food increased? 

Mr. WISE. Definitely. 

Mrs. HAYES. Have you had to get a prescription for yourself or 

your children? 

Mr. WISE. Yes. 

Mrs. HAYES. Have those costs increased? 

Mr. WISE. Yes, they have. 

Mrs. HAYES. Ok. 

So to Dr.—I am sorry, I can’t read your whole name, I am so 

sorry, I don’t mean to—when you talk about corporations and the 

effect that this will have on the economy, have corporations stalled 

their price increases to wait for people who are living in poverty 

under minimum wage to catch up? If everything else is increasing 

except for their wages, are corporations held to the same standard 

where they are stalling to wait for people’s wages to catch up? 

Mr. ZIPPERER. If I understand the question correctly, I think it 

is the case that businesses in general in this country, unfortunately, have not paid low wage workers well without the help of 

a minimum wage increase. 


EDL-011-D with DISTILLER
127 

Mrs. HAYES. So if only 7 percent of minimum wage workers live 

in poverty, how could raising those workers to $15 have the catastrophic effects that we are hearing about? If it is such a small 

number, if it is such a small number in the overall economy and 

the overall number of workers, I just heard only 7 percent of minimum wage workers live in poverty, so how could that small number disproportionately impact the overall economy if that group is 

lifted up? 

Mr. ZIPPERER. I don’t think that there will be disastrous effects 

of a $15 minimum wage. But you might be interested in hearing 

from Dr. Holtz-Eakin. 

Mrs. HAYES. Yes. I am interested to hear your response. 

Dr. SPRIGGS. I want to help out here. In 1966, when we expanded 

coverage for the minimum wage, suddenly 20 percent, 20 percent 

of the American work force suddenly had coverage and protection, 

which means this is a bigger experiment than what you are talking 

about right now and when you think about what we did. Twenty 

percent of the entire American work force had not been protected. 

We raised their wages from $0.80, because on average that is what 

they made, to $1.60. 

Mrs. HAYES. I was here for that. 

Dr. SPRIGGS. We doubled it. 

Mrs. HAYES. Yep. 

Dr. SPRIGGS. And yet, employment did not fall. And in those 

states that had no State minimum wage employment did not fall 

because those States would have been the ones most impacted. 

So the evidence, the experience, the real experience, not some 

theoretical experience, the actual experience of the American people in the work force was when we doubled the minimum wage, 

which 61 percent of Republicans voted for, and gave 20 percent of 

these workers access to protection, poverty went down. Their employment did not go down. It was helpful. And it got the Black poverty rate for children down to 39 percent, the lowest it was until 

1994. 

Mrs. HAYES. Thank you. I guess, Dr. Spriggs, you would do well 

to answer the next question. 

When we talk about the improvement in the economy and the 

jobs numbers goes up, every month we hear about all of the people 

who have entered the work force, does this include minimum wage 

workers around the country? 

Dr. SPRIGGS. Yes, it does. 

Mrs. HAYES. So that number, although we are talking about 

more people are employed, does not accurately reflect an increase 

in living conditions, our communities improving, because although 

people are employed, it does not sound like they are at a livable 

wage. 

Dr. SPRIGGS. That is correct. And increasingly, it has been difficult for us to deliver lower poverty levels simply from higher levels of employment and from economic growth. When we disconnected the minimum wage from a living wage and you look at the 

poverty, this is why it took from 1969 to the 1990’s to get Black 

child poverty back down below the level it was in 1969. 

Mrs. HAYES. Thank you. Thank you so much. 


EDL-011-D with DISTILLER
128 

And I guess the last thing I would say is, with all due respect, 

the fact that you don’t know how much you make or what that 

translates to over a specific amount of time is more telling than 

anything else you could ever say, because I bet you every single 

person in this galley knows exactly how much they make. They 

know exactly how much they will lose if they are late, if they don’t 

show up, if they call out, if it is a holiday. They know exactly to 

the penny what that means for them and their family. 

I have been them. I know what that feels like, and that should 

be all you need to know. 

Mr. Chair, I yield back. 

Chairman SCOTT. Thank you. 

The gentleman from Indiana, Mr. Banks. 

Mr. BANKS. Thank you, Mr. Chairman. 

There has been a lot of focus today on how this proposal will destroy jobs, and rightfully so. You have already heard a lot about 

the NFIB study, but another recent study using the methodology 

of the Congressional Budget Office found that this proposal would 

cost my home state, the State of Indiana, 64,130 jobs in 2020 alone. 

This isn’t just a number. That is nearly 65,000 Hoosiers losing 

the dignity that comes from having a job and being able to provide 

for themselves and their families. At a time when we have nearly 

7 million jobs that cannot be filled, it is incredibly reckless to rob 

people of their livelihoods in order to live up to a campaign talking 

point. 

I have heard from local business owners in my district who believe this legislation would have a disastrous effect on their ability 

to grow and hire Hoosiers. One business owner who runs a number 

of local franchises conveyed to me that approximately 25 percent 

of his staff would need to be cut to account for this proposal. He 

would also be forced to raise prices in his restaurants by 2 to 4 percent just to stay in business. 

Another constituent of mine who owns a number of restaurants 

as well and employs nearly 250 people told me that the tipped 

wage provisions of this bill would force him to cut half of his staff 

just to stay afloat, along with across-the-board menu prices as well. 

Think about that. Anywhere from one in four to one in two workers 

unemployed who are then forced to pay higher prices after losing 

their jobs. 

And as if that wasn’t bad enough, there is evidence that this will 

actually reduce income for low wage workers. By making labor 

more expensive, fewer workers will be hired, and the ones that do 

keep their jobs will work fewer hours, which translates into lost income. 

And, in fact, that is exactly what we saw in Seattle. The city of 

Seattle recently, as you know, increased the minimum wage to $15 

an hour. And a study from the University of Washington found 

that this reduced the number of hours worked in low wage jobs by 

nearly 7 percent and lower take home pay for low wage workers 

by $74 a month. That is right, the minimum wage increase actually 

resulted in lower overall wages. 

Now, I take personal offense to this conversation as well because 

in high school and college, my folks didn’t have enough money to 

pay for my college degree. So I worked low-wage, minimum wage 


EDL-011-D with DISTILLER
129 

jobs to be able to save up for college and make ends meet. So this 

conversation reminds me of just how important jobs like these are 

to those Americans who are hopeful to 1 day pursue the same 

American dream that I have been able to live in my life. 

So, Dr. Holtz-Eakin, can you expand on the insights of these 

studies from the University of Washington, the NFIB study, the 

Congressional Budget Office statistics, specifically how minimum 

wage laws actually can reduce the income of low wage workers? 

Mr. HOLTZ-EAKIN. I am happy to, Congressman. 

First, in the interest of clarity, none of these studies indicate 

that overall employment in the economy is at a decline. The economy will continue to grow. There will be fewer jobs created than 

otherwise would have been. That is the nature of the loss. Those 

jobs are going to be concentrated in a particular part of the labor 

market, which is the low wage, low skill, little experience part of 

the labor market that you started out in. 

And the adjustments that businesses of all sizes will be forced to 

make will be either to charge higher prices or cut their labor bill 

somehow, and that means cutting back on raises, cutting back on 

hiring, cutting back on hours of work. And if you are one of those 

people who is lucky enough to maintain their job, but is not getting 

a raise and getting their hours cut, you could end up with less income. 

Mr. BANKS. Another study suggests that 2.3 percent of the American workers actually receive minimum wage or work in minimum 

wage jobs. And of those 2.3 percent, most of them are under the 

age of 25, which reflects upon the story that I have lived as well. 

They work those jobs to pursue something better, the proverbial 

American Dream. 

I am struck at the outset of this hearing, Dr. Zipperer admitted—he conceded over and over again, although not on the—we can 

debate the scale, but he conceded over and over again the negative 

impact that proposals like this would have on low-wage workers all 

over the United States of America. 

This conversation is concerning to me. It is concerning to not just 

business owners in my district but those who work in jobs like 

these. It would have a disastrous effect. 

And with that I yield back. 

Chairman SCOTT. Thank you. 

I yield to myself for 5 minutes. 

Dr. Spriggs, do you know if the poverty rate is connected to the 

minimum wage at all? 

Dr. SPRIGGS. It no longer is connected to the minimum wage, 

though when Congress formulated the minimum wage they clearly 

had the intent that workers would not have to say: ‘‘I hope to 1 day 

get to be poor. I hope that 1 day I will get a raise so I can get up 

to the poverty level.’’ That is what Congress was trying to avoid. 

They wanted work to have dignity. And everyone agreed, Republican and Democrat, that should be an American principle. So no 

longer— 

Chairman SCOTT. So increasing the minimum wage will not affect the poverty rate? 

Dr. SPRIGGS. It would not affect the poverty rate because there 

is little evidence that it would create a sufficient inflationary force 


EDL-011-D with DISTILLER
130 

that the poverty level would go up. As the Congresswoman said, it 

is not enough workers, and it is not a big enough part of cost. And 

as the Congresswoman was suggesting, if CEO pay goes up and 

that doesn’t affect cost, if profits go up and that doesn’t affect price, 

as she was saying, prices went up without wages going up, so why 

should we think that if wages go up that would happen? 

Chairman SCOTT. I just wanted to correct that for the record, because there was a suggestion that if we increase the minimum 

wage, we would be affecting the poverty rate. We would just be affecting how many fewer people would actually be poor. 

You say on the uniform Federal minimum wage, why that is important. If you had a subminimum wage for some States that didn’t 

apply or a region minimum wage that was lower, would some 

States be able to attract businesses by bragging about the fact that 

you could underpay your workers? 

Dr. SPRIGGS. There will be an attempt, I am sure, for some 

States to brag about it as they do brag that they are not union, 

that they do brag about other weak investments. So I am sure that 

some States may wish to brag that, yes, we pay our workers less. 

Chairman SCOTT. You had a chart that showed the support for 

increasing the minimum wage amongst Republicans. Are there any 

Republican States or States that are considered Republican States 

that have recently voted to increase its minimum wage by referendum? 

Dr. SPRIGGS. Yes. Several of the states are states headed by Republican Governors who through public referendum have shown 

that this is something that the American people agree with, and 

they think it is part of their standard. 

So whether it is the efforts in Arkansas or the efforts in some 

other States, Florida has raised its minimum wage, we have had 

a number of victories in red States because of the people you see 

with these red shirts and the efforts of organized labor and the efforts of Americans of all stripes who understand this is the right 

thing to do. 

Chairman SCOTT. Thank you. 

And, Dr. Zipperer, a lot has been said about job loss, and we 

found a couple of studies that have suggested that there would, in 

fact, be job loss. Overall, of all the studies done, what is the conclusion drawn? 

Mr. ZIPPERER. Overall, the recent set of scholarship over the last 

15 years finds that on average the minimum wage does not have 

negative effects on employment but, in fact, raises wages for low 

wage workers. 

Chairman SCOTT. What is the importance of making the increase 

in the minimum wage gradual rather than all at once? 

Mr. ZIPPERER. It is important to allow employers time to adjust 

to the new higher wage standard. That is why past Federal increases and other State and city level increases include a gradual 

path to their ultimate minimum wage standard. So raising the 

minimum wage gradually to $15 by 2024 as time passes and the 

cost of living increases, that is equivalent to raising the minimum 

wage to roughly about $13 today. 


EDL-011-D with DISTILLER
131 

Chairman SCOTT. Thank you. And can you say a bit about the 

demographics of who minimum wage workers are and their likelihood of actually spending the increase? 

Mr. ZIPPERER. Yes. So low wage workers are actually an incredibly diverse population. They are mostly women. They are more 

likely to be people of color, more likely to be Black or Hispanic than 

White workers. They are likely to be low wage. 

If you were to raise the minimum wage to $15 by 2024, the average age of who would get a wage increase, the average age would 

be about 35 years old. Most low wage workers are not very young 

at all, primarily because so few teenagers work to begin with. 

Chairman SCOTT. Thank you. 

My time has expired. I would ask unanimous consent that a letter led by the National Employment Law Project and co-signed by 

500 worker organizations be entered into the record. Without objection. 

[The information follows:] 


EDL-011-D with DISTILLER
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EDL-011-D with DISTILLERInsert offset folio 91 here 35268.091

NATIONAL 

EMPLOYMENT 

LAW 

PROJECT 

Workers in All 50 States Will Need $15 an Hour 

by 2024 to Afford the Basics 

Think the $15 minimum wage is justa New York and California thing? Cost of living data from 

the Economic Policy Institute shows that in all fifty states-in both rural and urban areas-$15 

an hour is the minimum wage that a single adult working ful!*time will need by 2024 to cover 

basic living expenses- including rent, food, transportation, health care, and taxes. And 

workers in expensive regions, or workers with children, will need even more. The Raise the 

Wage Act would increase the federal minimum wage to $15 an hour by 2024. To learn more, 

visit www.nelp OI]J. 

Hourly living Wage in 2024, Fifty States and the District of Columbia 

In the chart below, hourly living wages for rural and urban workers across the fifty states 

and the District of Columbia are clustered above the $15 mark (vertical red line 1 . 

• • 

e 

I} •• $10 $15 $20 $25 

Hourly Living Wage 

NELP ! WORKERS IN ALL 50 STATES WILL NEED $15 BY 2024 TO AFFORD THE BASICS I MAY, 2017 

$30 
133 


EDL-011-D with DISTILLERInsert offset folio 92 here 35268.092

Annual Cost of Living and Hourly Living Wage in Rural and Urban Areas 

Across the U.S., 2024 

Urban 

Annual Hourly Annual Hourly 

Cost of Living Cost of Living 

Living in Wage in Living in Wage in 

State Metropolitan Area 2024 2024 Rural Area 2024 2024 

AK Anchorage $40,290 $19.37 Rural average $38,699 $18.61 

AL Birmingham $33,649 $16.18 Rural average $32,796 $15.77 

AR Little Rock $34,333 $16.51 Rural average $32,569 $15.66 

AZ Phoenix $34,397 $16.54 Rural average $33,686 $16.20 

CA Los Angeles $42,572 $20.47 Rural average $38,074 $18.30 

co Denver $35,181 $16.91 Rural average $38,533 $18.53 

CT Hartford $40,368 $19.41 Rural average $39,797 $19.13 

DC Washington $51,400 $24.71 Rural average N/A N/A 

DE Wilmington $41,989 $20.19 Rural average $38,287 $18.41 

FL Miami $38,262 $18.40 Rural average $35,985 $17.30 

GA Atlanta $38,200 $18.37 Rural average $36,443 $17.52 

HI Honolulu $56,511 $27.17 Rural average $44,284 $21.29 

lA Des Moines $32,741 $15.74 Rural average $32,312 $15.53 

ID Boise $30,456 $14.64 Rural average $33,628 $16.17 

IL Chicago $38,237 $18.38 Rural average $33,524 $16.12 

IN Indianapolis $33,873 $16.28 Rural average $32,834 $15.79 

KS Wichita $30,357 $14.59 Rural average $32,069 $15.42 

KY Louisville $32,070 $15.42 Rural average $32,141 $15.45 

LA New Orleans $36,796 $17.69 Rural average $34,850 $16.75 

MA Boston $48,030 $23.09 Rural average $46,137 $22.18 

MD Baltimore $41,484 $19.94 Rural average $39,381 $18.93 

ME Portland $38,865 $18.69 Rural average $37,335 $17.95 

Ml Detroit $31,817 $15.30 Rural average $34,107 $16.40 

Minneapolis-St. $33,222 $15.97 Rural average $31,572 $15.18 

MN Paul 

MO St. Louis $33,782 $16.24 Rural average $32,502 $15.63 

MS Jackson $32,799 $15.77 Rural average $34,390 $16.53 

MT Billings $31,513 $15.15 Rural average $33,688 $16.20 

NC Charlotte $37,201 $17.89 Rural average $35,924 $17.27 

ND Fargo $30,234 $14.54 Rural average $36,619 $17.61 

NE Omaha $31,714 $15.25 Rural average $31,421 $15.11 

NH Manchester $35,342 $16.99 Rural average $38,511 $18.51 

NJ Newark $47.755 $22.96 Rural average NjA NjA 

NM Albuquerque $32,078 $15.42 Rural average $33,171 $15.95 

NV Las Vegas $36,056 $17.33 Rural average $35,431 $17.03 

NY New York $53,107 $25.53 Rural average $37,444 $18.00 

OH Cleveland $31,858 $15.32 Rural average $32,471 $15.61 

OK Oklahoma City $30,879 $14.85 Rural average $31,262 $15.03 

OR Portland $37,626 $18.09 Rural average $33,242 $15.98 

PA Philadelphia $41,204 $19.81 Rural average $33,384 $16.05 

RI Providence $37,247 $17.91 Rural average NjA NjA 

sc Columbia $36,215 $17.41 Rural average $34,685 $16.68 

SD Sioux Falls $32,555 $15.65 Rural average $32,405 $15.58 

TN Nashville $33,678 $16.19 Rural average $29,830 $14.34 

TX Houston $33,929 $16.31 Rural average $32,015 $15.39 

UT Salt Lake City $34,833 $16.75 Rural average $33,945 $16.32 

VA Virginia Beach $44,751 $21.51 Rural average $34,914 $16.79 

VT Burlington $46.420 $22.32 Rural average $39,752 $19.11 

WA Seattle $39,200 $18.85 Rural average $32,646 $15.70 

WI Milwaukee $34,291 $16.49 Rural average $33,736 $16.22 

wv Charleston $34,573 $16.62 Rural average $33,893 $16.29 

WY Che~enne $34,102 $16.40 Rural avera!le $37,285 $17.93 

Annual cost of living and hourly living wage figures calculated based on the Economic Polley Institute's .Em:ni!y Budget Calculator 

applying Congressional Budget Office Consumer Price Index projections to update them to 2024. The District of Columbia, New 

Jersey, and Rhode ls!<Jnd do not have rural areas. 

-·-~~---~---·~----~· .. ·-·-.. -···~--~-----·-----~·-···-.. -- ...... ------·-------·---·-·--.. --.... ----------·----------·----- NELP I WORKERS IN ALL 50 STATES WILL NEED $15 BY 2024 TO AFFORD THE BASICS / MAY, 2017 
134 

Chairman SCOTT. I remind my colleagues that pursuant to committee practice, materials for submission to the hearing must be 

submitted to the committee clerk within 14 days following the last 

day of the hearing, preferably in Microsoft Word format. Materials 

submitted must address the subject matter of the hearing. Only a 

member of the committee or an invited witness may submit materials for inclusion in the hearing record. 

Documents are limited to 50 pages each. Those longer than 50 

pages will be incorporated in the record by way of an internet link 

that you must provide to the committee clerk with the required 

timeframe, but please recognize that years from now that link may 

no longer work. 

I want to thank our witnesses for your participation today. What 

we have heard is very valuable. Members of the committee may 

have additional questions, and we ask the witnesses to please respond to those questions in writing. The hearing record will be held 

open for 14 days to receive those responses. 

I remind our colleagues that pursuant to committee practice, witness questions for the hearing must be submitted to the majority 

staff or the committee clerk within 7 days to allow ample time for 

witnesses to respond. Questions must address the subject matter of 

the hearing. 

Thank you. 

And that concludes the first panel. We will have a 15-minute 

break before the next panel. We expect votes presently. And as 

soon as the votes are over, we will return for the second panel. 

Thank you. We are in recess. 

[Recess.] 

Chairman SCOTT. The committee will come back to order. We 

will now introduce the second panel. 

Ms. Vanita Gupta is president and CEO of the Leadership Conference on Civil and Human Rights, the Nation’s oldest and largest 

civil rights organization. Ms. Gupta is an experienced leader and 

litigator who has devoted her entire career to civil rights work. Before joining The Leadership Conference, she served as Acting Assistant Attorney General and the head of the U.S. Department of 

Justice’s Civil Rights Division. 

Ms. Simone Barron has been a full service restaurant employee 

for nearly 33 years. She has worked in several cities across the 

country, including Indianapolis and Chicago, and has lived and 

worked in Seattle for the past 17 years. 

Ms. Kathy Eckhouse is founder and co-owner of La Quercia, a 

producer of artisan cured meats made with nonconfinement, antibiotic-free, sustainable raised pork from family farmers in the Midwest. Based in Norwalk, Iowa, the company produces products that 

are sold throughout the U.S. and Canada. 

Michael Strain is the Director of Economic Policy studies at the 

American Enterprise Institute, AEI. He oversees the institute’s 

work in economic policy, financial markets, poverty studies, technology policy, energy, economics, healthcare policy, and related 

areas. 

Professor Michael Reich is Professor of Economics at the University of California, Berkeley, where he is also the co-chair of the 

Center on Wage and Employment Dynamics. The professor has 


EDL-011-D with DISTILLER
135 

published over a dozen books and over 120 papers and in the past 

decade has authored numerous policy and scholarly studies on living wages and minimum wages. 

Representative Paul Brodeur is serving his fifth 2-year term in 

the Massachusetts State House representing the residents of the 

32d District in Middlesex, just north of Boston. 

He was the House Chairman of the Joint Committee on Labor 

and Workforce Development during the 2017–2018 legislative session. He was successful in convening negotiations between labor 

unions, religious organizations, community groups, business trade 

groups, and employer advocacy organizations to reach a landmark 

agreement which, among other provisions, raises the state’s minimum wage to $15 an hour by 2023. 

We appreciate all of the witnesses for being here today and look 

forward to your testimony. Let me remind the witnesses that we 

have read your testimony and the testimony in full will appear in 

the hearing record. Pursuant to committee rule 7(d) and the committee practice, each of you is asked to limit your oral testimony 

to a 5-minute summary of your written Statement. 

Let me remind the witnesses that pursuant to Title 18 of the 

U.S. Code, Section 1001, it is illegal to knowingly and willfully falsify any Statement, representation, writing, document, or material 

fact presented to Congress, or otherwise conceal or cover up such 

a material fact. 

Before you begin your testimony, please remember to press the 

button on your microphone in front of you so it will turn on and 

members can hear you. As you begin to speak, the light in front 

of you will turn green. After 4 minutes, the light will turn yellow 

to signal that you have 1 minute remaining. When the light turns 

red, your 5 minutes have expired, and we ask you to wrap up. 

We will let the entire panel make their presentations before you 

move to member questions. When answering a question, please remember to once again turn on your microphone. 

We will start with Ms. Gupta. 

STATEMENT OF MS. VANITA GUPTA, PRESIDENT AND CEO, 

THE LEADERSHIP CONFERENCE ON CIVIL AND HUMAN 

RIGHTS 

Ms. GUPTA. Chairman Scott, Ranking Member Foxx, and members of the committee, my name is Vanita Gupta, and I am President and CEO of The Leadership Conference on Civil and Human 

Rights, a coalition of more than 200 national organizations working 

to build an America as good as its ideals. Thank you for the opportunity to testify here today about the minimum wage. 

The Leadership Conference strongly supports H.R. 582, the Raise 

the Wage Act of 2019. Gradually raising the Federal minimum 

wage to $15 an hour by 2024, indexing it to median Federal wages, 

and ensuring that all tipped workers, working people with disabilities, and young people get paid at least a full minimum wage is 

essential for working people to cover basic expenses like housing, 

food, transportation, childcare, healthcare, and other necessities. 


EDL-011-D with DISTILLER
136 

Congress has not raised the Federal minimum wage of $7.25 

hour since 2007, and the tipped minimum wage has been stuck at 

$2.13 an hour since 1991. 

First, the Raise the Wage Act of 2019 is a step in the right direction toward closing the gender pay gap. In a 2018 report that we 

prepared with the Georgetown Center on Poverty, we found that 

nearly half of working people in our country are paid less than $15 

per hour, 55 percent being women. The National Women’s Law 

Center and the National Employment Law Project have noted that 

women of color are more likely than any other group to be paid the 

lowest wages. 

Second, on the tipped minimum wage, it is really important to 

note its history. Before the Civil War, tipping was largely frowned 

upon in the United States, but after the war the practice of tipping 

proliferated, and at that time the restaurant and hospitality industry hired newly freed slaves without paying them base wages. The 

effect was to create a permanent servant class for whom the responsibility of paying a wage was shifted from employers to customers, and having to depend on tipping put African-Americans in 

an economically and socially subordinate position. 

The Fair Labor Standards Act then established a bare minimum 

floor for tipped wages only in 1966, and it increased to $2.13 an 

hour in 1991, still leaving tipped workers earning far below their 

basic needs. 

Third, as with the tipped minimum wage, the subminimum wage 

under Section 14(c) of the FLSA that allows people with disabilities 

working in segregated settings to be paid less than the minimum 

wage leaves this already vulnerable community that much more 

vulnerable to poverty and exploitation. 

I previously served as head of the Justice Department’s Civil 

Rights Division from 2014 to 2017, where I oversaw the Disability 

Rights Section. In 1999, in Olmstead v. L.C., the Supreme Court 

held that under the Americans with Disabilities Act unjustified institutional isolation of persons with disabilities constitutes discrimination. And, unfortunately, 20 years after Olmstead and almost 30 years after the passage of the ADA, too many people with 

disabilities spend their time in segregated workshops or day programs with some paid just pennies per hour. 

While in theory segregated settings provide job training and experience to people with disabilities and help them find regular employment in their community, the reality is that too many remain 

stuck in segregated settings for years. 

Cases that the Department of Justice investigated to enforce 

Olmstead’s community integration mandate illustrate the deep concerns with 14(c) employment, and one of those cases involved Oregonians with disabilities, people like Gabrielle who dreamed of 

saving up money to buy a home, who assembled nut-and-bolt kits 

and knee pads in a sheltered workshop for $100 to $150 per month. 

And after the settlement, she began working as a grooming assistant at a dog daycare earning more than $9 an hour. And as she 

told a local media outlet, ‘‘I feel better about my life, and I ended 

up buying that house.’’ 

Some states and localities have taken action to raise the minimum wage, and while these States and localities should be apVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00144 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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plauded, Federal action is needed to establish a higher universal 

floor for wages. The Leadership Conference opposes prevention 

laws that allow states to prevent cities and counties from raising 

the minimum wage and proposals like a regional minimum wage 

that could be misused by employers and further calcify racial and 

gender inequities. 

At the 1963 March on Washington for Jobs and Freedom, one of 

the founders of The Leadership Conference, Black labor leader A. 

Philip Randolph, noted, ‘‘Nor is the goal of our civil rights revolution merely the passage of civil rights legislation. Yes, we want accommodations open to all citizens, but those accommodations mean 

little to those who cannot afford them.’’ 

Working people should be allowed to live with dignity and have 

the dignity of a fair paycheck, and that is what the Raise the Wage 

Act of 2019 would do. And I want to thank you for the opportunity 

to testify at today’s hearing. 

[The statement of Ms. Gupta follows:] 


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STATEMENT OF V ANITA GUPTA, PRESIDENT AND CEO 

THE LEADERSHIP CONFERENCE ON CIVIL AND HUMAN RIGHTS 

U.S. HOUSE COMMITTEE ON EDUCATION & LABOR 

HEARING ON "GRADUALLY RAISING THE MINIMUM WAGE TO $15: GOOD FOR 

WORKERS, GOOD FOR BUSINESSES, AND GOOD FOR THE ECONOMY." 

FEBRUARY 7, 2019 

Chairman Scott, Ranking Member Foxx, and Members of the Committee, my name is Vanita Gupta and I 

am the president and CEO of The Leadership Conference on Civil and Human Rights, a coalition of more 

than 200 national organizations working to build an America as good as its ideals. Thank you for the 

opportunity to testify here today about the minimum wage. 

The Leadership Conference strongly supports H.R. 582, The Raise the Wage Act of2019, which would 

amend the Fair Labor Standards Act to give low-wage working people an overdue raise and ultimately 

end several carve outs that allow certain groups of working people to be paid even less than the federal 

minimum wage. 

As an organization that is committed to promoting and protecting the civil and human rights of all persons 

in the United States, The Leadership Conference advocates against injustice in all forms, including in the 

workplace. The Leadership Conference has long maintained that civil and human rights are inextricably 

linked to economic security. From the passage of the Universal Declaration of Human Rights in 1948 to 

the March on Washington for Jobs and Freedom in 1963, the economic security of all in America has 

long been a priority of the civil and human rights community. We should all be paid fairly for the work 

that we do, regardless of our gender, race, ethnicity. disability, age, sexual orientation. or immigration 

status. 

Working people should be able to live with the dignity of a fair paycheck. Today, low-paid working 

people care for our family members. They pick our fruits and vegetables. They clean our homes and 
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offices. They cut our hair and serve lunch to our children-' They do valuable work that benefits us all. 

And they should be paid fairly for that work. 

Gradually raising the federal minimum wage to $15 an hour by 2024, indexing it to median federal 

wages, and ensuring that all tipped workers, working people with disabilities. and young people get paid 

at least a full minimum wage is essential for working people to cover basic expenses like housing, food, 

transportation. childcare, health care, and other necessities. Paying tipped workers and people with 

disabilities the full minimum wage would also rectify longstanding injustices and ensure that no one will 

work for pennies in America. 

For decades. wages for most people in America have stagnated while productivity has increased. This has 

been particularly true for low-wage and working-class people. Congress has not raised the federal 

minimum wage of $7.25 an hour since 2007. And the tipped minimum wage has been stuck at $2.13 an 

hour since 1991. Tipped workers have not received a raise in 28 years. 

In a 2018 report entitled Bare Minimum: Why We Need to Raise Wages for America's Lowest-Paid 

Families.' The Leadership Conference's sister organization, The Leadership Conference Education Fund. 

together with the Georgetown Center on Poverty, looked at the plight of low-wage working people in our 

country, focusing on their lived experiences. 

What we found is that nearly half(42.4 percent) of working people in our country are paid less than $15 

per hour.' And according to a 2018 report from the Board of Governors of the Federal Reserve, 44 

percent of American adults cannot afford a $400 emergency.' One cause of the decline in wages for 

working people over the last 40 years has been attacks on the ability of working people to organize. The 

share of the workforce represented by a union has plummeted, from 24 percent in 1973 to 10.7 percent in 

2018, which has impacted working people's ability to bargain collectively for higher wages and benefits.' 

' For examples of !ow~pmd occupations see '·Low Wage Workers 

among Work1ng Fam1hes U S Government Accounting Office 

Wage Johs !!eld Women W1!l Grow the MQst Over the 

~ http'//civllrightsdocs inf<>ipdll/re,port<iEiare-M.InmJurr, pdf 

and Macpherson, "U S 

and Coverage Database_ 2018. Available ut http"//unionstats.com/ 

Usc of Selected Federal Social Safety Net Programs Persist 

p Sec also Robbms. Kathennc Gallagher and Juhe Vogtman ''LowDecade .. , 2016 

See Hirsch, Barry 

'"Lnmtmg L:tbor Busmess Poht!cal Mobllrzat10n and Union Setback m "Journal 

-2 017." Umon Membership 

Dixon, Marc 

Ph1llips-Fein, 

K11n ''lfRusmt'SS and the Country Wdl Be Run The Business Ch:1llenge to the L1bera! Consensus, " International Labor and 

Working-Class History 72 ! 92-215, Fall 2007 

2 
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In addition, the value of the federal minimum wage has eroded because it does not currently increase 

automatically with either wages or prices. 

Today, the National Women's Law Center has noted that women make up nearly two-thirds of those 

earning the federal minimum wage of$7.25 an hour.6 Fifty-five percent of all working people making less 

than $15 an hour are women.' Afi·ican American and Latina working women in particular are 

overrepresented in low-paid jobs. Women of color are more likely than any other group to be paid the 

lowest wages.' The Raise the Wage Act of20l 9 is a step in the right direction towards closing the gender 

pay gap. 

When many of us think about the minimum wage, one of the first images that comes to mind may not be 

that of a child, but perhaps it should be. Over 3 l .5 million U.S. children two of every five ( 42.9 

percent) children- live in households with at least one working person earning under$ I 5 per hour? 

Working mothers are especially likely to be paid low wages. Almost one in five working mothers with 

children under three are employed in low-wage occupations. 10 Raising the income of working families is 

essential for the future wellbeing of our country, as more than a decade of research has shown how low 

incomes negatively impact children's health, economic opportunity, and educational success." 

6 Vogtman, Juhc. "The Raise the Wage Act: Roostmg Women's Paychecks and Advancing Equal Pay" National Women's Law Center. May 

2017 https //nw!c orglresourceslthe-raise-the-wage-act-boosting-womens-paychecks-and-advancing-equal-pay/ 7 Trung, Irene, et al "The Growmg Movement for $15." National Employment Law ProJect, November 2015 Avmlab!e at 

!:H.!Q~!\~W nclp or~cnt/up!oaJs/Growm£-Mowmcnt-for-l5-Do!larsJ2Q_f 

'!d 

3 
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Just as we believe the federal minimum wage must be raised, The Leadership Conference strongly 

supports ensuring that tipped workers, working people with disabilities, and young people are paid at least 

the full minimum wage. 

Congress must acknowledge the origins of the tipped minimum wage because they are deeply entwined in 

our nation's struggles with racial and gender inequality. The custom of tipping itself is rooted in the 

history of slavery." 

The practice of tipping escalated in the United States after the Civil War. Before the Civil War, tipping 

was largely frowned upon in the United States. But after its end, the practice of tipping proliferated. At 

that time, the restaurant and hospitality industry, exemplified by the Pullman Company, hired newly freed 

slaves without paying them base wages. 13 The effect was to create a permanent servant class. for whom 

the responsibility of paying a wage was shifted from employers to customers. 14 An early 20'h century 

southern journalist recounted being uncomfortable tipping White working people. As he observed in 

1902, "one expects ... Negroes [to] take tips ... it is a token of their inferiority. But to give money to a White 

man was embarrassing to me." 15 

Having to depend on tipping kept African Americans in an economically and socially subordinate 

position. By 1880, 43 percent of all working people employed in hotels and restaurants were Black. By 

1900, 25 percent of all Black working people engaged in non-agricultural labor were employed as 

servants and waiters, including the vast majority of Black women. 16 In the early 1900s, it is estimated that 

five million working people in the United States- more than 10 percent of the labor force- were in tiptaking occupations." The Fair Labor Standards Act established a bare minimum floor for tipped wages 

only in 1966. The federal tipped minimum wage has remained at $2.13 an hour since 1991 and it is long 

overdue for an adjustment. Failing to raise the tipped minimum wage disproportionately hurts people of 

color and women. 

1

" Azar, Ofer H 'The h!story oft1ppmg-from sixteenth-century England to United States in the 1910s." The Journal ofSocio-Econmmcs. Vol 

33. Issue 6 Pgs 745-764 December 2004 11 B.T Pullman Porters and the Rise of Protest Po!Jttcs m Black Amenca, 1925-19./5 

Michael and Tco111o Reves workers better v.ouldn 't January 

4 
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One can see the through line from the origins of the tipped minimum wage to today. In 2018, people of 

color are more likely to work in the tipped workforce and live in poverty than their White counterparts." 

For example, the take-home wages of people of color who work in restaurants are 56 percent less than 

their White colleagues. 19 The median annual income for tipped workers of color is $14,300. For Black 

working people, it is even lower at $12.900 per year. 20 Poverty rates for people who work for tips are 

more than twice as high as rates for working people overall- with female tipped workers, especially 

women of color. at a particular disadvantage. 21 

Multiple additional factors impact pay for tipped workers, and support the need for paying tipped workers 

the full minimum wage with tips only added on top of that. Studies have shown that restaurant customers 

discriminate against African American servers, consistently tipping them less than White servers, 

regardless of the quality of service." 

According to the 2012-2015 ACS data on gender and race for tipped occupations, of the almost 6 million 

tipped working people in our country, 66 percent are women." And women of color are 

disproportionately represented in the tipped workforce. Ensuring that tipped workers are paid at least the 

full minimum wage with tips only on top of that will help to address the gender pay gap in our country. 

Some tipped workers also encounter sexual harassment. Tipped restaurant servers are highly dependent 

on customers for their income and on management for good shifts. This situation creates a power 

imbalance that makes people working for tips- many of whom are women- particularly vulnerable to 

sexual harassment. As the National Women's Law Center has noted, "Women's lack of economic power 

in these workplaces perpetuates the already pervasive culture of sexual harassment in 

the restaurant industry and others that employ large numbers of tipped workers."24 We can and must do 

better. 

1

g Gallagher Robbins, Kathenne and Julie Vogtman. "Low-v.age Jobs held pnmanly by women \VI!l grO\v the most over the next decade " April 

2016 https //nw!c-c lw49t!xgw5lhab stackpathdns.com/wp-contentfuploads/20 !6/04/Low-Wage-Jobs-Held-Primarily-by-Women-W 1!1-Grow-theMost-Over-the-Ncxt-Dccade pdf 1

') Oatman, Madd1e. "The rae 1st twisted 

5 
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As with the tipped minimum wage, the subminimum wage under Section 14(c) of the Fair Labor 

Standards Act that allows people with disabilities working in segregated settings to be paid less than the 

minimum wage leaves this community vulnerable to poverty and exploitation. 

I previously served as head of the Justice Department's Civil Rights Division from 2014 until January 

2017, where l oversaw the Disability Rights Section. The Disability Rights Section works to achieve 

equal opportunity for people with disabilities in the United States by implementing the Americans with 

Disabilities Act (ADA). When Congress passed the ADA in 1990, it ushered in a new era for people with 

disabilities in this country. Progress built the pathway for further reform. And in 1999. in Olmstead v. 

L.C., the Supreme Court recognized a crucial tenet of the ADA: the community integration mandate. The 

court held that under the ADA, "unjustified institutional isolation of persons with disabilities" constitutes 

discrimination. 

Unfortunately, 20 years after Olmstead and almost 30 years after passage oft he ADA, for too many 

people with disabilities, we continue to see a real gap between what the law guarantees and what people 

experience. We see this gap in employment, as hundreds of thousands of people with disabilities spend 

their time in segregated workshops or day programs, with some paid just pennies per hour. 25 

Employers who have applied for approval from the Department of Labor under Section 14(c) of the Fair 

Labor Standards Act are permitted to set wages for people with disabilities in segregated settings based on 

a piece-rate standard of how much they produce per hour. The National Disability Rights Network 

believes that "sheltered workshops have replaced institutions in many states as the new warehousing 

system and are the new favored locations where people with disabilities arc sent to occupy their days.''26 

While in theory segregated settings provide people with disabilities the opportunity to receive job training 

and experience that will help them to find regular employment in their community, the reality is that too 

many remain stuck in segregated settings for years. In a 2018 report, The National Council on Disability 

found that "[i]n the experts' judgment, the sheltered workshop business model, itself, rather than the 

25 DePd!Js, Lydta 'l)tsabled people arc allowed to work for pennies per hour- but maybe not for much longer " The Washington Post. February 

I 2, 2016 https I lwvrw. \\<lShingtonpost com/news/wonk/wp/20! 6/02/l2fd isablcd~peop!e~are-allowed-to-work- tOr-pcnnles-per-hour-but-maybenot-for-much-longer/"~utm_tenn=. tbfc31 a999fJ~ Nat tonal Council on D1sabil!ty ''National Disability Employment Polley, From the New Deal to 

the Rca! Deal· Joming the Industries of the Future" Oct 18, 2018. 

httns:/ !ncd.gov/sites/defaultlfilts/!\e"' '"/o20 l>eal'%20to%20 Rtal'%200tai%20Fil\,\ L 508. I'll F. 

li. ··segregated and Exploited The Failure of the Disahtlity Scrvtce System to Prov1dc Qua!1ty Work" Natwnal DJsab!IJty Rq;~hts Network. 2011 

For an update on rnore dfecuvely mtcgrat~ wmkcrs With dJsabt!ittes mto compct1t1VC employment 

Segregated .md E:q•luttcd Update on Employment of People wtth DJsahd!!lCS ··National Dtsab!ltty Rtghts Network. Apnl 

h1mJI\-\W\:>: nQro nm't11Higt;.,-;/DorJill~P..1'i..Rcsourccs/flill.]J.£.U.lJ~ill.~J3.eport:;/Be\ond Scgn:gal~L<msLf:.;.;p)~lli./~ 

6 
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impact of disability on productivity, incentivizes low wages and correspondingly disincentivizes 

reasonable accommodations, better job matches, and more integrated employment services. " 27 

Cases that the Department of Justice investigated to enforce Olmstead's community integration mandate 

illustrate the deep concerns with 14(c) employment. One example comes from a landmark agreement the 

Department of Justice and private plaintiffs reached regarding Oregon's employment services system, 

which unlawfully and unnecessarily- placed people with disabilities in segregated settings instead of 

integrated jobs in their communities. 

The agreement impacted 7,000 Oregonians with disabilities- Oregonians who can and wanted to work 

in typical community employment settings. As a result of the settlement, one individual, Zavier, no longer 

earns $1.70 per hour assembling small company parts. Instead, with employment support, he began 

working at a local YMCA, helping kids complete their homework and resolve their conflicts. Another, 

Gabrielle- who dreamed of saving up money to buy a home no longer assembles nut-and-bolt kits 

and knee pads in a sheltered workshop for $100 to $150 per month. Instead, she began working as a 

grooming assistant at a dog day care and boutique, earning more than $9 per hour. And as she told a local 

media outlet, "I feel better about my life and ... I ended up buying that house." 

When the Fair Labor Standards Act was first enacted in 1938, the provision allowing people with 

disabilities to be paid a sub-minimum wage was included. Think about how differently we as a society 

perceive what it means to have a disability today versus then. The era in which the Fair Labor Standards 

Act was signed into law is the same era of the infamous case Buck v. Bell, in which the Supreme Court 

found that people with disabilities were "manifestly unfit from continuing their kind," and sanctioned the 

practice of people with disabilities enduring compulsory sterilization." Section 14(c) reflects that painful 

past and it belongs in the dustbin of history. 

The National Council on Disability's 2012 Report as well as its 2018 Report- recommended phasing 

out the Section 14(c) program29 The time has come for federal action to support and fully integrate 

people with disabilities into the workplace. The Raise the Wage Act would do just that, eventually 

sunsetting the Section 14(c) program entirely. 

7 
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H.R. 582 also includes the elimination of the youth minimum wage for those under the age of 20. The 

Leadership Conference believes that all people should be paid fairly for the work that they do 

including young people. The Fair Labor Standards Act currently allows employers to pay employees who 

are under the age of20 a lower "youth" wage for 90 calendar days when they are first employed. During 

that time period, employers may pay any wage rate above $4.25 an hour. 

Many households rely on the income of young members of the family for support. Some young working 

people currently being paid the lower youth subminimum wage are also students who are either partially 

or fully supporting themselves. The National Employment Law Center notes that of 18- and 19-year-olds 

enrolled in college, 70 percent also work. Of those working. "[n]early 50 percent of U.S. students 

pursuing a two-year degree, and over 40 percent of students pursuing a four-year degree. work more than 

35 hours per week."30 

One area that requires more study but should raise concern for members of the committee is the potential 

negative consequences of the youth minimum wage on food insecurity faced by too many college 

students today. In April2018, Wisconsin's HOPE Lab conducted a study on food insecurity in college 

students at 66 institutions across 20 states and Washington, DC. Their conservative estimate was that 36 

percent of students were food insecure, which is defined as the limited or uncertain ability to obtain 

nutritionally adequate food due to lack of financial resources, which can result in disrupted eating patterns 

and/or reduced food intake." According to the study, 47 percent of Black students and 42 percent of 

Hispanic students at 4-year institutions experience food insecurity compared to 30 percent of their White 

peers. The study also shows that 46 percent of Pel! Grant recipients at 4-year institutions experience food 

insecurity:" 

In the face of inaction at the federal level, some states and localities have taken action to raise the 

minimum wage on their own. Seven states currently require tipped workers to be paid the standard state 

minimum wage before tips: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. 

And states and localities like Maryland, Alaska, New Hampshire, and the city of Seattle eliminated the 

subminimum wage for people with disabilities. While these slates and localities should be applauded, we 

need federal action in this area to establish a higher universal floor for wages in our nation, one that pays 

working people fairly for their work and keeps pace with median federal wages and increases in 

w ld 

8 
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productivity. Unfortunately, there are regions of the country where low-wages are the norm. Ten of the 21 

states stuck at $7.25 an hour are in the South," with large African American populations, and growing 

Latino and Asian American populations. The Leadership Conference opposes proposals like a regional 

minimum wage that could be misused to enable forum shopping for employers and would further calcify 

racial and gender inequities. 

Low-wage working people across the country also need Congress to act because some states prevent 

cities and counties from raising the minimum wage through preemption laws. Seventeen of the 21 states 

that follow the $7.25 federal minimum wage have passed such laws. In 2017, state preemption laws in 

Iowa and Missouri nullified local minimum wage laws that had already gone into effect causing some 

people's paychecks to decrease." One example of preemption in action is the case of Birmingham, 

Alabama. In August 2015, the Birmingham City Council voted to raise the city's minimum wage to 

$10.10 an hour. But in 2016, days before the pay raise was set to take effect, the state passed and signed 

into law HB-174, which nullified the ordinance. The Alabama State Conference of the NAACP, fast food 

workers in the Fight for $15, the Alabama Black Legislative Caucus, and Greater Birmingham Ministries 

challenged the law, and the case has been in litigation since. Derrick Johnson, CEO of the NAACP, noted, 

"The state's legislature must be held accountable for discriminating against hard working Birmingham 

citizens fighting to get out of poverty."" 

At the 1963 March on Washington for Jobs and Freedom, one of the founders of The Leadership 

Conference, black labor leader A. Philip Randolph, noted, "Nor is the goal of our civil rights revolution 

merely the passage of civil rights legislation. Yes, we want all public accommodations open to all 

citizens, but those accommodations will mean little to those who cannot afford to use them." 

The beauty of America's story and the promise of its legal framework show us that we, as a country and 

as a people, can change. We can progress, imperfectly but unyieldingly. This progress must include the 

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passage of new laws- and vigorous enforcement of the laws we already have to secure the freedoms 

that our Constitution guarantees and the opportunities that all people deserve. 

We should all be paid fairly for the work that we do. And that is why The Leadership Conference 

supports the Raise the Wage Act of 2019. Thank you tor the opportunity to participate in to day's hearing 

and share the perspective of the civil and human rights community. We call on Congress to give working 

families across our country the raise they are overdue. 

I am available to answer questions from the Committee. 

10 
148 

Chairman SCOTT. Thank you. 

Ms. Barron. 

STATEMENT OF MS. SIMONE BARRON, SEATTLE, WA 

Ms. BARRON. Good afternoon and thank you, Chairman Scott and 

Ranking Member Foxx, for the opportunity to testify today. 

My name is Simone Barron. I am the mom of a smarty-pants 

teen boy. I am a semi-professional actor, and I have worked in the 

full-service restaurant industry for nearly 33 years. I have worked 

in several cities across the country, including Indianapolis and Chicago, but I am coming to you today from Seattle, Washington, 

where I have been a tipped worker there for the past 17 years. 

Today the minimum wage in Seattle is $15 an hour, and it is 

supposed to be a paradise for employees like myself. Instead, I am 

watching my income drop as the mandated wage rises. As I have 

learned that Chairman Scott has proposed to raise the Federal 

minimum wage to $15, I am here to tell you to, to warn you, and 

to share with you my experience as a full-service restaurant worker 

living in a city with a $15 an hour minimum wage. 

To understand my predicament, you first must need to understand my industry a bit. Control over my earnings is one of the biggest perks of working in the restaurant industry. The harder I 

work to show hospitality to my guests, the better my tip, and that 

is an average of 20 percent that I can garner on about every bill. 

The standard tipping model also has a cost of living increase 

built into it, too. As the cost of goods go up, menu prices go up, and 

so do my tips. 

Contrary to the rhetoric of my industry’s critics, I am not forced 

to rely on tips. I have been able to thrive on tips. Historically, in 

short four-to 6-hour shifts, I can earn $25 to $50 an hour, and that 

is enough to make a life for myself and my son. 

In Seattle, the rapidly rising minimum wage has upset this beneficial arrangement. Without getting into the nitty-gritty details, 

you should know that Seattle is one of a handful of locales in the 

country that doesn’t count my tips toward my hourly wage. What 

this means in practice is that the pressure other businesses are 

feeling under the 15 is magnified in full service restaurants. 

Things have started to change in Seattle in our industry in ways 

that have negatively affected workers like myself. At my restaurant, it was the loss of tipping. As 15 went into effect, some restaurants made the decision to change the tipping model either in 

favor of a flat stagnant wage or replaced with service charges to 

substitute for tipping. 

The math on that is pretty simple. If you are forced to give a 

raise to tipped employees who are already making hundreds of dollars a night in tips, where does the money to pay for it come from 

without a huge jump in prices. Well, my employer, who is a leader 

in our restaurant community, took away tip lines and went to a 

service charge model in order to keep his restaurants sustainable 

for as long as possible. 

Service charges are a mandatory charge to a guest that must be 

filtered through the employer and in which the employee receives 

a percentage instead of a customer tip. In my case, I receive only 


EDL-011-D with DISTILLER
149 

14 percent of my sales from a 20 percent service charge on a bill. 

So from a $100 sale, I receive $14 on my paycheck as a salary commission instead of the $20 or more in cash tips that I could have 

received before. The other $6 is then retained by the house to be 

paid out to support other team employment costs and benefits like 

insurance and vacation. 

The few dollars an hour increase in my minimum wage doesn’t 

cover the loss of income because of not receiving tips. Under a service charge model, it is less about how I use my knowledge and 

skills to maximize my income. I am no longer bothered to give excellent service to receive that tip but must instead sell you the 

most expensive item on the menu to make the sale. The minimum 

wage increase has literally changed my job from the art of service 

to a routine sales job. 

I used to work four shifts a week and made enough money to 

raise my son, pay my rent, go to school, and be part of a vibrant 

arts community. With the cost of living skyrocketing and the impact of the minimum wage increase on my income, I had to get a 

second job and work 6 days a week. 

I couldn’t sustain that pace. Now I worry every month about paying my rent, and this is a worry that I never had until the minimum wage increase impacted my job. I have had to give up my 

passion for acting, I no longer can take trips with my kid in the 

summers, and my smaller income all goes to bills. All my time goes 

to picking up just one more shift. 

I have many friends who have lost their jobs because of the rise 

in the wage. And these are not people of privilege. These are working folks, people who have invested in their jobs, moved up ladders 

through experience and education, worked hard to grow their jobs, 

only to lose their jobs because of a policy forced on their employers. 

My friend, JW, is one of those. He worked his way up from a 

busser to a sommelier over years of experience but lost his job because the restaurant he worked closed in Seattle because of the 

minimum wage increase. 

My friend, Ritu was excited when she opened her pizza place. As 

an Indian female business owner, she was proud that all of her 

hard work and experience had led her to a place where she could 

be an owner. After the increase, she closed because she could not 

make the numbers work. 

And these are just two of several dozen stories. 

Now, I understand the typical arguments for legislating higher 

wage rates, and I especially understand that in Seattle, where the 

cost of living is incredibly high, but there is no free lunch here. 

Under our minimum wage increase, tipped workers are losing our 

incomes and moving backward to $15 an hour. And I would happily 

trade my gig in Seattle for the golden days in Indianapolis, a socalled low-wage market, where I wouldn’t be working more for less 

and watching my financial stability whittle away as the minimum 

wage rises. 

Unfortunately, if Chairman Scott’s one-size-fits-all bill is passed, 

I won’t even have that option to consider. 

Thank you, and I would be happy to answer questions. 

[The statement of Ms. Barron follows:] 


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EDL-011-D with DISTILLERInsert offset folio 30 here 35268.030

Testimony of Simone Barron 

House Committee on Education and Labor 

"Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy" 

Thursday, February 7th 2019 

Good afternoon and thank you Chairman Scott and 

Ranking Member Foxx for the opportunity to testify today. 

My name is Simone Barron. I am a mom of a smarty-pants teen boy, I am a 

semi-professional actor and I have worked in the full service restaurant industry for 

nearly 33 years. I have worked in several cities across the country, including 

Indianapolis and Chicago, but I am coming to you today from Seattle, Washington. 

I have been a tipped worker there for the past 17 years. Today, the minimum wage in 

the city is $15 an hour, and it's supposed to be paradise for employees. Instead, I am 

watching my income drop as the mandated wage rises. As I have learned that 

Chairman Scott has proposed to raise the federal minimum wage to $15, I'm here to 

tell you-and warn you- about my first-hand experience as a full service restaurant 

worker living in a city with a $15 minimum wage. 

To understand my predicament, you first need to understand my industry. Control over 

my earnings is one of the biggest perks of working in the restaurant industry. The 

harder I work to show hospitality to my guests, the better my tip. That's an average of 

20 percent I make on each bill. The standard tipping model has a cost of living increase 

built into its structure, too- as the cost of goods goes up, so do menu prices and then 

so do tips. 

Contrary to the rhetoric of my industry's critics, I'm not "forced" to rely on tips- I've 

been able to thrive on tips. Historically, in short four to six hour shifts, I can earn $25 

to $50 an hour- enough to make a life for myself and my son. 

In Seattle, the rapidly rising minimum wage has upset this beneficial arrangement. 

Without getting into the nitty gritty details, you should know that Seattle is one of a 

handful of locales in the country that doesn't count my tips towards my hourly wage. 

What this means in practice is that the pressure other businesses are feeling from $15 

is magnified for full-service restaurants. 
151 


EDL-011-D with DISTILLERInsert offset folio 31 here 35268.031

Things have started to change in Seattle in our industry, in ways that have negatively 

affected workers like myself. At my restaurant, it was the loss of tipping. As $15 went 

into effect, some restaurants made the decision to change the tipping model, either in 

favor of flat stagnant wages or replaced with service charges to substitute for tipping. 

The math on that is pretty simple: If you're forced to give a raise to tipped employees 

who are already making hundreds of dollars a night in tips, where does the money to 

pay for it come from without a huge jump in prices? 

My employer, who is a leader in our restaurant community, took away tip lines and 

went to a service charge model in order to keep his restaurants sustainable for as long 

as possible. Service charges are a mandatory charge to a guest that must be filtered 

through the employer and in which the employee receives a percentage instead of a 

customer tip. In my case, I receive only 14% of my sales, from a 20% service charge 

on a bill. From a $100 sale I receive $14 on my paycheck as a salary 

commission-instead of the $20 in cash tips I would have received before. The other 

$6 is retained by the house to be paid out to support other team employment costs and 

benefits like insurance and vacation. 

The few dollars an hour increase in my minimum wage doesn't cover the loss of income 

because of not receiving tips. Under a service charge model, it's less about how I use 

my knowledge and skills to maximize my income; I am no longer bothered to give 

excellent service to receive the tip, but must instead sell you the most expensive item 

on the menu to make the sale. The minimum wage increase has literally changed the 

job from the art of service to a routine sales job. 

I used to work 4 shifts a week and made enough money to raise a son, pay my rent, go 

to school and be a part of a vibrant arts community. With the cost of living skyrocketing 

and the impact of the minimum wage increase on my income, I had to get a second job 

and work 6 days a week. I couldn't sustain that pace. Now, I worry every month about 

paying my rent. This is a worry I have never had until the minimum wage increase 

impacted my job. I have had to give up my passion of acting, I no longer can take trips 

with my kid in the summers. My smaller income all goes to bills, all my time goes to 

picking up just one more shift. 

I have many friends who have lost jobs because of the rise in the wage. These are not 

people of privilege, these are working folks. People who have invested in their jobs, 

moved up ladders through experience and education, worked hard to grow in their jobs 

only to lose their jobs because of a policy forced onto their employers. My friend JW is 

one of those. He worked his way up from busser to sommelier over years of experience, 

but lost his job because the restaurant he worked closed in Seattle because of the 
152 


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minimum wage increase. My friend Ritu was excited when she opened her pizza place. 

As an Indian female business owner, she was proud that all of her hard work and 

experience had led her to a place where she could be an owner. After the increase, she 

closed because she could not make the numbers work. These are just two of several 

dozen stories. 

I understand the typical arguments for legislating higher wage rates. I especially 

understand it in Seattle where the cost of living is incredibly high. But there's no free 

lunch. Under our minimum wage increase, tipped workers are losing our incomes and 

moving backward to $15 an hour. I'd happily trade my gig in Seattle for the golden days 

in Indianapolis, a so- called "low wage" market where I wouldn't be working more for 

less and watching my financial stability whittle away as the minimum wage rises. 

Unfortunately,if Chairman Scott's one-size-fits-all bill is passed, I won't even have that 

option to consider. 

Thank you, and I'd be happy to answer any 

questions. 
153 

Chairman SCOTT. Thank you. 

Ms. ECKHOUSE. 

STATEMENT OF MS. KATHY ECKHOUSE, OWNER, LA QUERCIA, 

NORWALK, IA 

Ms. ECKHOUSE. My name is Kathy Eckhouse. I am the co-owner 

with my husband of La Quercia in Norwalk, Iowa. We make 

award-winning cured meats, like prosciutto and pancetta. We 

source exclusively from family farms in the United States, primarily in Iowa and Missouri. I strongly support raising the Federal 

minimum wage to $15 by 2024 as called for in H.R. 582 because 

it will be good for businesses, workers, and our economy. 

We founded our business in 2000 and by 2004 we were able to 

build our own production facility. We started with just ourselves 

and now have 60 employees. Our products are sold across the 

United States and Canada in large grocery chains like Hy-Vee and 

Whole Foods as well as independent shops. 

We have always paid a livable wage, and that is an important 

factor in our success. We are a meat processor, a generally low-paying sector of the economy. We have been committed from the start 

to true sustainability and livability in our work chain from the 

farmers to our employees. 

Our starting hourly wage for production staff is $12 to $14 an 

hour, depending on experience. The cleanup crew, which works a 

later shift, gets a $2 an hour premium. Anyone with us for 2 years 

or more is currently making at least $16 to $17 per hour plus a 

quarterly bonus equivalent to a week’s wages. We also provide paid 

time off, paid maternity leave, and other benefits. All our employees work full-time year round. 

The Raise the Wage Act does not call for a quick jump to $15. 

It calls for gradually raising the minimum wage to $15 by 2024 

which will give businesses time to adjust and experience the benefits of higher wages. 

Reduced turnover is one benefit. High employee turnover is common in low wage industries. Turnover is costly for a business in 

terms of both money and time, requiring advertising open positions, screening applicants, training, and onboarding. 

Employees new to our operation or any operation are less productive. It takes at least 3 months for an employee to learn our particular processes and be efficient, even those who worked in meat 

processing plants before. It takes a year for true proficiency. We 

see more waste, more downtime, and more inefficiency on our production line with newer staff. That is costly. 

In addition, not spending time on a constant cycle of rehiring and 

training frees us to look beyond the day to day to innovate and 

grow our business. It encourages employees to be part of that process, too, as they develop new skills and techniques and familiarity 

with our work. 

A minimum wage that covers the basics like rent, groceries, and 

transportation reduces turnover, reduces employee stress, and allows them to be more focused and productive at work. 

It also has a broader societal impact. When businesses pay wages 

that are not enough to live on, the costs of necessities get partly 


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154 

shifted to the community at large, the taxpayer-funded government 

assistance programs and food banks, for example. It also means 

that our business is subsidizing the profits of low pay competitors. 

This is not a fair or efficient way to run an economy. Workers 

in one business are the consumers for another. Minimum wage increases put money in the hands of people who will spend it. Increased wages mean increased consumer spending. 

My home, State of Iowa uses the Federal minimum wage floor 

of $7.25, as do 20 other States. In 2017, Iowa enacted a law that 

blocked cities or counties from setting higher minimum wages, and 

it is unlikely that Iowa will raise our state minimum wage ahead 

of the Federal. We need a Federal increase to ensure that wherever 

people live and work in Iowa or around the country and whoever 

they work for, they can at least meet their basic needs. 

For 80 years, the Federal minimum wage has set the national 

wage floor. I do not support a regional approach to the Federal 

minimum wage. Nobody should receive a geographical penalty on 

their wages. 

Raising the minimum wage is not a threat to business. Inadequate wages are, weakening the consumer demand that businesses depend on to survive and grow. The minimum wage is the 

floor in working people’s lives and should enable a minimum standard of living that workers and businesses can build on, as we have. 

This is why I have joined with businesses across the country to 

call for raising the Federal minimum wage. It is time to get moving 

to $15 by 2024 to help businesses, workers, communities, and the 

economy to thrive. 

Thank you for having me today, and I am happy to answer questions. 

[The statement of Ms. Eckhouse follows:] 


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American Made. American Inspired Cured Meats< 

La Quercia LLC - 400 Hakes Dr. Norwalk. lA 50211 - (515) 981-1625 

Written Testimony from Kathy Eckhousc 

Owner of La Quercia in Norwalk, Iowa 

Before the U.S. House Committee on Education and Labor 

The Honorable Robert C. "Bobby" Scott, Chairman 

Hearing on H.R.582, "Gradually Raising the Minimum Wage to $15: Good for Workers, 

Good for Businesses, and Good for the Economy" 

February 7, 2019 

My name is Kathy Eckhouse. I am the co-founder and co-owner of La Qucrcia in Norwalk, 

Iowa. We make award-winning cured meats like prosciutto and pancetta. We source exclusively 

from family farms, primarily in Iowa and Missouri and all in the United States. I strongly support 

raising the federal minimum wage to$ I 5 by 2024, as called for in H.R.582, the Raise the Wage 

Act of 20 I 9, because it will be good for businesses, good for workers, and good for our 

economy. 

My husband and I founded our business in 2000 and by 2004 were able to build our own 

production facility. We started with just ourselves and now have 60 employees. The deli sector is 

one of the fastest growing components of retail food, and antibiotic-free meat. which we have 

always used, is the fastest growing sector of deli. Our products are sold across the U.S. and 

Canada, in large grocery chains like Hy-Vec and Whole Foods, as well as in local grocery chains 

and independent shops. 

We've always paid a livable wage and that's an important factor in our success. We are a meat 

processor, a generally low-paying sector of the economy. But we have been committed from the 

start to true sustainability and livability for all elements in our work chain, from the farmers to 

our employees. 

Our starting hourly wage for production staff is$ I 2 to $14 per hour, depending on their 

experience. The clean-up crew, which works a later shift, gets a $2/hour premium. After 90 days, 

employees have a review and an opportunity for a raise. Anyone with us for two years or more is 

currently making between $16 and $17 per hour or more, plus a quarterly bonus equivalent to a 

week's wages. We also provide paid time off~ paid maternity leave, and other benefits. All of our 

employees work full-time and year-round. 

The Raise the Wage Act does not call for a quick jump to $15. It calls for gradually raising the 

minimum wage to $15 by 2024, and that will give businesses time to adjust and experience the 

benefits of higher wages. 

Let's look first at turnover. Paying higher wages helps reduce turnover by providing a more 

livable wage and increasing employee loyalty. High employee turnover is common in many lowwage industries. People switch jobs frequently, trying to make ends meet. Turnover is costly for 

a business in terms of both money and time, requiring advertising open positions, screening 

applicants, training, and onboarding. Employees new to our operation or any operation-
156 


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American Made. American Inspired Cured Meats. 

La Ouercia LLC - 400 Hakes Dr. Norwalk. lA 50211 - (515) 981-1625 

aren't as productive as long-term staff. They require skills and training specific to us. It takes at 

least three months for an employee to understand our particular processes and be efficient, even 

those who have worked in meat processing plants before. That's just the beginning. It takes a 

year for true proficiency; all jobs in all occupations require familiarity and skill. We see more 

waste, more down time, and more inefficiency on our production line with newer start: That's 

costly to us. And because turnover is costly for all employers, reduced turnover is an important 

benefit of raising the minimum wage. 

In addition, not spending time on a constant cycle of rehiring and training frees us to look 

beyond the day-to-day to innovate and grow our business. It encourages employees to be a part 

of that process, too, as they develop new skills and techniques in our field, and familiarity with 

what customers want. 

A wage that covers the basics like rent, groceries and transportation reduces employee stress and 

allows them to be more focused and productive at work. We want our employees to earn wages 

that enable them to live and thrive. This is not only good for our business, it's good for our local 

community and society more broadly. 

When businesses pay wages that are not enough to Jive on, the costs of necessities like food and 

housing get partly shifted to the community at large, to taxpayer-funded government assistance 

programs and food banks, for example. It also means that our business is subsidizing the profits 

of low-pay competitors. This is not a fair or efficient way to run an economy. 

At a minimum, someone working full-time and earning the minimum wage should be able to pay 

for basics like safe housing, sufficient food, and reliable transportation. The minimum wage is 

the floor in working people's lives, and it should be a decent minimum standard of living that a 

business can build on, as we have. For example, many of our employees have been able to obtain 

better lodging or new vehicles because they earn better wages with us. Their improved wages 

enable them to afford enrichment activities for their children after school and during the summer 

and enable them to afford vacations out of town. 

Workers in one business arc the consumers for another. Minimum wage increases put money in 

the hands of people who most need to spend it- for car repairs and new shoes for a child, or by 

not having to choose between groceries and a medical bill. Increased minimum wages mean 

increased consumer spending across all businesses, helping other businesses grow. 

My home state of Iowa uses the federal minimum wage floor of $7.25, as do 20 other states. The 

federal minimum wage has been stuck at $7.25 since 2009. In 2017, Iowa enacted a law that 

blocked cities or counties from setting higher minimum wages, and it is unlikely Iowa will raise 

our state minimum wage ahead of the federal. We need a federal increase to ensure that wherever 

people live and work in Iowa or around the country, they can meet their basic needs. 
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American Made. American Inspired Cured Meats. 

La Querela LLC - 400 Hakes Dr. Norwalk. lA 50211 - (515) 981-1625 

For eighty years, the federal minimum wage has set the national wage floor and it's important it 

remain a national floor when it increases. We do not support a regional approach to the federal 

minimum wage. Nobody should receive a geographical penalty on their wages; we do not want 

to lock in the current poverty of regions where wages are depressed and communities arc 

struggling. 

It's not raising the minimum wage that is a threat to business. It's stagnant wages, such as we've 

seen in recent decades, which weaken the consumer demand that businesses depend on to 

survive and grow. We need to address the erosion of the federal minimum wage and reestablish a 

strong national wage Ooor supporting our national and local economies. 

When the minimum wage is too low, it is a drag on our businesses, our customers, our 

communities, and our economy. This is why I've joined with businesses across the country in 

Business for a Fair Minimum Wage to call for raising the federal minimum wage. Raising the 

minimum wage supports a healthy food system that sustains everyone from producers and sellers 

to customers and the communities we live in. 

It's time to get moving to a national minimum wage of$15/hour by the year 2024 to help 

businesses, workers, communities, and the economy to thrive. 

Thank you. 

Kathy Eckhousc 

Owner 

La Quercia 

400 Hakes Drive, Norwalk Iowa 502 I I 

kathy@laquercia.us 

515.981.1625 
158 

Chairman SCOTT. Thank you. Dr. Strain. 

STATEMENT OF DR. MICHAEL R. STRAIN, PH.D, DIRECTOR OF 

ECONOMIC POLICY STUDIES, AND RESIDENT JOHN G. 

SEARLE SCHOLAR, AMERICAN ENTERPRISE INSTITUTE, 

WASHINGTON, D.C. 

Mr. STRAIN. Chairman Scott, Ranking Member Foxx, and members of the Committee, thank you for the opportunity to be here 

today to discuss raising the Federal minimum wage to $15 per 

hour. It is an honor. Congress should not increase the minimum 

wage to $15 per hour. The benefits of doubling the minimum wage 

would accrue to middle class households while the cost would be 

borne by workers with relatively fewer skills and less experience. 

It is already difficult enough for workers without a college education, workers trying to get their start in the labor market, and 

more vulnerable workers, including the formerly incarcerated, to 

find jobs. Congress should not erect a barrier in their paths in 

order to legislate a raise for the middle class. 

Increasing the minimum wage to $15 per hour would very likely 

result in significant reductions in employment. For context, consider the Congressional Budget Office’s analysis of President 

Obama’s proposed $10.10 minimum wage. CBO found that would 

cost half a million jobs. Importantly, CBO also found that the extra 

earnings generated by a $10.10 minimum wage would accrue to 

households above the poverty line. Three dollars out of every $10 

of extra earnings would go to households earning more than triple 

the property line, while only $2 in every $10 would go to the working poor. Fully $8 in $10 of extra earnings generated by the $10.10 

minimum wage would go to families in the working and middle 

classes and not to the working poor. 

CBO’s analysis then highlights several important tradeoffs for 

minimum wage increases. First, they reduce employment while 

raising earnings. Second, most of the benefits of increases go to 

families that aren’t in poverty, while most of the costs are borne 

by the least-skilled and least-experienced workers in the labor market. These tradeoffs are only more severe for a $15 minimum wage, 

because $15 is such a high-wage floor. 

It is hard to overstate how high this wage floor would be. Over 

half of all workers in Mississippi and Arkansas make less than $15 

an hour. In 20 States, half of all workers earn less than $17 an 

hour. Nationally, around one-third of workers, one-third earn less 

than $15 per hour. 

Given how many workers earn at or just above $15 per hour, a 

$15 wage floor would be extremely disruptive to the labor market 

and would likely cause significant employment reductions and 

other unintended consequences. It is hard to forecast with confidence how severe employment reductions would be, because a $15 

minimum is so far outside our evidence base. But research I have 

done studying previous minimum wage increases finds that larger 

increases produce disproportionately larger employment reductions. 

In other words, if employment fell by X percent when we last increased the minimum wage, my expectation is that employment 

will fall by more than X percent as the minimum wage goes higher 

and higher. 


EDL-011-D with DISTILLER
159 

The productivity of workers, the additional revenue they are able 

to generate for their employer for each hour they work, is the primary determinant of their wages. Why would a firm pay a worker 

$15 per hour when that worker is only generating, say, $9 in revenue for every hour he or she works? If a firm paid this high minimum wage to that worker, it would be losing money every hour 

he or she worked. Businesses can absorb and have absorbed minimum wage increases through channels other than reducing employment, but they can only cut profit margins so much or raise the 

prices they charge for goods and services so much higher. 

Doubling the Federal minimum wage will leave many with no 

choice other than to cut jobs. This is particularly true if Congress 

indexes the minimum wage to median wage growth or to any other 

measure of price or wage inflation. Research I have done shows 

that preventing the value of the minimum wage from eroding over 

time through indexing leads businesses to reduce employment more 

than they otherwise would. My research finds the magnitude of 

employment reductions is three times more severe in the presence 

of indexing. 

Raising the minimum wage to $15 an hour sends us into unchartered waters. It is imprudent. It is a very risky gamble, with 

the employment opportunities and livelihoods of the least skilled, 

least experienced, and most vulnerable workers in the United 

States bearing the risk. There are better ways to help the working 

poor than a policy that risks putting so many of them out of work. 

Thank you. 

[The statement of Mr. Strain follows:] 


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~,AMERICAN ENTERPRISE 

INSTITUTE 

Statement before the House Committee on and Labor 

On Raising the Minimum Wage to 

A $15 Minimum Wage Will Harm 

Workers 

Michael R. Strain, Ph.D. 

Director of Economic Policy Studies 

john G, Searle Scholar 

7,2019 

T!:E~ 1\rnHican Er~terpdse Institute (1\F..l) Is a nonpartis~n, nonoroflt, 501(c)(3) educdtional or9anlza!ion 2nd does 

nGt t.1ke irlstitutionai positions on :;-my IS';ues. T~E; views expressE:d in this testirnony dre those d the author. 
161 


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Chairman Scott, Ranking Member Foxx, and Members of the Committee, thank you for 

the opportunity to appear before you today to discuss raising the federal minimum wage to 

fifteen dollars per hour. It is an honor. 

WAGE DETERMINATION 1 

Worker productivity is the primary factor that determines wages. The textbook economic 

logic is simple: If a worker generates, say, eight dollars of additional revenue for his firm for 

every hour he works, then his firm will not pay him more than eight dollars per hour in wages. If 

the firm did pay him more than eight dollars per hour, then the firm would lose money every 

hour the worker works. Similarly, the worker will not accept a wage lower than eight dollars per 

hour, because he knows he can take his skills and effort elsewhere for a higher wage. In this way, 

market forces push wages to correspond with productivity. 

Of course, the real world is not so simple, and there are important frictions in the smooth 

operation of the market mechanism that can create a divergence between the wages workers 

receive and the revenue they generate for their employers. For example, the time, effort, and 

financial costs associated with changing jobs can allow workers to be paid at a rate different than 

their productivity should require. Firms may pay workers above-market wage rates if it is 

difficult to monitor their output. Workers may not have all the information they need to make 

decisions about better-paid employment opportunities. Labor market regulations like 

occupational licensing can reduce mobility,2 which can in turn affect wages. I suspect that a 

general decline in labor market dynamism can also push wages and productivity further apart. 

1 For a more thorough discussion, see, Michael R. Strain, "J.ll.~J_,inh...li£1lY£~tL\\3Jg_~i.J.!!Hi Pmdf!f:_t_b:i!L10tron.g." in 

Melissa S. Kearney and Amy Ganz editors, Expanding Economic Opporlunily for More Americans, The Aspen 

Institute, 20 !9; and Jeffrey Clemens and Michael R. Strain, 'TstinmtinQ the Emplovmcnt LITccts of Recent 

fVIi!linJJJJ1LY.l'.;i&£JJb1ngcs: I::arlv Evidence. an Interpretative I'ramcv\·ork. ani) a. Pn.:-C'OJnmitm£.!JU9 h1turc 

/\••cili~~ie," NBER Working Paper Series, no. 23084, January 2017. 

:! Janna E. Johnson and Morris M. Kleiner, "ls._Q~~-~H?-':t1i2!l::!U .kensir.!&.!:l_I~_{Ifrh:.LJ~Llrr~.L'il<:fu:_M.ilmltion?'' 1VBER 

Working Paper Series, no. 24107, December 2017. 
162 


EDL-011-D with DISTILLERInsert offset folio 38 here 35268.038

And changes in worker bargaining power, including the decline of private sector unions, can as 

well. 

In my view, then, the best way to think about wage determination is as the product of 

competitive market forces, bargaining power, and institutions. Productivity is the baseline for 

wage determination, and other factors can push wages higher or lower relative to that baseline. 

Recent empirical estimates support this view. A paper by economists Anna Stansbury and 

Lawrence Summers finds that over the last four decades, a one-percentage-point increase in 

productivity growth is associated with a 0. 73 percentage point increase in the growth rate of 

median compensation.3 And aggregate productivity tracks compensation very closely over time, 

as the following chart by economist Robert Lawrence demonstrates.4 

UlO 

100 

140 

100 

60· 

197() 191$ tOOO 1005 1900 iOOS 2000 2005 2010 2014 

1 Anna M. Stansbury and Lawrence H. Summers, "Productivilv and Pav: Is the link broken"" NBER Jf'orking Paper 

Series, no. 24165, December 2017. 4 Robert Z. Lawrence, "Does Still Determine Worker Compensation?" in Michael R. Strain editor, Ifl~ 

~"-±"""""-'-"""='--"'i!."'cW!J:!Lf!!ill~"'"-"~SW:!LLLf!!!!E..!2~ AEl Press, 2016. See also Strain (20 19). 

2 
163 


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A $15 MINIMUM WAGE WILL REDUCE EMPLOYMENT 

Increasing the federal minimum wage from its current level of$7.25 per hour to $15 per 

hour over a six-year period will likely have a significant and negative effect on employment. The 

reduction in employment opportunities will be felt most strongly among workers with relatively 

fewer skills and workers with relatively less labor market experience (e.g., young workers). 5 

The effect that minimum wage increases have on employment is an area of active 

research among labor economists. with different studies reaching differing conclusions.6 And 

views on this issue differ among economists. In my research, I have found evidence that 

employment decreases when minimum wage rates are increased. 7 And my reading of the 

economics literature leads me to conclude that the weight of the evidence suggests that minimum 

wage increases lead to non-negligible employment reductions. 

In a 2014 analysis, the Congressional Budget Office examined the labor market effects of 

increasing the federal minimum wage to $9 per hour and to $10.10 per hour. CBO found that 

increasing the minimum wage to $9 per hour would reduce employment by 100,000 workers, 

while also increasing the earnings of 7.6 million workers. CBO also found that a $10.10 

minimum wage would reduce employment by 500,000 workers while increasing earnings for 

16.5 million workers. 8 More generally, CBO's analysis highlights the tradeoff present in 

5 Jonathan Meer and Jeremy West, "Effects of the Minimum Wage on Employment Dynamics," Journal q(Human 

Resources, vol. 51, no. 2, spring 2016. 6 For example, Arindrajit Dube, T. William Lester. and Michael Reich. "Minimum Wage Effects Across State 

Borders: Estimates Using Contiguous Counties," Review of F-t:onomics and Statistics, vol. 92, no. 4, 201 0; and 

David Neumark, J. M. I an Salas, and William Wascher, "Revisiting the Minimum Wage-Employment Debate: 

Throwing Out the Baby with the Bathwater?'' Industrial and Labor Relations Review, vol. 67,2014. 7 For example, Clemens and Michael R. Strain, ''J].l~Sh~~.!J.:J{.E!lLm_pl~2J-J.!l.£.m .. £.!I~t;lS_QJJ~~~-~D.L~1!.D.i.m\.J.m 

-'""-'"'-'--''"'"""'''-'-'-''""'''"" ""'-"'-'""--'''"-''"""'~'--"-'""-''"'-'"'-'--""''--'-'-' "Contemporary Economic Policy, vol. 36, no. 4, minimum wage increases enacted between January 2013 and January 2015, and find that increases 

exceeding $1 per hour reduced employment among low-skilled population groups by just over one percentage point. 

We also found that smaller increases had smaller effects on employment. 8 Congressiona 1 Budget Office. "I!J~Ji!]l:Q~J){il. }~ti~lill! ~!.!n.:~.lY;lgS:J!lY.I.~11Sg. on E!1JJ!lV)JDS: !!t ~!lliLf.illi!il:Y.lD.f.Q.!Jl£," 

February 2014. 
164 


EDL-011-D with DISTILLERInsert offset folio 40 here 35268.040

minimum wage increases: Employment is reduced, but the earnings of employed workers 

increase. 

Of course, minimum wage increases can be absorbed by firms through channels other 

than, or in addition to, reducing their employee headcount or the number of hours their 

employees work. For example, minimum wage increases are associated with reduced turnover,9 

which can help defray the cost of higher wages by reducing recruiting and training costs. 

Modestly higher wage payments can induce greater effort among workers, increasing 

productivity. Minimum wage increases can reduce profit margins. Importantly, tirms can raise 

the prices they charge for the goods and services they produce as a way to pass their higher wage 

bills onto their customers (who are often low-wage workers themselves). 10 

But recent research suggests that the larger the minimum wage increase, the more 

pronounced its effect on employment. 11 I expect that raising the federal minimum wage to $15 

per hour would significantly reduce employment among lower-skilled workers and lessexperienced workers. 

A $15 MINIMUM WAGE IS FAR OUTSIDE OUR EVIDENCE BASE 

A $15 minimum wage is outside both the national and international evidence base. 

Perhaps the most relevant study available is of the effects of Seattle's decision to raise gradually 

its minimum wage from $9.47 per hour to $15. A team of researchers found that once the 

"Arindrajit Dube, T. William Lester, and Michael Reich, "Minimum Wage Shocks, Employment Flows, and Labor 

Market Frictions," Journal of Labor Economics, val. 34, no. 3, 2016 and R. Kaj Gittings and ian M. Schmutte, 

" Industrial and Labor Relations 

Review, 69, no. 5, 2016. 10 Daniel Aaronson, Eric French, and James MacDonald, "The Minimum Wage, Restaurant Prices, and Labor 

Market Structure," Journal ofHuman Resources, val. 43, no. 3, 2008. 11 For example, Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van lnwegen, Jacob Vigdor, and Hilary 

\Vething, "\tlininmw __ \Val!c Iqcrca~cs. \Vagcs. and Low~\Va!!c I-:mploymcnt: !·.vidence from Seattle," NBf:R 

Working Paper Series, no. 23532, May 2018; Jeffrey Clemens and Michael R. Strain, "Minimum Wage Analysis 

Using a Pre-Committed Research Design: Evidence through 2016," 1/.A Discussion Paper Series, no. 11427, March 

2018: and Clemens and Strain (20 18). 

4 
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minimum wage was as high as $13 per hour for some workers, hours of work fell by 6.9 percent 

and employment fell by 5.9 percent. 12 But a 2016 headline from Vox captures the sentiment 

well: "California just passed a $15 minimum wage. Even left-leaning economists say it's a 

gamble." 

A $15 per hour federal minimum wage is a large and risky gamble, and is outside our 

evidence base, because it is such a high minimum wage relative to the existing distribution of 

wage rates. Data from the Bureau of Labor Statistics for May 2017 show that over half of all 

workers in Mississippi and Arkansas make less than $ J 5 per hour. Eight states, including those 

two, have a median wage less than $16 per hour. In total, twenty states have a median wage less 

than $17. In thirty-four states, over one-third of total employment is in occupations with a 

median wage of $15 per hour or less. 

These simple statistics show that a $15 per hour federal minimum wage is not a modest 

policy change. It is a very large policy change. It will impact a very large share of the labor 

market. Such a large increase in the minimum wage would send labor market policy into 

uncharted waters, and would risk harming the very groups of workers and individuals the policy 

is designed to help. 

EMPLOYMENT IS NOT THE ONLY RELEVANT OUTCOME 

A minimum wage increase of this magnitude is also imprudent because of the likelihood 

that such a large increase will create unintended consequences. For example, recent research 

suggests that minimum wage increases during this decade have reduced the share of workers 

who report having employer-provided health insurance. This research finds that among workers 

in very low-paying occupations, coverage declines offset nine percent of the wage gains from 

12 Jardim eta/. (2018). 
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minimum wage increases. 13 In my own research, my coauthors and I have found that minimum 

wage increases are associated with decreases in self-reported health outcomes among men, 

particularly among unemployed men. 14 These are just two channels among many along which 

unintended consequences of a policy change this dramatic could be transmitted. 

LONGER-TERM EFFECTS 

Minimum wages are typically increased to a certain dollar amount. where they remain in 

nominal terms until the next increase. They are typically not indexed to a measure of inflation 

that is, they typically do not automatically increase as consumer prices increase. Therefore, as 

consumer prices increase, the purchasing power of the minimum wage decreases over time, 

falling each year until the next nominal increase. Likewise, the cost of the minimum wage to 

businesses decreases between nominal increases. 

The Raise the Wage Act of2019 calls for the federal minimum wage to be indexed to 

median wage growth to ensure that its purchasing power does not fall over time. This is another 

reason to be concerned about the effects of the act on employment. 

Since inflation will erode the real value of a nominal minimum wage increase over time, 

businesses may view moderate minimum wage increases as a temporary increase in the cost of 

production. It is costly for businesses to change the way they produce goods and services- for 

example, by investing in automated checkout machines and hiring fewer cashiers and 

businesses may be reluctant to make these types of changes in the face of a temporary increase in 

the cost of employing workers. But indexing the minimum wage to a measure of prices makes 

13 Jeffrey Clemens, Lisa B. Kahn, and Jonathan Meer, "The l\/linimum Wauc. FrinllC Bcncf!b, and Worker Welfare," 

NB£1111/m·king Paper Series, no. 24635, May 2018. 14 Brady P. Horn, Johanna Catherine Maclean. and Michael R. Strain, "[!o \iil.)imuJ.q \Va~.::e ln~.re.ases fnflqence Worker Healihl" Economic Inquiry, val. 55, no. 4, 2017. -----~-- --- --------- -- ----------

6 
167 


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the increase more permanent, and businesses may be more willing to make significant changes to 

their operations in the face of such an increase. 

Over the last fifteen years or so, it has become increasingly common for states to index 

their minimum wages to inflation. 15 In a recent paper, my coauthor and I study whether 

employment responds differently to minimum wage increases in states that index their increases 

to inflation. We find that the immediate disemployment effect of an increase in the minimum 

wage in a state that indexes its minimum wage to inflation is around three times as large as the 

disemployment effect associated with nominal increases. 16 

EXPANDING OPPORTUNITY AND FIGHTING POVERTY 

Young workers need to get their start in the labor market, using their first jobs to learn 

and gain invaluable experience. Lesser-skilled workers should have the opportunity to contribute 

to society through paid employment. Government should not erect barriers in their paths; it 

should expand their opportunities. 

At the same time, no one who works full time and heads a household should live in 

poverty- regardless of the wage they can command in the labor market. These goals are not 

irreconcilable. Congress should focus on expanding earnings subsidies to help increase 

employment and pull workers and their families out of poverty. 

15 For more information on state minimum wage regulation. see Jeffrey Clemens, Michael R. Strain, and Duncan 

Hobbs, "l~.AnJabase_QJUIJe QiJiliW.~ alHl e!!rt_~tm.~J..H_gLr~.~~!.L~l~HfJlliu.U.rr.~.u.u.._~Y..;.ig~jllQI~~~i,'' AEJ Economics 

Working Paper Series, no. 2018-08, August 2018. 16 Peter Brummund and Michael R. Strain, '"Does Emplovmcnt Rc:-.pond Differently to Minimum \\'a!!e Increases in 

the Presence of Inflation lndcxj_u,RC Journal of /Iuman Resources·, forthcoming. On long*run effects, see also: Isaac 

Sorkin, "Are there long-run effects of the minimum wage?" Review of Economic Dynamics, vol. 18, no. 2, April 

2015 and Daniel Aaronson, Eric French, Isaac Sorkin, and Ted To, "Industry Dynamics and the Minimum Wage: A 

Putty-Clay Approach," International Economic Review, vol. 59, no. I, 2018. 

7 
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Congress should not double the federal minimum wage. The benefits of a $15 per hour 

minimum wage would accrue to middle-class households. The costs would be borne by workers 

with relatively fewer skills and less experience. Setting the wage lloor substantially higher than 

the productivity of many workers will likely result in significant employment reductions. A $15 

per hour federal minimum wage is a risky gamble because it is so far outside our evidence base. 

There would likely be significant unintended consequences to such a high minimum wage. 

Indexing the minimum wage will likely exacerbate employment reductions and unintended 

consequences. 

Workers deserve better than a minimum wage that will likely put so many of them out of 

work. 

8 
169 

Chairman SCOTT. Thank you. Dr. Reich. 

STATEMENT OF DR. MICHAEL REICH, PH.D., PROFESSOR, 

UNIVERSITY OF CALIFORNIA, BERKLEY, CA 

Mr. REICH. Thank you, Chair Scott, Ranking Member Foxx, and 

the other members of the committee, for the opportunity to testify 

today about the Raise the Wage Act of 2019. 

I want to begin—and this is not planned—by talking about Amazon. Amazon announced last October it was going to raise its minimum wage for all its workers—temporary, seasonal regular, 

250,000 workers in the United States—to $15 an hour. It was a 

substantial increase, even in rural areas and in low-wage areas of 

the South. These are for the big warehouse centers that they maintain. 

This was a good business decision by Amazon. It has not disrupted those local labor markets, those rural labor markets. In fact, 

Amazon, the only disruption I guess is that Amazon got 850,000 requests for a job at Amazon, quite a large number, reducing their 

recruitment and retention costs. 

I wanted to make five points or touch on five points. Well, rather 

than say what they are I will just go through them, because I don’t 

have enough time to do the prelims. First of all, the increase from 

$7.25 to $15 is over 6 years, is surprisingly smaller than it might 

appear. First, $15 in 2024 is about $13 or $13.33 in 2019 dollars, 

depending on which price series and forecast you use. 

Second, entry-level wages in unskilled jobs in our low-wage 

states, not just in high-wage states, in our low-wage states are already near or above $9. We heard some testimony, some comments 

earlier today to that effect in North Carolina. And those wages are 

going to go up anyway, 3 percent per year has been the forecast 

that was mentioned. That would bring you to $10.50 anyway by 

2024. 

So an increase from $10.50 to $13 is about a 30, 35 percent increase, 5 percent per year. That is well within the range of previous experience. If you want to calculate it another way, you could 

say that the increase from $9, the entry-level pay today, to $13.33 

is a 48 percent increase. That sounds high, but it is over 6 years, 

so it is about 8 percent per year. By comparison, most of the 140 

or more State and Federal minimum wage increases of the past 35 

years have averaged between 6 and 9 percent. Some of the citywide 

minimum wage increases have been as high as 28 percent in a 

given year. 

Now, 5 years ago, many minimum wage experts, including myself, told officials in Seattle and Los Angeles that a $15 minimum 

wage would be a bold experiment into unchartered territory. In 

2019, however, we have the early results from many recent minimum wage experiments. These include States like California and 

Massachusetts that are $12 an hour, New York City that is at $15, 

San Francisco is at $15, Seattle is at $15 and so forth. So the increase in real wages from H.R. 582 actually does lie within our historical experience. That means that the studies that researchers 

have done does provide a good roadmap to what the likely effects 

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Now, I want to emphasize that the studies that minimum wage 

economists have done have really changed in their findings over 

the last 30 years, especially in the last 10 years and even in the 

last year. Increasingly, we find very small effects of minimum 

wages on employment. It is really important to be up to date when 

doing a review of this literature. And these new studies are of better quality, they have better data than the old ones, and they have 

been influential. 

In 2015, a panel of prominent economists put together by the 

University of Chicago Booth School of Business asked the panel 

what would be the likely effects of a $15 minimum wage? This was 

in 2015. An overwhelming majority did not think it would have a 

substantial negative effect on employment. Since then, we have 

had further improvements in our research methods and the 

datasets that we can use to study the effects of minimum wages. 

These newer studies really supersede the estimates from the old 

ones. It is just not Ok anymore to rely on these very old studies. 

We now, for example, have excellent estimates of the effects on all 

jobs. Our older studies used to look at teens and restaurant workers, and we would then try to guess how many workers would be 

affected throughout the labor force. CBO just took a guess at that 

in 2014. 

What do these studies tell us? Well, I review the literature in detail in my submitted testimony. In one sentence, I would say the 

new studies indicate that a $15 minimum wage by 2024 will work 

as it was intended to, that is intended to, increase pay, will have 

minimal to no adverse effects on employment. 

I have to say, of course, that I have been a participant, an active 

participant in doing these studies. My most recent one looked at 

minimum wages in six cities that are the pioneers in going above 

$10 all the way. By 2016, they were $13, which is the equivalent 

of—well, it is higher than what $15 would be in 2024. And those 

included some low-wage cities or low-cost cities like Chicago as well 

as San Francisco and Seattle and so on. And we found, a very careful study, that it did not have any effect on restaurants’ employment. 

Why does the minimum wage have such small effects? We are 

also making progress on that front. Labor demand might fall, that 

is true, but automation is really overrated. A lot of it has already 

happened. It is going to happen anyway, because technology costs 

are falling. Don’t blame the minimum wage for the good effects of 

automation. Labor supply has not been mentioned very much, but 

labor supply of low educated workers is going to increase, especially those who have young children and high child— 

Chairman SCOTT. Summarize the rest of your testimony. You are 

about a minute and a half over. 

Mr. REICH. I am not following what you are saying. I still have 

a minute and a half, right? 

Chairman SCOTT. No, you are over a minute and a half. 

Mr. REICH. Oh, my God. Ok. I will bring it to a close. All right. 

I will bring it to a close. 

I will just say very briefly that there are price adjustments that 

will occur that are pretty small that could be handled by most industries. Individual businesses can’t understand how much the 


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prices are going to go up, because they are just an individual business. But these costs are changing for all businesses, and when you 

do the math, simple math, you find very small price increases. The 

latitude to increase prices is more limited in manufacturing, but we 

have already lost all or most of our low-wage manufacturing. 

And then we are going to have an economic stimulus, because 

there will be more consumption demand. The effects will be greater 

in the low-wage cities—low-wage states, I am sorry. And the lowwage States will have a more educated, more healthy, and a bigger 

work force. So I would say, contrary to the fears that some people 

have said that you have to look only at cost, in fact, the effects are 

going to be much better in the low-wage States. 

Thank you. And apologize for going over. 

[The statement of Mr. Reich follows:] 


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Likely Effects of a $15 Federal Minimum 

Wageby2024 

By Michael Reich, Ph.D.* 

Testimony prepared for presentation at the hearing of the House Education and Labor Committee, 

Washington, DC, "Gradua!!y Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy," February 7, 2019. 

*Professor. University of California, Berkeley and Co-Chair, Center on Wage and Employment 

Dynamics at UC Berkeley. I am gratetUl to David Card, Arindrajit Dube, Ken Jacobs, Claire 

Montialoux, Jesse Rothstein and Ben Zipperer for helpful comments and to Pascha Hao for 

assistance. 
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Contents 

I. Introduction and preview of findings .................................................................................................. 3 

2. $15 by 2024 lies within the range of previous increases ..................................................................... 5 

3. Employment effects: what do the studies tell us? ............................................................................... 7 

4. Why did minimum wage increases have such small effects on employment? ................................. 12 

5. Will a $15 minimum wage make low-wage states uncompetitivc? .................................................. 14 

6. Should the federal minimum wage floor vary with regional living costs? ....................................... 15 

7. Should we keep subminimum wages for tipped workers and youth? ............................................... 16 

8. lmp011ant downstream ctTects on health, education and parenting ................................................... 17 

9. Summary and conclusions ................................................................................................................ 18 

I O.Referenccs ........................................................................................................................................ 19 

II. Figures and tables ............................................................................................................................ 23 

Appendix: Scientific criteria for credible minimum wage-employment studies .................................. 28 

Ukely Effecll; of a $15 Federal Minimum Wage by 2024 
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1. INTRODUCTION AND PREVIEW OF FINDINGS 

Thank you, Committee Chair Scott, Ranking Member Foxx and other Members of the Committee, for 

the opportunity to testify today about IIR582, The Raise the Wage Act of2019. I have conducted 

research on low-wage labor markets since I was a Harvard Ph.D. in the late 1960s. During the past 

decade I have published numerous studies of living and minimum wages. 

I IR 582 proposes to increase the federal minimum wage in six steps, from its current $7.25 level to 

$15 by 2024. It would gradually eliminate, by 2027, the subminimum wage for tipped workers, which 

has stood at $2.13 since 1991, and it would eliminate as well as the subminimum wages for youth and 

for workers with disabilities. The Act also calls for the federal minimum wage to be indexed annually 

after 2024 by the percentage increase of each year's BLS-calculated median hourly wage. 

My testimony today primarily concerns the likely effects ofHR582 on the number of jobs, especially 

in low-wage states. I also briefly touch on whether the federal floor should vary with regional living 

costs and subminimum wages for tipped workers and youth. Finally, I review the important 

downstream positive effects of minimum wages on children and on adult physical and mental health, 

and how these benefits would in turn increase employment and economic growth. 

My testimony does not consider the likely effects of minimum wages that would be well above the 

$15 level set out in HR 582. These may differ, of course. 

Other witnesses have discussed the percent of workers who will get increases and the effects of these 

increases on higher living standards for workers and their families. I will note only that these increases 

will be larger among women and various racial-ethnic groups. I also note that a $15 per hour 

minimum wage would reduce poverty rates significantly (Dube 2018), especially in low-wage, highpoverty states. Nonetheless, our poverty measures do not adequately account for the growing costs of 

childcare. A $15 wage does not suffice to permit households with young children to afford organized 

child care for children under six-in any county in the U.S. 

Much minimum wage discussion, including my own today, focuses on the effects on the number of 

jobs. I will argue that a $15 minimum wage will have at worst a minimal negative effect on the 

number of jobs. llowevcr, it is important to clarify at the outset that more pessimistic scenarios. such 

as a loss of say, X jobs or Y hours of work per job, do not imply that X or Y workers will never again 

hold jobs. Failure to make this distinction has led to considerable confusion. 

Low-wage labor markets arc characterized by high rates of worker turnover, with relatively short 

unemployment spells between jobs. A hypothetical reduction in the number of jobs will most likely 

slightly increase the duration of unemployment spells between jobs. As a result, some workers will 

end up working fewer hours per year. But even pessimistic minimum wage studies all suggest that the 

positive effects on hourly pay greatly exceed any earnings losses that would occur hecause of a 

reduced number of jobs or reduced number of hours per job. Putting these points together, pessimistic 

scenarios may imply fewer hours of week per year for some workers, but higher annual earnings 

among these workers. 

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Preview of my remarks In contrast to much commentary, I will argue today that a phased minimum 

wage to $15 by 2024 docs lie within the range of our previous experience. Economists have conducted 

literally hundreds of studies based on over 160 minimum wage changes in the past thirty-five years. 

The best of these studies do provide a credible guide to the likely employment effects of a $15 floor. 

They indicate that the Act will have minimal to no adverse effects on employment and that they will 

have substantial positive dynamic effects on the lowest-wage areas of the U.S. 1 

Why would minimum wage increases up to $15 have minimal negative effects? The answer requires 

examining empirically which industries will experience the greatest cost increases, how much they 

will raise their prices to absorb the increase, and the responses of consumers to those price increases. 

The answer also involves the extent to which workers receiving pay increases will want to increase 

their working hours and increase their spending on consumer goods. Automation is much less of a 

factor, because so much automation is happening anyway, as the costs of technology have fallen so 

much in recent decades. 

Minimum wage effects arc concentrated in a small number of industries, most notably restaurants and 

retail, but also fanning, janitorial services, security guards, home health care and residential and 

nursing care homes for the elderly and childcare. Minimum wage costs are mainly absorbed through 

slightly higher prices in these industries, by increased spending by low-income households and-- for 

eldercare and child care-- by increased public funding, most of it federal. 

A $15 minimum wages will increase costs for the lowest-paying manufacturing industries, such as 

apparel and wood furniture. Since the latitude to increase prices is more limited in these industries, 

some jobs may move elsewhere. The amount of relocation will be limited by the transportation costs 

of moving durable finished goods from more distant locations. My analysis of recent manufacturing 

job trends indicates that these effects will be modest, even in such a low-wage state as Mississippi, in 

large part because the number of remaining low-wage manufacturing jobs in these states is quite 

small. 

On the plus side, a $15 minimum wage will generate a substantial economic stimulus because of the 

increased purchasing power for consumption. These effects, which will be greatest in the lowest-wage 

states, will offset employment loss among low-wage manufacturing industries. The lowest-wage states 

will also experience lower outmigration and hence become more attractive locations for investment. 

Workers in these states will also be healthier, more able to enter the workforce and to be more 

productive workers. 

The greater positive effects for the lowest-wage states suggest the advantages of retaining a single 

national tloor. Regional minimum wage differentials would have the disadvantage of locking in 

current inequality between higher and lower-wage areas. Subminimum wages do not accomplish their 

goals of increasing employment. 

Minimum wage increases have substantial beneficial downstream effects on children and adults. They 

reduce child neglect and poverty and improve child educational outcomes. They also reduce adult 

smoking rates, absenteeism from work for health reasons and obesity. For example, a ten percent 

1 for recent reviews of this literature, see Arindrajit Dube's 2013 testimony to this Committee and the recent 

volume by Belman and Wolfson (2014). 

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increase in the minimum wage would lead to 770 fewer suicides per year. These important 

downstream etTects suggest that minimum wage policy should be evaluated, as are most other 

programs, on criteria that are broader than their effects on employment and government budgets. 

Moreover, a healthier population is also a more economically active and productive population. 

Health benefits can therefore translate over time in further positive effects of minimum wages. 

2. $15 BY 2024 LIES WITHIN THE RANGE OF PREVIOUS INCREASES 

A $15 per hour federal minimum wage in 2024 is the equivalent of about $13.33 in 2019 dollars. HR 

582 would thus raise the federal minimum wage beyond its previous peak, reached in the late 1960s, 

of about $11.50, when expressed in 2019 dollars (Figure I). 

The early adopters of a $15 minimum wage policy-Seattle in 2014 and Los Angeles in 2015-were 

told they were engaging in a bold experiment, that they were moving into uncharted territory. Some 

observers made the same characterization of HR 582's 2016 predecessor. In 2019, however, we have 

the early results from many recent minimum wage experiments. The examples now include states that 

have reached $12 per hour and cities that have already reached $ J 5 per hour. The examples also 

include percentage increases that are comparable to or exceed those in HR 582. 

A $15 standard by 2024 would not place us in uncharted territory. The actual increases in real wages 

that would result from this bill are much smaller and lie within our historical experience. We do 

therefore have a road map, laid out by the findings of the best minimum wage research by economists, 

of the likely effects of$15 on employment levels. Moreover, improvements in our research methods 

and data provide a more reliable road map than economists could provide in 2016. 

The size olthe increases $15 in 2024 from now does not equal $15 in today's dollars. The 

Congressional Budget Office's January 2019 ten-year forecast estimates that the Consumer Price 

Index will increase at about 2.5 percent per year over the period from 2019 to 2024. 2 $15 in 2024 is 

thus equivalent to about $13.33 in 2019 dollars. Jn real terms, the bill would thus increase the federal 

minimum wage by $6.08 over its current level of$7.25. This inflation-adjusted increase in levels 

amounts to an 83.9 percent real increase over six years, which translates into annual increases of about 

13.9 percent per year, compounded over the six years. 

These are substantial, but not unprecedented, increases. In 1950 the federal minimum wage increased 

by 87.5 percent in a single year, from the equivalent of about $4.10 in 2019 dollars to just above 

$7.50. The J 966 amendments to the Fair Labor Standards Act raised wages by 35 percent (over the 

extant average wage) in the newly-covered industries (Derenencourt and Montialoux 20 18). The 

minimum wage in San Jose, CA increased 25 percent in 2013 and stands at $15 today. Most 

important, the federal increases that were last enacted in 2007 raised the minimum wage by 41 percent 

over three years; the average annual increase was just under J 4 percent, similar to the 13.9 percent 

increase we are discussing today. 

'11ttps:l/www.cbo.gov/ahout/products/budget-economic-data#4 

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Moreover, HR 582 will have a smaller effect in the states that have already raised their minimum 

wages. Figure 2 provides a map of2019 minimum wages in all fifty states. The Act will not generate 

any pay increases in California, the District of Columbia, Massachusetts, New Jersey and New York 

(downstate), all of which have already enacted laws to increase their minimum wages to $15. Small 

increases would occur in the tifteen states that are already scheduled to increase their minimum wages 

to between $10 and $15. Somewhat larger increases will occur in the states that are currently 

scheduled to have minimum wage increases above $7.25 but below $10 by 2024. 3 

The increases in !ow-wage states The greatest increases will occur among the slightly under 40 

percent of the U.S. population who resided in 2018 in the twenty-one states with a $7.25 floor 

(Congressional Research Service 20 19). However, even in these states the mandated increases will not 

be as large as the actual increases. The $7.25 floor is not as binding in these states as it was in 2009. 

Actual entry-level wages for unskilled jobs in these states have been increasing in recent years; they 

are now about $9 or more, depending on the state. 

Consider the case of Mississippi, which has one of the lowest wage levels of any state. Table I shows 

the most recent Bureau of Labor Statistics hourly wage data for the nine largest (measured by 

employment) lowest-wage occupations in Mississippi. Median hourly pay in these occupations in the 

three years up to May 2017 averaged $9.19. Entry-level (25'h percentile) pay in the same occupations 

averaged $8.34. Since nominal wages have been rising at about 2.5 percent per year, 2019 entry-level 

wages in these occupations are already about around $9. 

If $9 is the current entry-level wage in Mississippi, an increase to $13.33 (which is $15 in 2019 

dollars) amounts to a 48.1 percent increase over five years, or about 9.6 percent per year. By 

comparison, most state minimum wage increases in the past thirty-five years have ranged between 6 

and I 0 percent. 

Some wage increases would occur even without the policy Equally important, we need to recognize 

that nominal wage increases would continue even if the minimum wage itself is not increased, 

especially as the growth of nominal wages has begun to exceed inflation. The Economist recently 

forecast that nominal wages will grow by 3 percent in 2019; the Economic Policy Institute finds that 

nominal wages grew by 2.85 percent in 2018 and above 3 percent in the past quartcr4 Moreover, 

recent wage increases in the bottom quartile of the wage distribution have exceeded wage growth at 

higher percentiles. 

Absent the policy, and assuming that current 3 percent growth trends continue, entry-level wages 

could therefore grow by 15 percent over current levels by 2024, in Mississippi to $10.35 in 2024 

dollars.' We should compare this projected entry-level wage of$10.35 in 2024 to the $15 policy level. 

Doing so, we obtain a policy-related increase of 44.9 percent, or 9 percent per year. 

3 Additional states are likely to enact higher minimum wages by 2024. I do not take these into account here. 4 https://www.epi.org/blog/the-fed-shouldnt-give-up-on-rcstoring-labors-share-of-income-and-measure-itcorrectly/ 

http:/ /country .eiu.com/article.aspx?articleid= I 34 727291 8&Country=United%20States&topic=Econo 

my 

5 Table 2 shows how industry-level weekly wages have changed in Mississippi between 20 I 4 and 20 I 7. 

likely Effects ota $15 Federal Minimum Wage by 2024 
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The above calculation is for the lowest-wage state. Entry-level wages are higher in many of the other 

states that are still at $7.25. In Georgia and Pennsylvania, for example entry-level wages are $1 to $2 

higher than in Mississippi. The average increase from current entry-level wages among all the $7.25 

states would therefore be somewhat lower. 6 

Let me summarize. The likely real wage increases attributable to HR 582 lie within the range of 

current local and state levels and previous state and federal increases. We therefore can draw from 

those experiences to examine the effects on employment. 

3. EMPLOYMENT EFFECTS: WHAT DO THE STUDIES TELL US? 

With over 160 federal, state and local minimum wage increases in the U.S. in the past thirty-five 

years, economists have a considerable number of events to study the impact of this policy. This 

section first provides a brief review of how economists conceptualize the mechanisms through which 

minimum wages may affect employment. I then review the recent empirical literature on the subjecton teens, on restaurant workers, and most importantly, on all minimum wage workers. 

Economic themy is ambiguous Modern economic theory recognizes that employers and worker adjust 

to economy-wide minimum wage increases in ways that can both reduce and increase the demand for 

less-skilled workers. The potential negative employment effects come from automation, reductions in 

operating hours, reductions in sales if companies raise prices, reductions in benefits (such as health 

insurance), substitution of skilled workers for unskilled workers and relocation of economic activity to 

other areas. The potential positive effects include increases in the labor supplied by workers, savings 

for employers in labor recruitment and retention costs because of reduced employee turnover, 

productivity gains that make hiring workers more desirable, and increased demand for goods and 

6 Economists often use other metrics besides the percentage increase in the minimum wage to contextualize the 

effects of a given minimum wage level on business costs. These measures include the proportion of workers 

who would receive a pay increase and the ratio of the minimum wage to the full-time median wage. However, 

these metrics are just mechanical rules-of thumb, historical indicators. They do not directly inform how the 

economy today would adjust to minimum wage increases. First, a greater proportion of our economy today 

consists of goods and services that have to be produced in the same area that they are consumed-economists 

call these nontradeables. The room for minimum wage adjustments in nontradeables depends upon how much 

prices would increases and how consumers respond to higher prices. As a result of growing inequality, a larger 

number of more affluent consumers are more able and willing to pay higher prices for nontradeables than was 

the case in the past. Second, many of the low-wage tradeable industries have already left the U.S. for lower-cost 

areas. As I argue below, the remaining low-wage producers of tradeables constitute a small proportion of jobs, 

even in low-wage states. The pressure on their average costs, and therefore on their likelihood of departure, 

depends on the current level and distribution of wages in their industry, not on the number of their employees 

or on local median wage levels. 

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services from low-wage workers, who have higher income increases and higher propensities to 

consume than do more affluent individuals. (See Reich et al. 2017 for a more detailed discussion.) 

Some, but not all, of these individual mechanisms have been examined in empirical studies. For 

example, Aaronson and Phelan (20 15) study the effects on the use of technology; they find that 

minimum wages accelerated a decline in highy routinizable low-paid jobs (such as cashiers) and a 

similar increase in the number of less routinizable low-paid jobs (such food prep workers). Allegretto 

and Reich (2018) find a small increase in restaurant prices after a 25 percent minimum wage increase 

in San Jose. Cooper et al. (20 17) find that state-level minimum wage increases have modest positive 

effects on restaurant prices and sales. as well as on local consumer spending growth. Cengiz (20 18) 

finds that minimum wage increases do not lead to reductions in health insurance benefits. These 

studies illuminate the magnitudes of individual adjustment mechanisms, but they do not themselves 

provide estimates of how the mechanisms interact to generate overall effects. I return to this point 

below. 

As this brief discussion highlights, minimum wages can have positive or negative net effects on 

employment. Economic theorizing is insufficient by itself to identify the likely net employment 

effects. For this very reason, economists have spent considerable effort on empirical studies on this 

question. We turn next to these studies. 

Empirical research on teens and restaurant workers The effect of minimum wages on employment 

constitutes one of the most studied questions in all of empirical economics. Great strides have been 

made, partly through improved statistical methods and partly from greater access to administrative 

microdata. As a result. the effects of minimum wages are clearer than they were in previous decades. 7 

Earlier empirical studies focused on two groups of workers with very low wage levels: teens and 

restaurant workers. This strategy made sense-- employment effects arc likely to be smaller to 

nonexistent for groups that experience smaller or no increases in their pay as a result of minimum 

wage increases. The early teen studies often found that a 10 percent increase in the minimum wage 

reduced teen employment by one to three percent (Neumark and Wascher 2008). 

However, teen employment has been falling for at least three decades, and unevenly so in different 

states. The challenge for minimum wage studies involves isolating the effects of the policy from the 

confounding effects of declines in teen employment that are attributable to other causes. For example, 

states that raised their minimum wages were more likely to emphasize educational policies that result 

in teens continuing their schooling longer, which reduced the number of available teen workers. 

Careful studies that credibly take such confounding forces into account find that a ten percent 

7 Nonetheless, the literature is not unanimous. Consider, for example, the exchange between 

Neumark, Salas and Wascher 2014 and Allegretto, Dube, Reich and Zipperer 2017. 

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minimum wage increase reduces teen employment by a much smaller amount, between 0.5 percent 

and zero (Allegretto, Dube and Reich 2011; Allegretto, Dube, Reich and Zipperer2017). 

Economists have also attempted to estimate the effects of minimum wages on low-paid adult workers. 

One such group of studies looks at restaurant workers, many of whom are also exposed to minimum 

wage increases. Remarkably, given previous controversies among minimum wage scholars, studies of 

restaurant workers have arrived at a consensus: A ten percent increase in the minimum wage affects 

restaurant employment somewhere between - 0.5 percent and zero (Dube, Lester and Reich 20 I 0; 

Allegretto eta!. 20 17; Cengiz, Dube, Lindner and Zipperer 20 19). 

Although recent studies have not been unanimous (a rare event in economics), the most credible teen 

and restaurant worker studies have visibly shifted the views of the economics profession. In 2013, a 

panel of 41 prominent economists organized by the University of Chicago's Booth School of Business 

was asked about the desirability of raising the minimum wage to $9 an hour, as proposed by President 

Obama. 8 Only one-third of the panel agreed that the minimum wage hike "would make it noticeably 

harder for low-skilled workers to find employment."" The panel supported the Obama proposal by a 3 

to I margin. In 2015, the panel was asked the same question, but for a $15 an hour federal minimum 

wage. Only 26 percent of the panel agreed with the proposition about job loss. 

Empirical studies af all law-wage jobs and workers The teen and restaurant worker studies together 

account for about 90 percent of all minimum wage studies. However, these studies leave an 

incomplete picture, as these two groups of workers together account for only about half of all the 

workers exposed to minimum wages. In the past few years, two advances have allowed empirical 

economists to overcome this limitation. 

The first advance is methodological-the development of a "bunching" estimator that allows 

examination of the net change in the number of all jobs that are just below and just above the 

minimum wage (Cengiz, Dube, Lindner and Zipperer 20 19). Using this method, Cengiz eta!. find that 

federal and state minimum wage changes over the period 1992 to 2016 did not reduce employment, 

either overall or among specific groups of less-educated workers. 

Cengiz et al. are also able to assess methodological issues in two oft-cited studies of all workers that 

do obtain negative employment effects: Clemens and Wither 2014, and Meer and West 2016. These 

issues include whether the highest minimum wage policies have more negative employment effects 

than more modest increases, whether previous studies adequately control for changes in business cycle 

conditions, and whether previous studies spuriously find negative employment effects where they 

should not, such as among professional and other highly-paid workers. Cengiz eta!. find that both the 

Clemens and Wither and the Meer and West studies do not pass these basic methodological checks. 

Ccngiz et al. do find negative employment effects among one group of low-wage jobs-those that are 

located in tradeable industries. As I mentioned above, tradcables arc goods and services that can be 

8 http://www.igmchicago.org/survcys/minimum-wagc 

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produced in a different locations from where they arc consumed. Tradeables account for 13.4 percent 

of the jobs in their sample. The employment effect is small-a ten percent increase in the minimum 

wage generates a 0.5 percent loss in such jobs-and it is balanced by an increase of the same 

magnitude in all other jobs. 

The Cengiz et al. paper has already proven very influential. David Autor of MIT and Co-Director of 

Labor Studies at the National Bureau of Economic Research, has called this study the most important 

minimum wage paper since Card and Krueger's in the 1990s9 

The second and also very recent important advance in the minimum wage literature involves the new 

availability. at least for Census Bureau researchers, of data obtained from income tax filings that are 

then linked to Current Population Surveys. These data permit much greater statistical precision 

because the number of tax filings is so much larger than the sample size of the CPS. Studies by 

Census Bureau economists using this newly-available data do not find negative employment effects, 

even five and ten years after a minimum wage increase (Rinz and Voorheis 2018; Toddy and Zipperer 

2018). 

Studies of cit)'1Vide minimum wage studies The highest minimum wage levels in the U.S. today are 

found at the city level. San Francisco was the first city to implement a citywide minimum wages-at 

$8.50 in 2004 and currently at $15. Dube, Naidu and Reich (2007) studied the San Francisco policy 

effects through a survey of affected and non-affected restaurants in San Francisco and the East Bay. 

They found no employment decreases. Dube, Naidu and Reich (20 14) updated the San Francisco 

study, also with similar results. 

A new wave of citywide minimum wage policies began to be enacted in 2014, with Los Angeles, San 

Francisco and Seattle leading the way among large cities, and Oakland, San Jose and many other cities 

following shortly thereafter. By the end of2016, minimum wage levels in Oakland, San Francisco, 

Seattle and San Jose had reached $13. These levels are higher in 2019 dollars than the minimum wage 

levels in HR 582. 

Two studies of the Seattle minimum wage appeared in June of20 17. [n a food services industry study, 

Reich, Allegretto and Godoey (2017) found that minimum wages raised pay and did not adversely 

affect employment. To isolate the causal effect of the policy, Reich et al. compared Seattle's 

experience to a ·'synthetic'' control group drawn from urban metro areas across the U.S. In contrast, 

Jardim et al. (20 17) found that reduced hours and employment left Seattle workers worse off after the 

minimum wage increased from $12 to $13. Jardim ct al. also drew upon a synthetic control, but theirs 

was drawn exclusively from other urb41n areas in Washington State. However, Seattle experienced an 

economic boom-related to the expansion of Amazon-at the same time that the minimum wage was 

9 Another important study --Cengiz (20 18) --uses Machine Learning methods to identify about 75 percent of all 

minimum wage workers. This innovative approach also finds no effect of minimum wages on employment. 

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implemented. Other areas of Washington did not experience a boom in those years, undermining the 

validity of using those areas as a control group. 

Jardim et al. were thus criticized for not having an adequate control for business cycle conditions 

(Schmitt and Zipperer 20 17). The boom-related wage growth in Seattle was well above wage growth 

in the rest of Washington. Thus Jardim et al.'s data contained fewer low-wage jobs, but because of the 

boom, not because of the minimum wage policy. Jardim et al. revised their study in 2018, with 

estimates that were about half the size of their previous numbers, but they did not expand their control 

group, continuing to leave open the credibility of their finding. A second study by Jardim ct a!. (2018), 

using longitudinal data and the same control groups, found positive effects overall, but again did not 

address the issue of how to control for the economic boom in Seattle that did not occur in the rest of 

the state. 10 

Finally, Allegretto et al. 2018 and Nadler et al. (2019) expanded their previous work to examine high 

minimum wages in the six large cities that were early adopters: Chicago, District of Columbia, 

Oakland, San Francisco, San Jose and Seattle. Using a variety of state-of-the-art statistical methods 

and checks, and again with control groups from around the entire U.S., they found that pay increased 

in food services, that employment did not change, and that there was no evidence that employers 

switched their hiring to more-educated workers. 11 

Summary To summarize, our most credible evidence comes from studies that carefully check that their 

treatment and control groups exhibited similar trends prior to the minimum wage policy treatment, 

that their effects on pay line up with the size of the mandated increases, and that the methods do not 

find results where they should not-such as among the college-educated or in high-paying industries. 

The studies that meet these criteria do unanimously find no negative employment efl'ects. 12 

The Cengiz et al. paper constitutes our most definitive study of past minimum wage increases. As I 

discussed above, the increases they study are not so different from those that would occur with a 

federal $15 minimum wage by 2024. Allegretto eta!. (20 18) and Nadler et al. (20 19), study minimum 

wages that are already as high in real dollars or exceed $15 in 2024. They also find that they do not 

cause adverse employment effects. The weight of the evidence in carefi.il empirical minimum wage 

studies increasingly has tilted toward finding small to zero negative employment effects of citywide, 

state and federal minimum wages. This conclusion has been reinforced by the results in the newer 

studies that used improved methods and data. These newer studies supersede the older ones. 

10 The Jardim et al. data also did not include most of the multi-location employers in the state, also limiting the 

validity of their study. 11 Nadler et al. (20 19) further examined a claim made by .lardim eta!. 20 18--that using industry-based 

averages from Quarterly Census of Employment and Wages data attenuated employment effects that 

would be detected in individual-based data. Their evidence refutes the attenuation argument. 

12 Appendix A discusses these issues in more detail 

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4. WHY DID MINIMUM WAGE INCREASES HAVE SUCH SMALL EFFECTS 

ON EMPLOYMENT? 

Why have past minimum wages had such small effects? The answer lies in the multiple channels 

through workers and employers adjust to minimum wages increases. Here is a list that includes only 

mechanisms that have been demonstrated by empirical research. It is nonetheless quite long. They 

include reductions in employer rents (i.e. above competitive levels of profits), automation and staff 

reductions, price adjustments in nontradeable sectors and stimulus effects from increased purchasing 

power of low-wage workers. These adjustment mechanisms interact with one another. In research 

conducted in 2017, Reich, Allegretto and Montialoux (20 19) examined these mechanisms and their 

interactions for an earlier but similar version of HR 582. They quantify the individual and overall 

effects using the best research available and integrate them into a simulation model. Their bottom-line 

results for employment effects in the U.S. and in Mississippi are consistent with the findings of the 

econometric studies in the previous section. 

Employer wage-setting power Low-wage workers are concentrated in a small number of industries: 

food service and retail lead this list. Inter-industry wage studies show that wages are lower in these 

industries than would be predicted for workers with comparable levels of schooling and experience 

(Nadler et al. 20 18). This result suggests that employers or consumers are collecting abovecompetitive market economic rents. A higher minimum wage can help compete away such rents 

without adverse effects on employment. 

Modern search and matching models of the labor market recognize that employers can choose 

between two equally profitable strategies: a low-wage/high-turnover human resource management 

model or a high-wage/low-turnover model. In the low-wage industries, many employers, but not all, 

opt for the first model. f ligher minimum wages can then move these employers closer to the highwage model. Employers then save on vacancy, recruitment and retention costs and have greater 

incentives to provide training to their workers. These adjustment mechanisms reduce negative effects 

on their demand for workers (Manning 2003). Dube, Lester and Reich (20 16) find that minimum 

wage increases do indeed reduce turnover. 

A recent study by John Abowd et al. ( 20 !2) demonstrates the substantial room for wage growth in 

low-wage industries in the U.S. Using longitudinal linked employer-employee data available only to 

some researchers, Abowd et al. can disentangle wage differentials among industries that are 

attributable to individual heterogeneity (such as the demographic, educational, and work experience 

characteristics of workers in the industry), which they label person effects, from the characteristics of 

the product market and bargaining power of firms in the industry, which they label industry effects. 

Abowd et al. can observe wage changes when individual workers move from one employer to another. 

They find very strong industry average firm effects, particularly for industries that have high average 

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pay and low average pay. Among restaurants, for example, they find that 70 percent of the relatively 

low wages in the industry are attributable to firm effects, and only 30 percent to person effects. Their 

findings suggest that a change in an industry's environment can have large effects on worker pay. 

Employers also possess wage-setting power by deploying non-compete agreements that suppress 

wages. Recent research shows that such agreements are widespread in low-wage sectors (Ashenfelter 

and Krueger 20 I 8). 

Automation and staff and hours reductions Automation has already occurred rapidly where 

technological possibilities permit. Additional automation may occur in manufacturing, but the 

minimum wage effects will be small because labor costs increases are far outweighed by reductions in 

technology costs. Employer survey and behavior shows that firms would prefer to raise prices over 

reducing capacity-- by reducing staff and operating hours. 

Price adjustments Price adjustments provide the principal adjustment mechanism for minimum wage 

increases: higher labor costs are passed through to consumers, mainly for food consumed away from 

home. Such an increase does not deter restaurant customers. Price increases are also detectable for 

grocery stores (Leung 20 18; Renkin, Montialoux and Siegenthaler 20 19), but not more generally. The 

effect on inflation is therefore extremely small. 

Daniel Cooper and Maria Luengo-Prada, research economists at the Federal Reserve Bank of Boston, 

and Jonathan Parker of MIT provides the most careful study of the price effects of minimum wages. 

Using detailed data for 27 metro areas, (Cooper et al. 20 17) credibly show that restaurants absorb the 

costs of higher minimum wages entirely by slightly higher restaurant prices. A ten percent increase in 

the minimum wage increase costs and restaurant prices about 0.5 percent. This result is consistent 

with the Allegretto and Reich (2018) case study of an overnight minimum wage increase of25 percent 

San Jose in March 2013. The price effects alone can explain why there are no negative employment 

effects in non-tradeables. 13 

Siimulus and dynamic ~[feels Cooper, Luengo-Prada and Parker (20 17) also find a modest positive 

stimulus effect. Low-wage workers purchase more food away from home and more cars. In other 

words, low-wage workers spend their increased incomes locally, stimulating the local economy 

modestly. 

Since wage increases are greater in low-wage states, the stimulus is also greater. Reich et al. 2019 

quantify how much the stimulus etfect increases with higher minimum wage increases, taking into 

account how consumption propensities vary by household income. They find that stimulus effects will 

be stronger in the low-wage states. 

Labor supply effects An emerging literature finds that minimum wages increase labor supply and 

employment among vulnerable groups-single low-educated parents (Godoey, Reich and Allegretto 

L' We discuss the effects on tradeables in Section 5. 

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20 18), older workers (Borgschulte and Cho forthcoming), and among the formerly incarcerated (Agan 

and Makowsky (20 18) .. 

Godoey, Reich and Allegretto estimate positive employment effects for low-educated parents of 

young children. They find significant positive effects for single mothers, similar to positive labor 

supply effects found for the Earned Income Tax Credit. They also find positive effects for fathers. In a 

recent paper studying elderly workers, Borschulte and Cho (forthcoming) find positive effects on 

earnings, suggesting small positive labor supply response for individuals who are near retirement age. 

Agan and Makowsky show that higher minimum wages lead released prisoners to obtain employment 

rather than to engage in criminal activity. 

These positive supply-side effects provide a relatively new explanation of why minimum wages can 

have such small employment effects: Negative demand and positive supply effects cancel out each 

other. 

Outmigrationfrom low-wage states Migration from the low-wage states is a long-standing problem in 

low-wage states such as Mississippi (ALME 2018). Out-migrants are disproportionately younger and 

better-educated than those who remain. Higher minimum wages will reduce outmigration, which 

means better quality workers for Mississippi's employers and consumers. A higher quality workforce 

also means more incentives for investors to locate new plants in states that have been locked into a 

low-wage/low education labor market equilibrium. 

5. WillA $15 MINIMUM WAGE MAKE lOW-WAGE STATES 

UN COMPETITIVE? 

A key issue often raised about minimum wages concerns whether they could make businesses 

uncompetitive. Some states may have not raised their minimum wages because of fears that they are 

vulnerable to becoming uncompetitive. I discuss this issue here in the context of Mississippi. 

Tradeables Industries with jobs that are likely to leave when wages rise arc often characterized by 

economists as tradeables. The underlying idea is that prices in the tradeables are determined at the 

level of international markets, while nontradeables are produced for local consumption, and at prices 

that can vary by location. As we have seen above, minimum wage increases to $15 for nontradeables 

are mainly absorbed by the local population through price increases. But cost increases in tradeables 

may force companies with less room to increase their prices to exit the industry or relocate in a lowercost area. I take up this question here by examining the exposure of Mississippi's low wage jobs to 

relocation. 

Table 2 shows that manufacturing accounted for about 140,000 jobs, or nearly 14 percent of private 

sector employment in 2017. This proportion is very similar to the size of the tradeables sector in the 

U.S. as a whole over the period 1992-2016 (Cengiz et al. 2019). Recall that Cengiz et al. did find a 

small negative employment effect among tradeables. 

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Manufacturing employment in the U.S., and in Mississippi, continued their long decline in the years 

prior to and during the Great Recession. Most of this decline occurred in low-wage manufacturing 

industries. Manufacturing employment has remained relatively stable during the long recovery from 

the Great Recession, while manufacturing wages have been increasing. These trends suggest that the 

remaining manufacturing jobs are concentrated in higher-paying industries. In the Southern states as a 

whole, textiles and apparel no longer ranks as the largest manufacturing industries; they have been 

replaced by advanced manufacturing plants. 14 

The question mark for Mississippi employment is greatest for its remaining low-wage tradeables. 

Figure 3 shows that manufacturing jobs have been declining in Mississippi, while tourism-related 

industries, such as restaurants have been growing (see also Miller 20 I 8). As Table 2 also shows, the 

weekly wage in manufacturing averaged $927 in 2017, well above the reach of a $15 minimum wage. 

A substantial portion of manufacturing in Mississippi consists of (transportation equipment. Seven 

Southern states, including Mississippi, now are home to fourteen motor vehicle assembly plants. 

Aircraft assembly plants for Airbus and Boeing arc also located in these states. These jobs already pay 

well above$ I 5 per hour and arc highly automated. 

About 40,000 Mississippi manufacturing jobs are located in two lower-wage industries: wood 

furniture and food processing. However, pay in both of these industries ($61 0 in food manufacturing 

and $66 I in wood furniture) averages substantially above that in non-tradeable services. Pay in these 

two industries has grown steadily in recent decades. These considerations further suggest only a minor 

effect of minimum wages on employment in these industries. 

6. SHOULD THE FEDERAL MINIMUM WAGE FLOOR VARY WITH 

REGIONAL LIVING COSTS? 

Some observers suggest that minimum wage policy should not maintain a single federal standard. 15 

Such recommendations usually reflect concerns from employers and policy makers in lower-wage 

areas. They can also reflect a concern about fairness among workers: Why should workers in low 

living cost areas have a higher real minimum wage than workers in high living cost areas? We take up 

this issue brietly here. 

There is surprisingly little recent research on the advantages and disadvantages of regional wage 

standards. Congress discussed including a Southern differential in the debates leading up to the Fair 

Labor Standards Act of 1938. In 1938, wage and living cost differentials between the South and the 

14Quarterly Census of Employment and Wages: Ratter 2012. 15 A similar policy is in place for tax and transfer payments. Income and payroll tax rates, including 

the Earned Income Tax Credit do not vary with local living costs. States can and do add their state 

taxes. Public benefits form a more mixed picture. Social Security, Medicaid and food stamp benefits 

are uniform across the U.S., while child care, TANF and housing subsidy levels are set by the states. 

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non-South were much greater than they are today. But in the end, Congress decided to establish a 

single national minimum wage floor. 16 

By establishing a single national floor at a time of other major economic transformations, Congress 

set in motion a series of substantial positive economic changes in the South (Wright 1997). In 

particular, the isolated economies of the rural South became more linked to the national economy. The 

South prospered in succeeding decades, and the southern regional wage differential became much 

smaller. A similar development occurred as a result of the civil rights revolution and the associated 

extension of Fair Labor Standard Act coverage to more of the South's industries (Wright 2005, 20 15; 

Derenencourt and Montialoux 20 18). 

Congress did authorize states to set higher floors. States began to do so in the 1980s and with 

increasing frequency, especially as Congressional inaction has allowed the real value of the minimum 

wage to decline over time. The patchwork of state minimum wages today allows states to adjust their 

minimum wages to reflect living cost differences among the states. 17 

The key disadvantage of regionalizing the federal tloor concerns the potential dynamic effects that 

high minimum wages can exert on low-wage areas. Minimum wage policy cannot by itself transform 

a stagnating economic region into a dynamic one. But it can contribute to such a transformation. 

7. SHOULD WE KEEP SUBMINIMUM WAGES FOR TIPPED WORKERS 

AND YOUTH? 

Tipped workers The minimum wage for tipped workers has remained at $2.13 since 1991. Numerous 

states set a higher subminimum; seven states set the tipped worker minimum as the same as for other 

workers. Tips are approximately the same percentage in non-tip credit states as in the $2.13 states, 

suggesting that most consumers leave tips as a gratuity for customer service. They are not aware that 

their tips help pay the employee's minimum wage, in many cases benefiting owners more than the 

workers. Tipping is substantially a U.S. practice, not common in other industrialized countries. 

Allegretto and Nadler (20 15) used the variation among the states in the size of the "tip credit" to 

analyze the effects of the policy. They found that lower subminimum wages left more restaurant 

servers, many of them female and of color, in poverty. They did not find any positive effects on 

16 Congress also exempted major economic sectors from minimum wage protection, diminishing its effects, 

especially in the Southern states. Most of these exclusions were reversed in subsequent amendments to the 

FLSA. 

17 State minimum wage variation also reflects other economic and political factors that are beyond our 

scope here. 

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restaurant employment. These results suggest that the restaurant industry could adjust to the 

elimination of the subminimum wage for tipped workers. 

Youth subminimum wages The subminimum wage for youth is generally understood to be a training 

wage-reflecting the lack of experience of teen workers--and also an incentive to provide additional 

jobs for teens. The subminimum creates perverse incentives to substitute teens from non-poor families 

for incumbent adult workers who might be supporting a household. Moreover, the labor supply of 

teens might be greater without a subminimum wage. contrary to the intention to encourage teen 

employment (Giuliano 2013). In any case, employer take-up of the youth minimum wage is extremely 

low (Card and Krueger ( 1995), perhaps because of administrative complexities of compliance. 

These considerations suggest that the federal youth subminimum wage is not accomplishing its 

intended purpose. 

8. IMPORTANT DOWNSTREAM EFFECTS ON HEALTH, EDUCATION AND 

PARENTING 

The effects of minimum wages on "downstream" outcomes represent a relatively new area of 

research. In recent years, over three dozen papers have examined the effects of minimum wages on 

twenty different health outcomes. 18 On the whole, these studies lind beneficial etfects and no 

consistent evidence of harmful effects. However, not all of this literature meets the standards of the 

credibility revolution in economics. The studies that do pass the tests of the credibility revolution find 

beneficial effects on smoking rates, obesity, suicides, health-related absenteeism from work, and as 

well as on child maltreatment (Raisian and Bullinger 20 17). 

For example, Godoey et a!. 2019 find that minimum wages reduce deaths of despair. A ten percent 

increase in the minimum wage would likely prevent 770 suicides each year. The average cost of a 

single suicide averages $1.3 million per year in lost productivity. The overall gain in output would 

therefore amount to $1 bill ion per year. 

The results in these studies are important in themselves. They also have implications for economic 

growth. For example, obesity is linked to pre-diabetic issues. Both have been linked to high poverty 

rates, on the one hand and low levels of labor force participation and productivity, on the other (Figure 

4). Mississippi has both the highest diabetes incidence of all states and the one of the lowest rates of 

labor force participation. 

These results are consistent with the now-accepted finding that minimum wages reduce poverty (Dube 

20 18) and with a large related literature that finds that anti-poverty programs have substantial 

beneficial effects on the health, educational outcomes and well-being of adults and children (Haynes 

and Schanzenbach 2018). 

18 For recent surveys, see Leigh and Du 2018; Leigh, Leigh and Du 2019. 

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Anti-poverty programs such as SNAP and the EITC arc typically assessed on grounds other than their 

effects on employment. Minimum wages should similarly be assessed on criteria that arc broader than 

just their effects on employment. 

9. SUMMARY AND CONCLUSIONS 

HR 582 proposes to increase the federal minimum wage to $15 by 2024 and to gradually eliminate 

subminimum wages for tipped workers, youth and the disabled. This policy will have its greatest 

effects in the twenty-one states that today remain at the 2009 federal level of$7.25. The increases 

even in these states lie within the range of our previous minimum wage policy experience. Studies of 

past minimum wage increases thus provides a guide to the effects of !IR 582 on employment. 

The best research studies of minimum wage-employment effects have found very small to negligible 

effects on teens and on restaurant workers. Newer studies use improved methods of identifying 

minimum wage jobs and/ or data linked to administrative tax records. These state-of-the-art studies 

find even less evidence that minimum wage policies have had negative effects on employment. Other 

studies, focused on the high minimum wages already in place in a number of U.S. cities, obtain 

similar findings. 

These results make sense when one considers that minimum wages can offset employer power that 

suppresses wages, that small price adjustments in a few industries largely shift the costs of minimum 

wages from employers to affiuent consumers who can pay higher prices. and the stimulus effects of 

increasing purchasing power among groups that spend most or all of their income on consumption 

goods. High minimum wages might seem to be more of a threat in industries that can relocate to other 

countries. However, the proportion of low-wage employment in these industries has become quite 

small. 

A single national floor for all workers is likely to be much more beneficial than carve-outs for some 

groups or regional differentials. The advantages of a single national floor are likely to be especially 

higher in the lowest-wage states and could generate dynamic advantages to the economies of those 

states. Finally, new research is demonstrating that minimum wages have beneficial effects on the 

health and well-being of children and adults. These benefits should be included in any assessment of 

minimum wage policy. They are likely also to have longer-term economics benefits as well. 

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Dube, Arindrajit 2018. "Minimum Wages and the Distribution of Family Incomes." American 

Economic Journal: Applied Economics forthcoming. https://equitablegrowth.org/minimum-wagesand-the-distribution-of-family-incomes-in-the-us/ 

Dube, Arindrajit, William Lester and Michael Reich 2016. ''Minimum Wage Shocks, Employment 

Flows and Labor Market Frictions.'' Journal of' Labor Economics 34, 3: 663-704. 

Giuliano, Laura 2013. "Minimum Wage EtTects on Employment, Substitution, and the Teenage Labor 

Supply: Evidence from Personnel Data," Journal <Jf' Labor Economics" 31, I: 155-194. 

Godoey, Anna, Christopher Lowenstein, Michael Reich and William H. Dow 2019. ''Minimum 

Wages and Deaths of Despair." Unpublished paper. 

Godoey, Anna, Michael Reich and Sylvia Allegretto 2018. "Minimum Wages and the Labor Market 

Outcomes of Single Mothers." CWED Working paper. 

Haynes, Hilary and Schanzcnbach 2018. "Safety Net Investments in Children." Brookings Papers on 

Economic Activity. 

Jardim, Ekaterina, Mark C. Long, Robert Plotnick, Emma van lnwegen, Jacob Vigdor, and Hilary 

Wething 2018a. "Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from 

Seattle." NBER WP 23532. 

Jardim, Ekaterina eta!. 20 18b. "Minimum Wage Increases and Individual Employment Trajectories." 

NBER WP 25182. 

Krueger, Alan and Orlev Ashenfelter 2018 .. "Theory and Evidence on Employer Collusion in the 

Franchise Sector." NBER WP 24831. 

likely Effects of a $15 Federal Minimum Wage by 2024 - 20 -
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Leigh, Paul and Juan Du 2018. "Effects of Minimum Wages on Population Health." Health Affairs 

Policy Bri~f 

Leigh, Paul, William Leigh and Juan Du 2019. "Minimum Wages and Public Health: A Literature 

Review." Preventive Medicine 118: 122-134. 

Leung, Justin 2018. "Minimum Wage and Real Wage Inequality: Evidence from Pass-Throughto 

Retail Prices. Unpublished paper, Booth School of Business, University of Chicago. 

Manning, Alan 2003. Monopsony in Motion. Princeton, NJ: Princeton University Press. 

Meer, Jonathan and Jeremy West 2016. "Effects of the Minimum Wages on Employment Dynamics." 

Journal of Human Resources 51, 2: 500-22 

Miller, Corey 2018. "Overview and Outlook for Mississippi's Economy." 

http://www.mississippi.edu/urc/downloads/prescntations/econ _ oview _I 0-IS.pdf 

Nadler, Carl, Sylvia Allegretto, Anna Godocy and Michael Reich 2018. ·'Are Local Minimum Wages 

Too High, and How Could We Even Know?" UC Berkeley Job Market Paper. 

Neumark, David and William Wascher 2008. Minimum Wages. MIT Press. 

Neumark, David, fan Salas and William Wascher 2014. "Revisiting the Minimum Wage-Employment 

Debate: Throwing Out the Baby with the Bathwater?" Industrial and Labor Relations Review 67, 3 

Supplement: 608-48. 

Rafter, Michelle 2012. "Manufacturing jobs making a comeback in southern U.S." Nbcnews. 

H ttps :/ /www. n be news .com/bus i nessma in/manufacturing-jobs-making-comeback -southern -us-1 c7660234 

Raissian, Kerri and Lindsey Bullinger 2017. "Money Matters: Does The Minimum Wage 

Affect Child Maltreatment Rates?" Children and Youth Services Review 72, c: 60-70. 

Reich, Michael, Ken Jacobs, Annette Bernhardt and Ian Perry 2015. "The Proposed Minimum Wage 

Law for Los Angeles: Economic Impacts and Policy Options." http://irle.berkeley.edu/files/2015/TheProposed-M inimum-Wage-Law-for-I ,os-Angeles.pdf 

Reich, Michael, Sylvia Allegretto and Claire Montialoux 2017. "Effects of $15 Minimum Wage in 

California and Fresno:· CWED Policy Report. http://irlc.bcrkeley.edu/files/20 17/E 

Reich, Michael, Sylvia Allegretto and Claire Montialoux 2019. "The Effects of a $15 federal 

minimum wage by 2024 in the U.S. and in Mississippi." CWED Policy Report. 

likely Effects of a $15 Federal Minimum Wage by 2024 w 21 -
193 


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Renkin, Tobias, Claire Montialoux and Michael Siegenthaler 2019. "The Pass-through of Minimum 

Wages into US Retail Pric.es: Evidence from Supermarket Scanner Data. 

http:/ /c.lairemontialoux.com/fi les/RMS20 19.pdf 

Rinz, Kevin and John Voorheis 2018. "The Distributional EtTects of Minimum Wages: 

Evidence from Linked Survey and Administrative Data." Bureau of the Census. WP 2018-02. 

Wright, Gavin 1997. Old South, New South: Revolutions in the Southern Economy since the Civil 

War. Basic Books. 

Wright Gavin 2005. Sharing the Prize: The Economics of the Civil Rights Revolution in the American 

South. Harvard University Press. 

Wright, Gavin 2015. ''The Regional Economic Impact of the Civil Rights Act of 1964." Boston 

University Law Review 95,3: 759-79. 

Zipperer, Ben 2016. "Employment Fell Because OfThe Great Recession, Not The Minimum Wage." 

EPI Report. www.epi.org/filespdf/118070.pdf 

Likely Effects of a $15 Federal Minimum Wage by 2024 - 22 -
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FIGURES AND TABLES 

Figure J.The Federal Minimum Wage f938 to 2018 

$1UJO 

%.00 

$4.QQ 

$1,00 

the fir~t ha!fof20fS. 

Likely Effects of a $15 Federal Minimum wage by 2024 - 23 -
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Figure 2. State Minimum Wage Rates ln 2() 19 

IIIII DC 

-At or above $11.00 

Souree: CRS i,\nalysis of U.S. Department of laOOr dat...1.. 

Notes: Rates in Figure-2 ;we either currently in effect or art> scheduled to be in effect at some- point in 20 !9. 

Figure3 

Education&HealthServkes 

Professional & Business Serviees 

Accommodation and Food Servites 

Trade, Transportation,-& Utilities 

Other Services 

Government 

Information 

Finan<:ia!Actlvltil'!$ 

M1111ngandlogging 

Construction 

------·18.042 ----11.317 -----·"·"'' 

-4.583 

.soat 

-1.392M 

-1.8!711111 

-2,18J-

-15,383 _____ -2.S83111111i11 .. 

Manufacturing -25,491 ________ _ 

-30,000 -25,000 -20.000 -15,000 -10.000 -5,000 5,000 10,000 15,000 20,000 25,000 

Source: ALME 2018 

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Figure 4 

Labor Force Participation Rate vs. % of Population with Diabetes 

?S%~~(b~y~s~la~le~,l~ab~o~<f~o~~·~p~a~rtic~ip~a~tio~n~·2~0~16~a~nn~u=al~a~w~~~g~e.~%~o~f~po=p~~~··~h~di~ab~~~as=·~20~1~5)~-r?S% 

~ ~ 70% 

! §, 65°/o 

~ c :lao% 

~ @ 

& 55% 

~ 

y = ~1.8291x + 0.804 R' =0.5638 

70% 

65% 

60% 

55% 

50%+-----~-----r----~------~----~----~----~-----+so% 

6% 7% 8% 9% 10% 11% 12% 13% 14% 

>.;' 

!l' 

6' 

~ 

f 

~· 

~ 

~ 

~ 

" I 

%of State Fbputation with Diabetes {2015) Source: CDC. BLS 

Source: ALME 2018 

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Table 1. Entry-level (25th percentile) and median hourly pay, nine largest 

unskilled occupations, Mississi(!(!i 2016 

Occupation Title Entry-level Median 

Cooks, Fast Food $8.1 $8.69 

~ks, Restaurant 8.7 9.77 

Cooks, Short Order 8.41 9.25 

Food Preraration Workers 8.22 8.92 

Janitors and Cleaners 8.53 9.56 

Maids and Housekeeping Clean::rs 8.29 9.01 

Childcare Workers 8.18 8.84 

Personal Care Aides 8.53 9.63 

Cashiers 8.1 8.79 --·· 

Average(unwcighted) 8.34 9.16 

Source: U.S. Bureau of Labor Statistics, Occupational Employment Survey May 

2017 

Note: OES data are based on three-year rolling surveys of establishments. Pay rates 

above are therefore more representative of 2016 rates than 2017 rates. 

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Table 2. Employment and Pay, Selected industries, Mississippi, 2014 and 2017 

Industry NAICS 2014 2017 2014 20 I 7 A veragc 

employment employment Average weekly wage 

(OOOs) (OOOs) weekly wage 

Manufacturing 31-33 139.6 144.11 877 927 

Food manufacturing 311 22.3 23.7 563 610 

Apparel 315 1.4 1.6 580 601 

Wood furniture 337 18.4 18.9 596 661 

Transportation 336 26.8 27.6 1152 l.l76 

equipment 

Food services 722 87.2 95.4 256 273 

Accommodations 721 29.3 31.5 488 493 

Nursing and 623 31 31.6 489 513 

residential care 

facilities 

Social assistance 624 27.3 30.8 368 386 

All private 1,077.3 1.103.2 701 733 

employment 

Source: Mississippi Department of Employment Security, Covered Employment and Wages, Annual 

Reports 

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APPENDIX: SCIENTIFIC CRITERIA FOR CREDIBLE MINIMUM WAGEEMPLOYMENT STUDIES 

A new generation of minimum wage studies has been much intluenced by the "credibility revolution" 

that has swept all areas of empirical economics. This revolution uses quasi-experimental methods and 

careful research designs to identify causal relationships and rule out spurious correlations. 

Much work in applied econometrics thus now routinely uses the language of treatment and control 

groups. Credible studies conduct tests to check that: the treatment and control groups are indeed 

similar before the treatment is administered, that we can observe a treatment effect in the treated 

group but not in the control group, that the effect of the treatment should be greater when the 

treatment is more intense. and that the treatment effect should be robust to small changes in 

specifications, such as in sample years or the presence of linear or nonlinear controls. 

These basic scientific principles provide the basis for assessing the validity of conflicting minimum 

wage studies. It is no longer sufficient to report whether a minimum wage coefficient is statistically 

significant or insignificant. 

The parallel pre-trends test, and the falsification and robustness tests comprise the core of the 

credibility revolution in econometric methods that has swept through all of empirical economics, not 

just the study of minimum wages. (For examples, sec Angrist and Pischke 20 I 0, 20 14; Athey and 

lmbens 2017.) The leaders of this revolution span both conservative and liberal economists. 

As it turns out, the minimum wage literature provides many examples of studies that either decline to 

conduct these tests or that do not pass them. We thus have new tools to assess conflicting results in the 

minimum wage literature. Here are some examples: 

Common pre-trends between the treatment and control groups Much of the recent debate concerns 

whether minimum wage states are a random sample of all states, or whether they are clustered 

geographically or along other dimensions in a manner that is correlated with low-wage employment 

trends. Such correlation could involve confounding factors that are not caused by minimum wages 

themselves. These confounding factors could be detected by examining whether treatment and control 

states exhibited common (parallel) employment trends before the minimum wage policies were 

introduced. 

Dube, Lester and Reich (20 I 0) and Allegretto, Dube and Reich (20 II) showed that previous work by 

Neumark and Wascher (2008) did not pass the parallel pre-trends test. Low-wage employment was 

trending downward in treatment states relative to control states well before minimum wages were 

introduced. Adding controls-such as examining contiguous border county pairs where minimum 

wages differed at the state border-eliminated the pre-trends, did not change the estimated effects on 

pay, and resulted in a small or zero estimated employment effect. 

Neumark, Salas and Wascher (2014) contested these t1ndings. Dube, Lester and Reich (2016) and 

Allegretto, Dube, Reich and Zipperer (20 17) reported additional results confirming the pre-trends 

problem and showed the fragility of the Neumark, Salas and Wascher findings. 

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Allegretto ct al. (2017) also showed that studies without controls for spatial heterogeneity failed a 

placebo test-that is, they found effects of minimum wages on employment among high-wage groups, 

such as professionals with a BA degree, who would not be affected by a minimum wage increase. 

Studies with controls passed such tests. (Placebo tests are also referred to as falsification tests.) 

Allegretto et al. 2017 further conducted robustness tests. These tests examined groups that were 

afJected by minimum wages and asked whether employment effects were greater among groups that 

were more affected. Here again, studies without the controls failed such tests; studies with the controls 

passed them. 

Effects of economic expansions and recessions Minimum wage enactment and implementation occur 

more frequently during economic expansions than during recessions. Since wages increase during 

expansions, the number of low-wage jobs may decrease just because of the expansion. A key issue 

therefore concerns distinguishing the effects of the minimum wages from the effects of economic 

expansions. A number of often-cited studies that find negative employment effects fail to account 

appropriately for these effects of the business cycle. These include Jardim eta!. 2018a, 20 18b, Meer 

and West (2016). for details, see Cengiz et al. 2018. 

In a similar vein, as Zipperer (2016) has shown, Clemens and Wither (2015) fail to control adequately 

for the steep economic recession that began in 2007. 

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CENTER ON WAGE AND EMPLOYMENT DYNAMICS 

Institute for Research on Labor and Employment 

University of California, Berkeley 

2521 Channing Way #5555 

Berkeley, CA 94720-5555 

(51 0) 643-8140 

http://www.irlc.berkclcy.edu/cwed 
202 

Chairman SCOTT. Representative Brodeur. 

STATEMENT OF THE HONORABLE PAUL A. BRODEUR, ESQ., 

STATE REPRESENTATIVE, 32ND MIDDLESEX DISTRICT, COMMONWEALTH OF MASSACHUSETTS HOUSE OF REPRESENTATIVES 

Mr. BRODEUR. Good afternoon, Mr. Chairman, Ranking Member 

Foxx, and members of the committee. 

My name is Paul Brodeur, and I have the honor of serving the 

residents of Melrose, Wakefield, and Malden in the Massachusetts 

State Legislature as their State Representative. 

I wish to share my perspective on the success we have had in the 

Commonwealth of Massachusetts confronting the problem of wage 

stagnation while creating a stronger economy by increasing our 

minimum wage to $15 an hour by 2023. Two years ago, under the 

leadership of our Speaker, Robert DeLeo, I was appointed to serve 

as the House chair of the Joint Committee on Labor and Workforce 

Development. 

The Commonwealth faced significant challenges. Despite historically low unemployment rates, income inequality was growing. 

New jobs were being created at a promising rate, but overall wage 

growth remained stagnant. Like you, our committee held extensive 

hearings and heard many hours of testimony. The statistics and expert testimony were compelling, but I was particularly struck by 

the stories we heard from Massachusetts workers and their families. We heard from single moms and dads that were working multiple jobs, teens who helped their families make ends meet, and 

families who have been working paycheck to paycheck for generations. 

We also heard from employers who care deeply about their workers, but were concerned about the impacts on their businesses. In 

particular, middle-skilled jobs went unfilled, which limited their 

business growth. And we heard from folks who want to get ahead, 

who want the training and skills to move out of low-wage jobs but 

cannot, because they do not have the time, energy, or money to 

seize those new opportunities. 

In response, our committee convened negotiations among a broad 

coalition of community organizations, religious groups, labor 

unions, and representatives of businesses, both large and small. Ultimately, we were successful in passing into law a bipartisan bill, 

which improved the financial stability of working families in the 

Commonwealth within a robust Statewide economy. Here is what 

shaped our efforts: We knew from our past experience that previous increases to our minimum wage had produced economic gains 

for workers while unemployment decreased and business confidence increased. 

Looking forward or projecting ahead, the Massachusetts Budget 

and Policy Center testified that nearly one-quarter of Massachusetts workers would benefit from an additional gradual increase in 

our minimum wage, and that this would include nearly one-fifth of 

all working parents in Massachusetts. We also knew that these 

working families will spend their additional income on our main 

streets and in our downtowns. These observations of our past expeVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00210 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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203 

rience, coupled with projections based on sound economic principle, 

led us to raising our minimum wage. 

During our deliberations, we considered a regional minimum 

wage, but rejected implementing one. We found it is very difficult 

to draw those lines, particularly when geography is not a clear indicator of cost of living. Locking certain regions of our State into 

lower wage status by using regional wage boundaries would detract 

from our hard work in investing in and revitalizing those cities, 

towns, and neighborhoods that needed help the most. 

Similarly, we rejected the creation of a training wage or teen 

minimum wage. Now, we all agree on the importance of getting 

that first job. It can be an incredible learning experience and can 

be a foundation for lifetime success. However, the testimony we 

heard and the statistics we reviewed told a more complicated story 

about teen employment. 

Teen workers are responsible in Massachusetts for nearly a fifth 

of household income amongst our poorest families. These teens are 

not merely working a summer job for extra spending money, but 

they are functioning as breadwinners for their families or earning 

money to further their education. Creating a complicated training 

wage system that few would use or a teen wage that would push 

other low-wage workers, including seniors, out of the job market 

was inconsistent with our goal of helping working families. 

So, contrary to what you may think, Massachusetts isn’t populated exclusively with elitist, wealthy, Ivy Leaguers. We are a diverse state of financiers and family farmers, laborers and lawyers, 

researchers and entrepreneurs, blue bloods and blue-collars. We 

have a proud history of tackling hard problems by working together 

to solve them. Finding a balance between these diverse and often 

conflicting interests was at the forefront of our work in raising up 

the minimum wage. 

I appreciate the opportunity to address you today. I thank you 

for the opportunity, and I am available to answer any questions 

you might have. 

[The statement of Mr. Brodeur follows:] 


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PAUL A. BRODEUR 

STATE REPRESENTATIVE 

32No MIDDLESEX DISTRICT 

HOUSE OP F!EPRESENTAT!VES 

!-{!All:. HOUSI:. 1:10$ fON. MA 02133·1054 

Statement of the 

Honorable Paul A. Brodeur, Esq. 

State Representative. 32nd Middlesex District 

Commonwealth of Massachusetts House of Representatives 

Testimony Before the U.S. House of Representatives 

Committee on Education and Labor 

February 7, 2019 

Chair 

Joint Cornrnittet= on labor snd 

Wor!dor¢0 Development 

STATF. HOUSF., ROOM 47? 

orncc: {617) 722-2013 Patll-Brodol.ll{_illN!Ahouse.gov 

Good Afternoonj Chairman Scott, Ranking Member Foxx and members of the Committee. My name is 

Paul Brodeur and I have the honor of serving the residents of Malden. Melrose. and Wakefield in the 

Massachusetts State Legislature as their State Representative. i appear before you today in support of the 

Raise the Wage Act (HR 582), and, as a fellow legislator, I wish to share my perspective on the great 

success we have had in the Commonwealth of Massachusetts relative to empowering our workers and 

equipping our businesses with the tools they need to succeed. 

Two years ago, under the leadership of Speaker Robert A. DeLeo, I was given the opportunity to serve as 

House Chair of the Joint Committee on Labor and Workforce Development. I realized that the work of 

my committee would be marked by several unusual circumstances both from an economic and a policy 

perspective. Despite historically low unemployment rates, income inequality had grown to new heights. 

New jobs were being created at promising rates, while wages remained stagnant. Legislative proposals 

before my committee called to increase our state minimum wage to $15 an hour. While these proposals 

had tremendous support from legislators, we were eager to determine what their impacts would be on 

small, locally-owned businesses. 

Statistics painted part but not the entire picture. Behind each number was a family who called my office 

seeking help and resources, a worker who worried about the future of their industry, or an employer who 

wanted to know how proposed policies would affect them. I knnw that each of you receive calls like 

these, and as dedicated public servants, it is our duty to listen to and address our constituents' concerns. 

The way forward was unclear, but the demand for action was pressing. 
205 


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It was against this landscape that we convened negotiations among a broad coalition of community 

organizations, religious groups, labor unions, and established employer advocate organizations which 

hailed from across the Commonwealth and represented both large multinational corporations, as well as 

small, family-owned legacy businesses. Together with these stakeholders, and guided by nationally 

celebrated economists and scholars, we endeavored to determine if we could arrive at a compromise that 

ensured economic stability for working families within a robust statewide economy. We were successful 

in this effort and enacted into law a bipartisan bill, which, among other provisions. raises the state's 

minimum wage to $15 an hour by 2023. I wish to review with you now the policy decision points that 

shaped our efforts. 

Impacts on Massachusetts Workers and Employers 

We began with the foreknowledge that previous increases to the minimum wage had produced net 

positive economic gains for businesses and workers in the Commonwealth. Since 2000, the state 

Legislature had increased the minimum wage gradually seven times. During that period, we saw median 

family incomes increase while employers created more jobs. We also knew that this strategic decision to 

invest in the working families of Massachusetts would be a positive step forward for our business 

community. During that same period, Massachusetts businesses demonstrated relative stability and 

growth following the great recession of 2009. 

While pleased with our success, we soon realized that our moderate gains would not be sufficient in 

tackling the issue of income inequity. The Economic Policy Institute found that in 2015 the top 1% of 

Massachusetts families had earned 31 times as much as the average of the bottom 99%. 1 Our own 

concerns were mirrored in a letter signed by 90 leading Massachusetts economists hailing from both 

academia and the private sector urging us to approve a $15 minimum. Furthermore, according to the 

Massachusetts Budget and Policy Center (MassBudgct), an economic and policy research firm based in 

Boston. nearly a quarter of Massachusetts workers would benefit from an increase in the minimum wage 

to $15 by 2023.2 This would include nearly a fifth of all working parents in the Commonwealth. We knew 

that these working families would be spending their additional income on our main streets and in our 

downtowns. These observations of our past experience, coupled with projections based on sound 

economic practices, lead us ultimately to raising the statewide minimum wage to $15 an hour by 2023. 

Impacts on Government Services and Resources 

While the economic benetits to workers and businesses in the Commonwealth were clear, articulating the 

consequences of raising the minimum wage for state budgeting purposes was, and has been, more 

difficult. In determining these impacts, we first examined our experience over the past five years and saw 

that the increased purchasing power, increased taxable income, reduced caseloads in social benetits 

programs, and growth in business confidence and success were outcomes of our incremental increases in 

the minimum wage. We sought to ensure that these trends would continue, and as such, structured our 

minimum wage increase schedule in a similar manner. 

1

https://www.epi.org/publication/the-ncw-gilded-agc-incomc-inequality-in-the-u-s-by-statc-metropolitan-area-andcountyl 

2

http://massbudget.org/report __ window.php?loc~F AQ-The-Massachusetts-$15-Minimum-Wage-Proposal.html 
206 


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The secondary, and in some cases tertiary benefits of raising the minimum wage are clear. Issues such as 

food insecurity, improved childhood health statistics, reduced employment turnover, and other factors 

have emerged as having been largely effected by these increases. For example, a 2016 report by the 

Century Foundation estimated that the increase to a $15 minimum wage would decrease food insecurity 

in the Commonwealth by 7% as 18,000 households would no longer be food insecure:' We expect these 

trends to continue. 

Implementation Questions 

Having identified the bene1its to businesses and workers in the Commonwealth and having reviewed what 

impact these increases would have on government services, we then considered a variety of 

implementation options. We recognized that other stales had implemented regional minimum increases, 

establishing varying minimum wages and increase schedules across geographic boundaries. At first, this 

proposal garnered some interest, with proponents observing that despite the relatively small size of our 

Commonwealth, significant economic differences persist between the rural and urban parts of our state. 

According to the U.S. Bureau of Labor Statistics, the average weekly wage in Suffolk County, which 

encompasses the city of Boston, is $1,711. Just a few driving hours away in the western and more rural 

part of Massachusetts is Berkshire County, where workers are earning only $880 a week on average, 

which is nearly half of what their friends in Boston take home. 4 The cost of living, consumer goods, and 

housing vary not only from county to county, but also among neighborhoods, towns, and cities. 

Ultimately, we determined that a regional approach would be deleterious to the economic wellbeing of 

our state. Already, much of our fiscal and economic development policy must grapple with our proximity 

to other states which have differing minimum wages. Our targeted investments in public transportation 

intended to improve worker mobility would be stymied by artificial boundaries either drawn along 

existing county and municipal lines, many of which pre-date the American Revolution, or through more 

data-driven approaches like census tracts or distance from major urban centers. 

Our Commonwealth has endeavored diligently and for decades to invest in our historically industrial but 

chronically under resourced cities. As many of these cities are turning a new corner in their histories, and 

are transforming into the vibrant, thriving communities they were designed to be, we would be hampering 

their progress by imposing certain wages in some parts of the Commonwealth while ensuring higher rates 

in others. 

Good public policy in Massachusetts hinges on our recognition that the continued concentration of 

resources in our capital city will result ultimately in the weakening and fraying of our state as a whole. A 

regionally based minimum wage would result in an asymmetric allocation of resources which many of my 

colleagues, hailing from Provincetown out in the Atlantic to Pittsfield on the New York border and all in 

between soundly rejected. It is for these reasons that 1 urge you to reject a regional approach to increasing 

the minimum wage at the national level and instead embrace the establishment of one fair wage floor for 

the whole country. 

3

https :1/tcf.org/content/reportlthe-impact -of-a-1 5 -min imum-wagc-on-h ungcr-in-amcrica/?agrced·c I &agreed~ I 4

https :I iwww .bls.gov /regionslnew-england/news-rclcasclcountyemploymentand wages_ massachusetts.htm#tab 1 .x lsx 
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Subminimum Wages 

In the same manner that we determined that a regional wage approach was the wrong choice for our state, 

we also recognized the importance of avoiding the establishment of new subminimum wage categories, 

especially a so-called "teen minimum wage". Initially, I was intrigued by the concept, and from my 

efforts on workforce development issues as well as my own experience, I understood the lifelong benefits 

of learning the value and dignity of work at a young age. However, as I continued to meet with my 

constituents and review expert testimony submitted to my committee, I again determined that this policy 

would adversely impact the very population it was designed to help. Among families in Massachusetts 

whose earnings are at the bottom 20th percentile, teen workers bring home nearly 18% of the family 

income.' These teens are not merely working a summer job for extra spending money, but are instead 

functioning as breadwinners for their families. To tell these hardworking young people that their work 

product or services, which might be rendered alongside and identical to those of an older worker, are 

somehow less valuable because of their age was unacceptable to me. 

1 applaud Chairman Scott and the co-sponsors of this legislation for targeting the payment of 

subminimum wages to individuals with disabilities. According to the Wage and Hour Division of the U.S. 

Department of Labor, as of July 2018, there were 1,337 people with disabilities working in Massachusetts 

for a sub-minimum wage. That represents a 63% drop trom just two years prior. 6 Massachusetts is 

gradually moving away from the model of paying subminimum wages to residents with disabilities, and I 

believe it makes sense for the nation to do so as welL 

Federal Action Needed 

In Massachusetts we increased the minimum wage to ensure that even our low paid workers earn enough 

to put rooves over their heads and food on the table, while we also addressed the serious problem of 

income inequality. Multiple studies have shown that the minimum wage does not have the buying power 

that it once had. It has not kept up with inflation, and it does not reflect the increased productivity levels 

of our workers. Massachusetts ranks as the sixth most income unequal state in the union, and we have 

mitigated this disparity by gradually raising our minimum wage. That being said, income inequality is 

rising in 50% of other states across the country at rates higher than the Commonwealth's. 7 This is an 

unacceptable and unsustainable trend, which demands a national intervention. 

Conclusion 

In the chamber of the House of Representatives in the Massachusetts State House, where we voted to 

raise the minimum wage to $15, there is inscribed a quote from President John F. Kennedy: "For what 

Pericles said of the Athenians has long been true of this Commonwealth: 'We do not imitate, for we are a 

model to others.'" 

5 http:/ I massbudgeLorg/report_ window. php ?Joe~ Teens, -Emp laymen!, -and-the-Mini mum-Wage. htm I 6 https:llwww.dol.goviwhdlspecialemployment/CRPiisthtm 

7 https:llwww. wbur.orgibostonomixl20 18107 I 191income-inequality·massachusetts-cpi 
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I am aware of the inaccurate perception of my home state as being populated entirely by highly educated, 

wealthy, and perhaps, uncharitably, elitist urbanites. This is not the model state that Pericles thought the 

Athenians to be, and it is not the model Kennedy thought our Commonwealth to be. Today, we are a state 

of financiers and family farmers, lawyers and laborers, blue bloods and blue collars. The conflicts among 

these diverse and often conflicting interests were at the forefront of the work we accomplished. We 

brought each stakeholder to the negotiating table, asked tough questions, and found a solution. I hope this 

achievement will serve as a model for you as you contemplate the bill before you today. 

1 urge each of you to consider carefully the fact that the forces and efforts which lead to a gradual increase 

in our minimum wage are the same forces and efforts that each of you must contend with in your own 

home states and districts. It is my sincere hope that you will take note of the careful, balanced, and 

deliberative process that we employed and apply it to your own work here. My constituents, the 

Commonwealth of Massachusetts, and our country depend on it. 
209 

Chairman SCOTT. Thank you. Thank you. 

We will now recognize members in the order of appearance this 

morning, and the first one is Representative Adams of North Carolina. 

Ms. ADAMS. Thank you, Mr. Chair, and thank you, Ranking 

Member. And thank you all for your testimony and for being here 

today to our second panel of witnesses. 

We have been here a while and we have had I think a lot of testimony and certainly testimony to the fact that poverty level wages 

don’t instill dignity. That is the first thing I want to say. Equality 

makes dignity, and dignity demands a job and a paycheck that 

lasts throughout the week, and I am quoting Dr. Martin Luther 

King on that. 

I am glad that we split today’s hearing into two parts, because 

I don’t think enough is said about the positive impact that raising 

the minimum wage has on our economy as a whole. Too often we 

view economic progress as a zero-sum game where if workers win, 

employers lose. But our economy is built by consumers. The more 

money Americans have in their pockets, the more they can spend 

on the goods and services that American businesses produce. So 

don’t take my word for it, a consensus of economists say the same 

thing. 

And with that, Mr. Chair, I want to enter into the record two letters, both from the Economic Policy Institute, one from Senior 

Economist and Director of Policy Heidi Shierholz, and the other 

signed by a collection of over 100 of our Nation’s leading economists. 

Chairman SCOTT. Without objection. 

[The information follows:] 


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Econontic 

Policy 

Institute 

POLICY CENTER 

February 5, 2019 

The Honorable Bobby Scott 

Chairman 

Committee on Education & Labor 

U.S. House of Representatives 

Washington, DC 

Dear Chairman Scott, 

On the behalf of the Economic Policy Institute Policy Center, I write to express my strong 

support toward H.R. 582, The Raise the Wage Act of 2019. The Economic Policy Institute is a 

nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middleincome workers in economic policy discussions. 

For the last decade, the federal minimum wage has stalled at $7.25 per hour, leaving today's 

workers earning 29 percent less per hour than their counterparts made SO years ago (after 

adjusting for inflation.) On January 16, members of the House and Senate introduced the Raise 

the Wage Act of 2019, which would raise the minimum wage to $15 per hour by 2024 and index 

it to median wages going forward. The bill would also eliminate the subminimum wage for 

tipped workers, which has been fixed at $2.13 since 1991, by gradually increasing it until it 

reaches parity with the federal minimum wage. 

The Economic Policy Institute estimates that a $15 minimum wage by 2014 would result in $120 

billion in higher wages for 39.7 million low-wage workers-over a quarter of the wage-earning 

workforce. This means a directly affected worker who works year round would receive a raise of 

$4,000 a year as a result of this bill. The vast majority of workers who would benefit from this 

increase would be adults in working families-disproportionately women-who work full time 

jobs to make ends meet. In addition to benefiting workers, raising the federal minimum to $15 

by 2024 would benefit communities as low-wage workers are more likely to spend their extra 

earnings, which would boost consumer spending and spur business activity and job growth. 

Overall, raising the federal minimum wage to $15 by 2024 would lift pay for tens of millions of 

workers, help reverse decades of growing pay inequality, and stimulate the economy. 

EPI Policy Center urges Congress to pass the Raise the Wage Act of 2019 and provide America's 

working families a much needed raise. 

Sincerely, 

Heidi Shierholz 

Senior Economist and Director of Policy, Economic Policy Institute Policy Center 
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Economic 

Policy 

Institute 

Economists in support of a 

feder::tl n1it1i1num wage of$15 

1Jy2024 

February 6, 2019 

Today, workers who earn the federal minimum wage make $7.25 an hour-about 29 percent less per hour 

than their counterparts made 50 years ago (after adjusting for inflation). We can afford to pay the lowestpaid workers in America substantially more than what their counterparts were paid a half century ago. 

Workers produce more today from each hour of work. with productivity nearly doubling since the late 

1960s. 

We, the undersigned, support gradually increasing the minimum wage to $15 by 2024, 

and then indexing it to median wages to protect against future erosion. We also support 

gradually phasing out the outdated subminimum wage for tipped workers, which has 

been frozen at $2.13 since 1991. 

This policy would directly lift the wages of 28.1 million workers by 2024. Another 11.6 million workers whose 

wages are just above tt1e new minimum would likely see a wage increase through "splllover" effects, as 

employers adjust their internal wage scales. Tt1e vast majority of employees who would benefit are 

adults-disproportionately women-in working families, who work at least 20 hours a week and depend on 

their earnings to make ends meet. 

A $15 minimum wage by 2024 would result in $121 billion in higher wages for 39.7 million low-wage 

workers, which would also IJenefit their families and their communities. Since lower-paid workers spend a 

large share of their additional earnings, this injection of wages would modestly stimulate consumer 

demand, business activity, and job growth. Further, modest and infrequent minimum wage increases 

are directly responsible for growing inequality between the bottom and the middle class; this minimum 

wage increase would provide a significant and much needed boost to the earnings of low-wage 

workers. And, because it would be indexed to growth in median wages, it would ensure that the wage 

floor keeps up with growth of middle-wage workers going forward. 

Economic Policy Institute. Washington. DC 
212 


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The last decade has seen a wealth of rigorous academrc research on the effect of minimum wage 

increases on employment, wi\11 tl1e weight of evidence showing tl1at previous, modest increases in the 

minimum wage had little or no negative effects on the employment of low-wage workers. It is time to 

support a bolder increase to address the fact tt1at wages for workers at the low end of the labor rnnrket 

have continued to stagnate. Even if the growth of aggregate work hours for low-wage workers were to 

slow somewhat, workers who work less could still break even, or carne out ahead, in terms of annual 

earnings. Since as many as 10 percent of the lowest-wage workers leave or start jobs every month, any 

decrease in the number of full-time equivalent jobs will rnean that some workers will take more time finding 

a new job, or will work fewer hours. But many of these workers may still see their annual earnings rise 

because of their wage increase. 

The benefits of gradually pl1asing in a $15 minimum wage by 2024 would be far-reaching, lifting pay for 

tens of millions of workers and helping reverse decades of growing pay inequality. The benefits of a $15 

minimum wage in 2024 for workers, their families, and their communities far outweigh the potential costs. 

Of course, the minimum wage is just one of many policies designed to help low-wage workers. We believe 

t11ut an increuse in the minimum wage should be accompanied by complementmy policies such us un 

expanded Earned Income Tax Credit (EITC), enhanced safety net, increased job training, and policies to 

generate full employment 

Sincerely, 

Daron Acernoglu, Massachusetts Institute of Technology, Ph.D. 

Jacqueline Agesa, Marshall University, Ph.D. 

Alan Aja, Brooklyn College, CUNY, Ph.D. 

Randy Albelda, University of Massachusetts Boston, Ph.D. 

Sylvia A Allegretto, University of Californiu, Berkeley, PI1.D. 

Bernurd E. Anderson, University of Pennsylvania, Ph.D. 

Robert M. Anderson, University of California, Berkeley, Ph.D. 

Eileen Appelbaum, Center for Economic and Policy Research, Ph.D. 

Micl1ael Ash, University of Massachusetts Amherst Ph.D. 

Algernon Austin, Demos, Ph.D. 

Kate Bahn, Washington Center for Equitable Growth, Ph.D. 

Dean Baker, Center for Economic and Policy Research, Ph.D. 

Erdogan Bakir, Bucknell University, Pfl.D. 

Stepl1en Baldwin, Retired, Ph.D. 

Nina Banks, Bucknell University, Ph.D. 

James Baron, Yale School of Management, Ph.D. 

Lourdes Bcncria, Cornell University, Ph.D. 

Jmed Bernstein, Ph.D. 

Josh Bivens. Economic Policy Institute, Ph D. 

Sandre Black, University of Texas at Austin, Ph.D. 

Gail Blattenbcrger, University of Utah, Ph.D. 

Robert Blecker, American University, Ph.D. 

Barry Bluestone, Northeastern University, Ph.D. 

Barry Boswort11, Brookings Institution, Ph.D. 

Heather Boushey, Washington Center for Equitable Growth, Ph.D. 

Clair Brown, Universrty of California, Berkeley, Ph.D. 

'-- ,,, ___ ,,,,_,, ___ ,,,,,,,,, -

Economic Policy Institute 2 
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Lawrence Chimerine, Radnor Consulting, Ph.D. 

Robert Coen, Nort11western University, Ph.D. 

Jennifer Cohen. Miami University, Ph.D. 

David Cutler, Harvard University, Ph.D. 

Sheldon Danziger, Univcristy of Michigan, Ph.D. 

Angus Deaton, Princeton University, Ph.D. 

Gregory DeFreitas, Hofstra University, Ph.D. 

James Devine. Loyola Marymount University, Ph.D. 

Geert Dhondt, John Jay College, CUNY, Ph.D. 

Peter Diamond, Massachusetts Institute of Technology, Ph.D. 

Adrienne Eaton. Rutgers University, Ph.D. 

Peter Eaton. University of Missouri-Kansas City, Ph.D. 

John Edgren, Eastern Michigan University, Ph.D. 

Gerald Epstein, University of Massachusetts Amtrerst, Ph.D 

Allan Freyer, NC Justice Center, Ph.D. 

Teresa Ghilmducci, The New School, Ph.D. 

Jeeten Giri, Union College, Ph.D. 

Martin Hart-Landsberg. Lewis and Clark College, Ph.D. 

Jeff Hayes. Institute for Women's Policy Research, Ph.D. 

Adam Hersh, Fonner Chief Economist of the Joint Economic Committee, Ph.D. 

Stephen Herzenberg, Keystone Research Center. Ph.D. 

Emily Hoffman. Western Michigan University, Ph.D. 

David Howell. The New School, Ph.D. 

Candace Howes, Connecticut College, Ph.D. 

Jennifer Hunt. Rutgers University, PI1.D. 

Jeffrey Keefe, Rutgers University, Ph.D. 

Mary C. King, Portland State University, Ph.D. 

Janet Knoedler, Bucknell University, Ph.D. 

Ebru Kongar, Dickinson College, Ph.D. 

Brent Kramer, City University of New York, Pt1.D. 

Haydar Kurban, Howard University, Ph.D. 

Paul Leigh, University of California, Davis, Ph.D. 

Henry Levin, Columbia University, Ph.D. 

Oren Levin-Waldman, Metropolitan College of New York, Ph.D. 

Mark Levinson, SEIU, Ph.D 

Frank Levy, Massachusetts Institute of Teclmology, Ph.D. 

David B. Lipsky, Cornell University, Ph.D 

Pamela Loprest, Urban Institute, Ph.D. 

Stephanie Luce. School of Labor and Urban Studies/CUNY, PI1.D. 

Lisa Lynch, Brandeis University, Ph.D. 

Stanley Malinowitz, Universidad Nacional de Colombia, Ph.D. 

Julianne Malve<>ux, Economic Education, Ph.D. 

Patrick Mason, Florida State University, Ph.D. 

Jordan Matsudaira, Columbia University, Ph.D. 

Peter Matthews, Middlebury College, Ph.D. 

Anne Mayhew, University of Tennessee, Ph.D. 

Economic Policy Institute 3 
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Elaine McCrate, University of Vermont, Ph.D. 

John Miller. Wheaton College, Ph.D. 

Lawrence Misilel, Economic Policy Institute, Ph.D. 

Monique Morrissey. Economic Policy Institute, Ph.D. 

Philip Moss, Univc)rsity of Massachusetts, Lowell. Ph.D. 

Eshragh Motahar, Union College, Ph.D. 

Tracy Molt, University of Denver, Ph.D. 

Richard Murnane, Harvard University, Ph.D. 

Robert Murphy, Boston College, Ph.D. 

Paulette Olson. Wright State University, Ph.D. 

Rudolpl1 Oswald, Retired, Ph.D. 

Spencer Pack, Connecticut College, Ph.D. 

Prasannan Parthasmat11i, Boston College, Ph.D. 

Manuel Pastor, University of Southern California, Ph.D 

Mark Paul, New College of Florida, Ph.D. 

Eva Paus, Mount Holyoke College. Ph.D. 

Kenneth Peres, Retired, Communications Workers of America, Ph.D. 

Joseph Persky, University of Illinois at Chicago Ph.D. 

Michael Piore, Massachusetts Institute of Technology, Ph.D. 

Robert Pollin, University of Massachusetts-Amherst, Ph.D. 

Mark Price, Keystone Research Center, Ph.D. 

Michael Reich, University of California. Berkeley, Ph.D. 

Rene Rosenbaum, Michigan State University, Ph.D. 

Jesse Rothstein, University of California, Berkeley, Ph.D. 

Daniel Rubinfeld, University of California, Berkeley, Ph.D. 

Emmanuel Saez. University of California. Berkeley, Ph.D. 

Isabel Suwhill, Brookings Institution. Ph.D. 

Peter Schaeffer, West Virginia University, Ph.D. 

William Schaniel, University of West Georgia, Ph.D. 

Stephen J. Schmidt, Union College, Ph.D. 

John Scl1rnitt, Economic Policy Institute, Ph.D. 

Geoffrey Schneider, Bucknell University, Ph.D. 

Juliet Schor, Boston College. Ph.D. 

Robert E. Scott, Economic Policy Institute, Ph.D. 

Heidi Shierholz, Economic Policy Institute, Ph.D. 

Rachel Silbermann, Connecticut Voices for Children, Ph.D. 

Andria Smythe, Howard University, Ph.D. 

Younghwan Song, Union College, Ph.D. 

Sarah Spell, Ph.D. 

Case Sprenkle, University of Illinois, Urbana-Champaign, Ph.D. 

William E. Spriggs, Howard University and AFL-CIO, Ph.D. 

Marshall Steinbaurn, Roosevelt Institute, Ph.D. 

James Stewart, The Pennsylvania State University, Ph.D. 

Frank Stricker, CSU Dominguez Hills, Ph.D. 

Kenneth P. Thomas, University of Missouri-St. Louis, Ph.D. 

Chris Tilly, University of California, Los Angeles, Ph.D. 

Economic Policy Institute 4 
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Laura Tyson, University of California, Berkeley, Ph.D. 

Johan Uribe, Denison University, Ph.D. 

Paula Voos, Rutgers University, Ph.D. 

Richard Walker, University of California, Berkeley, Ph.D 

Robert Wassmer, California State University, Sacremcnto, Ph.D. 

David Wei I, Brandeis University, Ph.D. 

Joann Weiner, Tt1e George Washington University, Ph.D. 

Jeannette Wicks-Lim. University of Massachusetts, Amherst, Ph.D. 

Charles Wilber, University of Notre Dame. Ph.D. 

Sarah Wilhelm, Ph.D. 

Robert B. Williams, Guilford College, Ph.D. 

Valerie Wilson, Economic Policy Institute, Ph.D. 

Yavuz Yasar, University of Denver, Ph.D. 

Alexandria Zhang, Ph.D. 

Ben Zipperer, Economic Policy Institute. Ph.D. 

Economic Policy Institute 5 
216 

Ms. ADAMS. All of these individuals are in support of the notion 

that a $15 minimum wage is beneficial to our economy and is long 

overdue. 

Ms. Eckhouse, you state in your testimony that when workers 

have more money in their pockets, they spend it. Why is it that— 

so why is it that it is so important for a business, including a business like yours that does not sell directly to consumers? 

Ms. ECKHOUSE. Thank you for your question, Congresswoman. 

One thing that is very important to us is, of course, what we 

make is sold to be eaten, and people need to be able to buy it so 

that they can enjoy it and we can continue as a business. So that 

is the first element. People have to have money in their pockets to 

buy food, and we make food. That is one thing that we do. 

The other thing that is important is that if people in our employ 

or in other companies’ employ have more money, they can do 

things like purchase goods and services in their communities, and 

that is really important. 

Ms. ADAMS. Ok. Everybody has to eat, and we heard this morning from laborers, workers who are in the fast food business and 

other businesses who have a difficult time trying to make the ends 

meet for their family. 

Professor Reich, the research and the testimony of Ms. Eckhouse 

clearly makes a compelling case that increasing the minimum wage 

boosts consumer spending. What about savings? 

Mr. REICH. First, I think her argument is borne out by a number 

of studies from the Federal Reserve Bank of Boston that show that 

the bigger the wage increase, minimum wage increase, the more 

consumer spending goes up. I think people who are making the 

minimum wage, most of them aren’t saving, and probably most of 

their income, most of their increased income goes to items like food, 

to buying a used car. 

The other effect that it has is on improving credit scores. And if 

you improve credit scores, you know, you have much lower interest 

rates and you can borrow. So ultimately, maybe it will get you to 

savings, but I don’t think at $15 we are talking about a lot of savings. 

Ms. ADAMS. Ok. Can you make the argument that raising the 

minimum wage allows individuals and families to make investments that provide long-term sustainable returns? 

Mr. REICH. Well, first of all, I think people who are struggling 

to make ends meet every month—and that isn’t just people who are 

below the poverty line, it is many people who are above the poverty 

line. The Federal Reserve just did a survey showing about onethird of Americans couldn’t meet a sudden $400 financial requirement. One-third, that is a very large number. 

Anyway, people who are struggling on a day-to-day level like 

that aren’t—you know, they are having a hard time being organized. They are having a hard time getting their kids to school, getting their cars to work, dealing with all the disruptions that everyday life has. And so I think if they want to, you know, be able to 

invest in training and education, it requires more income. Often it 

requires more time, you know, being able to work. 

Ms. ADAMS. Ok. Thank you very much. 

Mr. Chair, I yield back. 


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Chairman SCOTT. Thank you. Ranking Member Foxx, do you 

want to be recognized? 

Ms. FOXX. Would you recognize Mr. Comer? 

Chairman SCOTT. Ok. 

The gentleman from Kentucky, Mr. Comer. 

Mr. COMER. Thank you, Mr. Chairman. 

And, Ms. Barron, I really appreciated your testimony. The minimum wage is often talked about as a policy to help low-wage or 

lesser skilled workers, but you didn’t seem to fit in either of those 

categories. You are earning a good living— 

Ms. BARRON. I do, yes. 

Mr. COMER [continuing]. in the restaurant business. But that 

was because of your skills and your work ethic— 

Ms. BARRON. Yes. 

Mr. COMER [continuing]. and your experience. Seattle’s $15 minimum wage did not appear to help you. Would it have been better 

for the city of Seattle to just not do that and not try to help you? 

Ms. BARRON. I didn’t ask for the help. I was doing just fine. We 

don’t have a tip credit in that city, and that is another reason why 

it just is not working out. 

Mr. COMER. That is my experience. I was a state legislator for 

11 years in Kentucky, and I look back from a historical standpoint 

and there were a lot of bills that passed with good intentions but 

had unintended consequences. And I want to say it sounds like a 

policy that was supposed to help workers now appears to be doing 

the opposite in Seattle. 

As we are considering a legislative proposal to radically increase 

the Federal minimum wage and eliminate the tip credit, what 

would you want us to take into consideration, based on your experience? 

Ms. BARRON. I would say take into consideration tip credit for 

sure. I mean, that is one of the reasons why tipped workers in Seattle are having a hard time now. The tip models are changing, 

and we are losing money. And, you know, I lose money on a daily 

basis under a service charge, which is something that is going citywide now. 

And so I would say you have to look at this whole situation. It 

is a one-size-fits-all deal, and it doesn’t fit everything. So please, 

you know, look at it a little closer. 

Mr. COMER. And I couldn’t agree more that one size does not fit 

all, because the economy in Washington State is significantly different than the economy in rural Kentucky, where I represent. So 

I appreciated that. 

Dr. Strain, as you noted in your testimony, there are large regional differences in cost of living and average income. Obviously, 

the cost of living in Seattle is significantly higher than it is in Monroe County, Kentucky, where I reside. Can you elaborate on how 

a $15 minimum wage may result in disproportionate job losses in 

regions that have lower cost of living and lower average incomes? 

Mr. STRAIN. Yes. In addition to those differences, there are also 

differences in the existing minimum wages. Some States follow the 

$7.25 Federal minimum. Other States have significantly higher 

minimum wages. And, you know, the important thing to consider 


EDL-011-D with DISTILLER
218 

is how big of a shock will this be to the employers of low-wage 

workers? 

There are many businesses who will see the cost of employing 

minimum wage workers double. There are some businesses who 

will see the cost of employing minimum wage workers not double, 

but go up by 50 percent or something like that. And it stands to 

reason, and the evidence bears out, that the larger that shock and 

the larger the increase, the harder it will be for businesses to deal 

with that without reducing employment. 

Mr. COMER. And I will say again what I said in the first segment 

of testimony this morning. I believe that we are in a position in 

America now where we are finally starting to see wage growth. I 

think it is a result of policies over the last 2 years from a regulatory standpoint and from a lower taxation standpoint. Hopefully, 

we won’t do anything to deter the job growth that is being created 

just from the market. There is a shortage of workers. It is basic 

supply and demand. 

So I appreciate you all’s testimony. Thank you, Ranking Member 

Foxx, for letting me ask questions. 

And I yield back, Mr. Chairman. 

Chairman SCOTT. Thank you. The gentlelady from Oregon, Ms. 

Bonamici. 

Ms. BONAMICI. Thank you, Chairman Scott. 

And to the witnesses, I apologize I was not here to hear you 

present your testimony, but I certainly have reviewed it. I think it 

is important to keep in mind as we have this conversation about 

the Raise the Wage Act, which I am proud to support, that the increase is phased in. It is not all of a sudden. And also, low-wage 

workers spend their additional earnings. They go right back into 

the local economies. 

Ms. Gupta, in your testimony, you talk about how over 31 million 

children, two out of every five children live in households with at 

least one working person earning less than $15 an hour. Can you 

talk a little bit about how—because we talked a lot about the wage 

earners, but can you talk a little bit about the children and how 

these low incomes affect them, their health, their education as they 

are growing up? 

Ms. GUPTA. Yes. Thank you, Congresswoman, for the question. 

Everyone should be paid fairly, including young people. And some 

young people working—some young working people I should say 

currently being paid the lower youth subminimum wage, they are 

also students. Some of them are the sole family wage earner. We 

heard from Mr. Wise this morning, who talked about his own experience being the main provider for his family and being unable to 

do so on the existing minimum wage. 

The National Employment Law Center notes that of the 18-and 

19-year-olds that are enrolled in college, 70 percent are working. 

And so that is why we have to be paying attention to the role that 

young people play in their families. For many of them, they really 

are, you know, mainstream supporters and earners for their families and have a lot of other obligations. 

Ms. BONAMICI. So it is fair to say that the children who are being 

raised by parents making less than minimum wage are affected as 

well. It doesn’t just affect the wage earner; it is affecting their famVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00226 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

EDL-011-D with DISTILLER
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ilies and their children as they are growing up, because they might 

not have the food and resources and healthcare they need. 

Ms. GUPTA. Absolutely. 

Ms. BONAMICI. And also, Ms. Gupta, I want to get a couple questions in. Oregon is one of those States that prohibits employers 

from paying tipped workers a subminimum wage. I said this morning I was surprised to find out that there were other states that 

allowed a subminimum wage. Research demonstrates that workers 

in the seven States that have eliminated subminimum tipped wage 

continue to receive tips from customers. Businesses have not suffered hardship. 

In your testimony, you discuss the origins of the tip minimum 

wage, which are intertwined with the history of slavery in this 

country. Why do some states still continue to allow it and who 

would benefit from gradually phasing it out, as proposed in the 

Raise the Wage Act? 

Ms. GUPTA. Well, the civil rights history I think or the history 

of the tip minimum wage is crucial to understanding why States 

need to move away from it. The reality is that poverty rates for 

people who work for tips are more than twice as high as rates for 

working people overall. And the people most affected are women of 

color, low-wage earners. The median annual income for tipped 

workers of color is $14,300. For black working people, it is even 

lower at about $12,900 per year. 

And as we noted, tipped workers have not received a raise in 28 

years, but the actual racial impact and the gender impact of the 

current policies in states that have frozen the tip minimum wage 

for so long really disproportionately impacts women of color in families. 

Ms. BONAMICI. Thank you. 

And, Dr. Reich, thank you for your testimony. The most recent 

increase to the Federal minimum wage a dozen years ago did not 

address inflation rates, or in my State of Oregon, we indexed to inflation, based on the CPI. 

And I wonder if you could talk a little bit about how $15 in 2024 

does not equal $15 in today’s dollars. When you adjust past increases to the Federal minimum wage for inflation, how does the 

Raise the Wage Act compare? Based on your research, can you address projected effects on employment? 

Mr. REICH. On employment? Well, first, the question on indexing, 

there are about ten states that index their minimum wages, and 

I couldn’t find any difference on the employment effects in the 

states that do and the states that don’t. 

The States that do index and have for a long time, like Washington and Oregon, are actually a very interesting research topic, 

because in the rest of the country the real minimum wage has fallen where there hasn’t been indexing and it stayed at $7.25. So you 

see an increase in the minimum wage, but then in the subsequent 

years the real value decreases. So, you know, are we really observing an increase in the minimum wage when we look at those 

events? In the index states, we do see those events. So I think that 

is—and in those states, we don’t see negative effects on employment from indexation. 


EDL-011-D with DISTILLER
220 

Indexation means that there is a planful, you know, approach to 

the minimum wage each year, which means a small couple of percent increase rather than the kind of sawtooth pattern that we 

have, we have big increases every 10 years or so followed by long 

periods where we don’t. 

Ms. BONAMICI. Thank you. 

And I yield back. Thank you, Mr. Chairman. 

Chairman SCOTT. Thank you. 

The gentleman from Kansas, Mr. Watkins. 

Mr. WATKINS. Thank you, Mr. Chairman. 

Dr. Strain, you bring up the fact that there is a lack of international evidence regarding the effects of doubling minimum wage. 

In fact, you explained how States who increase their minimum 

wage are taking on a gamble. Now, I asked for international comps 

because I have lived outside the U.S. most of my career. I have 

been to about 75 countries, and I have never seen a country with 

more economic opportunity and more freedom and a chance to advance as the United States. 

So my question is, why is there a lack of international evidence 

that might compare to what this committee is considering today? 

Mr. STRAIN. Well, I think it serves to highlight how major, how 

big of a decision this would be for the Congress. There are not 

countries that have gone up to a level like $15, because $15 is a 

very high wage. There is a reason why in the United States only 

until very recently no states had gone up to $15, and there is a reason why the Federal minimum wage is less than half of $15. 

Mr. WATKINS. Can you think of any other nations in particular 

that might have come close? 

Mr. STRAIN. I think Great Britain is around $12 or so. 

Mr. WATKINS. All right. That is all I have. 

Thank you, and special thanks to Ms. Barron. I really appreciate 

your willingness to come and speak with us today. Your testimony 

was very moving and you are very selfless. Thank you. 

Ms. BARRON. Thank you. 

Chairman SCOTT. The gentleman yields back. 

The gentlelady from Florida, Secretary Shalala. 

Ms. SHALALA. Thank you very much, Mr. Chairman. 

Just to begin, Florida’s minimum wage as of January 1st is 

$8.46. It does increase with the rate of inflation, but a living wage 

in Miami-Dade, in my district in particular, would have to be almost $13. So I very much support this gradual increase. 

If I could start with Mrs. Eckhouse, I am very excited to see you, 

because I get your meat through Murray’s. 

Ms. ECKHOUSE. Wow, I am thrilled. Thank you. 

Ms. SHALALA. I have to disclose that. So I am a big fan. 

Ms. ECKHOUSE. Wow, that is really exciting. Thank you so much. 

Ms. SHALALA. I am interested because you are in the middle of 

Iowa, obviously in a small—it looks like a small town in Iowa. Tell 

us a little about the turnover rate, how long your employees have 

worked for you, because I have always been interested in when you 

raise wages what that actually does with turnover and retention. 

You obviously have done this over a long period of time. 

Ms. ECKHOUSE. So we opened our plant—we built our plant in 

2004 and we opened it in 2005, in February. Our longest term emVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00228 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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ployees have been with us since then, just a few. And we have had 

periods of greater and lesser turnover, but we do have a lot of loyalty among our employees. They appreciate that we pay high wage 

to them, as high as we can manage, that we give them regular increases in their wage. And we have a lot of other elements that we 

offer to our employees in addition to their hourly wage or their salary. 

But we have—we really—given the industry that we are in, 

which is the meat processing industry, we have a relatively low 

rate of turnover among our employees; and that is, as I said in my 

testimony, really critical to us, because, like all businesses, what 

we do is unique, but ours is possibly more unique than others, 

which I realize is not a grammatically correct formulation. But 

really, what we do is unusual and we need to train people very 

carefully to do a good job. And it takes a long time to train them, 

and to have people walk out the door because they can get more 

money somewhere else, that is damaging to us as a business and 

discouraging to us as well. 

Ms. SHALALA. Thank you very much. 

Dr. Reich, I have been very interested in your work for some 

time, and I am particularly interested in the discussion, and you 

are talking to us a little about the offset for minimum wage, the 

SNAP program, for example. And that is, by raising the minimum 

wage, I believe we would save money on the Supplemental Nutrition Assistance Program, because there would be less people using 

that program as the minimum wage went up. 

Mr. REICH. That is right. I looked at not just the rules, which say 

that there is a ceiling above which you are no longer eligible for 

the SNAP program, and that it is not really—or to mix my metaphors up, I guess, it is not a cliff. You don’t fall off it all of a sudden. It is a gradual decline in the food stamps that you get. And 

when I compared that across states with different minimum wages 

and try to make everything else controlled so that it was a controlled experiment, we found that, indeed, higher minimum wages 

led to lower food stamp expenditures as well as food stamp enrollments. 

Ms. SHALALA. I appreciate that. 

Mr. Chairman, just raising, increasing the minimum wage in my 

State of Florida to $10.10 per hour would decrease SNAP expenditures by $290 million. So when we talk about raising the minimum 

wage, we have to look at how it would offset certain Federal programs and actually create an offset that would be significant for 

the Federal Government. 

Thank you. I yield back. 

Chairman SCOTT. Thank you. The gentleman from Idaho, Mr. 

Fulcher. 

Mr. FULCHER. Thank you, Mr. Chairman. 

I think my question is best geared toward Dr. Strain. In our 

State of Idaho, approximately 65 percent of our commerce in the 

tax receipts come through what would be considered a small business or ag-based economy. And I just try to look at this, and I understand what my good colleague from Florida just mentioned 

about the potential offsets with Federal programs, but that is taxVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00229 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

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payer money as well. If we take that minimum wage to $15 in our 

State, where does that money come from? 

Mr. STRAIN. Well, the money comes from smaller profit margins 

for businesses that can continue to employ workers. The money 

comes from employing fewer workers and finding more cost-effective ways for businesses to conduct their operations without workers. So one obvious example of that is switching from human cashiers to automated kiosks and things of that nature. 

You know, there is no kind of magic source of money for these 

things. When Federal regulation says that you can’t pay a worker 

less than $15 an hour, businesses take that as a given unless they 

break the law. And, of course, there is a nontrivial rate of subminimum wage payments. The higher the minimum wage goes, the 

more of a problem that will be. 

But businesses take that as a given and then decide whether or 

not it makes sense to hire the next worker. And the concern is that 

businesses will decide it does not make sense to hire the next worker. 

Mr. FULCHER. Thank you. So in our situation potentially as policymakers, we would need to go into this understanding that part 

of the calculus, part of the result, part of the impact of implementing this would be that we are knowingly redistributing that 

revenue from one party to another, because what I am hearing you 

say is that the prices would have to go up or they would have to 

figure out how to put cost down in some other area. 

Mr. STRAIN. Yes. One way to think about it in those terms is that 

you are taking money away from low-skilled, less experienced 

workers and giving it to workers who get to continue keeping their 

jobs, who will disproportionately be higher skilled workers with 

more experience. And, you know, I think the position that you are 

in is to decide whether that is a good tradeoff. 

Mr. FULCHER. Thank you, Dr. Strain. 

Thank you, Mr. Chairman. I yield back. 

Chairman SCOTT. Thank you. The gentleman from Michigan, Mr. 

Levin. 

Mr. LEVIN. Thank you, Mr. Chairman. 

With permission, I would like to submit for the record a letter 

from I think 10 or 12—I didn’t count them—organizations representing disability rights groups, just an incredible range of 

groups, the Autism Society of America, Disability Rights and Education Defense Fund, National Down Syndrome Congress, supporting the bill. 

Chairman SCOTT. Without objection. 

[The information follows:] 


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EDL-011-D with DISTILLERInsert offset folio 99 here 35268.099

January 15, 2019 

The Honorable Bobby Scott 

The Honorable Mark Pocan 

The Honorable Stephanie Murphy 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Scott, Representative Pocan, and Representative Murphy: 

The undersigned organizations are writing regarding the introduction of the Raise the Wage 

Act of 2019. We want to thank you for including in the bill a phase out of the use of 14 (c) 

certificates under the Fair Labor Standards Act (FLSA), which currently allows certificate 

holders to pay workers with disabilities less than the minimum wage. 

Employment of people with disabilities has long been a bi-partisan national goal. The Workforce 

Innovation and Opportunity Act (WIOA) of 2014 established as a priority competitive integrated 

employment, where people with disabilities work in mainstream jobs alongside, and are paid 

comparable wages to, co-workers without disabilities. WIOA furthers the goal of the Americans 

with Disabilities Act (ADA) to advance the economic self-sufficiency of people with disabilities. 

Yet despite the clear national priority for competitive integrated employment, nearly 230,000 

people with disabilities are legally paid sub-minimum wages under Section 14(c) of FLSA, 

largely in settings where they are segregated from their nondisabled peers and broader 

society. The subminimum wage creates and reinforces a life of poverty and dependency on 

public support. 

As the Congressionally-created federal Advisory Committee on Increasing Competitive 

Integrated Employment for Individuals with Disabilities ("the Committee") described in its 

report to Congress and the Labor Secretary: 

[There is an] underlying need to amend Section 14(c) of the FLSA so that it 

reflects and aligns with modern federal disability policy and laws, which are 

based on the assumption that all individuals with disabilities are capable of, 

and have a right to, [competitive integrated employment]. The current 

widespread practice of paying workers subminimum wages, based on 

assumptions that people with disabilities cannot work in typical jobs, or on 

assumptions about the unavailability of alternative work opportunities, is 

antithetical to the intent of modern federal policy and law. 1 

The National Council on Disability, an independent federal agency charged with advising the 

President, Congress, and other federal agencies regarding policies that impact people with 

disabilities, has repeatedly called for the elimination of sub-minimum wages under Section 

14(c), including in its recent report, "National Disability Employment Policy, From the New Deal 
224 


EDL-011-D with DISTILLERInsert offset folio 100 here 35268.100

to the Real Deal: Joining the Industries of the Future." 2 

The inclusion of 14(c) in the Raise the Wage Act sends a clear message to Congress and to the 

public that it is no longer acceptable to pay individuals with disabilities less than the minimum 

wage. The undersigned organizations stand ready to assist you and your offices as this critical 

bill moves through Congress. The inclusion of 14(c) in the Raise the Wage Act sends a clear 

message to Congress and to the public that it is no longer acceptable to pay individuals with 

disabilities less than the minimum wage. The undersigned organizations thank you again for 

including in the bill provisions to end this unfair and outdated treatment of people with 

disabilities. 

Please contact Alison Barkoff, Policy Advisor to the Collaboration to Promote Self 

Determination (abarkoff@cpr-us.org or 202-854-1270} or Amanda Lowe, Senior Policy Analyst 

at the National Disability Rights Network (amanda.lowe@ndrn.org or 202-408-9514 ext. 101) 

if you have any questions or to follow up on this letter. 

Sincerely, 

Association of People Supporting Employment First 

Association of University Centers on Disabilities 

Autism Society of America 

Autistic Self Advocacy Network 

Bazelon Center for Mental Health law 

Center for Public Representation 

Collaboration to Promote Self Determination 

Disability Rights & Education Defense Fund 

Institute for Community Inclusion 

National Association of Councils on Developmental Disabilities 

National Council on Independent Living 

National Disability Institute 

National Disability Rights Network 

National Down Syndrome Congress 

TASH 

: https:/ /www.dol.gov/odep/topics/pdf/ ACICIEID Jinai_Report_9-8-16.pdf 

https:/ /ned .gov /publication s/2018/ new-deal-real-deal 
225 

Mr. LEVIN. And, Ms. Gupta, I would like to ask you a question 

about this very matter, their letter. The FLSA has a provision, section 14(c), as you know, that allows individuals with disabilities to 

be paid a subminimum wage. As your testimony States, some are 

paid as little as pennies an hour. Why is it important to phaseout 

14(c) to ensure all people in this country are paid a fair wage, as 

these groups are requesting? 

Ms. GUPTA. Thank you, Congressman. Section 14(c) of the FLSA 

was actually written at a time when individuals with disabilities 

were predominantly housed in institutions and endured long-term 

segregation. At that time, there were no statutory requirements 

that would support individuals with disabilities in the workplace, 

and individuals with disabilities didn’t actually have legal protections from discrimination. 

And when Congress passed the ADA in 1990, it ushered in a new 

era, and then the Supreme Court issued their Olmstead vs. L.C. 

opinion. And the reality is that people with disabilities deserve to 

work alongside friends, peers, and neighbors without disabilities. 

They deserve to earn fair wages, to access equal opportunity for advancement. And the 14(c) of the FLSA has really locked classes of 

people with disabilities, particularly with intellectual and developmental disabilities, into really degrading subminimum wage and 

sheltered workshops. 

Mr. LEVIN. And I assume it almost assures their continued dependence on family or Federal dollars of other kinds to be able to 

live and have food and shelter and so forth. 

Ms. GUPTA. That is right. It has created an increased long-term 

dependency and, of course, this also can create deeply kind of 

humiliating and personal experiences that make people with disabilities feel like kind of subhuman. 

Mr. LEVIN. Yes. I have to say, Mr. Chairman, for 4 years I ran 

the work force system of the State of Michigan, and one of the most 

delightful parts of my job was handling all the areas that help people with disabilities live independently and gain employment. And 

it was probably the area I learned the most in, but also we really 

do a disservice to huge swathes of our population if we say that 

they don’t deserve to earn a basic minimum wage. So thank you 

for that. 

Dr. Reich, I would like to ask you a question I don’t think has 

come up that much. And I don’t know if there is good research on 

this or not, but I feel like these discussions about the minimum 

wage lack imagination. And your profession is famous for lacking 

all imagination, so maybe it is an unfair question. 

There are profound, profound effects on the economy of having 

more money in working people’s pockets. Is there research to show 

the economic impacts to the restaurant, to, you know, the local 

store, to the barber shop, to the auto dealer when people are making more money in the community, and what happens, where that 

money goes and what it does to Main Street? 

Mr. REICH. Thanks for the question. I know of two studies on 

spending effects of the minimum wage. One is done at the Federal 

Reserve Bank in Chicago, in the research department, and the 

other more recently the Federal Reserve Bank of Boston. 


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Both found big spending effects, because people had more money 

in their pockets. And the Boston one actually looked most closely 

at food—restaurant spending, rather. And it found that while restaurant prices went up, restaurant sales also went up. So the 

prices did not deter people going to restaurants at all. 

Mr. LEVIN. You know, I think that is such a profound point. I 

know from my own experience that the restaurant industry is, you 

know, is a big opponent of this. And I just think that the experience in States and cities that have raised their minimum wage, 

and when you visit them they have unbelievably thriving restaurant scenes and high, high employment. 

So I really hope that we will pass this bill and we will allow 

workers to have more dignity and more self-sufficiency in our country, and it will actually help grow our economy and make it more 

fair. Thank you very much. 

I yield back, Mr. Chair. 

Chairman SCOTT. Thank you. 

The gentleman from Pennsylvania, Mr. Thompson. 

Mr. THOMPSON. Chairman, once again, thank you for this marathon hearing. 

Thanks to all of our panelists that are here. I appreciate that. 

I just want to make a comment, then I have got a couple questions. 

My comment is, I don’t know how many of you have ever—I spent 

28 years before I came to Congress serving individuals facing lifechanging disease and disability. I have spent a lot of time in supported workshops, supported employment sites. I spent a career 

trying to help adapt equipment, help look at facilitating processes, 

you know, to be able to help people achieve a competitive level of 

work. 

And you can do all that, and there are still individuals with some 

very severe complex disabilities who you throw by the wayside by 

eliminating piecework or subminimum wage, you know, folks who 

are just so complex in their disability. But I challenge you if you 

have not, where these folks are still working—and, unfortunately, 

a lot of them have lost their jobs and are no longer able to have 

that sense of accomplishment, that thing that defines them, the 

pride that they take. 

The coolest place I have ever been is in one of those sites on payday. And those checks, some of those checks aren’t very large, but 

you would think that the way they receive it was like for a million 

dollars. The self-esteem, the work. 

And so before you throw people with complex severe disabilities 

under the bus with some type of flawed policy that ignores the 

needs of the very, very disabled. We are not talking about—you 

know, I worked to help facilitate people back into life in a full and 

robust way. I encourage you to check that out. 

Dr. Strain, I want to just—the first question is about the future 

of a lot of minimum wage jobs. As I travel around, I am from a 

very rural district. You know, I go into grocery stores, self-checkout 

counters now. Restaurants, there is no wait staff, you order on electronically. Gas stations. I mean, all just kind of a lot of places 

where—not everywhere, but a lot of minimum wage jobs that I 

have heard referenced today, I mean, they are low-skilled jobs and 

so technology is eliminating a lot of those. It is not going to totally 


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eliminate them, but—and that is really why I look to a ladder of 

opportunity. You want people to do better in life, help them connect 

with the work that this body has already done, in terms of career 

and technical education training, skills-based education. 

Dr. Strain, any thoughts on how the advancement of technology 

in some of these settings where we have low-wage jobs are impacting low-wage jobs? 

Mr. STRAIN. Yes. I think that is an excellent point. The cost of 

that technology has been going down over time. And low-skilled 

workers, minimum wage workers have to compete more fiercely in 

order to have those jobs. A potential risk of raising the minimum 

wage at all, much less to $15 an hour, is that just tips the costbenefit calculus in favor of those kiosks and that technology and 

away from hiring a human worker. 

But there is even a more important point than that. Low-skilled 

workers, even if they are no longer going to be employed as cashiers as technology continues to get better and cheaper, do constitute a pool of available resources for businesses. And businesses 

are smart, and they are going to try and figure out a way to use 

those workers. 

So a $15-an-hour minimum wage not only makes it harder for 

businesses to employ those workers today, it makes it much harder 

for businesses to figure out how to employ those workers in the future doing new kinds of jobs that don’t currently exist yet. 

Mr. THOMPSON. Dr. Strain, you note in your testimony that 

worker productivity is primarily a factor in wage levels. How do 

education and skills development, the skills-based education factor 

into productivity? 

Mr. STRAIN. Well, they increase it. So if you are thinking about 

productivity is roughly how much revenue can you generate every 

hour you work for your firm? How much additional revenue can 

you generate for the firm? The more skills you have, the harder 

you work, the more education you have, which is a primary way 

we transmit skills, the more revenue you are going to generate, the 

more valuable you are going to be, the more firms are going to compete over you and the more your wage is going to go up in the market. 

Mr. THOMPSON. And we have a skills gap today. And I would just 

love, encourage folks to, you know, to check with the work force investment boards, the different great agencies that are out there, 

our community colleges, just the great places where you can access 

this type of education. 

The Federal Government is supporting that in a way more than 

what we ever have in the past with this piece of legislation that 

we enacted last year. And I really do think that is the pathway to 

greater opportunity. 

Thank you, Chairman. 

Chairman SCOTT. Thank you. The gentleman from New York, 

Mr. Morelle, is recognized for 5 minutes. 

Mr. MORELLE. Thank you, Mr. Chair. I will pay particular attention to the shot clock. I apologize for exceeding my time earlier 

today. 

Thank you to the panelists for being here. Over the years in the 

New York Assembly, I met regularly with the Center for Disability 


EDL-011-D with DISTILLER
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Rights, a not-for-profit community-based advocacy and service organization for people with all types of disabilities. And during my 

many conversations with the CDR, a recurring topic was the question of phasing out the subminimum wage for individuals with disabilities and working toward a Federal law, to allow those workers 

to earn the same wage and not face discrimination on the basis of 

the discrimination. 

Ms. Gupta, if I might ask you, section 14(c), the Fair Labor 

Standards Act, allows for individuals with disabilities to be paid a 

subminimum wage. It was written at a time when individuals with 

disabilities were predominantly housed in institutions, something 

that, gratefully, is no longer the case in many places. There was 

no statutory requirement, as I understand it, to support individuals 

with disabilities in the workplace, and the individuals did not even 

have legal protections from discrimination. 

I am just curious, can you describe how our legal framework has 

changed regarding those protections and supports for individuals in 

all aspects of society and how this does impact and necessitates the 

phasing out of 14(c)? 

Ms. GUPTA. Yes. As you said, Congressman, section 14(c) of the 

FLSA was written at a very particular period of our Nation’s history when there really was no legal framework for understanding 

discrimination against people with disabilities. And then when 

Congress passed the Americans with Disabilities Act in 1990, it 

really ushered in a very broad new wave of protections, kind of a 

new era for people with disabilities in our country. 

And then the Supreme Court kind of further elucidated the protections in 1999 in a case called Olmstead versus L.C. and recognizing I think what was a crucial tenet of the ADA, the community 

integration mandate. And it was there in that case that the court 

said that the ADA bars unjustified institutional isolation of persons 

with disabilities. 

And when I was in the Justice Department, although my predecessor started this, there was a real effort to ensure that mandate 

had real meaning in the lives of people with disabilities and to seek 

to make sure that where there were sheltered workshops that were 

segregated facilities that really excluded or primarily just focused 

on employment for people with disabilities who had little to no contact with people who did not have disabilities, there was a real effort to ensure that people with disabilities could work alongside 

peers and have equal opportunity to employment. 

And that is why we have seen a number of states actually now, 

both through litigation but happily through legislative action, take 

the charge to end 14(c) and to have a phased-in opportunity to 

raise the minimum wage for people with disabilities. 

Mr. MORELLE. Thank you for your answer. And actually, you answered my next question, which related to the conflict with the 

14(c) and the ADA, so I appreciate your comment on that. 

Let me just in closing, six states, as you mentioned, have completed or are in the process of phasing out 14(c). I think Vermont 

and New Hampshire have completely phased out. Maryland, Alaska, Oregon and Rhode Island are in the process of it, and I understand Hawaii and Kentucky are at least considering it. 


EDL-011-D with DISTILLER
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Can you just talk about the other benefits individuals with disabilities experience other than financial benefits from the phasing 

out of 14(c) and moving into a competitive integrated employment 

setting? 

Ms. GUPTA. Yes. I mean, so much of what we are talking about 

today is really about the dignity of work and people with disabilities feeling the dignity of being human beings entitled to the same 

protections as any other people in this country and being able to 

participate in the mainstream economy with people without disabilities, to have the opportunity, to have equal opportunity for jobs 

and housing and the like. 

And that this move from the ADA to Olmstead and beyond is 

really about ensuring that people with disabilities have equal opportunity and are not kind of considered, you know, folks to be segregated out of the mainstream economy. 

Mr. MORELLE. Very good. Thank you again to all the panelists 

for your great work. 

Thank you, Mr. Chair. And with that, I ask unanimous consent 

to submit into the record a 2018 report from the National Council 

on Disability that renews its recommendations for the phaseout of 

section 14(c) of the Fair Labor Standards Act. 

Chairman SCOTT. Without objection. 

[The information follows:]Mr. Morelle 

National Council On Disability: https://www.govinfo.gov/content/ 

pkg/CPRT-115HPRT36713/pdf/CPRT-115HPRT36713.pdf 

Mr. MORELLE. Thank you, sir. 

Chairman SCOTT. Thank you. Thank you. 

The gentleman from Pennsylvania, Mr. Smucker. 

Mr. SMUCKER. Thank you, Mr. Chairman. 

One of the opportunities I think we have here is to implement 

policies that continue to lift more people out of poverty. I know one 

of the goals of mine is to try to find ways that we can give people 

the opportunity to connect with a good-paying job and to provide 

that dignity that Ms. Gupta was just referring to. 

Dr. Strain, I would like to talk about the doubling of the Federal 

minimum wage in that context. Some people believe that doubling 

the minimum wage is an effective antipoverty policy. Is that the 

right way to view it? 

Mr. REICH. It is certainly not the way I view it. The benefits of 

increasing the minimum wage are that workers’ earnings go up. 

But if you look at who those earnings accrue to, they are to households that are not below the poverty line, on the whole. So it is certainly the case that the minimum wage is a very poorly targeted 

antipoverty tool. In addition, the costs of the minimum wage are 

borne by workers without a lot of skills, workers without a lot of 

experience. Those workers are much lower income, on average. 

And so you have this policy where the benefits go to people who 

are further up the income distribution. The costs are borne by the 

least-skilled, least-experienced, most vulnerable workers in society. 

If your goal is to help out, you know, middle class households, 

maybe that is a reasonable tradeoff. If your goal is to help the 

working poor, then it is certainly not, in my view. 

Mr. SMUCKER. Ms. Barron, just to followup to that, according to 

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cans who live in poverty do not work at all and, therefore, would 

potentially not benefit from a minimum wage increase. But, that 

said, I firmly believe that the vast majority of Americans desire the 

dignity of earning that success and would work for a living if the 

opportunities existed. 

Based on your experience, do you think that more than doubling 

the Federal minimum wage will make it easier or harder for unemployed Americans to find work and begin to make a living? 

Ms. BARRON. In my opinion, I would think it makes it harder. I 

mean, we have seen support staff jobs, which are typically jobs that 

people who are right out of school take or people, you know, lowincome workers I guess you could say or just people starting out 

would take, and those jobs are going away. 

In Seattle, we have a chain called Red Robin, and they employ 

a lot of people across the State and across the country, I believe. 

And due to the $15-an-hour minimum wage increase, they went 

ahead and wiped out all of their support staff. Now, that is bussers 

and hosts and food runners and things of that nature. And these 

are, again, jobs that, you know, when you are first starting out of 

school, I started that way. I started as a busser. And, you know, 

you work your way up through that industry. 

So, you know, I think people that are unemployed looking for 

jobs to start out in any sort of industry probably are going to have 

trouble, if something like Red Robin is an indicator. 

Mr. SMUCKER. There has been some discussion about teens, teens 

entering the work force. 

Ms. BARRON. Yes. 

Mr. SMUCKER. And my son is 16 years old, has several different 

jobs, is, by the way, thrilled with that one job was $9.50 per hour. 

But I was part of a presentation recently—I would just like to get 

your reaction to this—measuring the success of people who enter 

the work force. 

And in the view of this presenter, he was showing statistics that 

where he believed that having a job during high school was one of 

the best indicators of whether someone would be successful after 

that. Do you agree with that? 

Ms. BARRON. I do agree with that. And my son is going to be 

turning 16 next week. And, you know, I have raised him since at 

a very young age to start to work. You know, whether that is doing 

dishes at home or now he currently has a job walking dogs. 

Mr. SMUCKER. I was speaking to an owner of a restaurant in my 

area, a mixed bar and grill, saying that, you know, people who 

have been there for some time were earning well over $40,000 per 

year and more. And his view, as an owner of a business who enjoyed providing jobs for teens, said that would be much more difficult to do if they had to start at $15 an hour. Do you see that 

as well? 

Ms. BARRON. Yes. At the restaurant where I work, we are trying 

to hire people now that, you know, have way more experience. So, 

again, we don’t have those support staff jobs. So now we have to 

hire—you know, if we are hiring bartenders and such like that, we 

are looking at people that have had a lot of, lot of experience. And, 

again, those are hard to find, because now we are going to a service 

charge. And so people with a lot of experience have actually moved 


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out of the city. So we are seeing people leaving the city, because 

the minimum wage increase is impacting how they make their 

money. 

I honestly—I mean, for young kids, I think of myself when I was 

17 coming out of high school. And my mom worked in a restaurant. 

She got me a job bussing tables. And I think about how I worked 

my way up through the industry, and it has allowed me to survive 

and do some of the things that I wanted to do in my life. And I 

think about myself at 17, 16 years old, and wonder about the kids 

nowadays. Like my son, like I don’t know what he is going to be 

doing, you know, if he starts in the restaurant industry. I am trying to tell him don’t do that, but— 

Mr. SMUCKER. Thank you. 

Chairman SCOTT. The gentlelady from Michigan, Ms. Stevens. 

Ms. STEVENS. Thank you, Mr. Chairman, and thank you for this 

wonderful day of hearings on a very important topic. And thank 

you to our incredible panelists for being here today. Your testimonies have mattered a great deal. 

As someone who was managing a multimillion dollar federally 

funded portfolio focused on the future of work in the digital age of 

manufacturing in the age of automation before I was running for 

Congress and was now in Congress, it is obvious that the question 

around the future of work must be undergirded within our present 

reality, that the question of our economic orientation is, how do we 

choose to value human work and what are we handing over to automation versus what are we giving to people. 

The question of has a hamburger—excuse me, has a machine 

ever been able to buy a hamburger? No, that machine never has, 

that we must live in a human-driven and oriented economy. 

So I have got four quick questions for Dr. Strain, who I believe 

you are, you know, capable of answering these. Could you answer 

quickly, what is the yearly income of a person living in poverty? 

Mr. STRAIN. The yearly income of a person living in poverty? 

Ms. STEVENS. Yes. What is our federally indexed rate for somebody— 

Mr. STRAIN. It varies, depending on how many children you have 

in the household. Say $20,000 dollars. 

Ms. STEVENS. Ok. And what is the income of a person working 

full time at the minimum wage? 

Mr. STRAIN. A person working full time at the minimum wage is 

$15,000, roughly. 

Ms. STEVENS. And do you know how much our Federal Government spends on SNAP benefits a year? 

Mr. STRAIN. Not precisely, no. 

Ms. STEVENS. Ok. And so I take it you don’t know how many are 

working full time who may happen to be utilizing SNAP benefits? 

Mr. STRAIN. Who are working full time who are utilizing SNAP 

benefits? Not— 

Ms. STEVENS. Yes, the percentage of our work force. Ok. Well, we 

can do that as a question for the record after the hearing. 

So, Ms. Gupta, quickly for me, can you describe for us what this 

means to work full time in the U.S. at the poverty rate? How does 

this impact a person’s access to healthcare, to equal opportunities? 


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What does this mean for women, and particularly what does this 

mean for women of color? 

Ms. GUPTA. Yes. I mean, this means that women and women of 

color are harmed by—there is a pretty significant gender pay gap, 

and it targets in particular women of color because they can’t access and won’t have as much security around healthcare, and 

transportation, and additional money to support their families. And 

so there is a lot of—you want me to do this quickly, so I will just 

say that women of color in particular are deeply harmed by these 

kinds of policies and their ability to actually enter the mainstream 

economy. 

Ms. STEVENS. Well, there is lots of narratives to share around 

this important topic, and I appreciate your deep and thorough testimony that covers this, and thank you for being here with us 

today. 

Mr. Brodeur, you gave a great testimony, and I come from the 

great State of Michigan where increasing the minimum wage is 

overwhelmingly popular in my home state. And as I talked about 

the future of work in the digital age of everything, it certainly 

means a great deal to you, someone who is representing the largest 

robust automotive supply chain in the country. But I would love for 

you to share a little bit more about your experience and your work, 

particularly how did you see increasing the minimum wage as 

stimulating or revitalizing cities or towns across your state? What 

impacts did that on your local economies? 

Mr. BRODEUR. You know, thank you for the question because 

Massachusetts, I think, has had a little bit of a different perspective because we have done what you all started to talk about doing 

here in terms of gradually raising the minimum wage. Starting in 

2015, we did a round dollar year minimum wage increases. We 

took a year off, and then with the most recent legislation, over the 

next 5 years we will go up to $15. 

So we do not have the problem that I think is built into the system you currently have where if you don’t raise it, then it becomes 

harder to raise it, and then there is an argumentative that is a 

shock to the system, so we better not raise it, so folks get left behind. 

What I think is really important for you people to understand 

about Massachusetts and why I appreciate the question is particularly from the morning session. I heard Boston talked about maybe 

two or three or four times as, you know, a wonderful place but a 

very high wage, high expense place, and therefore, all of Massachusetts must be the same. That is not at all the case. We have rural 

areas, particularly in Western Mass, that struggle with some of the 

issues that I have heard about here today. 

In some places, median income is less than half of what is in 

Boston. We also have gateway cities. My friend from Greater Lowell can tell you about Lowell and Lawrence and some of those surrounding communities that essentially were—were really industrial 

dynamos but have struggled a little bit to make the transition that 

Boston and Cambridge already have into the digital economy, the 

service economy. 

So when we thought about how to approach the minimum wage 

and how to target things, we viewed it as an opportunity to raise 


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folks up, to put money into people’s pockets so that those parts of 

the economy that aren’t entirely Boston-driven will have an opportunity to participate in that success. And that was part of—you 

know, we kind of did a lot, quite frankly, in the last legislative session around raising people up. 

This was an important part of it, but again, we approved that we 

needed to give folks the opportunity to invest in themselves, and 

really, get off the ground floor, to get education, to get into some 

of the middle skilled jobs that we are desperate to fill in Massachusetts. 

Ms. STEVENS. Well, thank you for doing that work, and I yield 

back the remainder of my time. 

Chairman SCOTT. My distinguished colleague from Virginia, Mr. 

Cline. 

Mr. CLINE. Thank you, Mr. Chairman. I appreciate everyone’s 

time today, and I noted with interest the comments of my colleague 

from Michigan talking about the industries that are there. And it 

is a different economy than the economy of my State, the Commonwealth of Virginia, and different than Representative Brodeur’s 

Commonwealth of Massachusetts, another commonwealth. But we 

do share similarities in that there are rural parts and suburban 

parts that have more robust economies, more diversified economies. 

And so I wanted to start by asking Dr. Strain. The effect of an 

increase in the minimum wage on unemployment is fairly straightforward. You have noted that in your testimony. Is there an indirect inflationary pressure on the cost of goods and services in an 

area, say, rent or other types of products that an increase in the 

minimum wage may influence? 

Mr. STRAIN. Yes. So when a business faces an increase in the 

minimum wage, they have to absorb that cost somehow. One way 

to absorb that cost is by having fewer workers work there. Another 

way to absorb that cost is by raising prices. And you see that when 

the minimum wage goes up, the prices that businesses that employ 

minimum wage workers charges also go up. 

This is, you know, kind of a double-edged sword for those minimum wage workers in that sense because a lot of the customers 

of businesses who employ minimum wage workers are low wage 

workers themselves. So you give a worker a raise with your right 

hand, and then you take it back or some of it back at the cash register with your left hand. 

Mr. CLINE. And so those States that are pushing for a higher 

minimum wage are adjusting to the cost of living in their respective States, and I think what you are seeing are different States 

facing different pressures. 

Representative Brodeur, you may be able to answer this. In Massachusetts, with regard to a Federal minimum wage, there is a 

support for a floor in the wage versus a set dollar amount, all 

States shall pay a minimum wage of X. But would there be any 

kind of support for an increase in the minimum wage beyond an 

adjusted amount that reflected the cost of living? I mean, would 

you want to increase the minimum wage if the cost of living mandated an increase to $15, and you all were given a choice to increase it to $20? Would that be something that you all would enterVerDate Mar 15 2010 10:26 Aug 05, 2019 Jkt 000000 PO 00000 Frm 00241 Fmt 6633 Sfmt 6602 C:\USERS\NWILLIAMS\ONEDRIVE - US HOUSE OF REPRESENTATIVES\DESKTOP\3526

EDL-011-D with DISTILLER
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tain in Massachusetts, or would you want to target it more toward 

the cost of living? 

Mr. BRODEUR. We just got to the 15 thing, and that was a big 

lift, so we would like to take a little bit of time off, I think. 

One thing we did not do is indexing, and I know that is part of 

the chairman’s bill. And I think one reasons it is part of the chairman’s bill is because what historically was a bipartisan, well supported kind of regular process where the minimum wage would go 

up has become something of a political football. Quite frankly, that 

hasn’t happened in Massachusetts. 

One thing that is interesting about the commonwealth and our 

legislature is any bill that is filed gets a hearing, and every session 

folks file bills around minimum wage in many flavors, quite frankly. So it is kind of always on our mind. It is always a topic of discussion. It is not something we do and then hope it goes away— 

Mr. CLINE. If in a state like Virginia or a state that is more rural 

where you may not have the inflationary pressures or the pressures on cost of living to increase to a full $15 minimum wage, 

should a state be able to adjust it to something less where it maybe 

more accurately reflects the cost of living for that state? 

Mr. BRODEUR. I don’t think so, respectively. When I think back 

to the original setting of the minimum wage toward the end of the 

Great Depression, there was a national floor, and what we have 

heard from people that are way smarter than me, both in this 

panel and the panel before, is if we kept up with inflation and productivity, where would that be on the national level? It would be 

somewhere between 12 and 18 to 22, it sounded like. 

Mr. CLINE. As a former fellow State Representative, I would 

rather leave that to the states to make that decision as it specifically applies to each state’s cost of living. 

But I appreciate it, and I yield back, Mr. Chairman. 

Chairman SCOTT. Thank you. The gentlelady from Massachusetts, Mrs. Trahan. 

Mrs. TRAHAN. Thank you, Mr. Chairman. Thanks again for 

bringing us together to hear this important panel. I am so proud 

that Massachusetts—well, I am so proud to be from Massachusetts 

for a number of reasons, and it is because of Senator Brodeur’s 

work not just on this issue but on healthcare, education, on gun violence prevention. We are one of the states leading on raising the 

wage, and for that I am grateful. 

There is no one more well suited to speak before us today than 

you, and in terms of what it took, the collaboration and thinking 

creatively to get this done. In your testimony, you talked about the 

importance of coalition this to pass the grand bargain that resulted 

in both paid leave and raising the wage. I love that your approach 

was inclusive and truly people powered, so my question. In your 

testimony, you mentioned that it was a strategic decision to invest 

in the working families of Massachusetts while also being a positive step forward for our business community. During that same 

period, Massachusetts businesses demonstrated relative stability 

and growth. 

So I am wondering if you can talk about some of the specific positive feedback that you heard from Massachusetts businesses in 

terms of raising wages. 


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Mr. BRODEUR. There was certainly not unanimity of opinion, and 

that is why it was a grand bargain. There was give and take across 

a range of issues, both within paid family medical leave which was 

a more complicated, quite frankly, and challenging piece to put together because there were so many moving parts and the minimum 

wage piece and some other issues. 

And we heard from—you know, we talked to folks, you know, one 

or two-person operations, folks in my district to some of the biggest 

employers in Massachusetts. One thing that everyone recognized 

was that both programs were incredibly popular, that there was 

tremendous support across the spectrum for the general idea of 

both initiatives, maybe not particular details. 

You know in terms of the minimum wage, Mass, Inc. which is 

an organization that you are familiar that others might not be, a 

nonpartisan kind of think tank and polling entity that tested the 

waters on how popular or how supportive the public would be of 

these things, and they were popular across the board. Republicans, 

Democrats, IUndependents all supported it. 

So what I think we needed to do, and why it was such a long 

process, is we needed to start with paid family medical leave and 

some fact-finding and some exploration, and we all needed to kind 

of speak the same language and understand what kind of benefits 

we were trying to provide, what would actually help working families, what would be impediments. 

And we tried to be respectful of that and listen to what the business community in certain segments already provided in terms of 

wages and benefits and made sure that we didn’t reinvent the 

wheel, that we didn’t take away something that was better than 

what might be complemented or implemented under any particular 

plan. 

And I think that went a long way toward building trust, for lack 

of a better way to say it, and having constant communication, having some significant disagreements for sure along the way but recognizing that this was coming, and it is important to working families, it is important to the economy of Massachusetts, and you 

know, and then kind of putting the pieces together. 

And it was a humbling process to be a part of because you don’t 

see a lot of progress on big issues these days, and I think that is 

unfortunate, and I don’t think that needs to be the case. 

Mrs. TRAHAN. Yes, thank you. It was a testament not just to your 

leadership but I know that the grand bargain was in concert with 

our Republican Governor Baker as well as the many groups that 

you mentioned. Can you just discuss the implementation and the 

timetable for Massachusetts to transition to the $15 minimum 

wage? 

Mr. BRODEUR. I can. So it will be over 5 years, and first—let me 

make sure I get this right. The first 3 years will be a dollar increase, and then the final 2 years will be $0.75 increase, ultimately 

bringing it to 2023. On the tip wage, we did not eliminate the tip 

credit, but we did expand. Compared to some of our peers, we had 

a very low tip credit. Not as low as the Federal tip credit for sure, 

but that will grow over the same timeframe up to $6.75 when it 

is done in 2023. 


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Mrs. TRAHAN. Great. Thank you so much. Thanks so much for all 

of your time. I yield back. 

Chairman SCOTT. Thank you. The gentleman from Georgia, Mr. 

Allen. 

Mr. ALLEN. Thank you, Mr. Chairman, and I appreciate everyone 

being here today. I come from the State of Georgia who is the best 

state to locate your business 6 years in a row. I was a small business owner in that state, and in Georgia, we pay the wages according to our employee’s skill set. It is a free market environment, a 

growing economy that grows job which grows opportunity which 

grows wages. We reward a good day’s work. My Democrat colleagues don’t want to believe that we can produce economic opportunity in concert with growing wages without the government 

interfering. 

Signing the front of the paycheck and providing folks with a good 

job has been the greatest honor of my life. That is why I oppose 

the Raise the Wage Act. This one size fits all, top down government 

regulation will destroy millions of hard-earned jobs and turn our 

growing economy and wage growth into decline. Democrats have focused on economic growth and getting the American people back to 

work. Free market initiatives that we know grow wages and grow 

jobs. 

Dr. Strain, millions of jobs were created by our strong economy 

thanks to lower taxes and deregulation. How would raising the 

minimum wage to $15 hurt all of these economic gains we have 

been able to achieve? 

Mr. STRAIN. Well, I think it is certainly the case that we have 

seen the low wage labor market doing a lot better over the last few 

years. A hot economy really has benefited that group of workers. 

We have started to see wages grow at a more rapid pace, for example. We have been seeing vulnerable workers, workers with disabilities, workers who have been incarcerated getting jobs at higher 

rates, and this is all wonderful news. 

I am very concerned that doubling the Federal minimum wage 

will put a halt to a lot of that progress and will really gum up the 

works of job creation for workers without a lot of skills and without 

a lot of experience. 

Mr. ALLEN. Three hundred and four thousand jobs in January. 

Mr. STRAIN. That is quite a few. 

Mr. ALLEN. Yes. Do you agree that raising prices is not always 

an option for many businesses? 

Mr. STRAIN. Raising prices is not always an option for many 

businesses, particularly businesses in more competitive product 

markets. And again, you know, you have to raise prices quite a bit 

to absorb a $15 an hour minimum wage. This is not a $9 an hour 

increase we are talking about. This is doubling the Federal minimum. 

Mr. ALLEN. Right. So how would a business double its rate of pay 

and not raise its prices? 

Mr. STRAIN. Well, I think it would be hard for a lot of them to 

do that. 

Mr. ALLEN. Which then causes the cost of living to increase— 

Mr. STRAIN. Some of those businesses might invest in technology 

instead of hiring workers. 


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Mr. ALLEN. Yes— 

Mr. STRAIN. Some of those businesses will— 

Mr. ALLEN. They are going to figure out a way. Yes. 

Ms. Barron, how has the Seattle minimum wage hike affected 

your working career? 

Ms. BARRON. Well, I lose money on a daily basis. It is as easy 

as that. 

Mr. ALLEN. Yes. 

Ms. BARRON. And it is due to my employer having to navigate— 

Mr. ALLEN. Yes. 

Ms. BARRON [continuing]. the higher wage. So he went to taking 

away tip lines and going with a service charge. And under that 

service charge, I don’t make as much as I could. And there is no 

way for me to maximize my income with my job, so it has changed 

my job quite a bit. It has pretty much stagnated what I could 

make. 

Mr. ALLEN. So the government said we are going to raise wages, 

and your wages went down? 

Ms. BARRON. Yes. 

Mr. ALLEN. Ok. Your testimony talks about your friend who 

started her own pizza place. 

Ms. BARRON. Uh-huh. 

Mr. ALLEN. Tell us about that and what happened to your friend? 

Ms. BARRON. So my friend Retu, she has been in the service industry as long as I have. She decided she wanted to try her hand 

at being an owner, and she started a pizza place called—I think it 

is called Z pizza, And she employed I think about 10 people, and 

then the minimum wage came. So she had her business for about 

5 years, and she looked at the books and she said I can’t make the 

numbers work. And she even went to our city council and said look. 

If you want to see, you know, try to make them work for me because I don’t understand. I can’t make it work, and so she just— 

instead of struggling, she just went ahead and closed it because she 

couldn’t do it. 

Mr. ALLEN. Ok. Well, thank you so much for your testimony, and 

I yield back, Mr. Chairman. 

Chairman SCOTT. Thank you. The gentleman from Maryland, 

Mr. Trone. 

Mr. TRONE. First of all, I want to thank everybody for their long 

day today, but it is a really important subject that we are embarked on. Raising the minimum wage is, plain and simple, the 

right thing to do for hard-working Americans. We heard a lot today 

from many people that have never owned a business, never been 

an employer, that raising the wage is bad for business. 

Well, I started a business 30 years ago as an entrepreneur. I was 

the first employee. Guess what? I figured out how to make it work, 

and now that business employs over 7,000 folks across America in 

every region, every area of the country. We also employ hundreds 

of returning citizens as they deserve a fair wage too. But paying 

a fair wage was not just the right thing to do. It is the key to our 

success. The key to our success was paying a fair wage. 

Higher wages lead, we spoke about earlier, lower employee turnover, reduced recruiting and training costs. But at the end of the 

day, happier customers. Ms. Eckhouse, in your testimony you also 


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connected, and Ms. Shalala was talking about it, higher wages with 

lower turnover so the growth of your business. 

Could you talk a little bit about the piece that we don’t touch on 

enough here, and that is all the productivity gains, the efficiency 

gains, the awesomeness of having team members that know a business and care about the customers, and those folks stay with you. 

They stay with you long times, long term, because they make a 

good wage, and they have good benefits. So could you talk about 

and give us some insights on how important that is? 

Ms. ECKHOUSE. Well, thank you for your question. It is really 

critical to us to have people who work for us, whether they are 

working out in the fields selling what we make or whether they are 

working at home with us in the plant making what we sell who 

really understand what we are making, how it is sourced, how it 

is processed in our plant, how it is sent out in the world for people 

to consume. 

And if they don’t understand that, they cannot do a good job. 

And once they do a good job, they become invested in the process. 

They learn about it. They come up with ideas. If they have been 

with us for enough time, they can see improvements and suggest 

them to us. So we end up having a business that is not just a topdown business where we are telling people what to do. People are 

able to buildup from the bottom and because they fully understand 

the process, and they are invested in working for us because they 

can make an income that allows them to support their families. 

Mr. TRONE. I think you hit on what is such an important point 

that nobody really talks about, and that is a business isn’t run 

from top down. A business is run on ideas, great ideas, and that 

is what makes it success. And when the team members are empowered, the team members feel like they are part of the team because 

they are paid appropriately. They are paid fairly. That is when 

they have those insights, those ideas to make the business more efficient, more productive. 

So I commend you on running that type of business. That is just 

the right way to do things. 

Ms. ECKHOUSE. Thank you. I really believe that the labor is worthy of his or her hire, and we have to honor that. 

Mr. TRONE. Without question. Dr. Reich, you mentioned in your 

testimony business can adjust to a minimal wage increase in several ways. They go from a low wage, high turnover model or what 

I chose, a higher wage, low turnover model. I shared some of my 

experiences. What does research tell us about how we quantify, 

quantify the actual cost of employee churn, employee turnover? 

Mr. REICH. Thanks for that question. I happen to have published 

an article on that subject in the Journal of Labor Economics a few 

years ago, so—and actually, way back when I was a graduate student in the 1960’s, I developed the idea of duly labor markets, that 

labor markets do differ. Some are high wage, low turnover, some 

are low wage, high turnover. And this paper I just published a few 

years ago actually showed that when the minimum wage went up 

that employee turnover went down quite a bit. 

There are other studies that had already shown a correlation between the wage and turnover. This was really a study where we 

felt we had a causal identification. And as to the amount, well, it 


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varies by industry depending on what the costs of training are and 

where the vacancies are. 

In low wage industries like restaurants or in certainly big box retail, turnover each year is over 100 percent. These are firms that 

are constantly looking for work. They have very high vacancy rates. 

There is a cost of vacancy. This is even more true when the unemployment rate is very low. And those are big costs that we don’t, 

you know, talk about in Econ 1, in the simple supply and demand 

model. But when we add those costs in, those are substantial. We 

think they don’t totally—savings on recruitment and retention 

costs don’t totally offset increases in the wage costs, but they might 

offset maybe 20, 25 percent of it on average, obviously more in 

some industries than the others. 

We couldn’t look at the kinds of points that you are making 

about productivity or customer satisfaction so that might possibly 

add to that effect as well. 

Mr. TRONE. Thank you very much. That is all, Mr. Chairman. 

Chairman SCOTT. Thank you. The Ranking Member, Dr. Foxx. 

Ms. FOXX. Thank you very much, Mr. Chairman. I want to add 

my thanks to all the witnesses who have been here today. We have 

been here practically all day, and we are going to be here a little 

while longer. We have heard a lot of the same arguments over and 

over again. 

I do think some Democrats, and maybe one on this committee, 

understands the free market, how it really works and the opportunities it creates for Americans from every walk of life. You know, 

I grew up in a house with no electricity, no running water, and I 

have been working since I was 12 years old. And my husband and 

I did run a business, so I know what it is like to create jobs, to 

try to keep jobs going, and to meet a payroll. And I think almost 

every member of our committee on this side of the aisle understands that, so I know Mr. Trone isn’t talking about our folks not 

knowing how to run a business and what it takes. 

But it seems to me that there are people not always understanding the opportunities that the American way of life creates for 

Americans or maybe how smart business owners are in this country. After all, we have gotten to be a great country because of the 

capitalistic system. 

But I think the reason we have been here all day and we have 

been hearing these points made over and over and over again is 

perhaps some of our colleagues are trying to convince themselves 

and the rest of us that a socialist campaign talking point could actually be good policy, but I am not sure it worked. 

So I want to thank our witnesses who have come here today. I 

especially want to thank Ms. Barron for giving voice to those Americans who aren’t in lockstep with the labor interests driving this 

misguided campaign to eliminate jobs, particularly you, Ms. Barron, understanding you took time away from your workplace to be 

with us here today. 

We want to see wages go up for every working American, every 

single one, and they do go up for Americans. We are seeing more 

wage growth than we have in decades because of the smart economic policy that has empowered workers. Pushing back on heavyhanded regulations and giving Americans real tax reform has 


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opened up opportunity and wage growth that actually helps American families. 

And we know, one of our witnesses has already said, that employers are already free to pay higher wages than minimum wage, 

and it works. And guess what? Other employers understand that 

too. The law already allows it. But why do our colleagues want to 

force the government to run everybody’s life in this country? The 

growth we are experiencing right now makes a $15 Federal mandate look like the political stunt it really is. Washington doesn’t 

need to be making any more decisions for the people of this country. 

The dysfunction we have all experienced and all commented 

upon the last couple of months is all the proof we need that decisions about worker paychecks certainly shouldn’t be up to anybody 

in this city. We can spend our time trying to justify socialist ideas 

as mainstream, or we can spend our time looking for ways to put 

money in people’s pockets by their earning that money and not taking it from one person’s pocket and putting it in another one. We 

can sustain era of growth and opportunity. On our side for the sake 

of American workers, we are going to stay focused on the latter. 

And with that, Mr. Chairman, I yield back. 

Chairman SCOTT. Thank you. The gentlelady from Washington, 

Ms. Jayapal. 

Ms. JAYAPAL. Thank you, Mr. Chairman, and thank you all for 

being here. I know it has been a long day, and we appreciate it. 

I want to just correct the record on a couple of things. I was on 

the committee that raised the $15 minimum wage. I am glad to see 

one of my constituents here, and I appreciate your traveling here, 

although I imagine perhaps you don’t support my position on this 

issue based on your testimony. I certainly appreciate hearing from 

you. 

And I will tell you that we heard all of the arguments through 

months of testimony about what this was going to do to destroy the 

economy in Seattle, about all the restaurants that were going to 

close. And we went back through recently all of the restaurants 

that came to testify before us, and the majority of them had actually opened new restaurants, new restaurants. 

And so I will just say that you just need to look at our booming 

economy in Seattle to understand that the minimum wage law has 

worked and, in fact, we even heard the same arguments when we 

indexed minimum wage to inflation back in 2001, that this was 

going to destroy our state’s economy, that it was going to create 

problems. People were going to flee to other states. But people including, I think maybe Ms. Barron, moved to Washington State in 

part because we have a booming economy and jobs to take. 

I also just want to respond to the comment about a socialist campaign talking point. Let me just tell you that on our committee was 

one of the wealthiest capitalists, proud capitalists in our state, 

Nick Hanauer, who consistently has said over and over again that 

when workers do better, companies do better. When companies do 

better, the economy does better. When the economy does better, 

workers do better. It is a cycle that actually works over and over 

again. 


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We also had a small business owner, a tremendous number of 

small business owners and restaurant owners who have been doing 

the right thing for a long time. That included my friend and local 

Seattle restaurant owner Makeney Howell. And she said it best 

when she went to the White House Summit on Working Families 

back in 2014, and she said the economy—this is her quote. The 

economy is built from the bottom up, not the top down. Every job 

should be an economy-boosting job. 

Makeney for years, even before our law went into effect, would 

pool her tips and distribute them equitably to all the workers so 

that you take away that discrepancy between front of the house 

workers who may earn a lot in tips, and there were some workers 

who were earning a lot in tips who saw those tips go down, but it 

was because it was being shared with people in the back of the 

house. 

And so these are really important—there has been a lot of talk 

about Seattle today, and I am thrilled that is the case, but let me 

tell you as somebody who actually helped craft that law, who was 

on the front lines of making sure we heard the testimony, that the 

testimony that we continue to hear is simply not accurate. 

Does it mean that Ms. Barron is not correct in her wages? Of 

course I am not saying that, but I did want to ask you, Ms. Barron, 

about the organization that you are affiliated with. It is called the 

Full Service Workers Alliance of Seattle. Is that correct. 

Ms. BARRON. Correct. 

Ms. JAYAPAL. And are you aware that the FWSA is part of a 

group called the Restaurant Workers of America? 

Ms. BARRON. It is not part of the Restaurant Workers of America. That is not correct. 

Ms. JAYAPAL. Well, I have the research showing that it is part 

of a national network of server groups called the Restaurant Workers of America. 

Ms. BARRON. It is not part of the Restaurant Workers of America. The Full Service Workers alliance is a group that I cofounded 

with a friend of mine. We are a loose group of about 1100 full service workers, and that includes front of the house and back of the 

house. 

Ms. JAYAPAL. Thank you. Are you aware since you. 

Founded the organization, I assume you are, that a former 

FSWA member so severely misrepresented his role in the group 

and the details of the Seattle Secure Scheduling Law in a King 5 

TV news interview that the station’s news director was forced to 

pull it down. 

Ms. BARRON. That is incorrect. That is incorrect. If you watch— 

Ms. JAYAPAL. Ok. Well, I would be happy to take that information from you so that we understand because this is what our research has shown and I wanted to make sure— 

Ms. BARRON. Well, your research is incorrect. 

Ms. JAYAPAL [continuing]. that people know what the organization is. So let me turn to Miss Gupta. The Fair Labor Standards 

Act when it was passed excluded certain classes of workers in a 

compromise to appease Southern States. Those workers tended to 

be women and people of color, and the vestiges of those policies still 

impact those communities today. 


EDL-011-D with DISTILLER
242 

Thank you for make the arguments in your opening Statements 

that this is actually a women’s issue. Can you speak about how 

raising the minimum wage would help right some of those economic wrongs? 

Ms. GUPTA. Yes. Thank you, Congresswoman. 

African American and Latino working women in particular are 

overrepresented in low pay jobs and women of color are more likely 

than any other group to be paid the lowest wages. Gradually raising the Federal minimum wage to $15 an hour by 2024 and indexing it to median Federal wages and ensuring that working people 

are actually able to cover basic expenses like housing, food, and 

transportation would be a huge, huge win for working people. 

Working mothers, especially, are likely to be paid low wages, and 

that is why for the leadership conference, representing a broad constituency of communities of color and women, this particular bill 

would go a long way to closing the gender pay gap but also addressing kind of structural disparities that are created through racial difference. 

Ms. JAYAPAL. Thank you very much. I see my time has expired. 

I yield back. 

Chairman SCOTT. Thank you. The gentleman from Texas, Mr. 

Castro. 

Mr. CASTRO. Thank you. Perfect timing. So I guess I ask this 

question. I just obviously came here from another meeting, but who 

has been opposed to a minimum wage increase over the last few 

years on the panel? Anybody else? And I guess what has been your 

main opposition? 

Ms. BARRON. I am losing money. I am losing income because of 

the $15 an hour minimum wage increase. 

Mr. CASTRO. And do you think that it should be less? Do you 

think it should be, like, $11 or just no minimum wage or $6 an 

hour? 

Ms. BARRON. Well, I think I would leave that up to you folks to 

determine that, but all I know from my experience is that I am losing money because of loss of tips, because of the rise in the minimum wage, and I don’t feel that workers’ voices in the full service 

industry have been represented at all in this talk. 

Mr. CASTRO. So I guess your point is that you are not against a 

minimum wage. You think that $15 is not the right amount? 

Ms. BARRON. As everything is proposed at this point in time, I 

am finding myself as days go on opposed to the rise in minimum 

wage altogether. 

Mr. CASTRO. You would freeze it. 

Ms. BARRON. Yes. I would like to have a tip credit in Washington 

State, and we are not having that conversation. We are, I guess, 

not allowed to have that conversation in Washington State. 

Mr. CASTRO. I guess let me ask you. The reason I ask is the U.S. 

Chamber of Commerce for years would not support increasing the 

minimum wage, even by a penny. I mean, at all. And I know that 

obviously you are in the service industry. Are you a waitress? 

Ms. BARRON. Yes. 

Mr. CASTRO. That is different from somebody working at, say, 

Whataburger in Texas or somewhere else? 

Ms. BARRON. Right. 


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Mr. CASTRO. So you have been opposed for a while to a minimum 

wage increase, even one cent on minimum wage? 

Mr. STRAIN. Yes. I would be opposed to raising the Federal minimum wage at all. 

Mr. CASTRO. And I guess why is that? So you don’t think it 

should ever be raised? I mean, 50 years from now it should never 

be raised? 

Mr. STRAIN. In my view the primary focus should be on providing 

economic opportunity to the least skilled, least experienced, most 

vulnerable workers in our society. Those workers are the workers 

who will bear the cost of a minimum wage increase. If you raise 

the minimum wage by one penny, how many of them would be 

worse off? You know, I don’t know. Not nearly as many as if you— 

Mr. CASTRO. No, but you would agree also that their expenses go 

up, the cost of living goes up, people need a higher wage, right? 

Mr. STRAIN. Another reason to be opposed, another reason why 

I am opposed is because there are better tools that Congress has 

to help those workers. Expanding Federal earning subsidies puts 

more money in the pockets of the working poor and actually increases employment rather than reduces employment. 

So when thinking about how to help these workers, I think Congress should look at the full range of options and not only focus on 

the option that is going to put a lot of them out of work. 

Mr. CASTRO. Sir, I guess I disagree with you on your first point 

about not increasing the minimum wage, but I mean, you understand that other people that are opposed to increasing the minimum wage are also opposed to the subsidies you are describing. 

Mr. STRAIN. I am only speaking for myself, Congressman. 

Mr. CASTRO. Ok. I think part of the reason that we have gotten 

here and part of the reason that there is such frustration with the 

income inequality in this country is because the U.S. Chamber of 

Commerce and major business organizations have not taken the 

lead even though some companies on their own, including members 

of the Chamber of Commerce, have actually raised their own minimum wage on their own. And it is interesting that is an instance 

where private industry has actually been ahead of the main industry group that is coming to Washington and in their name arguing 

against raising the minimum wage by even one penny. I think 

that— 

Mr. STRAIN. I don’t know— 

Mr. CASTRO. I am in my comment part here. Thank you for your 

answers to my questions. 

And I think that this could have been a very different conversation over the years if different groups and organizations had 

worked in earnest and in concert, not even necessarily with the 

Federal Congress but with the states and with their own workers 

in making an earnest attempt to raise the minimum wage. 

But that has not happened now for decade, longer than a decade, 

that those conversations have happened. And so we find ourselves 

in a country where income inequality has grown, where workers 

have gotten very frustrated, where there is in American society 

now, I think, a real resentment at the fact that people—that you 

get more and more billionaires in our country, and you have a lot 


EDL-011-D with DISTILLER
244 

of people that may have a job but feel as though they have no future in their work. And that is where we find ourselves today. 

I yield back. Thank you, Chairman. 

Chairman SCOTT. Thank you. The gentlelady from Illinois, Ms. 

Underwood. 

Ms. UNDERWOOD. Thank you, Mr. Chairman, for calling this 

hearing, and thank you to all the witnesses for appearing here 

today. 

I am going home to Illinois 14th tomorrow to hear what our community has to say about this issue, and I am glad to have the opportunity to hear from experts like you today. 

Mr. Chairman, I would also like to ask for unanimous consent to 

submit a letter from advocate Aurora Health in Illinois for the 

record. 

Chairman SCOTT. Without objection. 

[The information follows:] 


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February 7, 2019 

Chairman Bobby Scott 

House Education and Labor Committee 

2176 Rayburn House Office Building 

Washington DC 20515 

Ranking Member Virginia Foxx 

House Education and Labor Committee 

2176 Rayburn House Office Building 

Washington DC 20515 

Advocate Aurora H ~:!a lth 

Re: Written Testimony for the Hearing Record Submitted to the House Education and labor 

Committee "Gradually Raising the Minimum Wage to $15: Good for Workers, Good for Businesses, 

and Good for the Economy." 

Dear Chairman Scott and Ranking Member Virginia Foxx, 

On behalf of Advocate Aurora Health (Advocate Aurora), the 10th largest not-for-profit integrated 

health care system in the country, stemming from the combination of Illinois-based Advocate Health 

Care and Wisconsin-based Aurora Health Care, I would like to thank you for your leadership and for 

holding your hearing today, February 7, 2019 on "Gradually Raising the Minimum Wage to $15: Good for 

Workers, Good for Businesses, and Good for the Economy." We appreciate the opportunity to submit a 

letter for the record highlighting Advocate Aurora's recent decision to raise the minimum wage for our 

employees to $15 by the year 2021. 

Background 

Advocate Aurora is a national leader in clinical innovation, health outcomes, consumer experience and 

value-based care, serving more than 2. 7 million patients, including an estimated 500,000 Medicare 

beneficiaries and more than 450,000 individuals with Medicaid coverage across more than 500 sites of 

care. As a major employer in the Midwest, we have more than 70,000 team members, including more 

than 22,000 nurses and the region's largest employed medical staff and home health organization. 

Together, each year, Advocate Aurora is engaged in hundreds of clinical trials and research studies, and 

is nationally recognized for its expertise in cardiology, neurosciences, oncology and pediatrics. We are 

proud to have contributed $2 billion in charitable care and services to our communities in 2017. 

Raising the Minimum Wage 

Our healing ministry is focused on helping people live well and that begins with our own team members. 

To that end, we announced in November 2018, that Advocate Aurora would increase our system-wide 

minimum wage to $15/hour by early 2021, with a plan for $13/hr by mid-2019 and $14/hr in early 2020. 

In addition to our mission to advance health and well ness and promote healing, we also seek to be a 

destination employer where our team members feel valued, have opportunities for growth and connect 

with our values and purpose-driven culture. As one of the largest not-for-profit employers in illinois and 
246 


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AdvocateAuroraHeaLth 

Wisconsin, this decision aligns with our longstanding commitment to be market competitive and remain 

a place that attracts and retains top talent. 

Competitive wages are just one aspect of the comprehensive approach we are taking to advance our 

compensation and benefits. Other key components of total compensation include education assistance, 

a retirement savings program, discounted medical and drug coverage and career advancement 

initiatives. We know that if our team members feel this is the best place to work, our patients will feel 

this is the best place to entrust their health and wellness. We want to support physical and economic 

well-being for our employees and their families. 

While we continue to face shrinking reimbursements and increasing pharmaceutical costs, we see this as 

a critical investment in our most valued resource, our employees. Continuing to ensure that our team 

members have access to rewarding jobs with comprehensive benefits, competitive wages and an 

engaging work environment will not only strengthen our workplace, it will strengthen economic wellbeing and enhance the quality of life in our communities from Green Bay, Wisconsin to BloomingtonNormal, Illinois and everywhere in between. 

We are proud to be an industry leader in advancing minimum wage. Advocate Aurora thanks you for the 

opportunity to submit testimony for the Congressional record and appreciates your leadership on this 

important issue. 

Sincerely and respectfully submitted, 

Kevin Brady 

Chief Human Resources Officer 

Advocate Aurora Health 
247 

Ms. UNDERWOOD. Thank you. I think many people don’t realize 

if you’re working full time to support your family right now at the 

Federal minimum wage, you are making $15,080 a year. That is 

not a livable salary anywhere in America today, and so I would like 

to learn more about how gradually raising the minimum wage can 

help workers and small businesses. 

Ms. Eckhouse, you have been paying a livable wage since you 

started your small business almost 20 years ago. In that time, have 

you seen the livable wages you pay contribute to lower levels of 

turnover, and would you say that this has been better for your bottom line? 

Ms. ECKHOUSE. Thank you for your question. Yes. We have seen 

lower turnover than we might have as expected in our business, 

and that has benefited our company. It benefits us in a lot of ways. 

We have more knowledgeable employees, we have more committed 

employees, and we are all able to work together to improve what 

we make. 

Ms. UNDERWOOD. That is great. And is it your experience that 

because you pay a livable wage and therefore have less turnover, 

you are able to dedicate more time to growing your business instead of a cycle of hiring and training new employees? 

Ms. ECKHOUSE. Yes. That is correct. And our employees are also 

able to contribute to better management of our business because 

they have been there longer and are more familiar. 

Ms. UNDERWOOD. And so you would say that paying a livable 

wage is an importantly part of your small business’s success. Is 

that right? 

Ms. ECKHOUSE. Yes, I would. 

Ms. UNDERWOOD. I am really encouraged by research showing 

that gradually raising the minimum wage can help reduce wage inequality and have a positive effect on women’s economic security, 

so I really appreciate Miss Gupta’s comments. I would like to just 

pivot for a second. 

Professor Reich, what does the current research say about the 

impact on health outcomes? I am a nurse, and so often I like to ask 

about the health impact as a result of the increase in the minimum 

wage. 

Mr. REICH. And thank you for that question. This is a very new 

area in my minimum wage research is to look at the health impacts, and there are about 20 studies, and they are not unanimous. 

No economists never are unanimous, so that is not a negative sign. 

But there are definitely good studies, high quality studies that 

show that higher minimum wages reduce smoking rates, they reduce obesity, they reduce prediabetic conditions. 

In a study that I have done but I have not yet published, they 

reduce suicides. There would be, like, 700 fewer suicides a year 

with every 10 percent increase in the minimum wage. 

Ms. UNDERWOOD. Wow, those really powerful findings. Thank 

you. 

I appreciate your testimony this afternoon. I do also recognize it 

has been a long day and know how important this issue is for 

workers, for business owners, and for the future growth of our 

economy in this country, so thank you for your service, and I yield 

back my time. 


EDL-011-D with DISTILLER
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Chairman SCOTT. Thank you. And I recognize myself for questions. And I would like to begin by responding to the idea that this 

is a socialist talking point. I would point out that Arkansas and 

Missouri recently by referendum passed increases in the minimum 

wage or a similar track to what we are doing in this bill by votes 

of well over 60 percent. 

Representative Brodeur, who has been helped in Massachusetts 

by the minimum wage increase? 

Mr. BRODEUR. Working families certainly have been. Again, as I 

started in my opening remarks talking about we see teens that are 

about 20 percent of our teens supplying 20 percent of the household 

income, you know, for folks that are really at poverty level. That 

is huge, and it leads to, you know, some of the results that Dr. 

Reich was talking about in terms of those dollars leading to better 

outcomes for families over the long term. 

It has also provided opportunities for folks to again to advance 

themselves. Education, we all agree, is the pathway to success both 

early ed and an environment where the family is more stable. Kids 

have more success, and those young adults that are trying to get 

higher ed or a certificate or whatever the case may be to improve 

their opportunities in the job market also benefit. 

Chairman SCOTT. Thank you. 

Dr. Strain, in your testimony, you indicated there are better 

ways to help the working poor. I think you mentioned the earned 

income tax credit. Is that what I understand you are referring to? 

Mr. STRAIN. Yes, Mr. Chairman. 

Chairman SCOTT. What are the other ways of helping the working poor? 

Mr. STRAIN. Well, another way is through the child tax credit 

which has a refundable component that can go to support low-income Americans. Another way is to expand education and training 

programs. I think apprenticeships offer a particularly promising 

path forward to building worker skills which will allow them to be 

more productive and command higher wages. There are many, Mr. 

Chairman. There are many. 

Chairman SCOTT. If you could supply those for the record after 

the hearing, I would appreciate it. 

Mr. STRAIN. Of course. 

Chairman SCOTT. Professor Reich, the 2014 Congressional Budget Office study showed a significant job loss. I understand there 

have been subsequent studies that come to different conclusions. 

Can you say what the overall body of research shows about whether or not low income workers are worse off as a result of an increase in the minimum wage? 

Mr. REICH. The CBI doesn’t do its own research on this topic. It 

just builds on and uses the research that other people have done, 

and they looked at the studies as of 2014 some by me, some by 

other people, and they basically took an average between those two 

as the effect on teens. That is not a very good scientific method because some of the studies are better than others. 

And they had to extrapolate from what the effect is on teens the 

effect on adults, and they arbitrarily came up with a number, a 

ratio of one-third because adults on the whole are better paid. That 

again is not a very good basis. More recently, we have studies that 


EDL-011-D with DISTILLER
249 

look at not only teens and restaurant workers but all workers, all 

jobs. 

Dr. Zipperer, who was on the panel this morning, is the author 

of one of those studies, and it is a study—I think that it is stunning 

study. It has been described as the best minimum wage paper since 

the 1990’s, and I agree. It is going to be the defining study. It is 

probably going to come out in the top economics journal in the 

world. It shows no negative effects. 

Chairman SCOTT. Does the research show how restaurants react 

to an increase in the minimum wage as far as the way they treat 

their workers? 

Mr. REICH. Yes. Well, first of all, you know, not everybody’s paid 

at the minimum wage in a restaurant or any other industry, so the 

actual increase is usually about half. The actual increase in cost is 

usually about half. In labor costs, it is usually about half what the 

minimum wage increase. If the minimum wage goes up 10 percent 

and the labor cost increases about 5 percent, and labor is only 

about a third of operating costs. 

So the actual increase in prices, full pass-through is maybe 1 to 

2 percent, especially when you take into account turnover savings. 

So that is the main adjustment mechanism, not reductions in employment. And by the way, it does increase automation for those 

jobs that can be automated, but many jobs in restaurants cannot 

be automated. 

Food prep is very, very difficult to automate. You cannot automate making a peanut butter and jelly sandwich, for example. It 

has been tried. And so you know, automation isn’t just something 

that is free. It has to be actually—there has to be a technology for 

it. 

Chairman SCOTT. Thank you very much. My time has expired, 

and I want to remind my colleagues of the process for submitting 

additional materials, and I want to thank our witnesses for their 

participation today. What we have heard has been very valuable. 

Members of the committee may have additional questions and we 

ask the witnesses to please respond to those questions in writing. 

The hearing record will be held open for 14 days to receive those 

responses, and I would ask the colleagues to submit those questions within 7 days so that the witnesses have ample time to respond. 

This hearing has demonstrated the benefits of increasing the 

Federal minimum wage to $15 by 2024, the benefits for workers, 

businesses, and the economy. No American working full time 

should be living in poverty, and by gradually increasing the minimum wage, you cannot only elevate the standard of living for 

nearly 40 million American workers but also put money back in 

their pockets to support local businesses. 

And without objection, I ask that the letter and documents from 

the business for a fair minimum wage and the Economic Policy Institute be entered into the record and without objection, so ordered. 

[The information follows:]Mr. Scott 

Economic Policy Institute: https://www.govinfo.gov/content/pkg/ 

CPRT-116HPRT36711/pdf/CPRT-116HPRT36711.pdf 


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BUSINESS 

FAIR MINIMUM WAGE 

Business for a Fair Minimum Wage Federal $15 by 2024 Sign On Statement 

As business owners and executives, we support gradually raising the federal minimum wage to 

$15 by 2024, It's good for business, good for customers and good for our economy. 

Workers are also customers. Today's $7.25 minimum wage- just $15,080 a year for full-time 

workers- doesn't even cover the basics. Raising the minimum wage puts money in the pockets 

of people who most need to spend it, increasing sales at businesses and boosting the economy. 

Raising the minimum wage makes good business sense. low pay typically means high 

turnover. Raising the minimum wage pays off in lower employee turnover, reduced hiring and 

training costs, lower error rates, increased productivity and better customer service. Employees 

often make the difference between repeat customers or lost customers. 

Raising the minimum wage is smart policy. It will reduce the strain on the safety net caused by 

wages that people can't live on. It will help level the playing field for businesses and strengthen 

the consumer spending businesses depend on to thrive. 

Inaugural Signers List in Formation 

Over 200 Inaugural Business Signers as of February 6, 2019. Businesses continue to sign at 

https:jjwww,businessforafainninimumwage.orgfFederal-15-By-2024-Sign-On·Statement 

Holly Sklar, CEO, Business for a Fair Minimum Wage 

Margot Dorfman, CEO, U.S .Women's Chamber of Commerce 

David Levine, President, American Sustainable Business Council 

Brandon MacDonald, Owner, MacDonald Insurance Group 

Birmingham, AL 

Pete Turner, Owner, Illegal Pete's Restaurants 

Tucson, AZ 

Natasha Winnik, Owner, Originate Natural Building Materials Showroom 

Tucson, AZ 

David Bronner, CEO, Dr. Bronner's 

Vista, CA 

Rinaldo Brutoco, Founding President & CEO, World Business Academy 

Santa Barbara, CA 

Sattie Clark, Owner, Eleek Incorporated 

Redwood Valley, CA 

business fora fair minimum wage.org '!I (@Minimum WageBiz 
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Eric Cohen, Owner, Justice Grace Vineyards 

San Francisco, CA 

Desi Dimitrova, Owner, Dimitrova Agency 

San Dimas, CA 

Jerome Dodson, President, Parnassus Investments 

San Francisco, CA 

2 

Jim Frazin, Principal, Financial Planner, Communitas Financial Planning Inc 

San Francisco, CA 

Nicole Irmer, Founder and Principal Attorney, Law Office of Nicole lrmer 

San Diego, CA 

Ari Isaak, Owner, Evari GIS consulting inc 

San Diego, CA 

Martin Kruger, COO, Follow Your Heart (Earth Island) 

Chatsworth, CA 

Erin Musgrave, Principal, EMC Strategies 

Santa Cruz, CA 

Mark Nelson, Owner, Renaissance Remodelers 

San Anselmo, CA 

Ben Rosenthal, Owner, Sustainable Computing 

Berkeley, CA 

John Schmidt, Director, Quiksilver 

Huntington Beach, CA 

Donald Taylor, President, Continental-Pacific Lumber 

Gold River, CA 

Alan Thiesen, Vice-President, Digital Research (retired) 

Nevada City, CA 

Kelly Vlahakis-Hanks, President and CEO, Earth Friendly Products (Makers ofECOS) 

Cypress, CA 

Esther Wagner, CFO, Excellent Packaging & Supply 

Richmond, CA 

Ben C. Alexander, Certified General Appraiser, Ben C. Alexander Appraisers 

Byers, CO 

Bryan Birsic, CEO, Wunder Capital 

Boulder, CO 

Richard Correa, Owner, Richard Correa Agencies 

Aurora, CO 

Jenny Davies, Owner, Progressive Promotions 

Denver, CO 

Matthew Elliott, Partner, Super Humane 

Denver, CO 

Jeffrey Fierberg, CEO, Sora Digital 

Denver, CO 

Kyle Garner, CEO, Organic India USA 

Boulder, CO 

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Chris Graves, Owner, Bardo Coffee House 

Denver, CO 

Sharon Hwang, Owner, The Wellness Center 

Glendale, CO 

john Kuebler, Owner, Kilgore Books 

Denver, CO 

Blake Manion, Founder, Soul Salve 

Denver, CO 

Stacey Marcellus, Co-Founder & CEO, Cappello's 

Denver, CO 

Chad Schubert, Director, Internal Operations, Pivot Energy 

Denver, CO 

Pete Turner, Founder/President, Illegal Pete's 

Denver, CO 

Samuel Weaver, CEO, Cool Energy, Inc 

Boulder, CO 

Hammad Atassi, CEO, American Sustainable Business Council 

Washington, DC 

Mike Englert, President, Eighty2degrees Design Studio 

Washington, DC 

Michael Lastoria, Founder and CEO, &pizza 

Washington, DC 

Gloria Nauden, CMO, City First Bank 

Washington, DC 

Michael Peck, Founder, MAPA Group 

Washington, DC 

Gina Schaefer, Owner, Logan, Glover Park, Frager's, Tenleytown, other Ace Hardware stores 

Washington, DC 

Aaron Seyedian, Owner, Well-Paid Maids 

Washington, DC 

Andy Shalla!, Owner, Busboys & Poets Restaurants 

Washington, DC 

Fran Teplitz, Executive Co-Director for Business, Investing & Policy, Green America's Green Business 

Network 

Washington, DC 

Daniel Turner, President, TCG 

Washington, DC 

Gabriel Feldmann, Owner, The Feldmann Agency 

Pensacola, FL 

Matt Henderson, Owner, Henderson Agency 

Orlando, FL 

joel Pollock, Co-Owner, Panther Coffee Roasters 

Miami,FL 

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Kyle Johnson, Owner, johnson Agency 

Marietta, GA 

4 

Jamison Weatherspoon, Owner, Weatherspoon Agencies 

Duluth,GA 

Darryl Pellegrini, Owner, Music business 

Aiea, HI 

Mike Draper, Owner, Raygun LLC 

Des Moines, lA 

Kathy and Herb Eckhouse, Owners, La Quercia 

Norwalk, lA 

Bill Parks, President and Founder, NRS 

Moscow, lD 

James Brandt, Board Member, Ringspann Corp. 

Franklin Park, lL 

Elizabeth Colon, President, Metaphrasis Language & Cultural Solutions 

Chicago, IL 

Jerry Moors, Senior VP of Sales, Springs Window Fashions LLC 

Roscoe, IL 

Bob Olson, President and CEO, Olson Agencies 

Lombard, IL 

Kelly Vlahakis· Hanks, President and CEO, Earth Friendly Products (Makers of ECOS) 

Addison, IL 

James Cunningham, Owner, James Cunningham Agency 

Indianapolis, IN 

Ben Stallings, Co-Owner, Interdependent Web LLC 

Emporia, KS 

Teresa Hendricks, Owner, Lucia's World Emporium 

Lexington, KY 

Camille Moran, Owner, Caramor Industries, 4 Seasons Christmas Tree and Plant Farm 

Natchitoches, LA 

Angela O'Byrne, Owner, Perez APC 

New Orleans, LA 

Mallory Whitfield, Owner, Malaprop LLC 

New Orleans, LA 

Robert Baker, President, Key Polymer Corp. 

Lawrence, MA 

Jeff Barry, President, Boston Organics 

Charlestown, MA 

Dean Cycon, CEO, Dean's Beans Organic Coffee Company 

Orange,MA 

Fred Davis, President, Fred Davis Corporation 

Medfield,MA 

Rob Everts, Co-CEO, Equal Exchange 

West Bridgewater, MA 

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Jen Faigel, Executive Director, CommonWealth Kitchen 

Dorchester, MA 

Julie Fraser, Principal & Director, Lyno Advisors Inc & Present Source 

Cummaquid, MA 

Valerie+ lhsan Gurdal, Owners, Formaggio Kitchen 

Boston, MA 

Laury Hammel, Owner and< CEO, The Longfellow Clubs 

Wayland,MA 

Emily Kanter, Owner, Cambridge Naturals 

Boston, MA 

Michael Kanter, Owner, Cambridge Naturals 

Cambridge, MA 

Stephen Katsurinis, Owner, 8 Dyer Hotel 

Provincetown, MA 

Sonia Kowal, President, Zevin Asset Management 

Boston, MA 

Gail Leondar-Wright, Owner, gailleondar public relations 

Arlington, MA 

Rob Libon, Investment Advisor, Greenvest 

West Whately, MA 

Philip McCarron, Owner, Beacon Solar 

Fall River, MA 

Nick Moore, Owner, Moore Agencies 

Marlborough, MA 

Dan Rosenberg, General Manager, Real Pickles 

Greenfield, MA 

Joseph Rotella, President, Spencer Organ Company, Inc. 

Waltham,MA 

David Sandberg, Owner, Porter Square Books 

Cambridge, MA 

David Schreiber, Investment Advisor, CFP, Green vest 

Arlington, MA 

Anne Sherman, Director of Operations & Sustainability, Staach Inc. 

Cambridge, MA 

Alex Silva, Owner, Best Value janitorial 

Malden,MA 

joy Silverstein, Owner, Fresh Hair 

jamaica Plain, MA 

Sidney Topol, President, The Topol Group LLC 

Boston, MA 

Alissa Barron-Menza, Vice President, Business for a Fair Minimum Wage 

Silver Spring, MD 

Mitchell Berliner, Owner, Skinny Salamis 

Potomac, MD 

businessforafairminimumwage.org '!II (@MinimumWageBiz 
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Denise Bowyer, Vice President, American Income Life Insurance Company 

North Beach, MD 

Andrew Buerger, Owner, B'more Organic 

Baltimore, MD 

Annebeth Bunker, Owner, Anne beth's 

Annapolis, MD 

Tim Cureton, Owner, Rise Up Coffee Roasters 

Easton, MD 

Brian England, President, BA Auto Care 

Columbia, MD 

Laura Hodges, Owner, Laura Hodges Studio 

Catonsville, MD 

Irwin Hoenig, Owner, Living Calmness 

Laurel, MD 

Tom Koerber, President, On Point Help, LLC 

Baltimore, MD 

Jeffrey Landsman, Owner, Specialty Food Sales 

Towson, MD 

Michael Lastoria, Founder and CEO, &pizza 

Baltimore, MD 

Ivan Makfinsky, Owner, Endosys, LLC 

Silver Spring, MD 

John Mitchell, Owner, Interaction Law 

Accokeek, MD 

Scott Nash, Owner, CEO, MOM's Organic Market 

Rockville, MD 

Abigail Rome, Owner, Tierra Vista 

Silver Spring. MD 

Gina Schaefer, Owner, Canton, Federal Hill, Waverly, Old Takoma Ace Hardware Stores 

Baltimore, MD 

Andy Shalla!. Owner, Busboys and Poets Restaurants 

Hyattsville, MD 

Michael Shuman, Director of Research and Public Policy, Business Alliance for Local Living Economies 

(BALLE) 

Takoma Park, MD 

Daniel Solomon, Managing Member, Soapstone Investments LLC 

Bethesda, MD 

Mayaah Tansi, Owner, Unik Touch Hair Palace 

Windsor Mill, MD 

Eleanor Whalen, CEO, Sprayology 

Gaithersburg. MD 

Steve Corman, Owner, Vena's Fizz House 

Portland, ME 

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Sharon Peralta, Principal, Custom Computer Services & more, LLC 

Springvale, ME 

James Wellehan, President, Lamey-Wellehan Shoes 

Auburn, ME 

WAP John, CEO, Grafaktri Inc. 

Ann Arbor, Ml 

Scott Urbanowski, Owner, Humanoid Digital 

Kentwood, MI 

Chad Deley, CEO, The Deley Group 

Brooklyn Park, MN 

Audrey Fairchild-Ehm, Owner, Fairchild-Ehm Foster Care 

Roseville, MN 

Chris Hanson, CEO, thedatabank, gbc 

Saint Paul, MN 

Christopher Loch, Owner, CONTEMPLB T-SHIRTS 

Minneapolis, MN 

Randy Alberhasky, Owner, Randy Alberhasky Attorney At Law 

Springfield, MO 

Michael Allen, Owner, Blossoms Floral 

Springfield, MO 

Bethany Budde-Cohen, Owner, SqWires Restaurant 

StLouis, MO 

Jessie Chappell, Owner, CG Immigration Law 

StLouis, MO 

Joseph Chevalier, Owner, Yellow Dog Bookshop 

Columbia, MO 

Pam Clark, Owner, Clark's Appliances 

Raytown, MO 

Zaid Consuegra, Owner & Chef, Pirate's Bone 

Kansas City, M 0 

Caitlin Corcoran, Managing Partner, CaVa 

Kansas City, MO 

Dominique Davison, Owner & CEO, DRAW Architecture 

Kansas City, MO 

Fred Domke, President, Bridge Bread Bakery 

StLouis, MO 

Mike Draper, Owner, Raygun 

Kansas City, MO 

James Fields, Owner, Divine Deli and Drop In 

University City, MO 

David Gragg. Agency Owner, David Gragg- Farmers Insurance Agent 

Springfield, MO 

Howard Hanna, Owner, The Rieger 

Kansas City, MO 

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Ruth Ellen Hasser, Celebrant, St. Louis Ceremonies 

St. Louis, MO 

Pam Hausner, Owner, Big Vision Design 

Kansas City, MO 

Notley Hawkins, Owner, Notley Hawkins Photography 

Columbia, MO 

Cindy Higgerson, Owner, Larder & Cupboard 

Maplewood, MO 

Craig Hosmer, Owner, Hosmer King & Royce 

Springfield, MO 

Nate Hunt, Co-Owner, Correa- Hunt Agency 

Kansas City, MO 

Joe Jackson, Owner and CEO, Jackson Pianos 

St. Louis, MO 

Stacy Jura do-Miller, Owner, Chief Mission Officer, The Vecino Group 

Springfield, MO 

Liz Kuba, Owner, Tea Rex 

St. Louis, MO 

Matthew Lautketter, Owner, The Ink Spot Inc. 

St. Louis, MO 

Paul Lauritsen, General Manager, Moonrise Hotel 

St. Louis, MO 

Leigh Lockhart, Owner, Main Squeeze 

Columbia, MO 

Andre McCullum, Owner, Hart-McCallum Agency 

Earth City, MO 

Chris Meyers, Owner, Crane Brewing Company 

Raytown,MO 

Alyson Miller, Executive Director, Partners for Just Trade 

Saint Louis, MO 

Marissa Rosen, Owner, Climate Social 

St. Louis, MO 

Phil Wages, Co-Owner, Wages Brewing Company 

West Plains, MO 

Peter Wallach, Director, Peter Wallach Fine Art 

St.Louis, MO 

Bridget Weible, Owner, Flowers to the People 

StLouis, MO 

Philip Chagnon, Owner /Manager, residential rental properties 

Raleigh, NC 

Susan Inglis, Executive director, Sustainable Furnishings Council 

Edenton, NC 

Antonio Reyes, Owner, Reyes Agency 

Mathews, NC 

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Lloyd Smith, President and CEO, Cortech Solutions, Inc. 

Wilmington, NC 

Rebecca Hamilton, Co-CEO and Family Owner, Badger Balm 

Gilsum,NH 

Kris Thieme, Owner, Thieme Agency 

Londonderry, NH 

Esteve Torrens, CEO, Stonyfield Farm 

Londonderry, NH 

Bill Whyte, Owner and CEO, W.S. Badger Company, Inc. 

Gilsum,NH 

Richard Lawton, Executive Director, New jersey Sustainable Business Council 

Point Pleasant Beach, N] 

Kelly Vlahakis· Hanks, CEO, Earth Friendly Products (Makers of ECOS) 

Parsippany, Nj 

Corey Neff, Owner, Neff Agency 

Las Vegas, NV 

Richard Brook, Member, Meyer, Suozzi, English & Klein 

New York, NY 

Ann Bryan, Owner, Ann Krupp Designer Goldsmith 

Saugerties, NY 

Simon Burke·Lipiczky, Owner, Build Smart With Simon 

Troy, NY 

Jon Cooper, President, Spectronics Corporation 

Westbury, NY 

jennifer Dotson, Executive Director, Ithaca Cars hare 

Ithaca, NY 

jeff Furman, Board Member Emeritus, Ben &jerry's 

Ithaca, NY 

Susan Hansen, Owner, Hansen's Advisory Services, Inc. 

Fayetteville, NY 

Kathleen Hoffman, Owner, Law Office of Thomas Hoffman 

New York, NY 

Eric Horowitz, Owner, The Double Windsor 

Brooklyn, NY 

George McDonald, President, The Doe Fund 

New York, NY 

Keith Mestrich, President and CEO, Amalgamated Bank 

New York, NY 

joshua Morton, Owner, Proof of Concept, LLC. 

New York, NY 

Ean Murphy, Managing Partner, Moxie Bookkeeping LLC 

New York, NY 

Clifton Patrick, Owner, Clifton Patrick P&C Insurance 

Chester, NY 

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Del Pedro, Managing Partner, Tooker Alley 

Brooklyn, NY 

Eleanor Prior, Owner, Prior Beeswax 

Germantown, NY 

Erwin Rakoczy, Director, CUFF 

Clarence, NY 

jan Rhodes Norman, Owner, Silk Oak 

Ithaca, NY 

10 

Darius Ross, Managing Partner, D Alexander Ross Real Estate Capital Partners LLC 

New York, NY 

Lesli Sagan, Owner, A vital's Apiaries 

Ithaca, NY 

Steven Salsberg, Chairman, Global Access 

New York, NY 

jason Schuler, Founder and President, Drink More Good 

Beacon, NY 

Elizabeth Schwartz, Co-Owner, Better Speech Now, LLC 

Long Island City, NY 

Dylan Skolnick, Co-Director, Cinema Arts Centre 

Huntington, NY 

Pat Benedure, Owner, The SS Bendure-Hartwig Group 

Columbus, OH 

Nicholas Eastman, President, Electroshield, Inc 

Yellow Springs, OH 

Kevin Holtz, Owner, Holtz Agency 

Cincinnati, OH 

Gary Johnson, President, AFI Contractors 

Toledo,OH 

Steve Mokris, Owner, Kosada 

Athens, OH 

Jim Surace, Owner, Surace-Smith Agency 

North Royalton, OH 

Pete & Jeanie Barkett, Owner, Vinnie's Pizza 

Portland, OR 

Adrienne Catone, CEO, Faerie's Dance, Inc. 

Happy Valley, OR 

Larry Fried, Owner, Do Good Investing, LLC 

Eugene, OR 

Rose Gerstner, Owner, Sympatico Clothing 

jacksonville, OR 

Alison Lueders, CEO, Great Green Content 

Portland, OR 

Kevin Marr, Owner, Motel Del Rogue 

Grants Pass, OR 

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Mitch Rofsky, President, Better World Club 

Portland, OR 

Julie Wasmer, Owner, Food Smart LLC 

Corvallis, OR 

Simon Arias, Owner, Arias Agencies 

Mars, PA 

Mark Bortman, Owner, Exact Solar 

Yardley, PA 

Jonathan Brandow, Owner, BizMiner 

CampHill,PA 

Michael Lastoria, Founder and CEO, &pizza 

Philadelphia, PA 

Michael O'Connor, Owner, La Barbe ria 

jenkintown, PA 

Deborah Schimberg, CEO, Verve, Inc/ Glee Gum 

Providence, RI 

11 

Judy Doty, Operations Manager & CoFounder, Doty Scientific, Inc 

Columbia, SC 

Brady Quirk·Garvan, Owner, Money With A Mission 

North Charleston, SC 

Mark Tilsen, President & Co-Founder, Native American Natural Foods 

Kyle,SD 

Doug Havron, Owner, Gabby's Burgers and Fries 

Nashville, TN 

MaryAnne Howland, CEO,lbis Communications 

Nashville, TN 

Steve Greer, CEO, American Income Life/National Income Life 

Waco, TX 

Carol Niemi, Owner, Aloha Services 

Houston, TX 

Michael Vasu, Owner, Vasu Agency 

Houston, TX 

Michael Lastoria, Founder and CEO, &pizza 

Alexandria, VA 

Sandra Leibowitz, Managing Principal, Sustainable Design Consulting, LLC 

Richmond, VA 

Sarah Mason, Owner, Poseidon's Pantry 

Chincoteague, VA 

Gina Schaefer, Owner, Old Town Ace Hardware 

Alexandria, VA 

Andy Shalla!, Owner, Busboys & Poets Restaurants 

Arlington, VA 

Patricia C Heffernan, President and Founder, Marketing Partners Inc 

Burlington, VT 

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Jeffrey Hollender, Chairman, Sustain Natural 

Burlington, VT 

Sue Morris, Owner, Editide 

Marshfield, VT 

Todd Walker, Senior Financial Advisor, Greenvest 

Wells, VT 

Rick Altig, President, Altig International 

Redmond, WA 

William McColl, Owner, McColl Studio Inc 

Blaine,WA 

Kelly Vlahakis· Hanks, CEO, Earth Friendly Products (Makers of ECOS) 

Lacey, WA 

Bruce Wade, Owner, Taurus Tech LLC 

Mount Vernon, WA 

Eric Yarnell, President, Heron Botanicals 

Kingston, WA 

Michael Katz, President, Molded Dimensions 

Port Washington, WI 

Gary Lemke, Owner, Gary L. Lemke Landscaping. LLC 

Potter, WI 

Jerry McGeorge, Vice President of Cooperative Affairs, Organic Valley 

La Farge, WI 

* New signers will be added regularly 

Over 200 Inaugural Business Signers as of February 6, 2019. Businesses continue to sign at 

https:/ jwww.businessforafainninimumwage.org/Federal-15-By-2024-Sign-On-Statement 

businessforofoirminimumwoge.org 'II (alMinimumWogeBiz 
262 

Chairman SCOTT. We look forward to continuing the discussion 

as we advance the legislation. 

Is there any other business to come before the committee? If not, 

the meeting is adjourned. 

[Additional submissions by Ms. Adams follow:] 


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House Health Bill Would Lead to Less 

Coverage, Higher Patient Costs 

PROPOSED MEDICAID RESTRUCTURE WOULD LEAVE 

NATION'S MOST VULNERABLE UNCOVERED 

March 7, 2017 

Washington, D.C., March 7, 2016-The legislation released by the House Energy and 

Commerce and Ways and Means Committees, while preserving some patient protections, 

will have the net effect of shifting health insurance costs to low and middle-income patients, 

significantly reduce the standards of what constitutes quality insurance, curtail the Medicaid 

expansion and over time substantially reduce over-all Medicaid funding. 

A statement from Chris Hansen, president of ACS CAN, follows: 

"The bills released by the House Energy and Commerce Committee and the House Ways 

and Means Committee retain key patient protections prohibiting insurers from charging 

more based on health status and prohibiting pre-existing condition exclusions. However, 

these protections are hollow if patients and survivors can't afford insurance that covers the 

health care services they need to treat their cancer diagnosis. 

"ACS CAN has long advocated that any changes to the health care law should provide 

equal or better coverage for cancer prevention, treatment and follow-up care than what is 

currently available. These bills have the potential to significantly alter the affordability, 

availability and quality of health insurance available to cancer patients and survivors. 

Changing the income-based subsidy to a flat tax credit, combined with reducing the 

standards for quality insurance could return cancer patients to a world where many are 

unable to afford meaningful insurance or are left to buy coverage that doesn't meet their 

health needs. 

"In 2015, approximately 1.5 million people with a history of cancer between 18-64 years old 

relied on Medicaid for their insurance. Nearly one-third of childhood cancer patients are 

insured through Medicaid at the time of diagnosis. The proposed repeal of Medicaid 
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expansion along with significant federal funding changes could leave the nation's lowest 

income cancer patients without access to preventive, curative and follow-up health care. 

"Moreover, reduced federal funding combined with state-specific eligibility and enrollment 

restrictions will likely result in fewer cancer patients accessing needed health care. For lowincome individuals these changes could be the difference between an early diagnosis when 

outcomes are better and costs are less or a late diagnosis where costs are higher and 

survival less likely. 

"According to multiple independent analyses, 30 million individuals, including many cancer 

patients and survivors, now have insurance facilitated by current law. ACS CAN will 

continue to urge lawmakers to strengthen and improve the law in a way that reduces the 

national cancer burden." 

ACS CAN, the nonprofit, nonpartisan advocacy affiliate of the American Cancer Society, 

supports evidence-based policy and legislative solutions designed to eliminate cancer as a 

major health problem. ACS CAN works to encourage elected officials and candidates to 

make cancer a top national priority. ACS CAN gives ordinary people extraordinary power to 

fight cancer with the training and tools they need to make their voices heard. For more 

information, visit https:l/www.fightcancer.org/. 
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TAT M T 

House Republican Health Care Bill a Dangerous Step in the Wrong 

Direction, Would Harm Women and Children While Shifting Costs 

onto Hard Working Families 

March 7, 2017 

Health Care 

Emily Hecker, 202/371-1999 

Statement from Kristin Rowe-Finkbeiner, executive director and CEO of 

MomsRising.org, a national online and on-the-ground organization of more than 1 

million mothers and their families, on House Republican's Affordable Care Act 

replacement plan 

''The House Republican plan to obliterate the Affordable Care Act and replace it with a 

plan that would make health insurance less affordable, less accessible, and less 

comprehensive is a dangerous step in the wrong direction. This bill would create a 

health care crisis by throwing millions of people off of their insurance. If it is enacted, 

fewer people would be covered and those who do have insurance would have weaker 

protections and face significantly higher costs. It is now clear why House Republicans 

tried to hide this bill for so long. Congress must reject it immediately. 

"The American Health Care Act makes a mockery of every campaign promise Donald 

Trump made about health care. It sets the stage for deep, punitive, permanent cuts to 

Medicaid in just a few years, which would cause grave harm resulting in rationing care 

for some of the most vulnerable people in our country: Black, Latinx, Asian, Native 

American, LGBTQ+, and low-income families; as well as pregnant women, people with 

disabilities, rural communities, and the elderly. The Republican plan would allow 

insurance companies to raise premiums and out-of-pocket costs, especially for seniors. 

The only winners would be the wealthy, and the losers, as too often is the case, would 

be women, communities of color, and all those who struggle to pay for health coverage 

and care. 

'The GOP plan would put coverage out of reach for millions of families. It undermines 

one of the Affordable Care Act's (ACA's) greatest achievements-granting protection to 

those with pre-existing conditions-by forcing those with any significant gap in their 

insurance coverage to pay hefty penalties. Experts agree, this could lead to a toxic 

health care environment in which only those who are sick and can afford coverage get 

the health care they need. 

"It would be devastating for people like MomsRising member Helena of Plantation, FL, 

who is a self-employed, single mother of three. Helena could not afford health insurance 

but, once the ACA was implemented, she applied and was approved, with her kids, for 

Medicaid coverage. But because Florida didn't participate in the Medicaid expansion, 

she was 'kicked off' in 2016. Luckily, she says, 'I was able to get coverage under the 
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ACA, and qualified for the tax credit, so I'm still insured. I worry that my insurance will be 

taken away, and that my kids will no longer be covered.' 

"Further harming the health of women and families, the American Health Care Act 

would defund Planned Parenthood, cutting off health care-including birth control, 

cancer screenings and other essential health services-for millions of women who have 

no other health care provideL 

"Simply put, this legislation would mean America's moms and families pay more for less 

comprehensive coverage, putting our families' and country's economic security at risk. 

"MomsRising members have put pressure on Congress since January to reject a repeal 

of the ACA Last month, our members delivered books with hundreds of stories from 

people who rely on the ACA, Medicaid, Medicare and CHIP to congressional offices in 

Washington D.C. and across the country to educate lawmakers about the impact of 

those programs. Thousands more have sent letters and made phone calls urging 

representatives to protect our health care coverage. We will work tirelessly to ensure 

that the American Health Care Act does not become law. Every lawmaker who supports 

it will have to answer to constituents." 

#### 

MomsRising.org is an on-the-ground and online grassroots organization of more than a 

million people who are working to increase family economic security, decrease 

discrimination against women and moms, and to build a nation where businesses and 

families can thrive. Established in 2006, MomsRising and its members are organizing 

and speaking out to improve public policy and to change the national dialogue on issues 

that are critically important to America's families, including criminal justice reform, 

immigration policy reform, and gun safety. MomsRising is working for paid family and 

medical/eave, affordable, high quality childcare and early learning, and for an end to 

the wage and hiring discrimination which penalizes women -particularly moms and 

women of color- and so many others. MomsRising advocates for access to healthy 

food for all kids, health care for all, earned sick days, and breastfeeding rights so that all 

children can have a healthy start. MomsRising maintains a Spanish language website: 

MamasConPoder.org. Sign up online atwww.MomsRising.org- and follow us on our 

blog, and on Twitterand Facebook. 
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National Disability Rights Network Opposes American Health Care Act 

For Immediate Release 

March 7, 2017 

Contact: David Card 

202.408.9514 x122 

press@ndrn.org 

WASHINGTON- NDRN Statement on the American Health Care Act: 

"The legislation revealed by House Republicans last night is a giant step backwards in the treatment and 

care of individuals with disabilities. 

"It repeals the expanded Medicaid match that encourages the community integration of people with 

disabilities and counters biases that lead to institutionalization. It permits discrimination against people 

with disabilities in the insurance market for their pre-existing conditions. It caps Medicaid funding which 

means a sharp reduction in services and availability of this important health care lifeline for children and 

adults with disabilities. In short, this plan is terrible. 

"The National Disability Rights Network urges the House not to send people with disabilities back to a 

time when it was nearly impossible for us to obtain health insurance, live in the home of our choice or 

participate in community life. We will never go back to those days. Never." 

111111 

The National Disability Rights Network (NDRN) is the nonprofit membership organization for the 

federally mandated Protection and Advocacy (P&A) Systems and the Client Assistance Programs (CAP) 

for individuals with disabilities. Collectively, the Network is the largest provider of legally based 

advocacy services to people with disabilities in the United States. 
268 

[Additional submission by Mr. Courtney follows:] 


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Hartford HealthCare to raise minimum 

wage to $15 across health network 

l-L:1!1f0rd O:uant, Jan 14,2019 

Hartford Health Care will increase its minimum wage to $15 per hour this 

spring, raising the pay rate of more than 2,400 employees of the health care 

network. 

About 12 percent of Hartford HealthCare's about 20,000 employees will 

benefit from the new minimum wage that takes effect March 31, the company 

announced Monday. The investment is expected to improve the health of the 

workforce, as well as increase employee retention, recruitment and 

satisfaction, Hartford HealthCare said. 

The state minimum wage is $10.10 per hour, though Gov. Ned Lamont and the 

Working Families Party are among those calling for an increase to $15 an 

hour, as well as paid family and medical leave, to keep pace with gains in 

productivity. 

"This important decision is a ret1ection of our respect for our staff and a 

product of our core value of integrity that calls us to 'do the right thing,' " CEO 

Elliot Joseph said. "Investing in the financial security of those who work \Vith 

us is further recognition of everyone's contributions to carrying out our 

mission." PAID 

The decision followed months of consideration, the company said. 

Amazon made a similar move in October, announcing it would pay all of its 

U.S. employees a minimum of $15 an hour, more than twice the federal 
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minimum wage of $7.25. Last January, Bloomfield-based Cigna raised its base 

pay for U.S. employees to $16 an hour, and raised many employees' wages 

above that level- investments that totaled more than $15 million. 

Other major American companies are approaching that benchmark. Costco 

pays more than $14 as minimum wage, Target has pledged to reach $15 by the 

end of 2020, and Walt Disney Co. aims to reach $15 at its California and 

Florida theme parks by 2019 and 2021, respectively. 

These voluntary, corporate wage increases are the preference of groups like 

Employment Policies Institute, a nonprofit research organization that opposes 

government-mandated minimums. 

"It's demonstrative of why a state or federal mandate is so unnecessary," said 

Michael Saltsman, EPI's managing director. "For years, we've been told the 

goal of corporate America and all these big companies is to keep wages low 

and the only way to raise pay at the bottom is to mandate it." 

He added, "The wrong lesson to take away is that it means every business can 

afford that kind of minimum, because we know that's just not true." 

Saltsman argues that minimum wage hikes of any level are ineffective at 

reducing poverty, but do plenty of harm to businesses and economies. 

Companies that can't keep up \"'ith labor costs either cut workers or close, 

Saltsman says, and in the event of a federal pay hike, states or municipalities 

would feel pressured to raise wages even higher, creating a viscous cycle of pay 

inflation. 

Meanwhile, supporters say they want workers to be able to survive on a single 

salary. 
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In a tweet Monday, Vermont Sen. Bernie Sanders called the federal minimum 

of $7.25 "a starvation wage," as he vowed to introduce a bill this week to 

increase the minimum wage to $15. 

Rebecca Lurye can be reached at rlurye@courant.com. 
272 

[Additional submission by Ms. Davis follows:] 


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empowering women since 1881 

February 6, 2019 

Congressman Bobby Scott 

Chairman, Committee on Education and Labor 

U.S. House of Representatives 

Washington, D.C. 20515 

Dear Chairman Scott and Ranking Member Foxx, 

Congresswoman Virginia Foxx 

Ranking Member, Committee on Education and 

Lahar 

U.S. !louse of Representatives 

Washington, D.C. 20515 

On behalf of the more than 170.000 bipartisan members and supporters of the American Association of 

University Women (AAUW), I would like to thank you for the opportunity to submit this letter in 

advance of the Committee's hearing on "Gradually Raising the Minimum Wage to $15: Good for 

Workers. Goodfor Businesses. and Goodfor the Economy." I respectfully ask that this letter be included 

in the hearing record. 

The Raise the Wage Act (H.R. 582/S. !50) is critical legislation, which would gradually increase the 

federal minimum wage from $7.25 to $15 per hour by 2024, and then require that the minimum wage 

increase be based on changes in the median wage. It would also eliminate the tipped minimum wage and 

prohibit the use of subminimum wages for employees with disabilities. 

Today. millions of women live in poverty because our federal minimum wage is inadequate for ensuring 

the economic well-being of workers and their families. The federal minimum wage is currently only 

$7.25 per hour and just $2. I 3 per hour for tipped workers. Women comprise a majority of the low-wage 

workforce, and African American women and Latinas are significantly overrepresented in the low-wage 

workforce.' Nearly two-thirds of minimum wage workers in the United States arc women, as well as 

two-thirds of workers in tipped jobs.' Some workers with disabilities are paid a subminimum wage 

through certificates issued by the Department of Labor. This is not even close to a living wage, which is 

necessary to lift workers out of poverty. A woman with two children working full-time at minimum 

wage earns a yearly salary of$14,500, $5,000 below the poverty line. 1 

Congress must take action to increase the minimum wage by passing the Raise Wage Act of 20 I 9 (li.R. 

582/S. 150). If enacted, this legislation would raise the federal minimum wage to $8.55 this year and 

increase it over the next five years until it reaches $I 5 an hour in 2024, phase out the outdated 

subminimum wage for tipped workers, and also sunset the ability of employers to pay workers with 

disabilities a subminimum wage. 

Women's overreprescntation in low-wage jobs is a significant factor contributing to the gender pay gap. 

Currently, women working full-time, year-round are typically being paid only 80 cents for every dollar 

paid to men.4 The pay gaps have grown even wider for women of color. African American women and 

Latinas make, respectively, 61 and 53 cents on the dollar as compared to non-Hispanic, white mcn5 

Women make up nearly 58 percent of the workers who would benefit from a $15 minimum wage, making 

this bill instrumental for helping to close the gender wage gap6 According to estimates that came out 
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just this week from the Economic Policy Institute, increasing the federal minimum wage to $!5 by 2024 

would give more than 31 percent of all working women a raise, including 41 percent of African American 

working women, 38 percent of working Latinas, 29 percent of white working women, and 23 percent of 

Asian working women. 7 

Raising the minimum wage is one action that Congress should take to ensure the economic security of 

families across the country. I thank the Committee for taking up this issue and urge you to swiftly pass 

the Raise the Wage Act (H.R. 582/S. !50). Cosponsorship and votes associated with this bill may be 

scored in the AAUW Action Fund Congressional Voting Record.for the /16th Congress. Please do not 

hesitate to contact me at 202/785-7720 or Anne Hedgepeth, Director of Federal Policy, at 202/785-7724, 

if you have any questions. 

Sincerely, 

Deborah J. Vagins 

Senior Vice President. Public Policy and Research 

cc: Members of the House Education and Labor Committee 

at 6 David Cooper, "Raising the federal minimum for nearly 40 million workers" 

(Economic Policy Institute, February 20 19), '~"'-'•···"-'"!''·"''·'~"" ''"-"-'""~'~"-"'""''""' Figure G. 7 !d. at Appendix Tables 7-l 0. 

2 
275 

[Additional submissions by Mrs. Foxx follow:] 


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Pnnl Close 

Seattle small businesswoman: I know the $15 minimum 

wage is bad for business - It has devastated mine 

By Heidi Mann 

Fm: News 

Democrats in Congress are holding a hearing today on a proposed bill to raise the minimum wage to $15 an hour. They wilt try to 

make the case that doing so is good for workers and for small business owners. But my experience as a small business owner !n 

Seattle- a city witf1 a $16 minimum wage for large companies and $15 for aU other businesses- has proven the exact opposite, 

My tlusband and I independently own and manage two Subway franchises in the greater Sealt!e area. One location is in Seattle 

proper; the other is eight miles nway in the city of Kirkland. 

Even tbough we're the very definition of a sma!! bt1siness, as a Subway franchisee, the city of Seattle considers us a "large 

business." T!lal r"leans our location ln the city is forced to pay workers the higher wage of $16 an hour. 

ANDY PUZDER: BERNIE SANDERS' MINIMUM WAGE PROPOSAL IS IRRELEVANT THANKS TO TRUMP'S PRO-GROWTH 

POLICIES 

Next year, in March 2020, we will, unfortunately, have to close our Seattle location due to the City's mandated minimum wage. If our 

experie.'lce in Seattle is any indication of the pitfalls of a S 15 mmimum wage, I implore Congress to carefully consider the 

ramifications of the proposed legislation. 

My husband and I are firm believers in creating a strong foundation for our staff, rnany of whom are new to tile workforce, We 

believe in paying them an appropriate wage for their skU! sets and responsibilities. While there was a lot of excitement for workers 

when wage increases first were announced, sadly, raisin!) the minimum wage has not benefited our employees as our local 

government intended, 

My husband and I are firm believers ln creating a strong foundation for our staff, many of whom are new to the workforce. We 

believe ln paying them an appropriate wage for their skill se:s and responsibilities. While there 1.vas a lot of excitement for workers 

when wage increases first were announced, sadly, raising the minimum wage has not benefited our employees as our local 

government mtended. 

Seattle's rapid minimum wage Increase forced us to drastically cut our expenses in order to continue running our business 

efffcient!y. 

We were forced to terminate four of our seven employees since we slrnp!y could not afford the new costs of labor. We tllcn 

sho:tened our business hoUis l<l accommodate this reduced staff Employees' hours were cut, and their shifts were changed to 

concentrate on stafling our peak hours. 

These changes occurred rapidly and led to an immedtate drop in team morale, 

A federal S15 minimum wage wi!! not only lead to job losses across our nation, bul wi!! cause small business owners to lose sight of 

the Amctican dream, as U1ey Drc forced to make dlfflcu!t dedstons in order to maintain their businesses, or close altogether. 

Because of the higher wage mandate, we can no longer hire and train unskilled high school and college students who are new to 

the workforce. We used to value teuching our first-time employees basic life and customer service skills, hke handling cas!1, 

punctuality, cleanliness, conflict resolution, organization, and how to cor.duct themselves professionally and responsibly. 

This is a Vd!u21ble part of beo.JrninB a thoughtful ant! contrihuling membm of our workforce and society. Out that foundation and 

stepping stone are being removed !hanks to the minimum wage manrJate. Today, we are forced to hire employees with more 

experience tc compensate for a smaller staff and higher wage requirement. 

Hlyher wages llave also translated into higher prices. Over the pas! two years, it has been both frustrating and disheartening to tose 

longtime customers, as we try in vain to raise our prices to offset costs. Not every neighborhood m Seatne is a wealthy one, Our 

Sentt!e Subway is in a midd!e~ctass area where customers me price sensltive- especially since they can visit a nearby Subway 

over the city border and pay a !ower pnce. 
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Our customers have also been burdened w1th longer wait times, as we often have to train our employe-es to be fu!!~service, from 

greeting, to taking orders, to making the food and collecting the payment- not to mention prep, cleanup and !abby care. 

The wage increase is putting pressure on evetyone. It's hard, and it's frustrating. 

We started this business believing in the American dream, but our dream of being our own boss, of earn!ng a fair wage for our 

family, and of helping others throu-gh meaningful employment, is slowly becoming a pipe dream that is less and less a reality. 

We started this business believing in the American dream, but our dream of being our own boss, of earning a fair 'Wage for our 

famlly, and of helping others through meaningful employment, Is slowly becoming a plpe dream that is less and less a reality. 

As each piece of the higher minimum wage is phased in, the American dream is becoming more eluslve and unattainable. We are 

all working longer days, with more responslbl!ity, and, !n the end, for less pay, despite the increases, 

Small business owners make America strong. They are the heart of our economy and they are responsible for ralsing a solid 

workforce as their employees navigate Into careers and higher paying positions. 

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A federal $15 minimum wage will not only lead to job losses across our nation, but will cause small business owners to lose sight of 

the American dream, ns they are forced to make difficult dedslons in order to maintain their businesses, or close altogether. 

I hope Congress will listen to the voices from Seatt!e, w!1ere a $15 minimum wage is disrupting our small businesses and our 

economy. 

Hejdi Mtmrt h> the owner and manager of two Subway franchiSes in the greater Seat!Jo <1te.tt. 

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Chairman Bobby Scott 

Chairman 

February 5. 2019 

U.S. !louse Education and Labor Committee 

Washington, D.C. 

The Honorable Virginia Foxx 

Ranking Member 

U.S. House Education and Labor Committee 

Washington, D.C. 

Dear Chairman Scott and Ranking Member Foxx: 

RESTAURANT NATIONA~ ASSOCIATION .. 

The National Restaurant Association submits this letter for the record in opposition to 

H.R. 582, "Raise the Wage Act," which is scheduled to be considered by the House Education 

and Labor Committee during a legislative hearing on February 7, 2019. The "Raise the Wage 

Act" would increase the federal minimum wage from the current $7.25 per hour to $15 per hour 

over five years, index the minimum wage to inflation thereafter, and eliminate the tip credit. 

As the leading business association for the restaurant and foodservicc industry, the 

National Restaurant Association represents more than 15.1 million employees, nearly I 0 percent 

of the nation's workforce. With one million locations across the country. the $825 billion in sales 

from the restaurant industry makes up four percent of the U.S. GDP. 

Restaurants are woven into the fabric and essence of communities across America. Each 

day, millions of Americans choose local restaurants as the centerpiece for the most special 

moments of their lives. When restaurants succeed, guests, employees, and American 

communities succeed. Unfortunately, H.R. 582 would jeopardize this success and harm those it 

proclaims to help. 

Mandating a $15 per hour starting wage across the country fails to recognize the simple 

economic reality that not all communities are the same. What might be right for California or 

New York would have stifling impacts to restaurants and other small businesses in areas where 

workers do not face the cost of living they do in major cities such as San Francisco and New 

York City. These small businesses cannot absorb a dramatic $15 per hour escalation in their 

labor costs. Such higher wages would lead to employers having to take dramatic steps such as 

cutting back on workers' hours and/or eliminating positions. Additionally, when labor costs rise, 

restaurants, which operate on tight profit margins between 3-6o/o, are forced to raise menu prices 

to maintain profitability, thereby driving up consumer costs. Entrepreneurial goals, like 

expansion and new job creation, would be undermined and quickly diminish. Everyone, 

including the economy, loses in that situation. 

L Strcn Washn'!qtcn. 20036 I (202) 
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RESTAURANT NATIONA~ 

ASSOCIATION _ 

Another provision contained in "Raise the Wage Act" that would have negative impacts 

on the employees it purports to help is the elimination of the federal tip credit. Eliminating the tip 

credit could dramatically change the restaurant business model that is supported by our owners. 

employees, and customers. When recent attempts were made to eliminate the tip credit in Maine, 

Michigan, and the District of Columbia, lawmakers faced significant resistance as tipped 

employees launched massive grassroots campaigns and rallied successfully to preserve the tip 

credit. 

The tip credit allows tipped-employees to earn far more than the minimum wage, while 

helping to reduce labor costs for restaurants and others that operate on thin profit margins. 

Tipping creates major earning potential for tipped employees and fuels the high-quality guest 

service that is a hallmark of the restaurant industry. According to our recent survey of 529 fullservice restaurant operators with tipped employees, the median hourly earnings of entry-level 

servers is $19 per hour, while the median hourly earnings of more experienced servers is $25 per 

hour. In this data, the upper quartile for more experienced servers is $38 per hour. 

We encourage the Committee to consider a common~sense, balanced approach in this 

debate over the federal minimum wage. The fact is that$ l 5 in New York City is not $15 in 

Dothan, Alabama. There are different economic realities in each city, state and region. If 

Congress drastically increases the cost of doing business, small businesses will hire less, cut 

hours, or even close their doors. We also encourage the Committee to seriously consider and 

address the negative impacts tipped employees would suffer if the tip credit is eliminated, as 

called for in the legislation. 

Thank you for the opportunity to share our views. We look forward to working with the 

Committee in the I 16th Congress on many important education, labor and workforce issues. 

Sincerely, 

Shannon L. Meade 

Vice President, Public Policy and Legal Advocacy 

National Restaurant Association 

I (800) 42t1-SI5G 
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~NFIB 

1201 F St NW #200 

Wash:ngtol'l. DC 20004 

1-800-552-5.342 

NFiG.cor:l 

February 7, 2019 

The Honorable Bobby Scott 

Chairman 

Committee on Education and Labor 

US House of Representatives 

2176 Rayburn House Office Building 

Washington, DC 20515 

Dear Chairman Scott and Ranking Member Foxx: 

The Honorable Virginia Foxx 

Ranking Member 

Committee on Education and Labor 

US House of Representatives 

2101 Rayburn House Office Buildir1g 

Washington, DC 20515 

On behalf of NFIB, the nation's leading small business advocacy organization, I write in 

opposition to H.R. 582, the Raise the Wage Act of 207 9. This legislation dramatically increases 

the federal minimum wage to $15.00 per hour over the next five years and automatically 

increases the threshold every subsequent year. 

The Raise the Wage Act will harm small business employment and the small business economy. 

NFIB estimates this legrslation will cost the economy 1.6 million jobs, reduce real GDP by over 

$980 billion, and reduce economic output by more than $2 trillion by 2029.' The negative 

effects of the proposed legislation will fall disproportionately on small employers as businesses 

with fewer than 500 employees will account for 57 percent of JOb losses (over 900,000 lost 

JObs) and businesses with fewer than 100 employees will account for 43 percent of JOb losses 

(nearly 700,000 jobs) 2 Small businesses are less likely than larger businesses to have cash 

reserves or profit margins to absorb the rncrease in labor costs. 

The NFIB Small Business Optimism Index has remained historically high throughout 2018 and 

early 2019. Record levels of small business owners are increasing employee compensation. 

Over the last 13 months, at least 30 percent of small business owners each month have 

reported compensation gains, a level that had been reached only once since 2001 3 With the 

1 NFIB Research Ce0ter, Economtc tffects of Enacting the Raise the Wage Act on Sma!f Businer;ses and the US Economy, january 25, 

2019 

'Nri8 Research Centt~r, NFfB Srna!t Business Economic Trends, january 8, 20'1 9. 
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small business economy roaring, now is not the time to consider 

damaging to Main Street. 

that will be 

Small businesses employ nearly half of the private-sector workforce. More than doubling the 

federal minimum wage will have real and significant consequences for small business owners 

and employees, which is why in a recent NFIB member ballot, 92 percent of small business 

owners opposed an increase in the federal minimum wage to $15.00 per hour4 

NFIB welcomes the opportunity to work on pro-small business policies in the 116'1l Congress, 

but opposes H.R. 582, the Raise the Wage Act of 2079. 

Sincerely, 

r~o' Dv-'J1~- juanita D. Duggan 

President & CEO 

NFIB 

'NFIB Nlember Ballot, Manda:e. vol 569. july 2016 
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Replacing Employer-Sponsored Health Insurance 

with Government-Financed Coverage: 

Considerations for Policymakers 

By Doug Badger 

P.O. Box 130 • Paeonian Springs, VA 20129 

Phone 703-687-4665 

www.galen.org 

www.AmericanHealthCareChoices.org INSTITUTE 
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December 20 I R 

Replacing Employer-Sponsored Health Insurance 

with Government-Financed Coverage: 

Considerations for Po/icymakers 

By Doug Badger' 

Critics of the way heallh care is financed in the United States often ask why it is the 

only highly developed country whose government has not established a universal 

health care systcm2 

'!he question is generally posed rhetorically with the intention of ending debate. It 

suggests that the U.S. can and should adopt health care financing structures similar 

to those of other prosperous countries. 

This paper will treat this as a genuine question and as a point of departure for debate, rather than its terminus. It will seek to inform that debate by examining the 

provenance, evolution, advantages and limitations of the leading source of coverage in the United States: employer-sponsored insurance (ESl). It will then examine some of the implications for health care financing and delivery were the US. 

government to supplant employers as the financer of medical care for most workers and their families. It will use the "Medicare For All Act" introduced by Senator 

Bernie Sanders(!-VT) as the point of comparison between a government-linanced 

system that would replace the current one, using 2016 as the reference year:' 

~lbc paper is not intended as a cost estimate or predictive mode] but rather as a way 

to identify and, in a more general sense, to quantify the implications of replacing 

ESI with government financing. 

The Evolution of ESI 

1he evolution of financing and delivering medical care in the United States and 

its reliance on ESI has often been described as an "accident of history."4 In fact, 

while it is true that the U.S. government, unlike the governments of other highly 

developed countries, did not specifically devise or rationalize a system for financing medical care, the hybrid of public-private financing evolved through a series of 
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decisions deliberately taken by government, employers, private insurers, providers, 

labor unions and consumers. 

Failure of Efforts to Establish National Health Insurance 

The first thread in the U.S. medical financing tapestry involves a long-standing 

policy of not centrally financing the provision of medical care. Despite more than 

a century of elfort-efiorts that once again have gained prominence-federal policymakers have repeatedly rejected national health insurance proposals. 

Advocacy for national health insurance has been traced hack lo the early lwenlieth 

century.' Progressive activists called for the creation of what they called "sickness 

insurance;' programs to compensate workers for loss of income due to illness, ben~ 

efits similar to those provided by voluntary mutual aid programs that had sprung 

up in Europe and the U.S. during the late nineteenth century.' As hospitals began 

to evolve from refuges for the poor and those with contagious diseases into places 

of healing, the concept was broadened to include medical bcneli!s. 

'D1e American Association for Labor Legislation is generally credited with advancing the first proposal for government-financed health insurance. In 1915, it laid 

out rnodel stale legislation that would provide workers wHh sick pay for up to 26 

weeks, coverage of hospital and physician care, maternity benefits and a $50 burial 

benefit.' 'l11e program, estimated to cost four percent of wages, was to be financed 

with contributions from workers, employers and state governments. R Between 

1915 and 1920, 16 bills were introduced in various state legislatures. No state 

established a program.' 

'!he New Deal olfered advocates a fresh opportunity to push f(>r what was at that 

point called "national health insurance:' President Roosevelt's Committee onEconomic Security was charged with making recommr;;ndations for establishing programs to protectt<m1ilies from financial distress linked to age, illness and disability. 

Included in its mandate was to recommend a government program of medical 

care to insure "against misfortunes which cannot be \Vholly eliminated from this 

man-made world o[ ours." 10 But the committee's final report contained no such 

recommendations, instead promising a subsequent report on government medical 

insurance. President Roosevelt quashed that report after its authors concluded 

that the program would necessitate a doubling of the payroll deduction required 

by the crealion o!Social Security. 11 

Proposals for national health insurance emerged again during the 1940s. This 
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time advocates sought to establish a federally administered program, financed by 

payroll taxes, a proposal more akin to Social Security than to the state-administered programs that were a feature of earlier proposals-" Despite the urging of the 

Truman Administration, Congress declined to act The Carter and Clinton administrations subsequently floated proposals to create universal, government-financed 

health insurance. All were unsuccessfuL 

In every case, opposition from segments of the health care industry helped doom 

these efl()rts. But it is also the case that Congress over this same timeframe vastly 

expanded government financing of medical care, as will be discussed below. One 

key diflerence between the successful efforts oft he johnson and Obama administrations and the series of failed proposals is that Medicare, Medicaid and the 

Affordable Care Act did not seek to replace ESI with public coverage, but rather 

alfected it at most tangentially. 

Emergence and Growth of Private Employment-Based Insurance 

The rise and durability of private health insurance, with its close links to the employer setting, is a second evolutionary factor that distinguished the U.S. system 

from its European counterparts. Robust programs of private health insurance 

generally did not develop in Europe; they did in the U.S. 

As in Europe, voluntary employee welfare arrangements had their antecedents in 

the nineteenth century. Statutory health insurance, first proposed during the 18ROs 

hy Otto Von Bismarck, took decades to develop throughout Europe, reaching full 

maturity only after World War II. 1.' 

The U.S. moved in a different direction. During the late nineteenth and early twentieth centuries, some labor unions and a handful of employers established what 

were called sick benefit programs. 14 As efforts to create government-sponsoreJ 

coverage (altered in the early decades of the twentieth century, private arrangements began to emerge. The first Blue Cross plan, established in 1929, presented a 

unique approach that wedded employers, workers and hospitals in prepaid hospital 

care arrangemcnts.r·; 

At the time, employer-sponsored coverage was relatively rare. An estimated 1.2 

million employees and a similar number of dependents participated in ESI in 

!930." But the Blue Cross model of voluntary non~profit, group hospitalization 
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coverage mushroomed during the Great Depression and the Second World War. 

By !935, there were 15 Blue Cross plans in 11 states." A decade later, 19 million 

people were enrolled in 80 Blue Cross plans." 

During this same period, Blue Shield plans covering physician services also appeared, along with physician group plans and other privately financed arrangements. Despite their many differences, these plans all predominantly emerged 

within the employer setting. 

'1hese arrangements multiplied because they worked. Employment-based groups 

of reasonable size ofTercd risk pools thal generally were broadly representative of 

their respective communities. Employment-based pools were in some respects 

ready-made for spreading medical risk, obviating the need for government to 

create pools at the state or federal level. By the lime of the Second World War, the 

development of workplace-based private insurance was a distinguishing feature of 

health coverage in the United States. 

The persistent growth in private health insurance coverage, which continued into 

the ensuing decades, was in part attributable to a decision of the National War Labor Board, which ruled that fringe benefits did not violate the federal wage freeze." 

ESI thus provided companies with a means to compete for scarce labor. The Revenue Act of 1954 sealed this arrangement by codifying the treatment of employer 

contributions to health insurance premiums as not subject to income and payroll 

taxation. w Employer~sponsored health insurance became a lax -preferred f()rtn of 

compensation that remains widespread and popular more than 70 years after the 

government lifted wage controls. 

Labor unions also helped fuel the growth ofESI. '!he Taft-Hartley Act, which 

became law in 1947, allowed collective bargaining over "conditions of employment."" '!he National Labor Relations Board ruled that health insurance benefits 

fell within this dctinilion. The Supreme Court upheld the Nl.RB ruling in 1949," 

'lhroughout the late 1940s and early 1950s, unions successfully negotiated (often as 

the result of strikes) the establishment and expansion of health benefits." Between 

1950 and 1965, health benefits tripled as a percentage of employee compensation-'' 

ESI thus became a firmly established source of health insurance in the U.S. at ahout 

the same time as government~financed plans came to prominence in other devel4 
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oped countries. ESI's growth in the U.S. is attributable to a variety of factors, some 

involving government, but many the work of private actors, including hospitals, 

employers and labor unions. Its growth and popularity were in that sense intentional, not accidental. 

The Growth of Public Insurance for Defined Populations 

The final important trend in the evolution of U.S. health care financing is the 

growth of public programs for defined populations. '!his public policy strand 

preceded the other two. Government-backed health care lor veterans is among its 

leading examples. The Department of Veterans Affairs traces the origins of government aid to veterans to 1636, when the Plymouth Colony waged war against 

the Pequot lndians 2 ' 1l1e federal government established the first medical facility 

for veterans in 181!." By the time Congress created the Veterans Bureau in 1921, 

medical care for veterans was a well-established federal priority. The new bureau 

undertook the construction of a network of federal hospitalsY 111at network has 

grown over the decades. Congress has approved a $50 billion budget for the Velerans Health Administration for fiscal year 2019." 

The real growth of government-financed medical coverage for specified populations began in the mid-1960s with the creation of Medicare and Medicaid. In 

some ways, this was a byproduct of the evolution ofESI during the post-World 

War 11 period. Since health insurance coverage was primarily linked to the workplace, advocates of government-financed medical care proposed public coverage 

for those whose attachment to the labor force was attenuated by age, disability and 

poverty. 

financing of these programs resembles those in other developed countries in that 

they tax workers and corporations to cover the costs of medical services. 1he 

U.S. programs, however, are not universal, but targeted to specific populations. 29 

Spending on these programs has grown rapidly, particularly with the creation of 

Medicare and Medicaid in the mid-1960s. The result, shown in Table], is that 

federal and state governments now finance the majority of personal health care 

expenditures. 

The government share of health spending doubled between 1960 and 2000. By 

2008, government had eclipsed the private sector as the dominant financer of personal health care expenditures." The percentage of medical care financed by the 

Table 1 - Percentage of 

Personal Health Care 

Expenditures Financed 

by Federal and State 

Governments 

1960 24.3% 

1970 38.1% 

1980 44.8% 

1990 44.2% 

2000 47.9% 

2010 52.0% 

2016 52.5% 

'· """ hbpend>· 

< 2016. Tobie 6."' 
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federal government is projected to continue growing. The Centers for Medicare 

and Medicaid Services projects that federal and state governments will pay for 

56.4 percent of personal health care expenditures in 2026. 31 

11lis increase can be ascribed to numerous factors. First, the creation of Medicare, combined with the aging of the population, has led to massive growth in that 

program. In 1970, Medicare spending constituted0.7percent ofGDP32 In 2016, it 

had nearly quintupled as a share of the economy to 3.3 percent. 33 With the program growing at an estimated 10,000 people per day, government sources forecast 

that it will consume 4.5 percent ofGDP by 2026. 34 

Medicaid spending, too, has grown more than fivefold, from 0.5 percent of GDP in 

1970 to 2.7 percent in 2016.35 Unlike Medicare, Medicaid spending is not a product of change in the composition of the population but in changes to the program 

itself. Beginning in the 1980s, Congress has expanded eligibility standards, adding 

tens of millions of people to the rolls. In 1970, 14 million people, representing 

less than seven percent of the population, participated in Medicaid." By 2016, an 

estimated 91.4million people, representing nearly 29 percent of the U.S. population, were enrolled in either Medicaid or the related CHIP program at some point 

during the year. 37 'lbe creation of new programs under the Affordable Care Act 

(ACA) and the Balanced Budget Act of 1997 contributed to this growth. 38 

TI1e result is that federal and state governments finance more than half of personal 

health expenditures and will continue to do so for the foreseeable future even in 

the absence of further public policy changes. 

6 
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The Current State of ESI 

Although the government now linances the bulk of medical spending, ESI remains 

a source of insurance coverage for the majority of the population. In 2016, 173.1 

million people had employer-sponsored health insurance." Table 2 shows the 

breakdown in the number of workers in firms that offer coverage, the percentage of 

employees eligible for such coverage and the percentage of eligible employees who 

enrolled in that coverage in 2016. 

Table 2- Offer and Participation Rates of ESt, 2016 

Percentage of workers in firms that offer coverage to at least some employees 

Percentage of workers in offering firms who are eligible to enroll in ESI 

Percentage of eligible workers in offering firms who enrolled in ESI 

Percentage of workers in offering firms who have ESI 

Percentage of workers in all firms who have ESI 

K<~NT l·~nnlv lound,ll!on, J:mpluyer l!ealth F\<ond!ls Annu,1l Suryey, 201(>, l·.xhthtts 3.1 and 3.2 

·rhe table shows that, while access to ESI is broad, it is far from universal. ·rhere 

arc several reasons for this, some involving decisions by employers and others due 

to choices made by workers themselves. Structural changes in the labor force also 

have contributed to the decline in the percentage of Americans with ESI. 

The vast majority of workers-89 percent according to the Kaiser survey-worked 

for companies that sponsored health insurance coverage in 2016. An estimated 

79 percent of those employees were eligible to enroll in their firm's plan. Compa~ 

nics may make certain employees, part~time workers for example, ineligible for 

coverage and they may not allow new employees to join their plans until they have 

completed a waiting period. 

Among employees in offering firms who were eligible for ESI in 20!6, 79 percent 

enrolled. Some may have chosen to remain uninsured despite exposure to tax penalties on the uninsured. 40 Others may have had other sources of coverage, through 

a working spouse, for example, a parent (in the case of those under 26), or through 

a public program !ike Medicare. In all, 62 percent of those working for employers 

that sponsor coverage enrolled in that coverage in 2016. 

The percentage of \vorkers in all firms-including those that ofYered coverage and 

7 

89% 

79% 

79% 

62% 

55% 
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those that did not-enrolled in ESI was 55 percent in 20!6. That figure has remained relatively stable over the past five years but is significantly lower than the 

65 percent figure in 2001.41 

Many critics of ESI have faulted its lack of universality and noted the secular 

decline in the percentage of the population enrolled in such coverage. TI1ere are a 

number o[ reasons for this. First, ESL unlike government~financed systems outside the U.S., was for many years voluntary both for companies and employees. 

'I11e ACA instituted mandates on both, ent(>rced by tax penalties. 

Firms with fewer than 50 full-time equivalent workers are exempt from the employer mandate. '!11e establishment of individual and employer mandates may 

have aflected coverage at the margins, but the percentage of workers enrolled in 

ESI was largely unchanged hy those mandates. 

The likelihood that a firm offers coverage depends to a great extent on its size, as it 

did before the mandate took eflect. The Kaiser survey found that nearly all firms 

with at least 200 workers in 2016 offered E$!. 42 Among firms with 50-199 workers, 91 percent oflercd coverage. That figure dropped to 80 percent for companies 

with 25-49 employees, 61 percent for those that employed !0-24, and 46 percent of 

companies with fewer than 10 \\'orkers. 

In general, it appears that larger firms, which are subject to the mandate, sponsored 

health insurance coverage before the government required them to do so, while 

a fairly substantial percentage of smaller firms, which are generally exempt from 

the mandate, did not offer coverage to their ernployees. 'Ihe crnployer mandate, in 

short, has not appreciably affected the practice off1rms with respect to ESJ. Participation rates are largely the same as they were under a purely voluntary system. 

Gauging the effectiveness of the individual mandate is a more difficult undertaking. There undoubtedly are some people who have enrolled in health insurance 

coverage solely to avoid the tax penalty on the uninsured. How many is a matter of 

considerable uncertainty. '!he Congressional Budget Office has repeatedly reduced 

its estimate of the coverage effects of the mandate. 43 Beginning in january 2019, 

the government no longer will levy a tax penalty on the uninsured. That change in 

policy may improve our understanding of the mandate's coverage effects. 

8 
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Structural changes in the labor force also may help explain the decline in ESI 

coverage. Assessing the effects of such changes is beyond this paper's scope, but 

they might include declines in the manufacturing sector, lower rates oflabor union 

membership, temporary and part-time employment, increasing heallh care costs 

and a secular decline in workforce participation, most pronounced among males of 

prime working age. 44 

Despite the decline in the percentage of the population with ES!, job-based health 

coverage remains widespread. As a consequence, ESI otTers considerable benefits 

to the government. Premiums for those withES! totaled nearly $991.3 billion in 

2016. 45 Of that amount, 73 percent was contributed by employers and 27 percent 

by workers.46 Government does not tax health benefits. If it treated ESI the same 

as it does wages, federal income and payroll tax revenues would increase.47 "Ihe 

Treasury Department estimates that, absent the tax exclusion, federal revenues 

would have been $348 billion higher in fiscal year 2016." 

By not taxing ESI, the government leveraged nearly $1 trillion in private health 

insurance spending at a net cost to the federal budget of less than $350 billion. 49 

A very rough estimate of the benefit to the government in 2016 can be derived 

by subtracting the amount of federal revenue lost to the exclusion ($348 billion) 

from the total amount of ESI premiums ($991.3 billion), yielding $643.3 billion. 

'!hat is a rough estimate of the net cost of supplanting ESI with direct government 

financing in 2016. 50 To finance that sum through payroll taxes in 2016 would have 

required raising the OASDI tax by 9.6 percentage points, from 12.4 percent to 22.0 

percent of taxable payroll." 

'I11is is not to suggest that the government would increase payroll taxes if it were 

to eliminate ESI. Congress might choose other means of offsetting costs and to at 

least partially finance the program through borrowing. Nor is this intended as a 

comprehensive estimate of the costs of replacing ESI \Vith a government-funded 

system. Such an estimate would have lo take into account a number of factors, 

some of which are discussed later in the paper- potential administrative savings) 

lower reimbursements for medical goods and services and increased consumption of such goods and services among them. Rather, it is an effort to illustrate 

the amount of private health insurance spending that the government leverages 

through the exclusion. 51 

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That leverage, as we have seen, was not the sole reason that ES! became so wide~ 

spread. Other developments in the marketplace and in government policy clearly 

contributed to its broad dissemination. 1he tax exclusion, however, undeniably 

serves as a powerful incentive to most employers to maintain health benefits plans 

for their workers. 

'lhe tax exclusion for ES! can be viewed as an efficient way for the government to 

increase health insurance coverage.>3 Instead of taxing workers and corporations 

and directly fmancing their medical care, the U.S. government exempts ESI from 

taxation, leveraging $2.85 in health insurance spending for every S I in federal 

revenue 1osses."4 

This efficiency takes on more importance in light of the fact that workers bear a 

large portion of the cost of financing public programs, including Medicare and 

Medicaid. '!he federal costs of those programs totaled $944.1 billion in 2016. 55 

This money came from a variety of sources. Workers paid $253.5 billion in payroll 

taxes in 2016 to finance Parl A of Medicare. 56 Since 89 percent of workers were in 

firms that offered ES!, one can allocate roughly $225.6 billion of the costs of providing hospital benefits to Medicare beneficiaries to these workers. 

1he bulk of federal health care spending is financed by general revenues and gov~ 

ernment borrowing. Workers in firms offering ESI supply the lion's share of these 

revenues. 1bey finance their own care at a relatively modest cost to the federal 

government, and Lhcir income and payrolllaxes contribute a substantial portion of 

the money that the federal government uses to provide medical benelits to others. 

\Vorkers in firms that offer ESI provide a potential third benefit to government 

by paying higher rates for medical care than do public programs. These higher 

payment rates may provide an often~overlooked benefit to public programs by 

supporting a supply of doctors and hospitals required to meet the medical care 

demands of those with both public and private insurance. Reducing these rates to 

Medicare levels could potentially have adverse consequences. 

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Table 3 compares private insurance reimbursement rates for hospitals and doctors 

with those paid by Medicare and Medicaid. 

Table 3- Medicare, Medicaid and Commercial Rates for Hospital and Physician Services, 2016 

Medicaid Commercial 

'!he table sets Medicare hospital and physician payments as the index rate, assigning it a value of 1.00. Medicaid and commercial payment rates are then assigned 

a value relative to average Medicare rates. Hospital rates are derived from the 

American Hospital Association's "Charthook." Physician rates come from two 

sources. The Medicare Payment Advisory Committee (MedPAC), an advisory arm 

of Congress, supplied average physician payments for Medicare and private insurers. 'lhe physician payment rates for Medicaid rclalivc to Medicare were compiled 

by the Kaiser Family Foundation. 

The first and most obvious observation from the table is that private insurers-a 

market that is dominated by ESI-on average pay hospitals and doctors far more 

than do Medicare and Medicaid. Medicare and Medicaid pay roughly comparable 

rates for hospital care (1.00 and 1.01 respectively), while private insurers pay rates 

that average 67 percent more than does Medicare. 

The numbers are a bit more complicated for physician payments. As with hospita1 

payments, Medicare physician reimbursement rates are substantially lower than 

commercial rates, hut substantially higher than for Iv1edicaid. 

These rate differentials are essential to evaluating proposals to supplant ESI with 

government financing. The Medicare For All bill, as will be discussed below, 

proposes to apply Medicare hospital and physician rates universally. '!his would 

have an uncertain eirect on hospitals, which run consistently negative margins on 

tv1edicare patients. 57 "I his trend of running negative margins on Medicare patients 

has persisted over time. Moreover, current law would dampen the rate of gro\\1h 

in hospital payments in future years, a pattern that Medicare trustees warn could 

have ominous consequences. 5

8 

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Private insurers also compensate doctors at higher rates than do I\1edkare and 

Medicaid. Medicare rates to all physicians would result in lower overall 

12 

their services, although that effect would to some extent be mitiraising Medicaid rates to Medicare levels. 
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Medicare For All Act and ESI 

Key provisions of the Medicare for All bill 

Efforts to remake the U.S. health care system in the image of its European counterparts have persisted for more than a century. Tire leading current proposal is the 

Medicare For All Act, authored by Senator Rernie Sanders (1-VT)-"' As its name 

implies, the measure would enroll all U.S. residents in a federally-funded health 

care program called the "Universal Medicare Program" (UMP). 1he bill would: 

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In sum, the bill proposes to ban ESI and private health insurance, expand the range 

of benefits that Medicare and ESI typically cover, and generally make care free 

at the point of service to all U.S. residents, all of which would require substantial 

increases ln federal spending."' 

Costs of the Medicare for All bill 

Supplanting private health insurance spending with additional government spending on health care is, of course, the bill's central purpose. The magnitude of those 

spending increases and the extent to which they can he off.;;et are matters of considerable controversy, and one into which this paper does not seck to wade. Independent analyses that have been produced to date put the net federal spending 

increases over the program's first decade of full implementation in the range of 

$24.7trillion to $29.ltrillion. 60 Supporters of the measure believe these costs to be 

overstated. 67 

Although there is disagreement over ils net federal costs, the hill's advocates and 

critics generally agree on the major factors that would affect those costs, as summarized in Table 4. 

Table 4 - Major Factors Affecting the Costs of Medicare For All 

Factors that would increase spending Factors that would offset spending 

Eliminate lllmt existing g(wcrnnKnt pw~1ams (see, 

901} 

Ehmin.1k tax cx<.:hi~Ion tor l·.Sl {~e.:. 701 (h)\ l)) 

In general, the bill would increase federal spending by putting nearly all personal 

health expenditures on the federal budget. It also would likely increase consumption by replacing private health insurance (including ESI) with a government program that finances a broader range of benefits than are generally financed under 

existing public and private programs,:'n eliminating cost-sharing for those benefits 

and covering virtually everyone in the country. It would ofT set these costs largely 

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by eliminating most existing government programs, setting payments for medical 

goods and services at Medicare rates, reducing administrative costs, and eliminating private health insurance and, consequently, the revenue effects of the tax 

exclusion. It also would establish a national health budget, although the bill does 

not specify whether or how the government would enforce that budget. 

Estimating the net costs to the federal government of these and other factors is beyond the scope of this paper.71 Instead, it seeks to identify factors that policymakers should consider as they contemplate supplanting ESI with government funding. 

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Replacing ESI with government financing - Policy considerations 

Substituting government spending for private spending 

"!he first factor has to do with the substitution of federal spending for private 

spending. 72 Federal revenues were S348 billion less in 2016, as we have seen, than 

they would have been had health benefits been subject to income and payroll 

taxation. Assuming employers converted 100 percent of health benefits to taxable 

wages, the government would recoup this entire sum. Spending on ESI health 

insurance premiums totaled $991 billion in 2016, leaving a gap of over $643 billion 

in health spending currently linanced through employers. While other factors 

might affect this number in both directions, it is difficult to see how the other 

provisions of the bill would generate sufficient savings to close this gap. Substituting federal financing for ES! at least to some degree would seem to entail "buying 

out the base"-requiring taxpayers to finance goods and services to which millions 

already have access without government assislance. 

Potential administrative savings 

Second, substituting government financing for ESI would reduce administrative 

spending, as Table 5 illustrates. 

Table 5 - Potential Administrative Savings Of Shifting ESI Enrollees to M4A 

Admin Costs Enrollees Admin ESI Enrollees I Admin 

Encoll~c Savings 

PHI Sl29.61l 216.2M" $599 

Medicare( S9.2B 56.8M $162 

Admin Savings $457 173.0M' I 75.2B 

"NliE, Table 20. ~>cemm:, Table L '20 17 HI Trustet'S, Table !LB. I 

<~:-.;HE, Table 21 

C?v1S estimates the administrative costs of private health insurance in 2016 at 

$129.6 billion. Dividing that figure by the Census estimate of 216.2 million enrollees in private health insurance yields an average administrative cost per enrollee of 

$599. CMS actuaries report 2016 Medicare administrative spending of $9.2 billion 

for 56.8 million beneficiaries. 'lhat computes to per-capita administrative costs 

of $162, or $,157 less than for private health insurance. Multiplying that figure hy 

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the estimated 173.0 million ESI enrollees suggests that spending on administrative 

costs for ESI enrollees would have been $75.2 billion less in 2016 had the government financed their health insurance. 

Once again, this is not intended as a point estimate of administrative savings, but 

rather to illustrate that such savings are likely and potentially substantial." 

Reimbursement of hospital and physician services 

Shifting people with ESI to a federally financed program that pays Medicare rates 

also holds the potential for savings. Unlike with administrative costs, these savings come with greater potential for adverse consequences. Table 6 shows 2016 

payments to hospitals by private insurers, Medicare and Medicaid and what those 

payments would have been-holding utilization constant-if all hospitals had been 

paid at Medicare rates. 

Table 6 --2016 Payments to Hospitals 

PHI Medicare Medicaid Total 

Current Law $426.7 $267.5 $189.8 $884.0 

M4A $255.5 $267.5 $187.9 $710.9 

Change -$!7!.9 $0 -$1.9 -$173.1 

Source: NHE, Table 7 and MedPAC 

Using the ratios presented in Table 3, this table compares hospital financing in 

2016 with what it would have been had Medicare rates applied to Medicare and 

private health insurance (including ESI). Assuming that utilization remained unchanged, hospitals would have received a total of$173.1 hillion less in 2010 from 

the three major sources of revenue had Medicare reimbursernent rates applied. 

One might argue that hospitals could absorb a 40 percent reduclion in payments 

on behalf of privately insured patients through greater efficiencies. It is also worth 

considering, however, that the rates paid hy private insurers-predominantly 

through EST-may be helping preserve access to medical care for those enrolled in 

public programs. As noted above, hospitals have consistently run negative margins on their Medicare patients. '!hat margin in 2016 was -9.6%. Since Medicaid 

payments are only slightly higher than Medicare (and a smaller source offunds), it 

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is likely that the combined Medicare-Medicaid margins are very close to that negative margin. Putting all Americans on the 1VJedicare payment scale would worsen 

those margins by sharply reducing reimbursement rates for services provided to 

those who currently have private insurance. 

Other countries are able to sustain a socially acceptable supply of hospital care 

through publicly-linanced systems.'"' But with a handful of exceptions, most countries with publicly-financed systems finance public hospitals to provide care for 

the bulk their citizenry." Only 15% of U.S. hospitals are public, which is quite low 

compared to most countries with publicly-tinanced systems. 

Moreover, most countries with government-11nanced systems permit the sale of 

private insurance to supplement public coverage. Voluntary health insurance 

can be sponsored by employers and often provides ac(:ess to private hospitals and 

increased amenities at public hospitals, including private rooms and shorter wait 

times for non-emergency services. 'fl1e Medicare for All Act would prohibit such 

private financing. 76 

It is unclear how an infrastructure that consists predominantly of private, not~forprofit hospitals and relies to a great extent on higher reimbursement levels from 

private insurers would adapt to large and abrupt payment reductions. 

Physician payments would also have been lower in 2016 under Medicare reimbursement rates, as Table 7 shows. 

Table 7--2016 PHI, Medicare and Medicaid Payments .to Physicians 

PHI Medicare Medicaid Total 

Current Law $239.8 $!39.3 $40.0 $419.1 

M4A $180.3 $139.3 S55.6 $375.2 

Change -$59.5 so +Sl5.6 -$43.9 

Source: NHE, Table 9 and MedPAC 

Once again using the ratios presented in Table 3, this table shows that, assuming 

no change in utilization, physician payments would have been $43.9 billion lower 

had the Medicare fee schedule applied to Medicare, Medicaid and PHI. Reductions in physician payments would be relatively less than for hospitals, in part 

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because Medicaid physician reimbursement rates would rise. Physicians would 

have collected $59.5 billion less in fees in 2016 had Medicare rates applied to privately insured patients. 'l11e overall reduction, net of the Medicaid adjustment, was 

-$43.9 billion, or 10.5 percent. 

Reductions of this size also would have an uncertain effect on access to care, particularly since the expansion of coverage to additional people and the elimination 

of cost-sharing can be expected to induce greater demand for services. 

ll is difficult to sort through the potential implications of universal reductions in 

hospital and physician reimbursement rates in an environment with multiple public and private payors. 1heoretically, there is a spectrum of possibilities. Medicare 

could be thought of as paying "correct" rates and private payors overpaying for services. If that were true, then the disruptions caused by abruptly reducing payments 

would be temporary, though no doubt troubling. But if Medicare rates arc "too 

lovv;' those consequences could be more enduring and severe. 

Matters are almost certainly more complex, with Medicare theoretically "underpaying" for some services and private insurers "overpaying" for others. Government can, and no doubt will, adjust rates, but the current system Medicare uses for 

setting those rates, which the Medicare For All bill would retain, was not designed 

to reimburse providers at levels that create equilibrium between supply and demand for the nation as a who1e.~7 Nor is it easy to imagine a government-administered methodology that would. 

In short, the Medicare For All Act would put upward pressure on demand through 

virtually universal coverage, expanded benefits and the elimination of most 

cost-sharing, while applying downward pressure on supply by establishing universal reimbursement rates for doctors and hospitals that are significantly lower on 

average lhan rates now paid by private insurers. 7

::; Policymakers should take care to 

examine the potential effects of these cross-pressures on access to quality medical 

care. 

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Global health care budget 

One way that other governments attempt to deal with this mismatch between 

supply and demand is to impose limits on the amount of medical care government 

will finance." 

1he Sanders bill makes a gesture in this direction. Section 60 I requires the HHS 

Secretary to establish a national health budget that "specifies the Iota! expenditures 

to be made for covered health care services under this Act." 'I he bill does nol, 

however, provide a mechanism for the Secretary to enforce compliance with the 

budget. 

Elsewhere the bill provides that the government will, with certain exceptions, only 

pay f()f services that comport with "national practice guidelines" developed by the 

Secretary." As with the national health budget, the effect of this limitation is not 

well articulated, although some savings would conceivably accrue from govern~ 

rnent's refusal to pay for covered services that are not provided in accordance with 

federally established practice guidelines." 

1hc House counterpart to the Sanders bill is much more descriptive and clear. 82 

Congress would annually appropriate an amount for total health care spcnding.:1~ 

'!he HHS Secretary would appoint a Director to enforce that budget."' 1hc Director, in turn, would oversee 15 regional administrators, who \vould make disburse~ 

mcnts lo providers on a monthly basis in accordance with the congressionally 

established annual budget.~>" 

The assumption behind both variants is that Congress and a federal agency can 

allocate medical goods and services more eft1ciently than our current mix of public 

and private payor::;. This, along with administrative eHkicndes, government-established reimbursement rates and other provisions, will assure that proper amounts 

are paid for all medically appropriate care. 'lhe current syslcm, by contrast, is 

suspected of wasteful outlays on unnecessary care and overtreatment.~ 6 

It may be that empowering Congress to set a national budget and conscripting 

HHS to enforce that budget will reduce health care spending and avoid supply 

.shortages. 'lhe Director and a cohort of regional administrators may be assumed 

to possess keen negotiating skills coinciding \Vith their plenary authority over 

health spending. 'lhey may substantially reduce incfliciencics, assuring that resources arc more perfectly aligned with medical needs. 

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There is also reason for lawmakers to question these assumptions. Increasing 

efticicncy and aligning reimbursement \Vith value have been the preoccupation 

of public and private payors for decades. Private insurers and employers who 

sponsor coverage for their workers have fairly obvious incentives to avoid paying 

for unnecessary care. They have devised any number of programs, approaches 

and strategies, not only to root out waste, but also to incentivizc employees to stay 

healthy. Employers have been especially active and innovative in this rcspect.1\7 

Om.~ can argue tha! these ongoing efforts have produced only marginal efli.ciencies, 

hut it is quite another thing to suggest that efllciency would improve if the government were to eliminate thc-se private elTorts entirely. 

That is especially true given the track record of government initiatives to enhance 

value. Public payors have pursued a panoply of proposals to improve efficiencies 

over a period of decades. 'lhesc include scores of Medicare demonstration projects 

and paymenl reforms around myriad ideas for enhancing value. Programmatic 

changes have ranged from prospective payment systems to competitive bidding to 

bundled payments to accountable care organizatlcms. 

None of these has had much impact on Medicare spending, and none has diverted 

the program from the path to insolvency. ~ Much of that spending, as mentioned 

above, is due to increases in the number of enrollees. But spending also has risen on a per-capita basis, despite reductions in reimbursement rates and efiOrts to 

control the volume of services. 

Medicare pays doctors far less, on average, than do commercial payers, as discussed above. Per capita Part B expenditures have nonetheless risen persistently. 

Congress clamped down on physician reimbursement when it enacted !v1edicare's 

Resource-Based Relative Value Scale (RBRVS) in 1989."' Under this system, the 

govcrnmt'nt assigns relative values to roughly 10,000 procedures, taking into account physician work, practice expenses and medical malpractice liability associated with each procedure.Yil 'lhc notion was that Medicare should reimburse physicians according to objective criteria that measure the resource costs of providing 

medical services. 

When that failed to arrest spending growth, they overlaid the RBRVS system with 

a sustainable growth rate (SGR) modifier." UnJer SGR, if total Medicare physician expenditures rose above specified levels in any year, the HHS Secretary would 

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be required to make across-the-board cuts in lv1edicare physician reimbursements 

in the subsequent year. RBRVS clamped down on the unit cost of services; SGR 

attempted to adjust those rates downward to account for increased volume. 

Adopted by Congress in 1997, SGR would have required cuts in Medicare reimbursement for physician services beginning in the early 2000s, something lawmakers were loath to do. So they repeatedly voted to prevent these cuts from taking 

effect. According to a March 2015 report by the Congressional Research Service, 

Congress on 17 separate occasions between 2003 and April2014 enacted legislation to override scheduled reductions in Medicare physician payments. 92 

With enactment of the Medicare Access and CHIP Reauthorization Act (MACRA) 

in 2015, Congress replaced the SGR system with one that presumably will pay doctors based on the "value" their services provide rather than on the volume of those 

services. 9

' 

According to analyses and projections prepared by the CMS Actuary, per-capita 

lv1cdicare Part B spending has risen-and will continue to rise-inexorably despite 

these reforms. In 1990, before implementation of the RBRVS system, Medicare 

Part B expenditures per beneficiary averaged $1,355.>;-l By :WOO, after enactment 

of both the RBRVS system and the SGR modifier, per-capita spending had nearly 

doubled to $2,496. A decade later, it had nearly doubled again to $4,907. By 2020, 

when the MACRA reforms will have reached tull tlowcr, actuaries project per-capita spending to reach $6,~62, more than live times the rate that prevailed before 

three generations of physician payment reforms. Over that period, Medicare Part 

B per-capita spending outpaced medical inflation (to which the Medicare program 

itself greatly contributed) by more than 50 percent." 

Nor have larger and more expansive reforms shown much promise. 'Jhc Af~ 

fordable Care Act introduced the concept of the Accountable Care Organization 

(ACO), a group of medical providers willing to be held accountable l(lf the quality, 

cost and overall care of the ivledicare beneficiaries within its purview. ACO pro~ 

ponents predicted that the program would transt(Jrm the delivery of medical care, 

introducing efficiencies never before seen in U.S. health care. 

Under the ACO shared savings demonstration program, the government devises a 

bespoke budget for each participating entity to provide medical care to a subset of 

Medicare beneficiaries. Entities that come in under budget share the savings with 

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the federal government, which would continue to bear the burden of cost overruns. 

Pioneer ACOs, by contra~t, entered into a two~sided risk arrangement, sharing 

in any savings but also going at risk for any Medicare spending in excess of the 

benchmark. In that sense, they would function under arrangements similar to 

those envisioned under a system of global budgets. 

The results have been less than transformative. Only 32 organizations signed up to 

become Pioneer A COs-" By the end of the second performance year (2013), nine 

of those organizations had dropped out of the program." Ultimately, only nine of 

the original Pioneer A COs remained in the program through 2016, with just seven 

achieving Medicare savings.% Aggregate savings totaled S61 million against a S3.4 

billion benchmark, a margin of 1.8 percenL99 

Seven of those Pioneer A COs transitioned into "Next Generation Accountable 

Care Organizations;' which CMS defines as "groups of doctors, hospitals and other 

health care providers and suppliers who come together voluntarily to provide 

coordinated, high-quality of care at lower costs to their original Medicare patients:' 

'!hose entities generated negligible savings. 'The 18 active programs covering 

477,197 patients in the first year reduced Medicare spending by only 1.1 percent-""' 

Although very few entities have agreed to accept the risk of something akin to 

global budgets, even these self-selected health systems were unable to achieve appreciable Medicare savings. 

Other ACO models have produced even more disappointing results. Advanced 

Payment Accountable Care Organizations, a group of 36 physician-based organi·-

zations, received up-front payments to invest in resources to improve care delivery. An evaluation of the program over its first three years (2012-2014) found no 

statistically significant savings in 2012 and 2013, a sla!istically significant increase 

in spending in 2014, and no statistically distinguishable differences in medical care 

quality.w1 

None of this inspires confidence in the ability of the government to improve the 

efficiency of health care delivery. TI1rough more than half a century, successive 

waves of reform that policymakers hoped would extract greater value from the 

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health care 

have lacked 

spending. 

have fallen short. Congress and a succession of administrations 

means and, at times, the political will to control federal health care 

It is certainly possible that this time will be different. Perhaps government has 

heretofore not had sufficient authority to make health care financing more efficient. 

Perhaps conferring on a small group of public employees plenary control over $4 

trillion in annual spending will produce a system that functions with something 

approximating perfect efliciency. To achieve this, policymakers have lirst to devise 

a budget allocating the resources necessary to provide medical care to all Americans-not so much as to subsidize inefficiency but not so little as to create shortages-distribute that money correctly and muster the political will not to exceed its 

budget. 

This is, of course, a theoretical possibility. But there is ample reason for caution, 

given government's long and undistinguished track record in this area. 

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Conclusion 

Answering the question of why the U.S. has not adopted a centrally financed universal health care system similar to those of other developed countries is neither 

simple nor straightforward. 1he short answer is that the American system evolved 

very differently, with the path diverging most sharply in the aftermath of the 

Second World War. Its private health insurance market became viable and robust, 

fueled in part by the spread of ESI which, in turn, benefited from government 

decisions to treat health benefits differently from wage compensation and to allow 

collective bargaining over such benefits. That pattern was not replicated in other 

developed countries. 

Nor is it clear what the effects of shifting to a government-financed system would 

have on patients. 'this paper has raised some important considerations of such a 

policy change onES!. Specifically, it finds that substituting government financing 

for ESI would: 

1. Place f1scal burdens on taxpayers that the private sector now voluntarily bears. 

In other developed countries, tl1e government taxes workers to finance public spending on their health benefits. The U.S. exempts employer-sponsored 

health benefits from taxation, leveraging private spending on health benefits. 

Putting this private spending, along with the costs of richer coverage, on the 

government's ledger would have profound fiscal consequences. 

2. Require workers with ESI to pay more to finance care for others, Estimates 

of the cost of establishing a new system vary, but all forecast a major increase 

in federal spending, which would to a large extent be borne by workers and 

employers. 

3. Eliminate the higher reimbursement rates that private insurers typically pay 

for medical care. It may be that hospitals, physicians and other providers will 

be able to perfimn more efficiently and meet the increased demand for services that the Medicare for All Act would induce. It also is possible that a new 

system could not sustain the level of access to quality care that Americans now 

enjoy. 

ESI has legions of critics on the Right and Left. Conservatives lament, among 

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other things, that it insulates consumers from the true cost of health insurance 

and, more importantly, from the true cost of care. "!hey also note the inequity 

of tax preferences for EST that do not extend to the individual purchase of health 

insurance and to out-of-pocket spending on medical care. And while ESI advocates view it is a valuable tool to attract and retain employees, many conservatives 

believe that tying health coverage to a job creates economic distortions and hampers worker mobility. 

TI10se on the Left complain that EST, even in combination with public programs 

like Medicare and Medicaid, has not achieved universal coverage, that the tax exclusion is regressive and of little value to people of modest means, and that administrative costs (especially profits), waste and unnecessary services make coverage 

and care more expensive and less accessible than if government alone paid for all 

medical care. 

Both sets of critics cite the high cost and inefficiencies of the U.S. health care system, although they o1Ier very different remedies. 'l11e Right would address these 

problems through market forces; the Left by putting the government in charge of 

allocating medical goods and scrvices. 102 

It may very well be that the health care financing systems in other countries are 

superior to ours. Coverage is virtually universal in other highly developed nations, 

per-capita costs are lower and, at least by some measures (e.g., life expectancy at 

birth), outcomes are better. But even if we were to concede that point, it does not 

follow that aJopting a government-financed system similar to those used by other 

countries would produce similar results in lhc United States. 

Replacing our admittedly inelegant health care Jinancing system with single payer 

is not like swapping U.S. customary units for metric measurements. It could have 

profound and unforeseeable consequences on the capacity of doctors, hospitals 

and other providers to deliver quality care. Displacements, even if temporary, carry potentially grave consequences. 

Planting a new financing system requires uprooting another, one that has grown, 

adapted and evolved over decades. Policymakers should carefully weigh the risks 

of scuttling an employer-based system that provides health security to the majority 

of Americans and that largely finances public programs that provide coverage to 

others. 

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Endnotes 

\ Doug Badger is a Senior Fellow at the Galen Institute and a visiting fellow at the Heritage Foundation. 

1 See, for example, ''America is a Healthcare Outlier in the Developed World," The Economist, April26, 2018. https://www.economist 

£QillfjJ2ff.hll:n:n.QLtL£QJ8/04126/1Lrn~nca-is-a-heallb.:rsu:g_:Qutller-in-the-dey£Lon~Y{QI.)£! 

3 S. 1804, introduced September 13,2017.ht!J,!_'ii.bY.'££Yi.COn_gn=_?_s.,gQ...y£QillLUJ1tl~r.ongress/s(~nate-=-.biii/18J).1{textlQ:.:.~h/B(J_·b22~s:_g.I£.t}_~ 

4 See, for example, Alex Blumberg and Adam Davidson, "Accidents of History Created U5. Health System;' NPR, October 22, 2009. 

b1!rL~1/Ww\YJlDr&rg/1~JJ:u.t!iit~'il.?l9J:Yfltory.ohp ?~torykb.:.JJ..104 51 ·~2 

1 A succinct summary of these efforts can be found in Edward Berkowitz, "Medicare and Medicaid: The Past As Proloaue:' Health 

Care Financing Review, 2008, pp. 

~Marilyn J. Field and Harold T. Shapiro (editors}, Employment and Health Benefits: A Connection At Risk, National Academies 

Press, 1993, pp. 51-53. httns:i/www nap ed!.JLLe.ftdi2J141i£.haptPrl1 

' Field and Shapiro, pp. 58-59. 

" Field and Shapiro, p. 59. 

"Berkowitz, pp. 81-82. 

1

° Field and Shapiro, p. 63. 

11 Field and Shapiro, p. 64. 

1

" Berkowitz, p. 84. 

13 Field and Shapiro, p. 57. 

14 Field and Shapiro, pp. 54-55. 

" Field and Shapiro, pp. 65-66. 

lb Field and Shapiro, p. 66. 

17 Field and Shapiro, p. 66. 

18 Field and Shapiro, p. 68. 

19 "History of Health Insurance Benefits," Employee Benefit Research Institute, March 2002. un:m;;rL'I1Yi'l.!.~1>Il,('IIJIJ)11Qli(:il.\.l',ll>t.LaJJS. 

\D_Q.g:>i_.Qrn}Jg.~-:.QJ.Q_;;jf!s:Jit should be noted that the board's rulmg did not create ESI, which existed in some 

least the !ate nineteenth century. 

10 PL 83-591. 

21 Taft-Hartley Act, PL80-1 01. htiD2;/Lyvww.Di~.t.omgntr.a.LQ~lDL(J.ilQJJJ)~!1.1~'I?JJbqtk~Y~-btm[ 

"Field and Shapiro, p. 71. 

"Field and Shapiro, p. 71. 

24 Field and Shapiro, p. 71. 

~"VA History," Department of Veterans Affairs. htt.t2.£/Lwww_,_y_a.gov/Q.QQllLI£1i!~YallisJQJY,,d5£ 

""Ibid. 

21 1bid. 

tH H. Rept. 115~929, p. 282. bltJ25Jlwww.congrt>ss.gov/115/crptfhwJ22_9L.Cill:.T.:lls..bJP1.222JJ..d.f. In addition to programs for veter27 
310 


EDL-011-D with DISTILLERInsert offset folio 186 here 35268.186

ans, the federal government a!.so operates the Indian Health Service (IHS) to 

Natives. "About IHS," U.S. Department of Health and Human Services. !l!l!lli'LW.Y:LVl'lb;;,ru;•YiJLQQ\lil!.liJ 

'

9 The5.e programs are financed differently. Medicare Part A is financed by the Health Insurance (HI} payroll tax. Medicare Parts B 

and 0 are financed by general revenues. Medicaid and CHIP are j-ointly financed by the federal government and the states, with the 

federal share paid out of general revenue. 

'° CMS, National Health Expenditures 2016, Table 6. 

31 CMS, National Health Expenditures 2016, Projection Table 5. 

GOP Source: Federal Reserve Bank of St. louis. 

GOP Source: Federal Reserve Bank of Stlouis. 

4 Medicare spending source: CMS, National Health Expenditures 2017, Spending Projections, Table 5. GOP Source; CBO Economic 

Outlook, August 2018. 

l> For sources, see footnote 31. 

' 7 MACStats, Medicaid and CHIP Payment and Advisory Committee, December 2017, Exhibit 1.!illps:!/ww~y,mQ.cpac.gov/publi.c._ilL!_QlJ.L 

!lLE'diCald-an(i<hiQ.:enroJ!ment-~l:Q£:fCE.'Jltage-of-thE'-_lJ.:~:Q.QQ!Jl<itlillJL 

38 BBA 97 created the Children's Health Insurance Program {CHIP). 

39 CMS, National Health Expenditures 2016, Table 22. The figure includes all participants, including those over age 65, most of whom 

also participate in Medicare. The figure also Includes plans that cover federal, state and local employees, which largely resemble the 

health insurance arrangements used by private employers and which exempt employer contributions from income and payroll taxes. 

40 26 USC SOOOA.l.lttps://WWV.ilrlW.Cor.D..Qlt.edu/~J..KQdP/text/26/l_OOOA 

1 The employer mandate instituted by the ACA appears to have had very little effect on the percentage of workers enrolled in ESI. In 

general, it appears that larger firms, which are subject to the mandate, sponsored health insurance before the government required 

them to do so, while a fairly substantial percentage of smaller firms, which are generally exempt from the mandate, did not offer 

coverage to their employees. 

Kaiser, Exhibit 2.3. 

the uninsured, effective January 2019, CBO continued to mandate 

exerted a fairly strong effect In particular, the agency predicted the premiums would rise on average by 15 percent in 

2019, with two-thirds of that increase attributable to repeal of the tax ("Federal Subsidies for Health Insurance Coverage 

For People Under 1\ge 65;'CBO, May 2018, p. 

R~tl 

prr~!11ium>.cfr!.<)£rai)ycfirrilile_~od:.~~.rl1,'UJ~:iicdlQ!:•:21lJ2), More recently, CBO has said that it plans to update 

Enzi from the CBO Director, November 14,2018. https://www.cbo.gov/system/files?-

44 The labor force participation rate among males aged 25-54 declined from over 97 percent in 1964 to less than 89 percent in 

September 2018, a decline that has persisted through both recessions and periods of economic growth. "Activity Rate: Aged 25-54: 

Males for the United States," FRED, St. Louis Federal Reserve, DJ1P.'>://_c.:vw_v_y_,_~l>Q.go.v;~y.st~rn/fi!~~?DJ.Q_:::fQlB.: 11/S4668__:H!SIM-Letter,Q.Qt 

45 CMS, National Health Expenditures, Table 24. 

28 
311 


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o& CMS, National Health Expenditures, Table 24. It is generally accepted that the employer contribution is, in fact, a form of compensation or, to put it somewhat differently, a labor cost 

41 Firms do, of course, deduct their contribution to ESI from their corporate taxes but they also deduct the wages they pay. The difference between wage and non-wage compensation is the latter's exclusion from federal income and payroll taxes. 

3 Department ofTreasury, "Tax Expenditures," Table 1, line 128 and footnote 12. Line 128 estimates the FY 2016 federal income tax 

loss. at $216.1 billion. Footnote 12 estimates lost payroll tax revenue of S 131.6 billion. 

49Th is paper is concerned largely with federal expenditures and consequently makes no effort to estimate the effects of the exclusion 

on state tax revenues. 

'

0This assumes that employers would convert 100 percent of tax-preferred health benefit compensation to wages, which are subject 

to federal income and payroll taxes. Under that assumption, federal revenues would have been $348 billion higher in 2016, partially 

covering the cost of financing public coverage of individuals whose insurance is now privately financed, 

; 1 Wages subject to OASD! taxe~ totaled $6.7 trillion in 2016.2017 SSA Trustees Report, Table VI.G6, p. 216. This is not to suggest that 

the government would fmance health care through an increase in the OASDl payroll tax, but merely to provide perspective on the 

amount of private health spending government leverages through the exclusion. 

12 This ratio in some sense understates the relationship between the tax exclusion and job-based health insurance coverage. Since it 

is !inked to health insurance premiums, lt does not take into account out-of-pocket spending by employees when they obtain medKal 

goods and services. Consider, for example, a physician office visit, for whtch a worker's job-based plan has negotiated a rate of $100. 

If the coverage requires aS 15 co-payment for an office visit, insurance would pay $85. The $15 co pay is thus excluded from the 

calculation. Assessing the effect of out-of-pocket spending for covered services is difficult to do. !t !S likely that in some cases, an individual who lost their ESI would not have any insurance at all. Such a person might pay a higher rate for the physician visit because 

the uninsured do not have access to negotiated rates. Or they might forego the visit altogether, since they are unwilling or unable to 

pay the final rate. Lacking the capacity to mode! that behavior, this paper simply compares that amount of insurance premiums paid 

for ESI with the revenue loss associated with the tax exclusion. 

"'That is not to suggest that this is the most efficient means of achieving this end. Many argue that tax-preferred treatment of health 

insurance premiums should be extended outside the workplace and that it should apply equally to both health insurance premiums and health insurance expenditures. Others have argued in favor of tax credits, rather than deductions, to avoid providing the 

greatest benefit to those who pay the highest marginal rates. The Affordable Care Act created refundable tax credits for people with 

incomes between 100 and 400 percent of the federal poverty level who purchase nongroup policies and placed a 40 percent excise 

tax on employer contributions to worker premiums in excess of specified amounts. The latter provision, whose enforcement Congress has repeatedly delayed, effectively functions as a cap on the tax exclusion. 

'

4 Others have arrived at a higher ratio. The American Benefits Institute has estimated that employers paid $4.45 to finance health 

benefits for every $1.00 in foregone federal revenue. (See American Benefits Legacy: The Unique 

American Benefits Institute, October 2018, 31. lillP->c'iYl'6'-~'.i\JJJill!SdUlll£llf.fll2J!JJJ!U<iJ!&DJiQJJ!iJ'illi5ll,21\'Li'lHilldJ;!JL!L:HZil: 

a7e96Q3e3bfc .} There are several this ratio and the one used in this paper. First, the American 

Benefits Institute (ABI) paper derives Its employer payments for group health insurance from the Commerce Department's National 

Income and Products Accounts. This paper uses data National Health Expenditures data compiled by the CMS Actuary. Second, AS! 

uses tax expenditure data compiled by the Joint Committee on Taxation. This paper uses Treasury Department data. Most importantly, this paper takes into account both foregone income and payroll taxes that result from the tax treatment of ESI. That yields a 

denominator of $348 billion in this paper, compared with S 155.3 billion in the ABI report 

'" CMS, National Health Expenditures, Table 5~3. 

'" 2017 HI Trustees Report, Table II,Bl. 

·, 1 As discussed further below, MedPAC estimates that hospitals ran a margin of -9.6 percent on Medicare patients in 2016. Medicare 

Payment Advisory Committee, March 2018 Report to Congress, Figure 3-6, p. 81. 

',~ 2018 Annual Report of the Boards ofTrustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance 

Trust Funds, pp. 1 04f. The Trustees examined the effect of reductions in Medicare reimbursement for physician and hospital services 

under current law. They project that hospital payment rates would be less than 37 percent of rates paid by private tnsurers and that 

29 
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physician rates would decline substantially as welL Even assuming that private health insurance is preserved and that these insurers 

continue to pay at inflation-adjusted rates, the Medicare cuts already in law"would result in approximately half of hospitals, roughly 

two-thirds of skilled nursing facilities and over 80 percent of home health agencies would have negative total facility margins, raising 

the poss.lbl!ity of access and quality-of care issues for Medicare beneficiaries" in 2040, They similarly expect "access to Medicare-participating physicians to become a significant issue in the long term," Those assessments almost certainly would worsen if all 

hospitals and physicians were paid at Medicare ratE's, 

'

8 Disentangling the interplay between reimbursement rates paid by government and private insurers ts a difficult business and one 

this paper does not attempt. The paper does not suggest that Medicare and Medicaid pay less for medica! services because private 

health insurers pay more, or vice~versa. Po!icymakers have undeniably reduced Medicare payments to doctors and hospitals over 

the course of recent decades and have set in place future payment cuts (which may or may not materialize), That does not suggest 

that Medicare payment reductions have led to providers exacting higher rates from commercial insurers. What is clear is that private 

insurers pay higher rates to physicians and hospitals and that applying Medicare rates universally to these providers would have 

uncertain effects on access to medical care and its quality. 

uns, 1804, 

J_l ill!1%l_2.1Q~J)_%l.Q&r:::J. 

House counterpart {H,R 676), which had 123 cosponsors in September 2018, bltmolfy.;\N~.cmog•:?c>,,,ggcyL!;!illLll51!J.c .. m!li!L'c.\\11lQ.U5§C: 

o: Section 201{c} also gives the Secretary authority to include coverage of"complementary and integrative medicine:' 

u Some cost-sharing would be permitted for prescription drugs (sec 202(b)) and of long-term care, which would continue to be covered by Medicaid (sec 204), Experimental services and drugs would not be covered (sec 203{b)), 

~>J That section also permits payments if the "health care provider providing the service exercised appropriate professional discretion 

to deviate from the guideline in a manner authorized or anticipated by the guideline" (sec. 203(c)), 

61 It is unclear whether this is merely a ministerial function or whether these budgets are binding, The section does not include any 

enforcement mechanism in cases where expenditures for covered health services exceed the budget. 

~~See, for example, Charles Blahous, "The Costs of a National Single-Payer Health Care System," Mercatus Working Paper, July 2018. 

h.ttQ.?.J!.Y~LW.YtJIIercatus.org/system/fi..!.g_~_bJ.§.bous-co.s_ts-medi£:.are-me..rr_QtlJ.i:.\:YQr.!s.l.o.9:.QapN-v1 1 ,pdf John Holahan et at, The Sanders Single-Payer Healthcare Plan: The Effect on National Health Expenditures and Federal and Private 

DC: Urban Institute, 2016), tables 1 and 

~~Charles Blahous, "Questions and Answers About Medicare For All's Costs;' E21, August 21, 2018. b.Hns://~Q.OQ!JJ.l.<d£LQL9.L 

htlill1!?2: . .b!ahou_2~Q.Q...d2_ 

""See, for example, Steffie Woolhand!er, David U, Himmelstein and Adam Payer Is Actually A Bargain;' The Nation, 

August 1 o, 2018. !J.t1g.>.,IJ'!'!.'!£Y'o'lhe!ll~iQQt;<2mrilrJl!cl£:Ls~J\J1s:cpilJ!£'I.cE:U.u,g\lY,Jl.u<illtcl:arg.ainl 

"

8 As discussed later in the paper, the bill's sponsors assume that replacing private insurance with federal financing w!ll achieve substantial administrative savings. 

09 States would be required to help finance long-term care and related services (sec. 204), but no longer would have to finance their 

portion of covering other Medicaid services, This paper assumes that Congress would require states to remit to the federal government the amounts they would otherwise have spent on Medicaid. If not, the bill would be a windfall to the states at the expense of 

the federal government. 

I() Estimating the effect of consumption is a perilous undertaking that is beyond this paper's scope, Consider dental services, The bill 

stipulates that VMP would cover those services (sec. 201 (a) without cost-sharing. In 2016, Americans spent an estimated $124.4 

billion on dentistry, Out-of-pocket spending accounted for $49,9 bi!Hon. Private health insurance financed $57.7 billion, while 

Medicare spending on dental services was estimated at $0.5 billion, (CMS, National Health Expenditures, Table 12), rheoretica!!y, 

30 
313 


EDL-011-D with DISTILLERInsert offset folio 189 here 35268.189

UMP would have covered the entire $124.4 billion. There are several caveats. First, dental benefits are not defined in the bilL It 

would presumably cover preventive screenings and things like crowns, fillings and root canals. But would it cover orthodontia, dental 

implants and cosmetic services? Then there is the question of how much UMP would pay for such services. Unlike physician, hospital 

and other services, there is no Medicare fee schedule for dental services, since the program offers only very limited coverage. There 

is also the question of consumption. If the government picked up most or all of the $50 billion that consumers spent out of their own 

pockets for dentistry in 2016, would they consume more than $124.4 billion in services?That, in turn, raises the question of supply. 

Would the current supply of dentists-both nationally and in particular geographic areas-be sufficient to meet additional demand? 

Would reimbursement rates be sufficient for dentists to supply services or would some limit their practices to patients able to pay 

cash? 

11 As referenced above, there have been a number of estimates of the net federal costs of the Medicare For AI! bill and more are 

likely to be forthcoming. 

n Substituting public for private spending would have macroeconomic effects that are beyond this paper's scope. Some economists 

have suggested that shifting from private insurance premiums to tax-based financing would likely yield a less efficient financing 

mechanism, which would dampen future economic growth. See, for example, "Medicare for All: Explaining the 

Math," Mercatus Center, August 23, 2018. rtl1R,\:L'l'1i.:V:IlfJ'JJl\C£.qiJ.V~cQI•gL!l.<i\l!;tgLm1Dlll'llilil\YLm!CQi"'l'blil!:g;mJiilll!IJU::UlSI1h 

' 3 Estimating the magnitude of administrative savings is, as with other estimates on this subject, fraught with uncertainty. One 

advocate of single-payer systems has concluded that it would have reduced annual administrative spending on insurance by $220 

billion in 2017. Additional administrative savings for doctors and hospitals would increase this figure to $500 billion. h.U:n::!/ann«l~ 

9Jg/d<:t a! Jourrwl~!.M...B3..21Z.ZLM lZ.Q..lQJJ::t.LI9.t)lf; Esllm.ill:_~Q_...£1-.siminlstril!J.:@_.aru:l. Pr0sQl£)_ii_Qg_..Dl1!.9. . .5ll.vinq'> Undg>r Sinq!P -Pay: 

g_L_fu:?foL!peg The $220 billion estimate compares Medicare administrative costs as a percentage of total claims with the percentage 

associated with private insurance. In comparing administrative costs of private insurance with Medicare, the paper uses per-capita 

ddministrative costs as the unit of measurement Basing an estimate on administrative costs as a percentage of claims yields a higher 

estimate of administrative savings, in part because average Medicare claims are much higher than average private insurance claims. 

The problem with this methodology is that it assumes a Hnear relationship between claim size and administrative costs. !tis not 

dear, however, that the cost of administering aS 1,000 medical claim is ten times as great as for a $100 claim. For that reason, this 

paper adopts the per capita approach. Both approaches paper over the difficulty of making apples-to-apples comparisons of public 

and private administrative costs. Some have argued that official government statistics on the administrative costs of Medicare are 

understated and that the comparison with private insurance administrative cost rates are consequently misleading. Merrill Matthews, "Medicare's Hidden Administrative Costs," Council for Affordable Health Insurance, January 2006. http;l/mtora!l.netlfilg~ 

C!\H.LM_ed~eare /\dmln._flmll.J::.\dJ)jication.pdf It is also worth noting that lower administrative costs are not an unalloyed good. The 

Comptroller Genera! has included Medicare on its "high risk" list since 1990, because of its "size, complexity, and susceptibility to 

mismanagement and improper payments." Additional administrative expenditures might arguably reduce the level of mismanagement and the amount of improper payments. This paper will not seek to adjudicate these issues but will instead note that shifting 

insurance coverage of workers with ESI to a government program would likely achieve substantial administrative savings. 

~ What is socially acceptable in other countries- for example, longer waiting times for hospital procedures- may not be socially 

acceptable to Americans. 

'" "International Profiles of Health Care Systems," Commonwealth Fund, May 2017, Table 4. 

n S. 1804, section 107. 

'

7 S. 1804, section 611 requires the Secretary to establish reimbursement rates "in a manner that is consistent with processes for 

determining payments for items and services under title XVIII oft he Social Security Act"(i.e., Medicare). 

)

8 The bill also would seek to reduce payments for other goods and services, including prescription drugs. Since there is no Medicare fee schedule for drugs, it is difficult to quantify (even in the highly qualified sense that this paper has used) these savings. The 

bill directs the Secretary to negotiate drug prices (section 614{a)} and to "promote the use of generic medications" (section 614(b)). 

The former provision leaves considerable room for speculation over whether the savings would be modest or substantia!; the latter 

provision would likely have a negligible effect, since generics accounted for 89 percent of prescriptions in 2016. "2017 Generic Drug 

Access and Savings in the U.S. Report," Association for Affordable Medicines. h1tJl~;/./iKGe.s..slbkn.lf~Q~,.mg/Jt.~QJ,U£~-~LlltQg)2Qi 7-g§;.:: 

lJ>;:ric~dnJ9:cl{.IJ;.>.~s.:.'llJ:d.:~J.Y'iil.9-5.:.~V-QU 

N Most systems allow escape valves from these limits, generally through private insurance. As noted elsewhere in this paper, the 

Medicare For All bill does not (see sections 107 and 801}. 

31 
314 


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l\(1 Section 203\c) of the bill provides that "a service shall be considered to have been provided in accordance with a practice guideline 

if the health care provider providing the service exercised appropriate professional discretion to deviate from the guideline in a manner authorized or anticipated by the guideline:' That stipulation appears to allow payment for services that deviate from a guideline 

only in cases where such deviation is "authorized and anticipated by the guideline:' 

31 If a provider were to administer a test or treatment for which the government refused to pay, it is unclear whether the patient 

would be responsible for the payment or if the provider would go uncompensated. Alternatively, the sponsors may envision that the 

provider seek the government's permission before providing any test or service. In that case, the ambiguity would be resolved by 

denying patients any test or treatment for which the government declined to pay. 

87 HR 676, sections 201 et seq. 

83 Section 201 {a). 

84 Section 301. 

Section 202. 

86 A 2012lnstitute of Medicine study estimated that"unnecessary health spending" totaled $750 billion in 2009 alone:' CMS estimates that health care spending totaled $2.495 trillion in that year, leading to the widely broadcast factoid that 30 percent of medical care is unnecessary. The remedy prescribed by the report was to "chart a transition to a system that learns, in real time and with 

new tools, how to better manage problems:' Such a "continuously learning health care system" would be onethat"continuously and 

rehably captures, curates and delivers the best available evidence to guide, support, tailor and improve clinical decision making and 

care safety and quality:' It is safe to say that the U.S. has not advanced very far toward this ambitious goal in the six years that have 

passed since it was articulated and that the federal government seems uniquely ill" equipped to design and implement a "continuously !earning health care system." Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, 

Institute of Medicine of the National Academy, September 2012. http:f/wvy_yv.natjgndhcademi~5..D19Lhmd/~!r&.Q@L.Etl.g;J.fiillQ.rt%2.Q 

[il!bi}O 12/Be~t · (QI~fLe..itCill~Q..Qt.t!Ju.ef,pQf 

87 American Benefits legacy, p. 53. 

s~ The most recent Trustees report warns:"Current-law projections indicate the Medicare still faces a substantial financial shortfall 

that will need to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize 

the impact on beneficiaries, providers and taxpayers."(2018 Annual Report of the Boards of Trustees of the Federal Hospital 

Insurance and Federal Supplementary Medica/Insurance Trust Funds, June 2018, p. 4. https://www.cms.gov/Research-Stat!5.ti.L'i:!2:JJ!;:LQlliJ-System s/Statl sti(s-T rend s-a nd.:_l)fport'i/!3.tJlorts Tn 1stFu n[.I~_Q.',Ynloads/ I R7.0J..HJ2.df) Similarlywordedwarnings have 

been contained in trustees reports filed by both Democratic and Republican administrations. They have so far gone unheeded. 

89 Omnibus Budget Reconciliation Act of 1989, Pl 101-239, b.ttr~.~JLw.w.v.LmJllli~22,£JQYLbi!.!LJ.QJ_H:.c..ongJess/house-b1!!/3/.99 

Q(J "RBRVS Overview," American Medical Association. h.ttps://www.ama··U>S!J,.QigjJ.bJJL?:QY..ervicw 

~~ Balanced Budget Act of 1997, PL 105-33, bllQ21L.!!Y.J:YW.SV.9..,gQV/fdsys/pkgLtlA~lQ.2QUb!33L(ontellt:detai!.html 

n "The Sustainable Growth Rate and Medicare Physician Payments: Frequently Asked Questions," Congressional Research Service, 

March 16, 2015, p. 1. b1.tl:l.~.//.\Yk'i.l"i . .t.Y1:rW.ire!LOrt.com/hl!;2L.2_Ql503tQ.Jl.4J.:lill a81 ad39199b033813l9ab08f9bee28dd6804badc 

'

13 Medicare Access and CHIP Reauthorization Act PL 114-10. bltQ,l;/1W.\'.J.'v.Y.i:9!.1Gl:f'.~5D9..YLJJ.1La1a_\!Y..>LQ..v_QlLOJ£L.I\W-114puQll.QJJ.9_f 

Report of the Boards of Trustees of the Federal Hospital Insurance and 

Insurance Trust Funds, June 5, 2018, Table V.Ol, 

noting that, while 

payments to physicians comprise the vast majority of Part B spending, there are other components as welL These include Medicare 

reimbursement for physician-administered drugs. Congress has repeatedly revised the formula for paying for such drugs as well and 

two successive administrations have now proposed demonstration projects designed to reduce spending on these products. As with 

payments for physician services, these various payment reforms have not arrested Medicare Part B spending growth. 

9

" The St. Louis Fed index for the medical portion of CP1-U (medical) was 156,000 in January 1990. In January 2018, it had risen to 

481,437. The CMS actuary forecast that it would increase by4.3 percent in 2019 and by 4.2 percent in 2020. Applying those in32 
315 


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creases to the January 2018 CPI-U (medical) reported by the St. Louis Fed yields 523,029. That figure is 3.35 times the January 1990 

rate, Medicare Part B per-capita expenditures, meanwhile, increased by a factor of 5.06 over that same period, outstripping medical 

inflation by 51 percent. The St. Louis Fed data through January 2018 can be found at: bltp .. :dili~.51tmJ.i.;..J.ert,JJWL2J:rlf2L..ill~f;JJ2l 

The CMS Actuary's estimates of CPI-U (medical} for 2019 and 2020 are at 2017 Report of the Boards of Trustees of the Federal 

Hospital Insurance Insurance Trust Funds, July 2017, Table V.82, p. 179. !:l.t\i21;illYK1fi. 

7 !bid, p. XL 

'"Ibid, Table 15, p. 75. 

'l'J These figures are taken from the Performance Year Five spreadsheet, which is linked at "Pioneer CMO Model," Center for Medicare 

and Medicaid Services. bllil-'i1Ll011QY.Q!.LQJJ,.<:.t11? .... 9ffi'iinJ!E.lti.Y.:g5/!?.l..9D.~.gL:_{L(_Q:-lllPJ,i£!L 

wo Kristina Hanson lowell, "Next Generation Accountable Care Organization Model Evaluation," NORC at the University of Chicago, 

August 27, That does not mean that spending was 1.1 

percent lower than in the prfor year, but 1.1 percent in 2016. 

101 ''tvaluation of CMMI Accountable Care Organization Initiatives: Advance Payment ACO Final Report;'L&M Policy Research, LLC, 

November 25, 2016 . .b.t!n.i:/ /innov_,ltioru::.rm..gov/Fi1Ps/r<;:p.J)lt~Lsldvpayaro-fnevalrn!J2rtf 

102 The author's sympathies lie decidedly on the pro-market side of this theological divide. 

:o> This table includes the category of"other third party payers and public health activity" in its calculation of government expenditures. This category includes some private third party payment, although a range of government programs (e.g., VA, IHS, workers 

compensation, MCH, VR, SAMHSA, school health and an unspecified list of"other"federa!. state and local programs) account for the 

bulk of spending. 

33 
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P.O. Box 130 • Paeonian Springs, VA 20129 

Phone 703-687-4665 

www.galen.org 

www.AmmicanHoalthCmeChoices.mg 
317 

[Additional submission by Ms. Jayapal follows:] 


EDL-011-D with DISTILLER
318 


EDL-011-D with DISTILLERInsert offset folio 193 here 35268.193

APIAHF 

ASIAN & PACIFIC ISLANDER 

AMERICAN HEALTH FORUM 

WRITTEN STATEMENT FOR THE RECORD 

http://www .apiahf.org/ 

FOR THE HEARING ENTITLED "EXAMINING THREATS TO WORKERS WITH PRE-EXISTING 

CONDITIONS" 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON EDUCATION AND LABOR 

FEBRUARY 6, 2019 

BY THE 

ASIAN & PACIFIC ISLANDER AMERICAN HEALTH FORUM 

1629 K STREET NW, SUITE 400 

WASHINGTON, DC 20006 

The Asian & Pacific Islander American Health Forum (APIAHF) submits this written testimony for 

the record for the February 5, 2019 hearing before the House Education & Labor Committee 

"Examining Threats to Workers with Pre-Existing Conditions." 

The Affordable Care Act has served not only as one of the most transformational laws in our 

nation's public health, expanding coverage to nearly 20 million people, but as a civil rights law 

protecting the health and well-being of the most vulnerable. APIAHF is the oldest and largest 

health policy and public health organization working with Asian American (AA), Native Hawaiian 

and Pacific Islander {NHPI) communities across the nation and its Pacific jurisdictions. With 

more than 150 community-based organizational partners in over 28 states and territories, 

APIAHF provides a voice in the nation's capital for underserved AA and NHPI communities and 

works toward health equity and health justice for all. 

For over 6 years, APIAHF has partnered with organizations helping consumers enroll in health 

coverage, including Affordable Care Act {ACA) Marketplace plans, Medicaid and the Children's 

Health Insurance Program {CHIP). As part of these efforts, we co-founded Action for Health 

Justice with the Association of Asian Pacific Community Health Centers (AAPCHO), Asian 

Americans Advancing Justice and Asians Americans Advancing Justice- Los Angeles. As part of 

Action for Health Justice, we worked with 72 community based organizations and health 

centers and countless local assistors to inform efforts by the U.S. Department of Health and 

Human Services to reduce barriers for AA and NHPI individuals navigating an often deeply 

complex enrollment process. 

1 
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EDL-011-D with DISTILLERInsert offset folio 194 here 35268.194

Our experience in working with partners as part of Action for Health Justice and successive 

enrollment periods has provided real stories that relay the impact the ACA has had on the lives 

of countless AAs and NHPis. Through this experience, and others first hand, we know both the 

importance of health insurance for individuals who have complex chronic conditions and who 

may be low-income, immigrant or limited English proficient, whether they get their coverage 

through employer-sponsored plans, the Marketplace, Medicaid, Medicare or CHIP. 

From our work with AA and & NHPI communities, we understand the role the ACA has played in 

improving access to health insurance for communities of color across the nation and for diverse 

American workers. Prior to the ACA, people of color were much more likely to be uninsured 

than whites. Since 2010, the uninsured rate has fallen from 15.1 percent to 6.4 percent in 2017 

for AAs and from 14.5 percent to 8.3 percent for NHPis, higher than any other racial group. 1 

Individual subgroups of AAs and NHPis have experienced their rates of uninsurance being cut by 

at least half, including Nepalese, Samoan, and Hmong Americans. 2 

As an organization that has worked for over 32 years at the federal, state, and local levels to 

advance sensible policies that reduce health disparities and promote health equity, we are 

deeply troubled by the District Court's ruling in Texas vs. U.S., challenging the 

constitutionality of the entire ACA, including protections for persons with pre-existing 

conditions. In the nearly nine years since the ACA became law, millions have gained coverage 

and the law has touched the lives of nearly every American, providing critical protections 

against insurance company practices, protecting seniors from high cost-sharing in Medicare, 

improving the quality of care and strengthening civil rights protections. Many of these 

provisions protect American workers, who while they had partial protections against preexisting conditions prior to the ACA, those protections required workers to maintain 

continuous coverage or otherwise imposed mandatory waiting periods. The ACA's 

guaranteed issue and community rating provisions, along with the entire law could be 

overturned if the ACA were to be found unconstitutional and would send a shockwave 

through the U.S. healthcare system. At least 20 million Americans could lose their coverage. 

At Risk: Stories from the Community 

Millions of AAs and NHPis could be at risk for losing coverage and their connection to health 

care if the ACA's pre-existing conditions were overturned. These include people like: 

Mr. Nguyen and his family of four in Alabama. Mr. Nguyen had been living with diabetes for 

years prior to the ACA and always struggled to keep his condition in check because he 

couldn't afford a doctor. That changed when he was able to afford a plan under the ACA and 

one that offered him coverage for his pre-existing condition: diabetes. 

1 Comparison of American Community Survey 2011-2015 5-year estimates to 2017 American Community Survey 1-

year estimates. 

2 /d. 

2 
320 


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Prior to the ACA, Ms. Lejjena, a mother of three in Oregon, "used to hesitate seeking medical 

attention until it was an emergency and I ended up hospitalized. Obamacare offered us the 

opportunity to obtain medical insurance for the first time and peace of mind that we can 

seek medical care for our children and selves." All that could change if the ACA's protections 

were overturned as Ms. Lejjena, like so many Americans, overcame a bout of pneumonia 

years ago, a deniable condition before the ACA. 

And there is Khamsay Chanthasaly, who in December 2015, was diagnosed with a rare case 

of breast cancer in men. It started on Christmas Eve, when he was admitted to hospital 

following an unbearable pain in his back and legs. "At first, I was depressed and hopeless. 

We didn't have enough money to pay for the treatments. Even before I was diagnosed with 

breast cancer, we could barely cover the living cost with the money that we earned." He was 

able to enroll in Medicaid coverage thanks to the ACA. 

Marina Wena in Arkansas lives paycheck-to-paycheck. She also lives with heart disease, type 

2 diabetes and a kidney condition that requires ongoing dialysis. Before the ACA, she often 

went to the emergency room for dialysis treatment as she couldn't afford coverage." The 

ACA gives me hope. Since I was covered by the ACA, I haven't missed taking my medications. 

I am a very healthy person nowadays and friends that meet me are surprised to see how 

healthy I am. This is the story of my life with health insurance!" 

These are just examples of the lives that have changed thanks to the ACA and what is at risk 

if those protections are overturned. 

Overturning Pre-Existing Condition Protections Would Disproportionately Harm Racial and 

Ethnic Minorities 

Living with a pre-existing condition is a fact of life for more than 130 million Americans, 

including millions of AAs and NHPis- the fastest growing groups in the country. 3 The Kaiser 

Family Foundation had previously estimated that 27% of adults under age 65 have health 

conditions that would lead them to be likely uninsurable under pre-ACA rules. 4 

Racial and ethnic minorities, including AAs and NHPis disproportionately experience a number 

of chronic conditions due to factors including poverty, inability to afford quality coverage, and 

challenges accessing culturally competent care, among others. 

3 Center for American Progress, Number of Americans with Medical Conditions by Congressional District, 2017, 

available at: ~ //www .a meri canprogress. org/i ssu es/hea lth fEEi.Dewsj_20 17/04/05/430059/ n urn ber -a rneri canspre~existing<ond!tions-congressiona!-district/. 

4 Kaiser Family Foundation, Pre-Existing Conditions and MedicallJn,-JenNril·inn 

Prior to the ACA, 2016, available 

3 
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The AA and NHPI community speaks over 100 different languages and traces their heritage 

to more than 50 different countries. Language barriers, lack of cultural competency, poverty, 

and immigration status all affect the ability of AAs and NHPis to access coverage and care. 

Overturning the ACA's protections for pre-existing conditions would deepen those disparities 

by turning back the clock on coverage gains that have substantially reduced uninsurance 

amongst communities of color by locking individuals with health conditions out of coverage. 

AAs and NHPis have a higher likelihood of suffering from a number of chronic conditions 

requiring routine access to care and underscoring the importance of early prevention, diagnosis 

and connection to treatment. NHPis have the highest age-adjusted percentage of people with 

diabetes (20.6%). more than 3 times that of Whites (6.8%).5 Fourteen percent of Indian 

Americans have diabetes, a rate higher than that of nearly all other racial groups6 

AAs and NHPis are the only racial group for whom cancer is the leading cause of death. 7 Certain 

AA and NHPI subpopulations suffer from even greater health disparities. Vietnamese women 

have cervical cancer rates five times higher than White women. 8 NHPis are 30% more likely to 

be diagnosed with cancer than whites9 Allowing insurance companies to discriminate and deny 

coverage on the basis of a pre-existing condition would make coverage prohibitive for these 

individuals. 

Discriminating against people with pre-existing conditions like HIV /AIDS wouldn't just hurt the 

people living with the condition and their families, it could interfere with and even discourage 

people from getting tested and linked to treatment which could be deadly. Of the 15,800 AAs 

estimated to be living with HIV in the United States in 2015, only 80 percent had received a 

diagnosis, a lower percentage than for any other race/ethnicity. 10 1 in 33 NHPI men will be 

diagnosed with an HIV infection in their lifetime, compared to 1 in 102 white men.11 1 in 5 AAs 

living with HIV does not know they have it, compared to 1 in 7 for all groupsY Of AAs living 

with HIV in 2014, 57% received HIV medical care, 46% were retained in HIV care, and 51% had 

5 Asian and Pacific Islander American Health Forum, Native Hawaiian and Pacific Islander Health Disparities, 2010, 

available at: www.apiahf o.r.g/sites/default/files/NHPI Report08a 2010.pdf 6 Spanakis, Elias and She rita Hill Golden, Race/Ethnic Difference in Diabetes and Diabetic Complications. Curr Diab 

Rep. 13(6), 2013, available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC38309.QU 7 Heron, Melonie, Deaths: Leading Causes for 2014. National Vital Statistics Reports Volume 65, Number 5. United 

States Centers for Disease Control, 2016. 

8 Miller BA et al., Racial/Ethnic Patterns of Cancer in the United States, 1988-1992, 1996, available at: 

https: I I seer. cancer. g ov I arch ive/p u bl.icat ions/ etbDlfityL 9 U.S. Department of Health & Human Services: Office of Minority Health, Cancer and Native Hawaiians/Pacific 

Islanders, March 29, 2016, available at: https:l/minorityhoalth.hhs.gov/omh/browse.aspx£1vl~4&1vlid=76. 

1

° Centers for Disease Control and Prevention, HIV Among Asians. available at: 

t>11l:>.?.L./W_w.'Y,f;Q<:.£ill!L~lvftt:9.ill?Hilf@.i~tbDl£!?5li!D.:JJD.fl.\'x. h I:.QlJ 11 1d. 

"rd. 

4 
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achieved viral suppression. 13 Removing protections for pre-existing conditions could threaten 

public health efforts by creating delays and barriers in testing and linkage to care. 

For questions contact Am ina Ferati, Senior Director of Government Relations & Policy 

aferati@apiahf.org (202-466-3550). 

13 /d. 

5 
323 

[Additional submission by Mr. Norcross follows:] 


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February 6, 2019 

Dear Representative: 

Communications Workers of America 

Chris Shelton I President 

litmmanMsmA 

Legislative Department 

Shane Larson I Director 

On behalf of the officers and 700,000 members of the Communications Workers of America (CWA), l 

am writing to urge you to support H.R. 582, the Raise the Wage Act of20 19. At a time when wage 

stagnation and income inequality hold back our families and our economy, the Raise the Wage Act will 

begin to reverse that cycle and raise pay broadly across the bottom of the workforce. 

It's been a decade since the federal minimum wage has increased. Meanwhile, the cost of living has 

continually increased for working Americans. For many Americans, working 40 hours or more a week is 

not enough to support themselves and their families. Airline employees, call center workers, retail store 

employees and bank workers are among those who work full time for some of the most highly profitable 

corporations, but still earn poverty level wages. It's time for an economy that works for working families 

and especially for the people who work full time but who earn poverty level wages. 

If enacted, the legislation will raise the federal minimum wage to $8.55 this year and increase it over the 

next five years until it reaches $15 an hour in 2024. Raising the minimum wage to $15 an hour will give 

roughly 40 million workers a pay increase, which is nearly 30% of the workforce. After 2024, the 

minimum wage will adjust each year to keep pace with growth of inflation. In addition, the legislation 

will phase out the subminimum wage for tipped workers, individuals with disabilities and workers 

younger than 20 years old. 

All workers deserve to earn a living wage so they can live with dignity and respect. It is time Congress 

takes action to raise the wages of these low income workers and ensure the economy works for 

everyone, instead of those in the I%. Therefore, l urge you to support H.R. 582, the Raise the Wage Act 

of2019. 

Thank you for your consideration. 

Sincerely. 

Shane Larson 

Legislative Director 

Communications Workers of America (CW A) 
324 

[Additional submissions by Chairman Scott follow:] 


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THE l F!URCH ifThe Episcopal Church supports the Raise the Wagc\ct of 2019, a bill that is in line with several 

official Church policies passed over the past two decades. The current federal minimum wage, $7.25 

per hour, bas not been increased in almost a decade. Since I 9'!7, The Episcopal Church has called 

for a "living wage" so that hardworking families are not trapped in poverty, in 21l1J.1 the Church 

reaffirmed and updated this call, recognizing that it is wrong that a family of four could live in 

poverty while employed full~time, and in 20!5 the Church called directly for a $15 minimum wage. 

The minimum wage is not only about supporting workers and their families; it is also a moral issue 

about the value and dignity of indi\·iduals and the contributions they make through paid work. 

Supporting an increase to the minimum wage so that workers earn an income above the poverty line 

is one way for us to demonstrate that all people, including minimum wage earners, are worthy of 

respect and a decent standard of living. 

The Raise the \X' age Act of 2019 would gradually phase in this increase in minimum wage alongside 

other reforms that bring our values into federal pay guidelines. The bill would phase out the $2.13 

minimum wage for tipped workers, which would empower tipped workers to defend themselves and 

speak out against inappropriate or threatening behavior without threatening their livelihood. 

The bill also addresses certain systemic injustices. According to the Economic l.'illj.s;~JrNirutc, 

women make up almost 56% of workers who would benefit from the increase in wages. In addition 

to helping address the gender wage gap, the bill would provide a more just compensation to 40°;{, of 

African American workers and 34% of Latino workers, who would sec increased wages when the 

law is fully implemented. Further, the bill would remove harmful provisions that enable various 

groups, including the disabled, to receive e\·en lower wages. 

The federal minimum wage is not just about economics, it reflects how we value the lives and labor 

of those who toil in the lowest~paying jobs. \Ve must be deliberate to ensure that those who work in 

low~paying jobs are still able to live their lives \\~th dignity. That is why the bill would also put in 

place automatic adjustments so that the federal minimum wage can keep pace with the growth in 

tvpical workers' wages without the nation waiting on Congress to act. 

The nation would further benefit from raising the minimum wage through reduction in demand for 

anti-poverty programs. \Vhen a person works full~time and still lives below the poverty line, the 

federal government provides assistance to help them meet ends meet. Raising the minimum wage 

will transfer responsibility of ensuring those who work can provide for themselves and their families 

from the federal government- who steps in when full~time work isn't enough to keep a family out 

of poverty- to employers. T n doing so, the federal government will be able to reduce expenditures 

on programs which currently make up for the gap between wages and poverty. 

The Episcopal Church supports The Raise the Wage Act of 2019 to ensure all workers receive a just 

compensation for their labor. 
325 


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The undersigned organizations enthusiastically support the Raise the Wage Act of 2019, as introduced 

by Senators Bernie Sanders (VT) and Patty Murray (WA), Representatives Robert C. "Bobby" Scott (VA), 

Mark Pocan (WI) and Stephanie Murphy (FL). 

If enacted, this legislation would: 

Raise the federal minimum wage to $8.55 this year and increase it over the next five years until 

it reaches $15 an hour in 2024; 

After 2024, adjust the minimum wage each year to keep pace with growth in the typical 

worker's wages; 

Phase out the outdated subminimum wage for tipped workers, which has been frozen at a 

meager $2.13 since 1991; and, 

Sunset the much criticized ability of employers to pay workers with disabilities a subminimum 

wage through certificates issued by DOL. 

Phase out the subminimum wage for workers under the age of 20. 

At a time when wage stagnation and income inequality pose serious threats to our families and our 

economy, the Raise the Wage Act of 2019 will begin to reverse that cycle and raise pay broadly across 

the bottom of the workforce. According to the Economic Policy Institute, this Act will deliver longoverdue raises to more than 1 in 4 workers, 90% of whom are over the age of 20. The average age of 

workers who would get a raise is 35, nearly half have some years of college education. In fact, those who 

work year-round would see a raise in the order of $3,000 a year, which is enough to make a tremendous 

difference in the life of a preschool teacher, bank teller, or fast-food worker who today struggles to get 

by on around $20,000 per year. 

28 percent are working parents with children, and half have family incomes of less than $40,000 per 

year. Women make up nearly 58 percent of the workers who would benefit from a $15 minimum wage, 

which would be instrumental in helping to close the gender-wage-gap. Raising the minimum wage to 

$15 would also significantly benefit workers of color, with 38 percent of African American workers and 

33 percent of Latinos seeing a pay increase once this law goes into effect. 

These are the frontline workers who make America run-yet due to the erosion of the real value of the 

minimum wage over the last half century, they are struggling even as our economy enjoys a solid 

recovery. 

The time for the Raise the Wage Act is long overdue, and we cannot delay in working toward its passage. 

We call on Congress to enact this important piece of legislation as quickly as possible, and for President 

Trump to sign it when it comes to his desk. 

Economic Policy Institute 

National Employment Law Project 
326 


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9to5 

A Better Balance 

A Place at the Table 

AAUWTexas 

Abortion Care Network 

ACCESS Women's Health Justice 

Accessible Housing Resources, Inc. (AHRI) 

Action Inc. 

Action Together NEPA 

ADAPT Montana 

Advocate For Justice Inc. 

Advocates for Youth 

AFL-CIO 

African American Ministers In Action 

Agape Missions, NFP 

AIDS Alabama South, LLC 

Alabama Arise 

Alameda County Community Food Bank 

Alianza Nacional de Campesinas, Inc. 

All Our Kin 

Allegheny Valley Association of Churches 

All-Options 

Amara Legal Center 

American Association of People with Disabilities 

American Association of University Women 

American Federation of State, County, and Municipal Employees (AFSCME) 

American Federation of Teachers, AFL-CIO 

American Federation of Teachers, Washington 

American Postal Workers Union - St Louis Gateway District Area Local 

American Psychological Association 

American Public Health Association 

Americans for Democratic Action (ADA) 

Anne Arundel County NOW 

Appalachian lndepoendence Center, Inc. 

Arizona Center for Economic Progress 

Arkansas Advocates for Children and Families 

Asian Law Alliance 

Asian Pacific American Labor Alliance, AFL-CIO 

Association of Programs for Rural Independent Living 

Association of U S. Catholic Priests (AUSCP) 

ATD Fourth World Movement 

Atlanta Community Food Bank 

AtWork! 
327 


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AUSCP- Association of U.S. Catholic Priests 

Autistic Self Advocacy Network 

Autistic Women & Nonbinary Network 

Bazelon Center for Mental Health Law 

Bend the Arc: Jewish Action 

Benedictine Sisters of Erie 

Black AIDS Institute 

Black Women's Roundtable 

Bread for the World 

Bucks County Women's Advocacy Coalition 

CA Capital Chapter- Coalition of Labor Union Women 

California Employment Lawyers Association 

California Food Policy Advocates 

Cambridge United for Justice with Prace 

Campaign for America's Future 

Campesinos Sin Fronteras 

CAP Services, Inc./Community Assets for People 

CARECEN-Central American Resource Center 

Caring Across Generations 

CASA 

CASA of Oregon 

Catalyst for Positive Change! 

Catholic Charities of Chemung/Schuyler counties, NY 

Center for Changing Lives 

Center for Groveport Madison Human Needs 

Center for Independence of the Disabled, NY 

Center for Law and Social Policy (CLASP) 

Center for New York City Affairs at The New School 

Center for Popular Democracy Action 

Center for Public Policy Priorities 

Center for Public Representation 

Centro de los Derechos del Migrante, Inc. 

ChangeLab Solutions 

Chester County Food Bank 

Chicago Chapter of RESULTS, Domestic 

Chicago Jobs Council 

Chicago Women's AIDS Project 

Child Care Resources 

Children's Defense Fund 

Children's Advocacy Institute 

Church World Service 

Cities of Peace Detroit 

Civil Liberties and Public Policy Program 
328 


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Cleveland Nonviolence Network 

CLUW of Southwestern PA 

CLUW: NORTHEAST CLEVELAND CHAPTER 

Coalition Ending Gender-Based Violence 

Coalition for Low Income Pennsylvanians 

Coalition of Black Trade Unionist -Northern California 

Coalition of Labor Union Women 

Coalition of Labor Union Women GPA 

Coalition on Human Needs 

Collaborative Center for Justice 

Collin County Democrats With Disabilities (CCDWD) 

Collin County Voters With Disabilities 

Colorado Center on Law and Policy 

Colorado Coalition for the Homeless 

Communications Workers of America (CWA) 

Communities Creating Opportunity 

Community Action Agency of Somerville, Inc. 

Community Action Partnership, NJ 

Community Advocates of Northern Indiana 

Community Labor United 

Community Reinvestment Alliance of South Florida 

Congregation Beth El, Berkeley 

Congregation of Our Lady of Charity of the Good Shepherd, US Provinces 

Congregation of Our Lady of the Good Shepherd, US Provinces 

Congregation of Sisters of St. Agnes 

Congregation of the Infant Jesus Nursing Sisters of the Sick Poor, Inc. 

Connecticut Association for Human Services, Inc 

Connecticut Legal Services, Inc. 

Connecticut Voices for Children 

Cronucopia Community Advocates 

CWA Local 6450 

D.C. Hunger Solutions 

Dakota Prairie Community Action Agency 

DC KinCare Alliance 

DC Language Access Coalition 

DC Law Students in Court 

DC Volunteer Lawyers Project 

DCAEHS, Inc. 

Delaware Ecumenical Council on Children and Families 

Demos 

Disability Law Center 

Disability Rights Education & Defense Fund (DREDF) 

Disability Voters of Maine 
329 


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Disabled in Action of Greater Syracuse Inc. 

Disciples Center for Public Witness (Disciples of Christ) 

Disciples Justice Action Network 

Dominican Development Center, Inc. 

Dominican Sisters - Grand Rapids 

Dominican Sisters of Houston 

DV LEAP 

East Central Illinois Community Action Agency 

East Hampton Housing Authority 

EcoC2S 

Economic Opportunity Institute 

Economic Progress Institute 

Economic Roundtable 

Ecumenical Poverty Initiative 

Educate. Advocate. 

Education Equals Making Community Connections 

Equal Pay Today 

Equal Rights Advocates 

Equality California 

Equality North Carolina 

Estreet Verdors Assiotation Of Chicago (SVAC) 

Faith Voices Arkansas 

Family Promise of Greater Des Moines 

Family Promise of Knoxville 

Family Values@Work 

F armworker Association of Florida 

Feeding Texas 

Feminist Majority 

First Christian Church 

First Focus Campaign for Children 

First United Methodist Church 

Florida Impact 

Food Chain Workers Alliance 

Food Finders Food Bank 

Food Lifeline 

Food Research & Action Center (FRAC) 

For Our Future PA 

Freedom Network USA 

Futures Without Violence 

GCCIIBT Local 24MI9N 

Gender Justice 

GLBTQ Legal Advocates & Defenders (GLAD) 

Global Justice Institute, Metropolitan Community Churches 
330 


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Godwin-Ternbach Museum, Queens College, CUNY 

Good Jobs Nation 

GRANDS AS PARENTS INC 

Greater Kansas City Coalition of Labor Union Women 

Greater New Jersey CLUW Chapter 

Greater Oklahoma City Chapter CLUW 

Greater Pittsburgh Community Food Bank 

Grey Nuns of the Sacred Heart 

H.O.P.E. 

HANA Center 

Hawaii Appleseed 

Head Start 

Heads tart 

HEAL Trafficking 

Healthy and Free Tennessee 

HEAR US Inc. 

Hill Snowdon Foundation 

Hispanic Federation 

Holy Cross Ministries 

Housing Authority of the County of Lawrence 

Housing Choice Partners 

Howard Brown Health 

Hudson County Housing Resource Center 

Humanity 

Hunger Action Network of NYS 

Hunger Free Vermont 

Hunger Solutions New York 

Idaho Interfaith Roundtable Against Hunger 

IHM Sisters IHM Sisters Justice, Peace and Sustainability Office 

lllilnois Hunger Coalition 

Illinois Collaboration on Youth 

Impact Fund 

In Our Own Voice: National Black Women's Reproductive Justice Agenda 

Indiana Community Action Association 

Indiana Institute for Working Families 

Indivisible Michigan 8th-lngham 

Inspirational Gospel Assembly 

Interfaith Impact of New York State 

Interfaith Worker Justice 

International Labor Rights Forum 

International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, UAW 

Iowa Citizens for Community Improvement 

Iowa Coalition Against Domestic Violence 
331 


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Jackson State University 

Jewish Women International 

Jobs with Justice 

Just Harvest: A Center for Action Against Hunger 

Justice and Advocacy Committee of the Lehigh Conference of Churches 

Justice for Migrant Women 

Kalamazoo Loaves & Fishes 

Kansas Association of Community Action Programs 

Kentucky Equal Justice Center 

Kentucky State AFL-CIO 

Keystone Progress 

Keystone Research Center 

Kings Local Food Pantry 

Korean Resource Center 

KWH Law Center for Social Justice and Change 

La Frontera Ministries 

La Plata County Thrive! Living Wage Coalition 

Labor Education Program, School of Labor and Employment Relations, University of Illinois 

Lamoille Family Center 

Law Foundation of Silicon Valley 

Law Students in Court 

Lawyers' Committee for Civil Rights Under Law 

Leadership Conference of Women Religious 

The Leadership Conference on Civil and Human Rights 

Leadership Team, Sisters of the Presentations 

Legal Aid at Work 

Legal Aid Service of Broward County 

Legal Momentum: The Women's Legal Defense and Education Fund 

Legal Voice 

Let Justice Roll: Living Wage Campaign 

Lincoln Hills Development Corporation 

LiveWell Colorado 

Long Beach Gray Panthers 

Los Angeles Alliance for a New Economy 

Louisiana Budget Project 

Louisiana Progress Action 

Main Street Alliance 

Maine Coalition to End Domestic Violence 

Maine Women's Lobby 

Mainers for Accountable Leadership 

Make the Road PA 

Maryland Center on Economic Policy 

Maryland Hunger Solutions 
332 


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Maryland National Organization for Women 

Massachusetts Law Reform Institute 

Maternal and Child Health Access 

MCCC/MTA 

Men of All Colors Together (MACT)/Phila. 

Mercyhaven Inc. 

Methodist Federation for Social Action 

Metro-Detroit Chapter of the Coalition of Labor Union Women (CLUW) 

Metropolitan Community Church of Washington, D.C. 

Metropolitan Washington Employment Lawyers Association 

Michigan League for Public Policy 

Michigan's Children 

Middlesex Coalition for Children 

Milwaukee Area Service & Hospitality Workers Organization 

Minnesota Coalition for the Homeless 

Mississippi Families for Kids 

Mississippi Low Income Child Care Initiative 

Missouri CLUW Chapter 

MomsRising 

Mountain State Justice 

MWC, AFL-CIO 

NAACP 

NARAL Pro-Choice North Carolina 

Nashua Soup Kitchen and Shelter 

National Advocacy Center of the Sisters of the Good Shepherd 

National Asian Pacific American Women's Forum (NAPAWF) 

National Association of Social Workers 

National Association of Social Workers NJ Chapter 

National Association of Social Workers Connecticut Chapter 

National Association of Social Workers, West Virginia Chapter 

National Association of the Deaf 

National Black Justice Coalition 

National Black Sisters' Conference 

National Center for Lesbian Rights 

National Center for Transgender Equality 

National Center on Domestic and Sexual Violence 

National Coalition for the Homeless 

National Consumers League 

National Council of Churches 

National Council of Jewish Women 

National Council of Jewish Women - PA 

National Council of Jewish Women- Texas 

National Council of Jewish Women - Florida 
333 


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National Disability Rights Network 

National Domestic Workers Alliance 

National Education Association 

National Employment Lawyers Association 

National Employment Lawyers Association - Eastern Pennsylvania 

National Employment Lawyers Association -Georgia Affiliate 

National Employment Lawyers Association- New York 

National Equality Action Team (NEAT) 

National Health Care for the Homeless Council 

National Human Services Assembly 

National Immigration Law Center 

National Korean American Service & Education Consortium (NAKASEC) 

National LGBTQ Task Force Action Fund 

National Low Income Housing Coalition 

National Partnership for Women & Families 

National Resource Center on Domestic Violence 

National Rural Social Work Caucus 

National Urban League 

National Women's Law Center 

National Working Positive Coalition 

National Work rights Institute 

NC Justice Center 

NC State AFL-CIO 

Nebraska Appleseed 

Nebraska Chapter of the National Association of Social Workers 

Neighbors Helping Neighbors Teton County MT 

NELA Hawaii Chapter 

NELA- Kansas City Affiliate 

NELA- Saint Louis 

NELA- Alabama 

Nenana Tortella Council on Aging, INC 

Network for Environmental & Economic Responsibility 

NETWORK Lobby for Catholic Social Justice 

New Jersey Policy Perspective 

New Jersey State Coalition of Labor Union Women 

New Jersey Tenants Organization 

New Mexico Association of Community Partners (NMACP) 

New Mexico Black Caucus 

New Mexico Center on Law and Poverty 

New Orleans Associates of the Sisters of the Blessed Sacrament 

New Voices for Reproductive Justice 

New York Paid Leave Coalition 

North American Climate, Conservation and Environment(NACCE) 
334 


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North Carolina Alliance for Retired Americans 

North Carolina Coalition Against Domestic Violence 

North Carolina Council of Churches 

North Dakota Chapter of the National Association of Social Workers 

North Dakota Economic Security and Prosperity Alliance 

Northwest Indiana Community Action 

Northwest Pilot Project 

Oakland Park Democratic Club 

Oakland Symphony 

Oasis Legal Services 

Ohaha Family Foundation 

Ohio Coalition of Labor Union Women 

Ohio Domestic Violence Network 

Oklahoma Policy Institute 

Oklahoma Women's Coalition 

One Pennsylvania 

One Stop Career Center of PR Inc 

Orange County Poverty Alleviation Coalition 

Organize Florida 

OURNOVA 

Oxfam America 

PathWays PA 

Patriotic Millionaires 

Pax Christi Florida 

Pax Christi Illinois 

Pax Christi USA 

Peace, Justice, Sustainability Florida 

Pennsylvania Budget and Policy Center 

Pennsylvania Council of Churches 

Pennsylvania Together 

People Demanding Action 

People's Institute for Housing Justice 

Philadelphia Coalition of Labor Union Women 

Philly Neighborhood Networks 

Piedmont Housing Alliance 

Planet Earth 

Policy Matters Ohio 

Poor Peoples Economic Human Rights Campaign 

Positive Women's Network-USA 

PowHer New York 

Presbyterian Church (U.SA) 

Pride at Work 

Princeton Community Housing 
335 


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Professional Child Care Provider Network of Prince George's Co., Inc 

Project Bread-The Walk for Hunger 

Promise The Children 

Provincial Council Clerics of St. Viator (Viatorians) 

Public Advocacy for Kids 

Public Citizen 

Public Citizens for Children and Youth (PCCY) 

Public Justice Center 

Rl Coalition of Labor Union Women (CLUW) 

Raise Minimum Wages 

Raise the Wage PA 

Raise-Op Housing Cooperative 

Refuge Ministries Tampa Bay 

Regina Mundi Inc. 

Religious Institute 

Restaurant Opportunities Center of Michigan (ROC-MI) 

Restaurant Opportunities Center of Pennsylvania 

Restaurant Opportunities Centers United 

RESULTS Raleigh 

RESULTS-Santa Fe 

Rural Coalition 

Rural Coaltion & Alianza Nacional de Campesinas 

Rural Community Workers Alliance 

Sacramento Housing Aliiance 

Sacramento Regional Coalition to End Homelessness 

SafeHouse Denver, Inc 

San Diego Hunger Coalition 

San Gabriel Valley-Whittier NOW 

Santa Fe NOW 

Sargent Shriver National Center on Poverty Law 

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Trillium Employment Services 

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Tipped Wage Effects on Earnings and 

Employment " in Full-Service Restaurants· 

SYLVIA ALLEGRETTO and CARL NADLER 

We exploit more than 20 years of changes in state-level tipped wage policy and 

estimate earnings and employment effects of the tipped wage using county-level 

panel data on full-service restaurants (FSR). We extend earlier work by Dube, 

Lester, and Reich (20 I 0) and compare outcomes between contiguous counties that 

straddle a state border. We find a 10-percent increase in the tipped wage increases 

earnings in FSRs about 0.4 percent. Employment elasticities are sensitive to the 

inclusion of controls for unobserved spatial heterogeneity. In our preferred models, we find small, insignificant effects of the tipped wage on FSR employment. 

Introduction 

The minimum wage is one of the most researched areas in labor economics, 

with a vast body of literature that dates back nearly 70 years (Brown 1999). 

Over the last several decades, research on the minimum wage has further proliferated as economists have exploited the growing variation in state minimum 

wage policies. However, research, public debate, and policy have largely 

ignored the lesser known tipped wage received by tipped workers (sometimes 

referred to as the subminimum or cash wage), even as it too has ample state 

variation that facilitates empirical estimation. Indeed, the existence of two federal wage floors, 1 with the federal tipped wage at $2.13 since 1991, is relatively unknown. 

The 1966 Fair Labor Standards Act (FLSA) amendments expanded wage 

protections to restaurant, hotel, and other service workers but also allowed for 

a "tip credit" whereby employers could use tips, provided by customers, as 

*The authors' affiliations are University of California, Berkeley, Berkeley, California. Email: allegretto@ 

berkeley.edu; cnadler@econ.berkeley.edu. 

The authors are grateful for generous support from the Ford Foundation and the Russell Sage Foundation. 

They thank Megan Collins, Luke Reidenbach, and Rachel West for excellent research assistance and David 

Card, Arindrajit Dube, Bill Lester, Michael Reich, Jesse Rothstein, Ben Zipperer, and two anonymous reviewers for their valuable comments and suggestions. 1 There is also a youth wage that allows employers to pay employees under 20 years of age a lower 

wage ($4.25) for a limited period (90 calendar days, not work days) after they are first employed. 

INDUSTRIAL RELATIONS, Vol. 54, No.4 (October 2015). © 2015 Regents of the University of California 

Published by Wiley Periodicals, Inc., 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington 

Road, Oxford, OX4 2DQ, UK. 

622 
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Tipped Wage Effects on Earnings and Employment I 623 

"credit" toward a worker's regular minimum wage. Today, at the federal level, 

the regular minimum wage is $7.25 and the allowable tipped wage is $2.13-

the $5.12 difference is the maximum allowable tip credit. The $5.12 tip credit 

may be thought of as a customer-subsidized portion of the employer wage bill. 

The paucity of research inquiry into the tipped wage and its tip credit counterpart means the policy and its effects are not well understood. Moreover, 

employment in the restaurant industry-a heavy user of the low-wage workforce-has been growing. Figure 1 shows that private-sector employment grew 

by approximately 22 percent from 1990 through 2012, while employment in 

the full-service (FSR) and limited-service (LSR) restaurant sectors grew by 78 

percent and 62 percent, respectively. At the same time, private-sector earnings 

grew by 20 percent while earnings increased by 14 percent and 2 percent, 

respectively, for workers in the FSR and LSR sectors. 

Employment of tipped workers is common in the FSR sector but not in the 

LSR sector. We use a panel (l990Ql-20l3Ql) of data from the Quarterly 

Census of Employment and Wages (QCEW) that allows us to separate FSR 

from LSR. This separation will allow for a more nuanced analysis of the two 

wage floors. We expect to find earnings effects on the tipped wage for the 

FSR sector but not for the LSR sector-an important falsification test. We will 

FIGURE 1 

EMPLOYMENT AND EARNINGS GROWTH: PRIVATE SECTOR, FULL-SERVICE (FSR) AND LIMITED-SERVICE 

(LSR) RESTAURANTS, 1990-2012 

200% 

• • • Pnvatcs<.'{'lorcnmmgs 

lXO% - - "FSR cnmings 

- ,.. tSR~·arnings 

160~/,, -FSRcmp!n;o.-rncnt 

- LSR \.'mp!oym,·r.t 

140% 

120% 

"' -.... -- -... 

SouRcE: Authors' analysis of Quarterly Census of Employment and Wages data. 
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624 I SYLVIA ALLEGRETTO AND CARL NADLER 

also be able to estimate minimum wage effects on earnings and employment 

separately by sector as the effects need not be the same. 

Although the federal tipped wage has not changed since 1991, there is 

ample variation in state policies. We use state variation in the tipped and the 

regular minimum wages to identify earnings and employment effects. 

Although there exists little literature regarding the tipped wage, many of the 

empi1ical issues, such as the nonrandomness of wage-floor policies, parallel 

those found in the literature on the regular minimum wage. 

Research using panel data often starts and sometimes ends with the twoway fixed-effects model. The two-way estimation strategy limits time and spatial controls to a single national time trend and state-specific fixed effects. 

Allegretto et al. (20 13) show that observable confounds vary considerably 

across high and low minimum wage states, suggesting that unobserved factors 

do as well. Moreover, given the existence of spatial clustering of both wagefloor policies, our research needs to adequately address the issue of spatial 

heterogeneity. At the crux of the issue is the validity of control groups-or the 

counterfactual for what would have happened in the absence of a change in 

the minimum or tipped wage. What research design would best account for 

wage policies that are correlated, but not causal, to growth patterns of lowwage employment? 

We start with the traditional two-way fixed-effects model and add controls 

for time-varying spatial heterogeneity. While estimates of the impact of the 

tipped wage on eamings are robust across specifications, estimates on employment are sensitive to the inclusion of spatial controls and suggest a strong negative bias that results in an improbably large negative employment effect in 

the FSR sector in the two-way fixed-effects specification. 

We next extend earlier work by Dube, Lester, and Reich (2010; hereafter, 

DLR) and compare outcomes between contiguous counties that straddle a state 

border. Given their geographical proximity, the border counties provide a natural control group when one county's state implements a change in their wage 

policy and the other county's state does not. Our results from this second analysis support our findings using all counties and including spatial controls. We 

find a 10-percent increase in the tipped wage increases eamings in the FSR 

sector by about 0.4 percent. Once we control for spatial heterogeneity, we find 

small, insignificant effects of the tipped wage on FSR employment. 

History of the Tipped Wage 

The tip-credit provision. The 1966 FLSA amendments widened the net of 

labor protections to include coverage for hotel, restaurant, and other service 
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Tipped Wage Effects on Earnings and Employment I 625 

FIGURE 2 

FEDERAL MINIMUM WAGE AND TIPPED WAGE POLICY, NOMINAL V ALOE, 1966-2014 

SIOOO 

$900 

SHOO 

$700 

$6.00 

$500 

$4.00 

SlOO 

5200 

$1.00 

" Theupcn:dilamoun! as 

apcrccnt0ftlwrcgular 

v mmunum wage 

Regular minimum wage 

71% 

----

_/,.------ ±------------------.~;;,::,:·----------!Slil 

50% -

v - ........... --.. ---~ 

SouRCE: Authors' analysis of Fair Labor Standards Act and amendments. 

workers. It also introduced a "tip credit" provision that allowed tipped workers 

to be paid a subminimum or tipped wage that was lower than the regular minimum wage (Elder 1978; Whittaker 2006). The tip credit allows an employer to 

use tips, provided by customers, as credit toward a tipped worker's wage so 

long as tips plus the tipped wage paid by the employer equate to at least the 

regular minimum wage? 

Initially, the tipped wage and the tip credit were each 50 percent of the regular minimum wage, as depicted in Figure 2. Over time, the ratio of the tipped 

minimum to the federal minimum varied---it was as high as 60 percent but 

didn't fall below 50 percent until 1996. The relatively proportional link 

between the two wage floors was broken with the passage of the Minimum 

Wage Increase Act of \996, which froze the tipped wage at $2.13 into 

perpetuity. Today the federal tip credit is 71 percent of the regular minimum 

2 Other restrictions apply, such as the worker must make at least $30 per week in tips; for additional 

information see http://www.dol.gov/whd/regs/compliance/whdfsl5.htm. To be in compliance with the 

FLSA's wage requirements the timing of when to calculate tips plus the tipped wage is assessed on a workweek basis. See 29 U.S.C. 206(a). A workweek is any fixed and regularly recuning !68-hour period. A 

recent (201(}..2012) compliance investigation by program analysts at the U.S. Department of Labor reported 

that 83.8 percent of restaurants had some type of wage and hour violation including 1170, tip-credit violations that resulted in nearly $5.5 million in back wages (email correspondence). 
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626 / SYLVIA ALLEGRETIO AND CARL NADLER 

wage, while the federal tipped wage is just 29 percent. Hence, tips are, in part, 

wages provided by customers via the tip-credit provision. 

States act in response to federal inaction. Over the past several decades 

minimum and tipped wage floors have varied considerably across states. States 

with minimum wage policies above the federal level ranged from just a few in 

the mid-l980s to more than thirty in 2008.3 The number tends to grow considerably when the federal rate is left unchanged for long periods. The situation 

is a bit different for state tipped wage policies. The number of states with 

more generous subwage polices has, for the most part, steadily increased over 

time given the $2.13 federal policy in place since 1991. Seven states do not 

allow for a tipped wage-in these states all workers are paid at least the regular state minimum wage. In the mid-l980s these seven states, along with five 

others, had a tipped wage above the federal level-that number increased to 

twenty-six in 2014. 

The map depicted in Figure 3 shows state (plus the District of Columbia) 

minimum wage and tipped wage policies as of January 2014. States with minimum wages above the federal level are marked with black hash marks. The 

three color codes on the map refer to whether the state tipped wage is set at 

the $2.13 federal level (light gray), above the federal level but below the regular minimum (medium gray), or if the state does not allow for a tipped wage 

(dark gray). The three color categories may also be referenced as states with 

full, partial, and no tip credit, respectively. 

The partial tip credit states currently have tipped wages that range from 

just above the federal level, such as the $2.23 policy in Delaware, to very 

close to a no tip credit policy, such as Hawaii's tipped wage of $7.00. Of 

the workforce, 35.5 percent work in full tip credit states, 46.4 percent in partial tip credit states, and 18.1 percent work in the seven no tip credit states 

(Allegretto and Cooper 2014). It is interesting to note the considerable differences that exist across states at any given time. For example, as of January 

2014, the state of Texas followed the federal polices for both wage floors, 

while Washington State, which does not allow for a tipped wage, had a single wage floor of $9.32. The wage policies at both the federal and state 

level provide a rich data source with ample vmiation to examine minimum 

and tipped wage effects on employment and earnings in the restaurant 

industry. 

3 Here and elsewhere in the paper the District of Columbia is included as a state. The number of states 

with higher minimum wages changes depending on changes in state and federal policies. For example, prior 

to the federal increase in 2007, thirty states had minimum wages higher than the federal minimum, which 

had been at $5.15 dating back to 1997. 
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Tipped on and I 627 

HGURE 3 

STATE MtNIMUM WAGE AND TIPPED WAGE PouciEs, JANUARY 2014 

NoTES: Hash marks denote states with minimum wage policies above the $7.25 federal rate. 

Light-gray states follow the federal tipped wage policy of $2.13. Medium-gray states have 

tipped wages above the federal level but below each state's binding minimum wage. Dark-gray 

states do not allow for a tipped wage. The state scenarios are always changing as minimum 

and/or tipped wages change at the federal or state level. 

Literature Review 

The tipped wage. Unlike the abundant research and debates the 

regular minimum wage, there has been little interest the tipped wage. 

A descriptive paper by and (2014) shows that average 

wages are higher and rates are lower for tipped workers (wait staff in 

particular) who reside in states that have wages. Other n"""'r"'-

and indicates that wait staff are overwhelmingly over 68 percent And while tipped workers and wait 

staff are disproportionately young, it is the case that 45 percent and 33 percent, 

respectively, are at least 30 years old. 

The sole published paper that examined tipped wage effects is by Even and 

Macpherson (20l4). used QCEW data to estimate employment and earneffects on the restaurant industry. The authors concluded that "results provide fairly convincing evidence that cash wages (otherwise tipped 

increase but reduce employment," but they caution 

in their of confidence and called for additional research (p. 23). In sum, 
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628 I SYLVIA ALLEGRETTO AND CARL NADLER 

they preferred the canonical two-way fixed-effects estimates and reported that 

a reduction in the tip credit (in other words, a to-percent increase in the tipped 

wage) increased worker earnings by less than l percent and reduced employment in full-service restaurants by less than I percent. 

Even and Macpherson (20I4) use two fixed-effects specifications: (l) the 

traditional two-way specification where they control for time and state fixed 

effects and (2) the addition of a state-specific time trend to the first specification.4 Even and Macpherson (20I4) prefer the two-way estimator without 

state-specific time trends. They contend that the inclusion of state-specific time 

trends, along with the high degree of collinearity between the minimum wage 

and the time and state fixed effects, overparameterizes the model-washing 

out the true disemployment effect. 

The overparameterization argument is hard to reconcile given the robustness 

of wage estimates that Even and Macpherson (2014) find for both of their 

specifications (table I, p. 643). This result would not follow if the specification 

with state-specific time trends were overparameterized. Robust minimum wage 

results are found with even more sophisticated specilications of the fixed-effects model, such as those that use state-linear time trends along with spatial 

controls (see Dube, Lester, and Reich 2010; Allegretto, Dube, and Reich 

201 I; Allegretto ct al. 2013 ). 

Anderson and Bodvarsson (2005) asked whether states with higher tipped 

wages boosted server pay. They examined 1999 aggregated data on wait 

staff and bartenders from the Occupational Employment Statistics from the 

Bureau of Labor Statistics. Anderson and Bodvarsson (2005) concluded, for 

the most part, that it docs not appear that tipped workers get a boost in 

total earnings in states with higher tipped wages. The estimate of an 

earnings effect will be improved by using a panel of data and controls 

for period and state fixed effects, which are not possible when only a single year of data is analyzed as in the Anderson and Bodvarsson (2005) 

paper. 

A paper by Wessels (1997) theoretically and empirically assessed whether 

restaurants have monopsony power over wages. Wessels's (1997) tested theoretical model hinged on the fact that tips allow restaurants to pay servers lower 

wages, and as more servers are hired, each serves fewer customers and consequently earns less in tips--thus restaurants must pay a higher wage to retain 

workers. Empirically, he concluded that the labor market for tipped wait 

staff in restaurants is indeed monopsonistic. Wessels (1997) detected the full 

4 They also include additional demographic controls such as the share of the population over 60, the 

share of the prime-aged (25-60) population, and female labor-force participation rate. 

EDL-011-D with DISTILLER

TABLE 1 

DF.SCRI!'nVE STATISTICS FOR TilE "ALL CouNTY" AND "BoRDER CouNTY" SAMPLES BY FULL-SERVICE (FSR) AND LIMITED-SERVICE (LSR) RESTAURANT 

All County Sample Contiguous Border County Sample 

FSR LSR FSR LSR 

Mean Std. Dev. Mean Std. Dev. Mean Std. Dev. Mean 

Population 189,479 434,560 257,058 506,425 222,009 364,542 352,252 

Private-sector average weekly earnings 542 178 570 I87 573 207 625 

FSR average weekly earnings 204 65 218 64 211 70 232 

LSR average weekly earnings 188 49 188 48 192 52 197 

Private-sector employment 71,695 179,432 98,886 209,481 89,818 182,474 145,303 

FSR employment 2693 6368 3826 7530 3213 6401 5247 

LSR employment 2489 5020 2849 5345 2646 3915 3517 

Minimum wage 5.47 1.21 5.46 1.21 5.50 1.23 5.51 

Tipped wage 3.04 1.43 2.93 1.41 3.07 1.31 2.86 

County distribution by Census division 

New England 0.04 0.04 0.10 0.12 

M iddie Atlan.tk 0.10 0.10 0.19 - 0.18 

East North Central 0.22 0.17 0.22 0.15 

West North Central 0.15 0.10 -· 0.13 0.10 

South Atlantic 0.16 0.22 0.15 0.22 

East South Central 0.05 0.08 0.03 0.03 

West South Central 0.09 0.13 0.02 0.06 

Mountain 0.10 0.08 0.12 - 0.09 

Pacific 0.08 0.09 - 0.05 0.04 

Number of counties 1281 890 332 197 

Number of county pairs 281 150 

Number of states ( + DC) 49 49 48 45 

Total county-quarter observations 119,133 82,770 52,266 27,900 

SoURCE: QCEW 1990Ql ~2013Q1 data (except population data) from the U.S. Census Bureau. 

Narc: *Total county¥quarter observations indicates the total number of observations within a sample, which has been balanced based on disclosed employment counts wit

private sector and the relevant subsector (either full- or limited-service restaurants). Descriptive statistics for other subsectors have a lower count. because they are based o

anced subset of the sample. In particular. there are 96,803 county-quarter observations with disclosed employment counts of limited-service restaurants within the All Cou

that has been balanced based on the full-service sub-sector. Likewise, there are 79,643 county~quarter observations with disclosed employment counts of the full-servi

within the All Counties sample balanced on limited-service. There are 43,083 county-quarter observations with disclosed counts of limited-service employment within 

Counties sample balanced on full-service. Lastly, there are 27,149 county-quarter observations with disclosed full-service employment within the Border Counties sam

on limited-service. 
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630 I SYLVIA ALLEGRETTO AND CARL NADLER 

"reverse C" monopsony employment pattern. He asserted that over some range 

(not established) a higher wage will increase restaurant employment. 

A second paper by Wessels (1993) on minimum wages and tipped employees used the Census of Retail Trade to estimate the effect of allowing a total 

offset of tips toward the minimum wage requirement. He concluded that 

restaurant employment would increase by 6.8 percent and those jobs would 

pay 30 percent or more above the minimum wage (which was $2.01 at the 

time). Wessels (1993) also found that a 10-percent increase in the tipped wage 

would result in a 4-percent decrease in employment, and workers who retained 

their jobs would have their hours cut by 6 percent. In total there would 

be a loss of 3 percent to 5 percent in total income, coupled with lower 

employment. 

We contribute to this literature in two ways. First, we use more than two 

decades of variation in state-level tipped wage policy to estimate tip wage 

effects on earnings and employment. That is, in contrast to earlier approaches 

relying on cross-sectional data, we use within-county variation for identification. Second, we address potential bias from time-varying spatial heterogeneity 

using designs from recent research on the minimum wage, focusing on 

comparisons of counties within the same Census division, or across a state 

border. 

Relevant minimum wage literature. The minimum wage is one of the most 

studied topics in labor economics. See Brown (1999) and more recently Neumark and Wascher (2008) for an overview of the literature. Recent debate on 

minimum wages has focused on the importance of research design. Kuehn 

(2014) gives a broad summary of the two main approaches: (I) those that use 

the two-way fixed-effects model and (2) those that use "matching criteria." 

The two-way fixed-effects strategy in its most simplistic form exploits variation in state minimum wages and uses states without minimum wage increases 

as counterfactuals. We know from looking at the map (see Figure 3) that there 

is a spatial component to both wage floors, and given that wage policies are 

not randomly assigned, there is a nontrivial possibility of estimating spurious 

effects. 

As Kuehn (2014) mentioned, different employment trends-for example, the 

stagnation in the Midwest compared to growth in the South-are due to structural shifts (such as the decline in manufacturing) and not due to minimum wage 

policies. Allegretto et al. (2013) used four data sets and six approaches-including geographic controls, border discontinuities, synthetic controls, and dynamic 

panel data models-to show that the two-way fixed-effects estimator for 

minimum wage studies is biased due to insufficient controls for time-varying 

heterogeneity. 
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Tipped Wage Effects on Earnings and Employment I 63 I 

Research designs such as the case study approach used by Card and Krueger (1994) in their Pennsylvania-New Jersey study and the generalization of 

that approach by DLR are based on matching criteria-that is, matching or 

identifying an appropriate comparison group to assess what would have happened to the treatment group in the absence of the treatment. In this case, the 

treatment is an increase in minimum wage. DLR assert that minimum wage 

research that relies on the two-way fixed-effects model does not adequately 

account for unobservable heterogeneity that is correlated, but not causal, to 

low-wage employment pattems and thus produces spurious negative employment effects. 

DLR extended the fixed-effects approach in conjunction with matching 

criteria by exploiting a research design based on contiguous border countypairs that assumes counties that are geographically close are better controls 

than those that are not. In their preferred specification, DLR argued that 

their research design, which matched a "treatment" county with a neighboring county across a state border as a "comparison" or counterfactual, is 

preferred to studies that do no such matching. DLR's estimates were essentially a pooled estimate of each contiguous county-pair with a minimum 

wage differential over a 17-ycar period. The estimated negative employment 

effects that resulted from the traditional two-way fixed-effects specification 

attenuated and became indistinguishable from zero in their preferred specification. 

The present research builds upon DLR as we estimate eamings and employment effects for the restaurant industry, but we analyze the full-service and 

limited-service restaurant sectors separately (DLR pooled them together). As in 

DLR, we are interested in minimum wage effects, but we extend our analysis 

to also include the tipped wage. 

In relation to the present study it may be that the confounders with the variation in the tipped wage may be similar, but not necessarily identical, to those 

relating to the minimum wage (as the map in Figure 3 suggests). Hence, spurious effects may differ but heterogeneity remains a potentially serious issue. 

The advances of incorporating spatial controls and policy discontinuities to 

better account for heterogeneity (as presented in Dube, Lester, and Reich 

2010; Allegretto, Dube, and Reich 2011; Allegretto et al. 2013) is an oftenpreferred approach (for example, see Autor 2003; Lee and Lemieux 2010; 

Magruder 2013), but it is not universally accepted within the discipline. 

Specifically, research by Neumark, Salas, and Wascher (2014) used a synthetic 

control approach to argue that areas in close proximity are not more similar. 

And, as discussed above, Even and Macpherson (2014) preferred the traditional two-way fixed-effects specification. 
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632 I SYLVIA ALLEGRETIO AND CARL NADLER 

Data 

The QCEW data provide a near census of county-level payroll data 

on employment and earnings covering approximately 98 percent of all jobs.5 

Importantly, these data are well suited for research on the tipped wage as 

tipped workers such as wait staff are prevalent in the full-service sector but 

rare in limited-service restaurants--and the two sectors are separately identified 

in the QCEW. Furthermore, both restaurant sectors are heavy users of minimum wage workers.6 

We construct a QCEW panel of quarterly observations of county-level 

employment and earnings for full-service restaurants and limited-service 

restaurants from the first quarter of 1990 through the first qumter of 2013. 7 

Quarterly employment is the average of the three monthly employment values 

reported for the corresponding months of each quarter. The earnings variable 

is the average weekly wage for a given quarter. 

The QCEW data include a measure on private-sector employment that we 

use as a control. Also used as a control is county-level population data for 

each quarter from the U.S. Census Bureau that was merged with the 

QCEW data. The dataset is further appended with data on the regular minimum wage and the tipped wage for each state and time period (year, 

quarter). 8 

We use four subsets of QCEW data. For both restaurant subsectors, we have 

a sample that includes all counties ("All County" or AC) sample and a subsample of the AC data restricted to contiguous border-county-pairs referred to 

as the "Border County" (BC) sample. The BC sample is restricted to contiguous county-pairs that straddle a state line and have a minimum or tipped wage 

differential. Each of the four samples, separately, is restricted to counties that 

have reported data for all ninety-three quarters. The descriptive statistics are 

provided in Table 1. The "All County FSR" sample consists of 1281 out of 

the 3109 counties in the United States with reported data on full-service 

5 QCEW data represent the number of covered workers who worked during, or received pay for, the pay 

period including the twelfth of the month. Excluded are members of the armed forces, the self-employed, 

proprietors, domestic workers, unpaid family workers, and railroad workers covered by the railroad unemployment insurance system. 6 The restaurant industry employs a large share of the minimum wage workforce, and of all workers 

employed in restaurants, about a third earn wages within 10 percent of the minimum wage (DLR 2010). 7 NAICS codes from 1990 through 2010: FSR 7221 and LSR 722211; from 2010 onward: FSR 722511 

and LSR 722513. 8 The construction of monthly, state data on the tipped and minimum wage from 1990--2013 were compiled using various sources. Older data were found via annual issues of the Monthly Labor Review and its 

chapter on State Labor Legislation available in January for most years. Other sources were via the Internet 

and state labor departments. 
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Tipped Wage Effects on Earnings and Employment I 633 

FIGURE 4 

STATE MINIMUM WAGES BY CENSUS DIVISION, 1990-2013 

New England Middle Atlantic East North Central 

SouRCE: The construction of quarterly state data on the tipped and minimum wage from 1990-

2013 were compiled using various sources. Older data were found via annual issues of the 

Monthly Labor Review and its chapter on State Labor Legislation available in January for most 

years. Other sources were via the Internet and state labor departments. 

restaurants. The "All County LSR" sample consists of 890 counties with data 

on limited-service restaurants. We use this sample to replicate the traditional 

two-way fixed-effects specification. The spatial depiction of minimum and 

tipped wages across time is evident in Figures 4 and 5, respectively. The figures illustrate the two wage floors for states within each of the nine Census 

divisions. Thus, we build upon the canonical model to include spatial controls 

and state-specific time trends. We discuss the importance of spatial controls 

further in the Estimation Strategy section. 

The BC samples are used for the border-county-pair analysis and consist of 

all contiguous county-pairs that straddle a state boundary and have a tipped or 

minimum wage differential. Descriptive statistics are reported in the right-hand 

panel of Table 1. The BC FSR sample consists of 332 counties and 281 

county-pairs, and the BC LSR consists of 197 counties with 150 county-pairs. 
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634 / SYLVIA ALLEGRETTO AND CARL NADLER 

FIGURE 5 

STATE TIPPED WAGES BY CENSUS DIVISION, 1990-2013 

Middle Atlantic East Central 

SouRCE: The construction of quarterly state data on the tipped and minimum wage from 199(}~ 

2013 were compiled using various sources. Older data were found via annual issues of the 

Monthly Labor Reviell' and its chapter on State Labor Legislation available in January for most 

years. Other sources were via the Internet and state labor departments. 

Figure 6 shows the variation in minimum and tipped wages for both restaurant 

sector datasets along with the mean absolute differential in the (log) minimum 

wage and the (log) tipped wage. The figures show that there is necessary variation in order to estimate earnings and employment effects. There are substantial pay gaps among these counties, especially regarding the tipped wage that 

has large increases in later years in the relevant FSR sector. 

Estimation Strategy 

Specifications using the All County sample. Our first strategy to assess the 

impact of minimum and tipped wages uses our AC sample of county-level 
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Tipped Wage Effects on Earnings and Employment I 635 

FIGURE 6 

NuMBER oF CouNTY-PAIRS WITH MINIMUM OR TIPPED WAGE DIFFERENTIAL AND AvERAGE ABSOLUTE 

RELATIVE DIFFERENTIAL 

r 

Full-service sample "{ g 

~· 

~ __ ,> 

,-..--- , ____ , .,; 

" 

.,...---" ,' J lr 

\ ,. r - - 1- \ ,.\. - ,.. , 

-"'r-- "'""" 

'.. ... ----1 

19,_9~0q-1 --,-•• ~.q-1 --2-00~2q-1 --2-00~Bq-1 __ 2J01°4q1 19<.9~0q-1--1-99~6q-1--2-00~2q-1--2-00~8q-1--2-'01°: 

NoTES: The solid line plots the number of pairs with a minimum or tipped wage differential in a 

given quarter. The dashed line plots the average absolute difference in the logged wage between 

the counties in a pair. 

panel data on earnings and employment. We begin by estimating the 

traditional two-way fixed-effects specification as our baseline model: 

lnyct lfrwlnTWs(c)r + IJMwlnMWs(c)r + Xcrr + ¢c + r, + 1:;c1 (I) 

where c indexes counties and t indexes quarters from l990Q I through 

2013QI. lnTWs(c)t and lnMWs(c)t arc, respectively, the log of the tipped wage 

and the log of the minimum wage in county c's state, s(c), in quarter t. We 

define the tipped wage and minimum wage as the maximum of the respective 

state and federal wage policy. lnYcr is the log of the labor market outcome of 

interest, which is either total employment or average weekly earnings in one 

of two subsectors: full-service or limited-service restaurants. (/Jc and r1 are 

county and quarter fixed effects, respectively. Xcr is a vector of county-level 

control variables. In all specifications, we control for the log of the county's 

population, reported on a quarterly basis by the Census Bureau. We also 

account for economic shocks affecting all industries in the county. In earnings 
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636 I SYLVIA ALLEGRETTO AND CARL NADLER 

regressions, we include (log) total private sector average earnings, and in 

employment regressions we include (log) total private sector employment. 

Our parameters of interest are IJIW and IJMW· They represent the elasticities 

of the dependent variable with respect to the state's tipped wage and minimum 

wage policies, respectively. Elasticities are estimated without bias under the 

assumption that E[ln7Ws(c)t<:c1J = 0 and E[lnMWs(c)tf:c1l = 0. In other words, 

specification (I) estimates causal impacts of state tipped and minimum wage 

policies if changes in wage policies are uncorrelated with unobserved changes 

in the local economy. As previously discussed, there is growing evidence that 

this condition does not hold. States appear more likely to enact increases in 

minimum wages during periods in which employment in low-wage sectors is 

already falling (e.g. Dube, Lester, and Reich 2010; Allegretto eta!. 2013). 

Because changes in tipped wage policies often occur at the same time as 

changes in minimum wage policies, estimates of the effect of tipped wages on 

employment may be negatively biased as well. 

To address this potential bias, we estimate fixed-effects specifications that 

additionally control for time-varying regional and state-level economic conditions. To motivate our approach, one may decompose the unobserved withincounty variation in a given quarter as follows: 

Cct = ),d(c)t + l/t 5 1 + Uct (2) 

where ),d(c)t is a time-varying, unobserved economic shock that is common 

across all counties in county c's Census division, d(c); Vts is a state-level trend; 

and uc1 is the unobserved heterogeneity that is uncorrelated with ),d(c)r and l/t sf. 

Plugging (2) into ( 1) we have: 

lnyct = '7rwln7Ws(c)t + IJMwlnMWs(c)t + Xcrr + ¢c + ),d(c)t + Vtsl + Ucr (3) 

By including controls for time-varying economic shocks within Census divisions and state trends. the model specified in equation (3) relaxes the previous 

identifying assumptions. Loosely speaking, identification of 11IW and IJMw is 

based on the arguably idiosyncratic timing of changes in state wage policies 

relative to nearby states presented in Figures 4 and 5, while adjusting for 

long-terrn trends in the state economy. In order to gauge the sensitivity of our 

results, we also estimate intermediate specifications in which we add to equation (1) either division-specific time effects or state trends. In all regressions 

we cluster the standard errors at the state level, because we are using countylevel data to estimate the effect of state-level policies. 

Identification using contiguous border-county-pairs. A limitation of our 

analysis of the AC sample. and of similar studies using state-level panel data, is 
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Tipped Wage Effects on Earnings and Employment I 637 

that we are only able to address the nonrandom timing of state-level changes in 

tipped and minimum wage policy by using geographically coarse controls or 

controls for the overall trend within the state. An alternative approach is to focus 

on local comparisons using pairs of counties that cross a state border. Given their 

geographical proximity, the border counties provide a natural control group 

when one county's state implements a change in their wage policy and the other 

county's state does not. We thus extend the border-county design originally 

implemented in Dube, Lester, and Reich (2010). Consider a sample of pairs of 

border counties. To belong in our sample, each pair, indexed by p, must be contiguous and lie across a state border and, at some point in our sample period, 

have different tipped or minimum wage policies. j indexes the counties that are 

in a pair: j I, 2. Because counties can be in multiple pairs, counties appear in 

the sample for each pair to which they belong.9 Let c(j,p) denote the jth county 

in pair p and s(j,p) the county's state. The regression model is: 

lnyjpr = ~lrwlnTWs(j,p)r + llMwlnMWs(j,p)t + Xc(j,p)tr + c/Jc(j,p) + Ppr + Vjpt ( 4) 

where Ppr is a time-varying economic shock common to both counties in pair 

p, and ~}pt is an unobserved, time-varying, county-level shock uncorrelated 

with Ppt· The other variables are as previously defined. IJrw and IJMw are identified under the assumption that E[lnTWs(j,p)rUjptl = 0 and E[lnMWs(j,p)tVjpr] = 0. 

This condition requires that local labor-market shocks that would bias our estimate of the effect of the wage policy are also affecting the labor-market outcomes of the county across the state border, adjusting for average differences 

between the two counties and our time-varying controls. In contrast, the two-way 

effects model we introduced in equation (I) assumes these confounding labor 

market shocks are shared across all counties in our sample, regardless of geographic proximity. 10•

11 Following Dube, Lester, and Reich (2010), we correct 

our standard errors for clustering within states and border segments of adjacent 

pairs using multiway clustering (Cameron, Gelbach, and Miller 2006). 

Results 

Estimates using the All County sample. Table 2 shows the regression 

results from our analysis on the AC sample. Panel A reports results for 

9 In practice, most counties appear in no more than two pairs, 10 For comparison with equation (I), we also estimate equation (4) substituting only time effects, r, for 

the pair-specific time effects, pP'' 11 Because the number of pairs grows with the number of counties, pair-specific time effects are not con· 

sistently identified. In practice, we control for this variation by de-meaning at the pair-quarter level. 

EDL-011-D with DISTILLER

TABLE 2 

ALL COUNTY SAMPLE EsTIMATES OF THE TIPPED AND MINIMUM WAGE ON EARNINGS AND EMPLOYMENT, BY RESTAURANT SECTOR 

Specifications 

(I) (2) (3) (4) 

Panel A Full-Service Restaurants 

lnTW 0.048" 0.038" 0.034. 

- -- - 

(0.014) (0.010) (0.015) 

-- -- 

lnMW 0.231" 0.173" 0.204" 0.150 .. 0.188" 0.165" 0.161" 

(0.027) (0.029) (0.037) (0.031) (0.027) (0.027) (0.027) 

Employment 

1nTW --0.139' 0.006 0.014 

--- 

(0.060) (0.037) (0.072) 

1nMW -0.244' -0.073 --0.0!7 -0.025 --0.058 -0.068 -0.007 

(0.120) (0.099) (0.090) (0.077) (0.036) (0.051) (0.042) 

Counties 1,281 1,281 1,281 1,28! 1,281 1,281 1,281 

County-pairs 

N 119,133 119,133 119,133 119,133 119,133 119,133 119,133 

Panel B Umited-Service Restaurants 

lnTW - 0.017 0.003 -0.021 - 

(0.015) - (0.012) - (0.019) 

lnMW 0.217" 0.196" 0.173" 0.169 .. 0.182" 0.196 .. 0.160" 

(0.029) (0.028) (0.028) (0.029) (0.031) (0.034) (0.024) 

Employment 

lnTW -- -0.038 O.Dll 0.037 

(0.051) (0.040) (0.071) 

1nMW -0.167' -0.119+ -O.Dl8 -0.033 -0.073+ -0.098+ -0,015 

(0.075) (0.067) (0.071) (0.053) (0.038) (0.054) (0.028) 

EDL-011-D with DISTILLER

Counties County-pairs 

N 

Controls 

Division-specific 

period effects 

State-specific 

time trends 

County-pairspecific period 

effects 

890 82,770 

(1) 

890 890 

82,770 82,770 

y 

TABLE 2 (cont.) 

---

Specifications 

(2) 

890 890 

82,770 82,770 

y 

y 

(3) (4) 

890 890 

82,770 82,770 82

y 

y y 

NOTES: Results report the estimated elasticities of earnings and employment with respect to the tipped and minimum wage. Standard errors are in parentheses. ln1W refers 

the tipped wage policy in a county's state in a given quarter. lnMW refers to the log of the minimum wage. All regressions control for log population and county effec

and employment models additionally control for log total private sector earnings and employment, respectively, Models (1), (3), and (5) in addition control for quarter 

text for construction of the All County sample, In models (I) through (4) standard errors are clustered at the state leveL Full results are available upon request. Significan

denoted as follows: ••t %, •5%, + 10%, 
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640 I SYLVIA ALI...EGRETIO AND CARL NADLER 

earnings and employment in the FSR sector. Panel B shows results for the 

LSR sector. All models control for log population. In addition, earnings regressions control for log earnings in the private sector. Employment regressions 

control for log employment in the private sector. 12 In addition to estimating 

the models we described in the previous section, we also estimate each specification omitting the log tipped wage. We do this for comparison of our results 

with the related minimum wage literature. We first discuss the AC results, 

specifications (1) through (4), and wait until the next subsection to discuss the 

results from our border-county-pair design. 

We begin by replicating results from Dube, Lester, and Reich (2010). We 

exclude the log tipped wage from the regression models and study the effect 

of raising the minimum wage alone. There are two main differences between 

our analysis and theirs. First, our QCEW data extend from l990Ql through 

2013Ql, whereas DLR's QCEW sample ends in 2006Q2. Second, we examine 

the effects of the minimum wage separately by restaurant subsector. Over all, 

our results are broadly consistent with theirs (DLR, Table 2). When only 

county and quarter effects are controlled for, in specification ( l ), raising the 

minimum wage 10 percent is estimated to increase earnings a little more than 

2 percent. The magnitude of this effect attenuates somewhat as division-specific period effects and state time trends are controlled for in models (2) through 

(4). Nevertheless, the robustness of this positive earnings effect suggests it is 

not biased by the nonrandom timing of state changes in wage policy over 

time. In contrast, estimated effects of raising the minimum wage on employment vary across specifications. Although in specification (1) we find a moderate, negative effect of raising the minimum wage, once division-specific period 

effects or state trends are controlled for, the effect attenuates dramatically. For 

example, in full-service restaurants, the effect falls in magnitude over 90 percent from -0.244 to -0.017 once division-specific period effects are controlled 

for in specification (2). 

One difference between our results and those in DLR worth discussing is 

found in specification (3). Including state trends in the baseline model attenuates the discmploymcnt effects found in model (1), but by a smaller amount 

than in models (2) or (4) that also control for division-specific period effects. 

Whereas DLR find a small, statistically imprecise, positive effect of raising the 

minimum wage once state trends are controlled for, 13 the result in specification 

(3) predicts raising the minimum wage 10 percent lowers employment -D.58 

percent and -D.73 percent in the FSRs and LSRs, respectively. Though both 

effects are small and estimated imprecisely, the effect on LSRs is significant at 

12 Full regression results are available upon request. 13 See Dube. Lester, and Reich (2010), Appendix Table AI. 
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Tipped Wage Effects on Earnings and Employment I 641 

the 10-percent level. Nevertheless, the substantial attenuation of the disemployment effect once division-specific period or state trends are controlled for suggests the two-way effects estimates in specification (l) are negatively biased. 

Next, we add the log of the county's state tipped wage to the models in 

Table 2. Model ( 1) is our baseline specification, corresponding to equation (I) 

in the Estimation Strategy section. In addition to the time-varying control variables we discussed earlier, model (l) controls for quarter and county effects. 

In FSRs, we find that raising the tipped wage 10 percent increases earnings by 

0.48 percent. The effect is precisely estimated and statistically significant at 

the !-percent level. In model (2), we control for division-specific period 

effects. The tipped wage effect falls about 20 percent from 0.048 to 0.038, but 

remains significant at the 1-percent level. Model (3) controls for state trends 

instead of division-specific period effects. The coefficient on the log tipped 

wage variable is slightly smaller. When both state trends and division-specific 

period effects are controlled for in model (4)-corresponding to equation (3) 

in the Estimation Strategy section-a I 0-percent increase in the tipped wage 

raises earnings 0.32 percent. Though this estimate is similar to those found in 

models (2) and (3), it is estimated with less precision and is significant at only 

the 10-percent level. 

As we found in models with the tipped wage variable, moving from left to 

right, the estimated effect of the minimum wage on earnings falls as we add 

division-specific period effects and state trends but retains statistical significance. In general, comparing specifications with the tipped wage to those without, we find that controlling for the tipped wage causes the estimated impact 

of the minimum wage to fall in FSRs. Intuitively, since state-level changes in 

tipped wages are often timed with changes in minimum wages, estimates of 

earnings impacts of the minimum wage on tipped workers are positively 

biased when we do not account for changes in the tipped wage policy. 

As a falsification test, in panel B, we consider the estimated impacts of the 

tipped wage on earnings in LSRs. Since workers in LSRs are not generally 

paid tips, changes in tipped wage policies should not have an impact on their 

earnings. Models (1) through (4) in Table 2, panel B present the same models 

we just discussed, except earnings and employment outcomes are specific to 

LSRs. As expected, across all specifications, we find very small and statistically insignificant impacts of the tipped wage on earnings. 

In contrast to earnings, effects of the tipped wage on employment (while 

also controlling for the minimum wage) are much more sensitive to the inclusion of division-specific period effects or state time trends. Without these controls, the baseline two-way effects estimate in model (1) reports a statistically 

significant, negative effect of the tipped wage on employment of in the FSR 

sector. A 10-percent increase is estimated to reduce employment nearly 1.4 
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642 I SYLVIA ALLEGRETTO AND CARL NADLER 

percent. A disemployment effect of this magnitude is hard to reconcile with an 

earnings elasticity of less than 0.5 percent and strongly suggests negative bias. 

Also surprisingly, once the log tipped wage is controlled for, the impact of the 

minimum wage in the FSR sector attenuates more than 70 percent and is no 

longer statistically significant at conventional levels. In models (2) through (4), 

we find that controlling for either division-specific period effects or state trends 

or both strongly attenuates the disemployment effect of the tipped wage. In all 

three specifications, the reported coefficients are very small and positive. 

Nevertheless, the impacts are imprecisely estimated and cannot rule out 

small-to-moderate negative impacts on employment. As before, in FSRs, the 

minimum wage is estimated to have a small negative, though statistically 

insignificant, impact on employment. 

In the LSR sector, in all specifications, increasing the tipped wage is estimated 

to have an insignificant impact on employment. Although in the FSR sector we 

find that the tipped wage seemed to explain a large portion of the disemployment 

effect of the minimum wage in model ( 1), in LSRs, we find the opposite. In both 

models (1) and (3), the estimated impact of the minimum wage on employment 

in LSRs is negative and marginally significant at the 10-percent level. Nevertheless, the sensitivity of this impact to controls for division-specific period effects 

suggests these impacts may also be somewhat negatively biased. 

One concern with including spatial controls such as division-specific period 

effects in our models is that we may remove valid identifying information 

(e.g., Neumark, Salas, and Wascher 2014). In our context, we do not feel such 

a concern is wananted for two reasons. First, the robustness of the estimates 

of the impacts of the tipped and minimum wage on earnings across specifications demonstrates that state-level variation in wage policies persists even in 

the presence of division-specific effects and state time trends. Second, if valid 

identifying information were removed, the inefficiency of our approach would 

lead us to find larger standard enors once we include these additional controls. 

This is not generally the case. For example, the standard enors in the employment regression in model (2) are smaller than those in model ( l ). 

Regression results based on the contiguous border-county-pair design. Results from the AC samples strongly suggest that the nonrandom timing of 

changes in state tipped and minimum wage policies are associated with unobserved regional variation in employment outcomes in the restaurant industry. 

This conelation negatively biases estimates of the employment effects of these 

policies in two-way fixed-effects models. So far, we have relied on coarse division-specific period effects and state trends to overcome this bias. In this section, 

we describe the results from a design that compares pairs of counties that straddle 

a state border. 
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Tipped Wage Effects on Earnings and Employment I 643 

TABLE 3 

BORDER-COUNTY-PAIR SAMPLE ESTIMATES OF THE TIPPED AND MINIMUM WAGE ON EARNINGS AND 

EMPLOYMENT, BY RESTAURANT SEcroR 

Panel A I<'uii·Service Restaurants 

Earnings 

lnTW 

lnMW 

Employment 

lnTW 

lnMW 

Counties 

County-pairs 

N 

Panel B Limited-Service Restaurants 

lnTW 

1nMW 

Employment 

lnTW 

lnMW 

Counties 

County-pairs 

N 

Controls 

Division-specilic period effects 

State-specitic time trends 

County-pair-specific period effects 

(5) 

0.235 •• 

(0,037) 

-0.096 

(0.103) 

332 

281 

52,266 

0.213 •• 

(0.031) 

-0.143 

(0.092) 

197 

150 

27,900 

Specifications 

(6) 

0.047. 0.042. 

(0.019) (0.019) 

0.188 .. 0.187*' 0.142. 

(0.039) (0.056) (0.059) 

-0.075 0.070 

(0.079) (0.079) 

-0.021 -0.042 -0.116 

(0.090) (0.079) (0.097) 

332 332 332 

281 281 281 

52,266 52,266 52,266 

0.014 0.012 

(0.027) (0.025) 

0.199 .. 0.114 .. 0.099. 

(0.033) (0.037) (0.044) 

0.012 0.051 

(0.067) (0.040) 

-·0.155. 0.014 -0.044 

(0.072) (0,083) (0.081) 

197 197 197 

150 150 150 

27,900 27,900 27,900 

y y 

NOTE: Results report the estimated elasticities of earnings and employment with respect to the tipped and minimum wage. 

Standard errors are in parentheses. lnTW refers to the log of the tipped wage policy in a county•s state in a given quarter. 

lnMW refers to the log of the minimum wage. All regressions control for log population and county effects. Earnings 

and employment models additionally control for log total private sector earnings and employment, respectively. Models 

(1), (3), and (5) in addition control for quarter effect~. See text for construction of the Border County sample. Standard 

errors in models (5) and (6) are clustered at the state and border segment level. Full results are available upon request. 

Signitlcance levels are denoted as follows: *"'1%, *5%, +10. 
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644 I SYLVIA ALLEGRETTO AND CARL NADLER 

Specification (5) in Table 3 estimates the earnings and employment impacts 

of the tipped and minimum wage controlling only for county and quarter 

effects, which is similar to the two-way fixed-effects specification in equation 

( 1 ). That is, we fit models of the fonn: 

ln)]pt 117wlnTWs(j,p)t + IJMwlnMWs(j.p)t + Xc(j,p)rl + <Pc(j,p) + Tt + lijpt (5) 

The estimated earnings impacts of the tipped wage and minimum wage are 

remarkably close to what we found earlier (see Table 2, specification 1), 

despite the fact that we are performing these regressions on a subset of the 

counties used in the AC analysis. 14 A I 0-percent increase in the tipped wage 

is estimated to raise earnings in FSRs by 0.47 percent. A 10-percent increase 

in the minimum wage raises FSR earnings 1.9 percent. The log tipped wage 

and minimum wage coefficients are significant at the 5- and !-percent levels, 

respectively. As before, minimum wages are estimated to have a similar 

impact in LSRs, while tipped wages are estimated to have a small, insignificant impact. 

Similar to what we found in specification (1) in Table 2, tipped wages from 

specification (5) in Table 3 are estimated to have a negative impact on FSR 

employment. However, the effect in specification (5) is somewhat smaller and 

not significant at conventional levels. Holding the tipped wage constant, minimum wages are estimated to have an even smaller impact than we found in 

model (l) in FSRs. Nevertheless, in the LSR sector, a 10-percent increase in 

the minimum wage is estimated to decrease employment 1.6 percent. This 

effect is significant at the 5-percent level. 

In model (6) we include pair-specific period effects, fitting equation (4) in 

the Estimation Strategy section. In these models, identification of the effects of 

the tipped and minimum wage is based on local comparisons between counties 

and their contiguous neighbors across the state border. The estimated earnings 

impact of the tipped wage is robust to the inclusion of these effects and maintains significance at the 5-percent level. The estimated elasticity, 0.042, is 

within the range of earnings estimates we found in the AC sample analysis. 

Consistent with moderate bias, minimum wage estimates drop about 25 and 50 

percent in the FSR and LSR samples, respectively. Both estimates retain significance at the 5-percent level. 

Once we control for pair-specific period effects, the estimated employment 

effect of the tipped wage is now positive. However, the estimate is imprecisely 

estimated, as a 95 percent confidence interval rules out employment impacts 

14 As noted in Table 2, there are 332 unique counties in the FSR BC sample, compared to 1281 in the 

AC sample. Likewise, there are 197 unique counties in the LSR BC sample, compared to 890 in the AC 

sample. 
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Tipped Wage Effects on Earnings and Employment I 645 

only lower than -0.9 percent and greater than 2.3 percent in response to a 10-

percent increase in the tipped wage. Given that we generally find earnings 

impacts in the range of 0.3 to 0.5 percent, this interval of potential employment responses is consistent with both neoclassical and alternative models of 

labor-market responses to the increases in the tipped wage. Surprisingly, the 

tipped wage is also estimated to have a similar positive, though insignificant, 

impact in LSRs. In contrast, minimum wages are estimated to have more negative, though not significant, employment effects. 

Given the imprecision of our estimated employment effects, we interpret our 

findings from the contiguous border county design as supporting the small, 

insignificant employment elasticities we found in the AC sample in models (2) 

through (4). 15 

Summary 

The tipped wage has been little researched, especially compared to its 

better-known and much-investigated minimum wage counterpart. While the 

federal minimum wage has increased nominally more than 90 percent since 

the early 1990s, the federal tipped wage remains at $2.13. 

We use a panel of QCEW data that spans 23 years to estimate earnings and 

employment effects of changes in state-level tipped wage policies on FSRsusing LSRs that do not employ tipped workers as a falsification test. We are 

concerned with spatial heterogeneity given the nonrandom timing of changes 

in state-level tipped and minimum wage policies. At issue is the validity of 

control groups-or the counterfactual for what would have happened in the 

absence of a change in the wage. 

We employ two approaches to address this potential bias. First, we estimate 

earnings and employment effects on a sample of all U.S. counties, controlling 

for Census division-specific period effects and state trends. Second, we extend 

earlier work by Dube, Lester, and Reich (2010) and compare outcomes on a 

sample of contiguous county-pairs that straddle a state border, controlling for 

time-varying heterogeneity at the pair level. 

15 As a robustness check, in results not shown, we have also estimated models (5) and (6) on an alterna· 

tive sample balanced on FSRs and LSRs. By balancing on both subsectors, we throw out more than half of 

the counties used in the FSR models, leaving only 165 unique counties. Here, we find similar earnings 

impacts of the tipped and minimum wage. However, the tipped wage is now estimated to have an employment elasticity of -D.032 in FSRs and 0.064 in LSRs. Both estimates are insignificant at conventional levels. 

Minimum wage employment elasticities are also small and insignificant: -·0.07 in both FSRs and LSRs. 

Results are available upon request. 
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646 I SYLVIA ALLEGREITO AND CARL NADLER 

Across a range of specifications, we find raising the tipped wage significantly 

increases earnings of workers in FSRs. Our point estimates suggest a 10-percent 

increase in the tipped wage raises average earnings about 0.4 percent. In contrast, 

estimates of the employment elasticity are sensitive to controls for spatial heterogeneity. Models that control for either division-specific petiod effects, state 

trends, or border-pair-specific period effects all find small, statistically insignificant employment effects. Although the point estimates of these models are positive, they are also very imprecise. Future research would benefit from ticher data 

on the components of server pay at the worker level. This information would better enable researchers to assess the potential effects of changes in tipped wage 

policy on those most likely to be affected by policy changes. 

REFERENCES 

Allegretto, Sylvia A., and David Cooper. 2014. "Twenty-Three Years and Still Waiting for Change." Economic Policy Institute and Center for Wage and Employment Dynamics Briefing Paper. Washington, 

DC: Economic Policy Institute. 

---, Arindrajit Dube, and Michael Reich. 20!1. "Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data." Industrial Relations 50(2): 

20540. 

--, ---,--,and Ben Zipperer. 2013. "Credible Research Designs for Minimum Wage Studies." lZA Discussion Paper7638 (September). Bonn, Germany: Institute for the Study of Labor. 

Anderson, John E., and Om B. Bodvarsson. 2005. "Do Higher Tipped Minimum Wages Boost Server Pay?" 

Applied Economic Leiters 12: 391··93. 

Autor, David. 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of 

Employment Outsourcing." Journal af Labor Economics 21(1): l-42. 

Brown, Charles. 1999. "Minimum Wages, Employment, and the Distribution of Income." In Handbook of 

Labor Economics, Vol. 3, edited by Orley Ashenfelter and David Card, pp. 2101-63. New York: 

Elsevier. 

Cameron, A. Colin, Jonah B. Gelbach, and Douglas L. Miller. 2011. "Robust Inference with Multi-Way 

Clustering." Journal of Business and Economic Statistics 29(2): 238--49. 

Card, David, and Alan M. Krueger. 1994. "Minimum Wages and Employment: A Case Study of the New 

Jersey and Pennsylvania Fast Food Industries." American Economic Review 84(4): 772-93. 

Dube, Arindrajit, William Lester, and Michael Reich. 2010. "Minimum Wage Effects Across State Borders: 

Estimating Using Contiguous Counties." Review of Economics and Statistics 92(4): 945-64. 

Elder, Peyton. 1978. "The 1977 Amendments to the Federal Minimum Wage Law." Monthly Labor Review 

101(1): 9-10. 

Even, William E., and David A. Macpherson. 2014. "The Effect of the Tipped Minimum Wage on Employees in the U.S. Restaurant Industry." Southern Economic Journal 80(3): 633-55. 

Kuehn, Daniel. 2014. "The Importance of Study Design in the Minimum-Wage Debate." Economic Policy 

Institute Issue Brief #384. Washington, DC: Economic Policy Institute. 

Lee, David, and Thomas Lemieux. 20! 0. "Regression Discontinuity Designs in Economics." Journal of Economic Literature 48(2): 281-355. 

Magruder, Jeremy. 2013. "Can Minimum Wages Cause a Big Push? Evidence from Indonesia." Journal of 

Development Economics 100(! ): 48--62. 

Neumark, David, J. M. Ian Salas, and William Wascher. 2014. "Revisiting the Minimum Wage and Employment Debate: Throw out the Baby with the Bathwater?" Industrial and Labor Relations Review 67 

(Supplement): 608--48. 
364 


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Tipped Wage Effects on Earnings and Employment I 647 

and William Wascher. 2008. Minimum Wages. Cambridge, MA: MIT Press. 

Wessels, W. J.. 1993. "The Minimum Wage and Tipped Employees." Journal of Labour Research 14: 

213-26. 

--. 1997. "Minimum Wages and Tipped Servers." Economic Inquiry 35: 334-49. 

Whittaker, William G. 2006. "The Tip Credit Provisions of the Fair Labor Standards Act." Congressional 

Research Service Repon for Congress. March 24. Order Code RL 33348. Washington, DC. 
365 


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DHN 

INTERRELIGIOUS WORKING GROUP 

ON DOMESTIC HUM/\N NEEDS 

Faith-based Organizations Support 

The Raise the Wage Act of 2019 

The undersigned faith-based advocacy and religious organizations enthusiastically support the 

Raise the Wage Act of 2019, as introduced by Senators Bernie Sanders (VI'} and Patty Murray 

(WA}, and Representatives Robert C. "Bobby" Scott (VA), Mark Pocan (WI} and Stephanie 

Murphy (FL). We are increasingly concerned about the plight of our sisters and brothers who 

work hard but still struggle making ends meet. As a remedy to that plight the Raise the Wage Act 

is legislation that not only provides for workers' financial well-being, but fosters their sense of 

self-worth as individuals and members of society. 

According to our faith traditions, justice requires that every worker receive a just wage that 

provides a standard of living in accordance with their God-given dignity. The current federal 

minimum wage of $7.25/hour and $2.10/hour for tipped workers is woefully insufficient and has 

remained stagnant for a decade. This disregard is a shameful statement of neglect for the lowest 

paid people in our society. 

The provisions of the Raise the Wage Act take substantive steps to ensure that the wages people 

earn are enough to provide for their livelihoods. If enacted, this legislation would: 

Raise the federal minimum wage to $8.55 this year and increase it over the next five years 

until it reaches $15 an hour in 2024; 

After 2024, adjust the minimum wage each year to keep pace with growth in the typical 

worker's wages; 

Phase out the outdated subminimum wage for tipped workers, which has been frozen at a 

meager $2.13 since 1991; 

Sunset the much-criticized ability of employers to pay workers with disabilities a 

subminimum wage through certificates issued by DOL; and, 

Phase out the subminimum wage for workers under the age of 20. 

Our families and our economy have been increasingly burdened by wage stagnation and income 

inequality. The Raise the Wage Act of 2019 will begin to lighten this burden by raising the wage 

floor to broadly impact those at the bottom of the workforce. According to policy experts more 

than 1 in 4 workers would be impacted by this legislation, 90 percent of whom are over the age of 

20. Some estimates project that those working year-round would see a raise on the order of 

$3,500 a year. The difference that makes for a preschool teacher, bank teller, or fast-food worker 

who today struggles to get by on around $20,000 per year would be remarkable. The Raise the 

Wage Act will especially, positively benefit women and minority workers, who are 
366 


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disproportionately represented among low wage workers. Additionally, the provlSions that 

protect workers with disabilities recognize the value of the work done by those individuals and 

corrects the harmful and exploitive practice of significantly under-paying individuals with 

disabilities. 

The time for the Raise the Wage Act is long overdue. Justice cannot wait; and neither can 

Americans who labor every day with insufficient pay. We call on Congress to enact this important 

piece of legislation as quickly as possible, and for President Trump to sign it when it comes to his 

desk. 

Bread for the World 

Church World Service 

Conference of Superiors of Men (Catholic) 

Daughters of Charity of St. Vincent de Paul 

Disciples Refugee & Immigration Ministries 

Ecumenical Poverty Initiative 

The Episcopal Church 

Evangelical Lutheran Church in America 

Faith in Public Life 

Franciscan Action Network 

Friends Committee on National Legislation 

Interfaith Worker .Justice 

National Council of Churches 

National Council of Jewish Women 

NETWORK Lobby for Catholic Social Justice 

The United Methodist Church -General Board of Church and Society 

Po ligon Education Fund 

Presbyterian Church (U.S.A.) 

Union for Reform Judaism 

Unitarian Universalist Association 

United Church of Christ Justice and Witness Ministries 
367 


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' ."' <<A 

o.ls.'AsluTY R.IGHTs NETWORK~ .. ~) )? Protection & Advocacy for lnd1vidunls v.11th DisabiiJties ',,~, 

January 15, 2019 

The Honorable Bobby Scott 

The Honorable Mark Pecan 

The Honorable Stephanie Murphy 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Scott, Representative Pecan, and Representative Murphy: 

As the nonprofit membership organization for the federally mandated Protection and 

Advocacy (P&A) systems and Client Assistance Programs (CAP) for people with disabilities, 

the National Disability Rights Network (NDRN) writes to thank you for the introduction of the 

"Raise the Wage Act". An increase in the minimum wage is long overdue and will have a 

positive impact for those individuals with disabilities who are employed. 

We are especially pleased with the inclusion of a phase out of the subminimum wage for 

individuals with disabilities currently allowed under Section 14(c) of the Fair Labor Standards 

Act in this legislation. As you know, the practice of paying individuals with disabilities 

subminimum wage is a relic from the Fair Labor Standards Act (FLSA) passed in 1938- a 

holdover which is now recognized as discriminatory, archaic, and in direct conflict with other 

exiting federal statutes and initiatives. 

Unfortunately, the use of subminimum wages for people with disabilities remains prevalent. 

Despite federal recognition of the importance and value of people with disabilities by the 

Americans with Disabilities Act and the integration principles found in Olmstead v. L.C., 527 

U.S. 581 (1999), people with disabilities are still paid less than minimum wage even when 

they are more productive than people without disabilities. The subminimum wage creates 

and reinforces a life of poverty and dependency on public support. 

NDRN has long supported the end of subminimum wage for people with disabilities. P&A 

and CAP agencies encounter many people with disabilities around the country who want an 

opportunity to work at a competitive wage, but unfortunately, have ended up in positions only 

earning dollars or even pennies by the hour. 

NDRN has issued two reports on the subminimum wage: "Segregated and Exploited: A Call 

to Action" and "Beyond Segregated and Exploited." 

As the Congressionally-created federal Advisory Committee on Increasing Competitive 

Integrated Employment for Individuals with Disabilities ("the Committee") described in its 

report to Congress and the Labor Secretary: 

820 FIRST STReET NE, SUITE 740 • WASHINGTON. DC 20002-4243 

TEL: 202.408 9514' I \X: 202.408.9520 • TTY: 202.408.9521 

WEBSITE: WWW.NDRN.ORG • E-MAIL: INFO@NDRN.ORG 
368 


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[There is an] underlying need to amend Section 14(c) of the FLSA so that it 

reflects and aligns with modern federal disability policy and laws, which are 

based on the assumption that all individuals with disabilities are capable of, 

and have a right to, [competitive integrated employment]. The current 

widespread practice of paying workers subminimum wages, based on 

assumptions that people with disabilities cannot work in typical jobs, or on 

assumptions about the unavailability of alternative work opportunities, is 

antithetical to the intent of modern federal policy and law.' 

The National Council on Disability, an independent federal agency charged with advising the 

President, Congress, and other federal agencies regarding policies that impact people with 

disabilities, has repeatedly called for the elimination of sub-minimum wages under Section 

14(c), including in its recent report, "National Disability Employment Policy, From the New 

Deal to the Real Deal: Joining the Industries of the Future."'' 

NDRN applauds you for your leadership in introducing the Raise the Wage Act which will 

result in a long overdue increase in the minimum wage, and as importantly the phase out of 

subminimum wages paid to individuals with disabilities. We see the pairing of these 

provisions in the Raise the Wage Act as an important and historic step in acknowledging the 

inherent worth of all individuals, including individuals with disabilities, in both the workplace 

and in society as a whole. NDRN stands ready to assist you in this move towards justice 

and equality. 

Should you have any questions, please do not hesitate to contact Amanda Lowe, Senior 

Public Policy Analyst at Amanda.lowe@ndrn.org or at 202-408-9514, ext. 101. 

Sincerely, 

Curt Decker 

Executive Director 

'https://www.dol.gov/odep/topics/pdf/ACICIEID_Finai_Report_9-8-16.pdf 

"https://ncd.gov/publications/2018/new-deal-real-deal 

2 
369 


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National 

Urban League 

February 4, 2019 

Honorable Bobby Scot! 

Chairman 

Education and Labor Commitlee 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Scot! and Ranking Member Fox: 

Marc H. Moria! 

President C~nd CEO 

120 Wall Street, 8'~ Floor 

New York, NY 10005 

Phone 212 558 5300 

Efax 646568 2185 

Empowering Communities. 

Changing Liv~s. 

Honorable Virginia Fox 

Ranking Member 

Education and Labor Committee 

U.S. House of Representatives 

Washington, DC 20515 

As President and CEO of the National Urban League, I am writing to express our strong 

support for immediate passage of the Raise the Wage Act of 2019 (H.R. 582). Raising the 

minimum wage to $15/hour is a key provision of the National Urban League's Main Street 

Marshall Plan, a bold and comprehensive plan for lifting urban communities out of poverty and 

stimulating their economic growth.• 

The National Urban League has been in every fight to raise the minimum wage. While the 

road from poverty to plenty is long, raising the federal minimum wage from $7.25 to $15/hour is 

an important and long overdue first step in lifting millions of families out of poverty and giving 

them a chance at a betler life. No one absolutely no one- who works full time should ever live 

in poverty. Yet. according to the Economic Policy Institute (EPI)." one in nine U.S. workers are 

paid wages that leave them in poverty, even when working full-time and year-round. Raising the 

minimum wage to $15 would have a major impact on people of color. According to research''' 

two-fifths or 40 percent of African Americans and one-third or 34 percent of Latinos would get a 

raise if the federal minimum wage were increased to $15. 

We applaud the Raise the Wage Act of 2019 because it is a comprehensive minimum 

wage bill that would positively impact workers on different levels. H.R. 582 would: 

Gradually raise the federal minimum wage from $7.25 to $15 over the next six years to 

lift millions of workers out of poverty, stimulate local economies, and restore the value 

of minimum wage; 

Index future increases in the federal minimum wage to median wage growth to 

ensure the value of minimum wage does not once again erode over time; 

Guarantee tipped workers are paid at least the full federal minimum wage by 

repealing the subminimum wage for lipped workers, which will ensure consistent. 

livable pay; 

Guarantee teen workers are paid at least the full federal minimum wage by 

repealing the rarely used subminimum wage for youth workers; and 

End subminimum wage certificates for individuals with disabilities to provide 

opportunities for individuals with disabilities to be competitively employed, taxpaying 

citizens and participate more fully in their communities. 

Putting more money in the pockets of working Americans who will reinvest in our 

economy on things like groceries and housing will boost the economy from the bottom up and 

create real and sustainable job growth. 
370 


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National 

Urban League 

Marc H. Moria! President ;ond Cf.O 

120 Wall Street, 8'" Floor 

New York, NY 10005 

Phone 212 558 5300 

Efax 646 568 2185 

Empowering Communities. 

Changing Lives. 

Page 2 

The federal minimum wage has not been increased since 2009. A decade is more than 

enough time for our nation's leaders to right this unjustifiable inequity. Let's get this done now 

during the opening days of the new I 16th Congress. It's time for Congress to do the right and 

smart- thing by working Americans. The National Urban League looks forward to working with 

you to gel the Raise the Wage Act of 2019 enacted into law this year. 

Sincerely, 

Marc H. Moria! 

President and CEO 

National Urban League 

'Main St. Marshall Plan, From Poverty to Prosperity, National Urban league, 2016, Accessed at 

http://soba.iarnempowered.com/sitesfsoba.iamempowered.com/themes/soba/flexpaper/SOBA2017-MSMP-FP3/ 

""One in nine U.S. workers are paid wages that can leave them in poverty, even when working full time 

Economic Snapshot," By David Cooper, June 15, 2018, Accessed at https://www.epLorg/publication/one-in-nine-u-s-workersare-paid-wages-that-can-leave-them-in-poverty-even-when-working-fu!l-time/ 

m"Why America Needs a $15 Minimum Wage, Fact Sheet," by Economic Policy Institute and National Employment law Project, 

January 15, 2019, p. 3, Accessed at https://www.ep! org/fi!es/pdfl127246.pdf 
371 


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Economic Policy 

Leaked documents show strong business support for raising the 

minimum wage 

why do most chambers of commerce still oppose it? 

By Lydia OeP!I!is 

Apnl4, 2016 

henever minimum wage increases are proposed on the state or federal level, business groups tend to fight 

hem tooth and nail. But actual opposition may not be as united as the groups' rhetoric might make it appear, 

ccording to internal research conducted by a leading consultant for state chambers of commerce. 

he survey of 1,ooo business executives across the country was conducted by LuntzGlobnl, the firm run by 

epublican pollster Frank Luntz, and obtained by a liberal watchdog group called the Center for Media and 

emocracy. (The slide deck is here, and the full questionnaire is hNe.) Among the most interesting findings: 

o percent of respondents said they supported raising their state's minimum wage, while only eight percent 

pposed it. 

"That's where it's undeniable that they support the increase," LuntzGlobal managing director David Merritt 

old state chamber executives in a wehinar describing the results, noting that it squares with other polling 

hey've done. "And this is universal. If you're fighting against a minimum wage increase, you're fighting an 

ph ill battle, because most Americans, even most Republicans, are okay with raising the minimum wage.'' 

erritt then provided some tips on how to defuse that support, such as suggesting other poverty-reduction 

ethods like the Earned Income Tax Credit. "Where you might find some comfort if you are opposing it in your 

tate is, 'how big of a priority is it against other priorities'/'" he said. "Most folks think there are 

igger priorities. Creating more jobs rather than raising the minimum wage is a priority that most 

veiJ.rone agrees vvith. So when you put it up against other issues, you can find other alternatives and other 

hings to focus on. But in isolation, and you ask about the minimum \vage, it's definitely a winner." 

ixty-three percent of respondents said they belong to a chamber of commerce, whether on the local, state, or 

ederallevel - suggesting that the groups' public statements might be out of step with their members' beliefs. 

he materials shed light on how some business trade associations operate, and why they've continued to 

ppose minimum wage increases even as the rest of the public thaws towards them. 

he research had been commissioned by the Council of Stale Chambers, a small, non-political umbrella 

rganization that coordinates messaging across the dozens of groups that make up its membership. The main 

urpose of the survey, says Council director Joe Crosby, had been to assess what the broader business 
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l __ ,, _ _. _. __ "' ___ ,_ -'--••• -··--- '"'"'"·-nnn _"' ___ _. <-• ·-·-·-- ,,.,._ -·-·-"~ .. ,___ TO..- "•'--'-·--•-- ,..., __ , 

ommunity thinks about state chambers, and what kind oflanguage they respond to best. (Under the terms of 

ts contract, Crosby says, LuntzGlobal was forbidden from discussing the survey publicly.) 

o why do state chambers, which are usually the largest and most powerful business organizations represented 

n state capitols, seem so far apart from the broader business community when it comes to the minimum wage? 

rosby argued that modest minimum wage hikes don't impact the majority of chamber members, and so they 

ctually tend to leave the issue to trade groups for retailers, hotels and restaurants, which employ most lowage workers. 

"In chambers, historically, it's more successful businesses that are in manufacturing and other higher wage 

ndustries," Crosby says. "They tend to see themselves as the voice of business, but there arc other groups that 

refocused on sectors that are focused on different wage mandates." 

n the more liberal areas where minimum wage increases have succeeded, that's often true: Broad-based 

usiness groups have hesitated to speak out too strongly against the popular measures, leaving those industries 

hat are most affected out in the cold. 

"Most folks think there are bigger priorities. So when you put it up against other issues, you can 

ind other alternatives and other things to focus on." 

- Republican pollster David Merritt 

n some instances, advocates have even targeted low-wage service industries first - a hotel wage ordinance 

assed in Los Angeles before the across-the-board increase, for example, and New York Gov. Andrew Cuomo 

aised wages for bst food workers before launching a campaign to do so for all workers (which New York Cityased chambers of commerce actually supported). 

ut in most states, chambers of commerce haven't been as shy in their opposition to minimum wage hikes. 

ennsylvania Chamber of Business and Industry president Gene Barr says he canvasses his members regularly 

n lots of issues, and they are against raising the state's minimum wage above where it still sits at the federal 

loor 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 LuntzGlohal presentation. "We don't get 

ushback saying that 'you really need to get behind a minimum wage increase,' because they understand that 

t's really not appropriate." 

innesota Chamber of Commerce president Doug Loon says his members' opinions don't match those of the 

untzGlobal survey- including those regarding requirements that businesses offer benefits like paid paternity 

eave, which 82 percent of respondents supported, or more paid sick leave, which 73 percent supported. The 

innesota Chamber has found that even those of its members who are offering those benefits would rather 

ave the choke ofwhctherto do so, and how. 
373 

Center on Wage and Employment Dynamics: https:// 

www.govinfo.gov/content/pkg/CPRT-115HPRT36712/pdf/CPRT115HPRT36712.pdf 

NBER Working Paper Series: https://www.govinfo.gov/content/ 

pkg/CPRT-116HPRT36710/pdf/CPRT-116HPRT36710.pdf 


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374 

[Questions submitted for the record and their responses follow:] 


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COMMITTEE ON EDUCATION 

AND LABOR U.S. HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

February 19,2019 

The Honorable Paul A. Brodeur 

State Representative 32"1 Middlesex District 

Commonwealth of Massachusetts House of Representatives 

Massachusetts State House 24 Beacon Street 

Boston, MA 02133 

Dear Representative Brodeur: 

VlRGINIAFOXX,'<OilTHCAROI.I._A 

Ra~l<·~g Mamoet 

I would like to thank you for testifying at the February 7, 2019. Committee on Education and 

Labor hearing on "Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy." 

Please lind enclosed additional questions submitted by Committee members following the 

hearing. Please provide a written response no later than Monday. March 4, 2019. for inclusion in 

the official hearing record. Your response should be sent to Eunice lkene or Udochi Unwubiko 

of the Committee stall They can be contacted at the main number 202-225-3725 should you 

have any questions. 

We appreciate your time and continued contribution to the work of the Committee. 

Sincerely) 

ROB/i,~t1[;,, SCOTT Chairman 

Enclosure 
375 


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"Raising the Minimum Wage to $15: Goodfor Working People, Goodfor 

Business, and Good/or the Economy." 

Thursday, February 7, 2019 

10:15 a.m. 

REPRESENTATIVE LORI TRAHAN 

Mr. Brodeur, those opposed to gradually raising the minimum wage to $1 5 an hour by 2024 have 

argued that, come a recession or economic down turn, that wage level will hurt our national and 

local economies. What would you say to this'~ 
376 


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Ms. Kathy Eckhouse 

Business 0\vner 

La Quercia 

400 Hakes Drive 

l\orwalk, Iowa 50211 

Dear Ms. Eckhouse: 

COMMITTEE ON EDUCATION 

AND LABOR U.S. HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

february 19.2019 

V'RGIN!AFOXX,N0'1THCAROV'</1 

Rnt>l<mgMOfi'I>M 

1 would like to thank you for testifying at the February 7, 2019, Committee on Education and 

Labor hearing on "Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy." 

Please find enclosed additional questions submitted by Committee members following the 

hearing. Please provide a written response no later than Monday, March 4, 2019, for inclusion in 

the official hearing record. Your response should be sent to Eunice lkene or Udochi Unwubiku 

of the Committee staff. They can be contacted at the main number 202-225-3725 should you 

have any questions. 

We appreciate your time and continued contribution to the work of the Committee. 

Sincerely, 

ROBER~ SCOTT 

Chairman 

Enclosure 
377 


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"Raising the Minimum Wage to $15: Goodfor Working People, Goodfor 

Business, and Goodfor the Economy. " 

Thursday, February 7, 2019 

10:15 a.m. 

REPRESENTATIVE MARCIAL. FUDGE 

Kathy Eckhouse: People have repeatedly made arguments that raising the minimum wage to $15 

is going to hurt small businesses and lead to more unemployment. Conversely, in your 

testimony you connect higher wages, lower turnover, and the growth of your business. Do you 

believe that paying your employees a livable wage not only benefits them Jinancially, but 

reduces the stressors that can decrease worker productivity? 

Kathy Eckhouse: Can you expand on your comment that '·workers in one business are the 

consumers for another'' and how the gradual increase in the minimum wage will increase 

consumer spending across all businesses? 
378 


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Mr. Michael Reich, Ph.D. 

Professor 

COMMITTEE ON EDUCATION 

AND LABOR U.S. HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

February 19, 2019 

University of California, Berkeley 

2521 Channing Way 

Berkeley, CA 94720 

Dear Dr. Reich: 

I'ERGlN'A CCXX, NQRT,; CAROl. INA 

Rnn~mr,Mnmonr 

I would like to thank you for testifying at the February 7, 2019, Committee on Education and 

Labor hearing on "Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy." 

Please find enclosed additional questions submitted by Committee members following the 

hearing. Please provide a written response no later than Monday, March 4. 2019, for inclusion in 

the official hearing record. Your response should be sent to Eunice Ikcne or Udochi Unwubiko 

of the Committee stat1~ They can be contacted at the main number 202-225-3725 should you 

have any questions. 

We appreciate your time and continued contribution to the work of the Committee. 

Sincerely, 

Enclosure 

Full Committee Hearing 
379 


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"Raising the Minimum Wage to $15: Goodfor Working People, Goodfor 

Business, and Goodfor the Economy. " 

Thursday, February 7, 2019 

10:15 a.m. 

CHAIRMAN BOBBY SCOTT 

Professor Reich, in 2014, the Congressional Budget Office concluded that a proposal to increase 

the federal minimum wage to $10.10 an hour would reduce total employment by about 500,000 

workers. Has there been an evolution in research, research methods, or economic conditions that 

could now better inform such projections') What has this research shown on the impacts of 

raising the minimum wage on employment? 

Professor Reich, what are the impacts of raising minimum wages on aggregate demand, 

including consumer spending, in the U.S. economy? 

Professor Reich, why is it that the minimum wage increases proposed in H.R. 582 would have a 

stronger stimulus effect in low-\vage states or states with a $7.25 an hour minimum wage? 

Professor Reich, what impact would a regionalized federal minimum wage have on low-wage 

areas? Would we see continued or widening gaps between these low-wage areas and the national 

economy'> 

REPRESENTATIVE JAHANA HAYES 

Professor Reich, what are the costs associated with employee turnover? Why does a higher 

minimum wage decrease employee turnover? 

REPRESENTATIVE SUSAN DAVIS 

Professor Reich, do we have any historical examples of substantial increases to the minimum 

wage? What do we know about the impacts of those increases? How do those increases compare 

to those under H.R. 582? 

REPRESENTATIVE MARCIAL. FUDGE 

Professor Reich: In your testimony you say that minimum wage increases are absorbed through 

higher prices. What do these price increases look like? 

If we're gradually increasing the minimum wage fl·om $7.25 to $15, docs that mean the price of 

a hamburger or other widely purchased item is going to double? 
380 


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COMMITTEE ON EDUCATION 

AND LABOR U.S, HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

February 19,2019 

The Honorable William E. Spriggs 

Professor, Department of Economics and Chief Economist 

Howard University and AFL-CIO 

2400 Sixth Street, NW 

Washington, DC 20059 

Dear Dr. Spriggs: 

VIHCIN'AIOXX.NORTHC>\ROVN!I, 

Rank•rv;M•ml><>l 

I would like to thank you for testifying at the February 7, 2019, Committee on Education and 

Labor hearing on "Gradually Raising the Minimum Wage to $15: Good for Workers, Good for 

Businesses, and Good for the Economy." 

Please lind enclosed additional questions submitted by Committee members following the 

hearing. Please provide a written response no later than Monday, March 4, 2019, for inclusion in 

the official hearing record. Your response should be sent to Eunice Ikenc or Udochi llnwubiko 

of the Committee staff They can be contacted at the main number 202-225-3725 should you 

have any questions. 

We appreciate your time and continued contribution to the work of the Committee. 

Sincerely, 

Enclosure 

Full Committee Hearing 
381 


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"Raising the Minimum Wage to $15: Good for Working People, Goodfor 

Business, and Good for the Economy." 

Thursday, February 7, 2019 

!0:15a.m. 

CHAIRMAN BOBBY SCOTT 

Dr. Spriggs, what are the lasting impacts to wage and wealth levels to regions of the country 

from the minimum wage coverage exclusions in the Fair Labor Standards Act in 1938? Would a 

regional minimum wage in 2019 lock in income and wealth disparities that were borne of the 

racially-motivated exclusions to the FLSA? Or have those disparities dissipated since the 1966 

FLSA amendments expanded coverage to agricultural and service workers? 

REPRESENTATIVE MARCIA L. FUDGE 

Dr. Spriggs: As we discuss raising the minimum wage for the f1rst time in over a decade it is 

important to remind ourselves that the original minimum wage left out women and African 

Americans, and wage inequality persists today. Can you further explain your statement that "a 

regional minimum wage would undoubtedly repeat a lower level of protection for African 

American workers?'' 

Arc you suggesting a regional minimum wage could help reinforce the discrimination embedded 

in the !938 version of the FLSJ\'? 
382 


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COMMITTEE ON EDUCATION 

AND LABOR 

Mr. Ben Zipperer, Ph.D. 

Economist 

Economic Policy Institute 

1225 Eye St. NW, Suite 600 

Washington, DC 20005 

Dear Dr. Zipperer: 

U.S. HOUSE OF REPRESENTATIVES 

2176 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6100 

February 19,2019 

VIRGINIAfOl<X NCftlHCAI<O~lliA 

Ronlo~gM,.mtl>t 

I would like to thank you for testifying at the February 7, 2019, Committee on Education and 

Labor hearing on ''Gradually Raising the Minimum Wage to $15: Good ICJr Workers, Good for 

Businesses, and Good for the Economy." 

Please find enclosed additional questions submitted by Committee members following the 

hearing. Please provide a written response no later than Monday, March 4, 2019, for inclusion in 

the otlicial hearing record. Your response should be sent to Eunice Ikcne or Udochi Unwubiko 

of the Committee staff. They can be contacted at the main number 202-225-3725 should you 

have any questions. 

We appreciate your time and continued contribution to the work of the Committee. 

Sincerely. 

l~BBY"SCOTT Chairman 

Enclosure 

Full Committee Hearing 
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"Raising the Minimum Wage to $15: Good for Working People, Good for 

Business, and Good for the Economy." 

Thursday, February 7, 2019 

10:15 a.m. 

CHAIRMAN BOBBY SCOTT 

Dr. Zipperer, if, under current law, employers who pay their tipped workers a subminimum wage 

must still ensure that these workers make the full federal minimum wage, what is the problem of 

having a subminimum wage for tipped workers? 

REPRESENTATIVE SUSIE LEE 

Dr. Zipperer, in your testimony you state that "workers in every region of the country will soon 

need $15 per hour to maintain a modest but adequate standard of living.'' Can you expand on 

this, why is that the case? 

REPRESENTATIVE MARCIAL FUDGE 

Dr. Zipperer: Prior to the passage of the FLSA, President Roosevelt challenged Congress to pass 

a law to establish fair labor standards to ensure "working men and women a fair day's pay for a 

fair day's work." According to the MIT Living Wage Calculator, a family of 3 ( l adult, 2 

children) in Cuyahoga County, OH needs to earn $56,119 per year before taxes, or a living wage 

of $26.98 per hour to attain an adequate standard of living without providing for retirement, 

buying a home, or even emergency funds. 

What do we know about the workers currently being paid the federal minimum wage? Are they 

receiving 'a fair day's pay for a fair day's work'? 

Dr. Zipperer; Working Americans must make difficult decisions on how to spend their money, 

be it on housing, food, education, child care, health care, transportation and other necessities, to 

say nothing of purchasing something a bit extra. 

Do you believe raising the minimum wage would further stimulate the economy? How so? 
384 

[Responses to questions submitted for the record follow:] 


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PAUL A. BRODEUR 

STATe REPRESENTATIVE 

32NO MIDDLESEX [)!STRICT 

HOUSt; OF A2.PPI~SENTAT!VES 

l:>"!AI!::. HOUS!;..I::iOSlON, MA02133-1064 

Statement of the 

Honorable Paul A. Brodeur, Esq. 

State Representative, 32m! Middlesex District 

Commonwealth of Massachusetts I louse of Representatives 

Testimony Before the U.S. House of Representatives 

Committee on Education and Labor 

Response to Question from Representative Lori Trahan 

February 28,2019 

.Joint Committee on Labor ~nd 

Workforoo Dovcloprn~t 

STATf'! HOU.!'<F, ROOM 47? 

OffiCC: (617) 722~2013 

Pau!.Brodour@MAho~JGo.gov 

Mr. Brodeur, those opposed to gradually raising the minimum wage to Sl5 an hour by 

2024 have argued that, come a recession or economic down turn, that wage level will hurt 

our national and local economies. What would you say to this? 

Gradual increases in the minimum wage have not historically been identified as singularly 

causing previous recessions and we know !rom our experience in Massachusetts that these 

increases are effective in curbing the harmful effect economic downtums have on working 

families. 

During the last recession. Massachusetts increased its minimum wage from $6.75 an hour to $8. 

While the Commonwealth's unemployment rate spiked during the 2008 recession at a rate 

similar to the trend in national unemployment, Massachusetts recovered at a faster pace. In 

January of2010, the Commonwealth's unemployment rate peaked at 8.8%, while the national 

unemployment rate was 9.8%. Over the next two and a half years, the Massachusetts 

unemployment rate dropped by 25% while the national rate dropped by 16.33%. 

These statistics are likely to be indicative of a number of scenarios and patterns each of which is 

shaped by our minimum wage policy. A recession's downward pressure on employment and 

wages forces many workers to find a new job, find a supplemental job, or to work the same job 

for lower pay. When unemployed individuals who formerly earned more than the minimum arc 

forced to settle tor an available minimum wage position, the higher wage will help offset some 

of the negative consequences of underemployment If a non-primary earner has to get a job to 
385 


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supplement their family's income, their wages will be supported by a high minimum wage that 

can help cover costs and prevent a family from sliding into bankruptcy. 

A higher minimum wage during a recession keeps money flowing through the economy when it 

is needed most. During an economic downturn, the retail and dining sectors are normally hit hard 

as consumers limit their purchases to necessities. A higher minimum wage puts more money in 

the pockets of low-income consumers, and during a recession that can limit the decline in 

demand for goods. These policies that support families during a downturn can also keep small 

businesses afloat by improving the overall health and resiliency of the local economy. 
386 

[Ms. Eckhouse response to questions submitted for the record follow:] 


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LA QUERCIA== American Made, American Inspired Cured Meats@ 

March 1, 2019 

Follow Up Questions for the February 7, 2019, Committee on Education and Labor hearing on "Raising 

the Minimum Wage to $15: Good for Working People, Good for Business, and Good for the Economy." 

March 1, 2019 

Thank you for your questions, Representative Fudge. 

1. People have repeatedly made arguments that raising the minimum wage to $15 is going to 

hurt small businesses and lead to more unemployment. Conversely, in your testimony you 

connect higher wages, lower turnover, and the growth of your business. Do you believe that 

paying your employees a livable wage not only benefits them financially, but reduces the 

stressors that can decrease worker productivity? 

It is easier to retain workers when they are paid enough money to afford secure lodging, a reliable mode 

of transportation, and sufficient food and clothing. A higher base wage can reduce turnover, since 

employees are not constantly searching for a small wage increase to survive. Turnover is costly in terms 

of time and efficiency, so keeping employees saves us money in both the short and the long term. We 

don't need, for example, to advertise positions, screen applicants, and engage in months of training. 

Furthermore, workers who earn enough money to live with some degree of comfort and security can 

focus on their jobs when at work, since they aren't constantly worrying about unaffordable but essential 

expenditures like car repairs, rent, and groceries, thus improving employee morale and efficiency. And 

long term employees are knowledgeable about their work and are therefore able to contribute in creative 

and substantive ways to the work process. 

2. Can you expand on your comment that "workers in one business are the consumers for 

another" and how the gradual increase in the minimum wage will increase consumer 

spending across all businesses? 

We are meat processors. We produce food, so workers in other businesses are literally our consumers! If 

people can't buy what we make, we can't sell it and then we'll go out of business. That may sound a little 

glib, but what's true for us as food producers is also true for other businesses, whether they be grocery 

stores, gas stations, clothing stores, or restaurants. Businesses depend on a customer base that has 

dollars to spend. Lower wage workers will actually spend their increased earnings since their 

expenditures are generally constrained. An increase in the minimum wage will enable them to buy goods 

and services that they could not previously afford. 

I hope these answers are helpful. I really appreciate your interest. 

Best wishes 

Kathy Eckhouse 

la Ouercia Cured Meats 400 Hakes Dr. Norwalk. lA 50211 (515) 981-1625 www.laquercia.us 
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"Raising the Minimum Wage to $15: Goodfor Working People, Goodfor 

Business, and Good for the Economy. " 

Thursday, February 7. 2019 

10:15 a.m. 

Responses to the questions for the record appear in italics below-Michael Reich 

CHAIRMAN BOBBY SCOTT 

Professor Reich, in 2014, the Congressional Budget Office concluded that a proposal to 

increase the federal minimum wage to SIO.lO an hour would reduce total employment by 

about 500.000 workers. Has there been an evolution in rescat·ch, research methods, or 

economic conditions that could now better inform such projections? What has this research 

shown on the impacts of raising the minimum wage on employment'! 

Economic theorizing is insufficient by itself to identify the likely net employment effects. For this ve~v 

reason, economists have spent considerable effort on empirical studies on this question. We turn next to 

these studies. 

The effect i>{ minimum wages on employment constitutes one of the most studied questions in all of 

empirical economics. Great strides have been made, partly through improved statistical methods and 

part~v from greater access to administrative microdata. As a result, the effects of minimum wages are 

clearer than they were in previous decades. 1 

Earlier empirical studiesfi>cused on two groups of workers with very low wage levels: teens and 

restaurant workers. This strategy made sense-- employment effects are likely to be smaller to nonexistent 

for groups that experience smaller or no increases in their pay as a result of minimum wage increases. 

The early teen studies often fi>und rhat a 10 percent increase in the minimum wage reduced teen 

employment by one to three percent ~11/eumark and Wascher 2008). 

However, teen employmenl has beenfallingfor at least three decades, and unevenly so in different states. 

The challenge for minimum wage studies involves isolating the effects of the policy from the confounding 

~fleets ofdeclines in teen employment that are attributable ro orher causes. For example, states that 

raised their minimum wages were more like(v to emphasize educational policies that result in teens 

continuing rheir schooling longer, which reduced the number of available teen workers. Carejid studies 

that credibly take such confoundingfi>rces info account find that a ten percent minimum wage increase 

reduces teen employment by a much smaller amount, between 0.5 percent and zero (Allegre I/o, Dube and 

Reich 2011; Allegrello, Duhe, Reich and Zipperer 2017). 

Economists have also attempted to estimate the ejf'ects of minimum wages on low-paid adult workers. One 

such group of studies looks at restaurant workers, many(){ whom are also exposed to minimum wage 

increases. Remarkably, given previous controversies among minimum wage scholars, studies of restaurant 

workers have arrived at a consensus: A ten percent increase in the minimum wage affects restaurant 

employment somewhere between - 0. 5 percent and zero (Dube, Lester and Reich 201 0; Allegretto eta/. 

20 17; Cengiz, Dube, Lindner and Zipperer 20 19). 

1 Nonetheless, the literature is not unanimous. Consider,fi>r example, the exchange between Neumark, 

Salas and Wascher 2014 and Allegretto. Dube, Reich and Zipperer 2017. 
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Although recent studies have not been unanimous (a rare event in economics). the most credible /een and 

restaurant worker studies have visibly shifted !he views of the economics profession. In 2013, a panel of 41 

prominent economisls organi~ed by the Universily of Chicago's Boo/h School of Business was asked about 

the desirability of raising the minimum wage to $9 an hour. as proposed by President Obama. 2 Only onethird of the panel agreed thai the minimum wage hike "would make it noticeably harder for /ow-skilled 

workers to find employment." The panel supported !he Obama proposal by a 3 to I margin. In 20I5. the 

panel was asked the same question. but for a SI5 an hour federal minimum wage. Only 26 percent of the 

panel agreed with the proposition about job loss. 

Empirical studies of all/ow-wage jobs and workers The teen and restaurant worker studies together 

accountfor about 90 percent of all minimum wage studies. However, these studies leave an incomplete 

picture. as these two groups of workers together account for only about half of all the workers exposed to 

minimum wages. In the past few years, two advances have allowed empirical economists to overcome this 

limitation. 

The .first advance is methodological-the development of a "bunching" estimator that allows examination 

oft he net change in the number of all jobs that are just below and just above the minimum wage (Cengiz, 

Dube. Lindner and Zipperer 2019). Using this method. Cengiz eta/. find thatfederal and stale minimum 

wage changes over the period I992 to 2016 did not reduce employment, either overall or among specific 

groups of less-educated workers. 

Cengiz eta!. are also able to assess methodological issues in two oft-cited studies of all workers that do 

obtain negative employment effects: Clemens and Wither 20I4. and Meer and West20I6. These issues 

include whether the highest minimum wage policies have more negative employment effects than more 

modest increases. whether previous studies adequately control for changes in business cycle conditions. 

and whelher previous studies spuriouslv find negative employment efji!Cts where they should not, such as 

among professional and other highly-paid workers. Cengiz eta!. find thai both the Clemens and Wither 

and the Meer and i'Vest studies do not pass these basic methodological checks. 

Cengiz eta!. dofind negative employment effects among one group of low-wage jobs-those that are 

located in tradeable industries. As !mentioned above, tradeables ore goods and services that can be 

produced in a differentlocalionsft·om where they are consumed Tradeables account for 13.4 percent of 

the jobs in !heir sample. The employment effect is small-a ten percent increase in the minimum wage 

generates a 0.5 percent loss in such jobs-and it is balanced by an increase oft he same magnitude in all 

other jobs. 

The Cengiz eta!. paper has already proven very influential. David Autor ofMITand Co-Director of Labor 

S!Udies at the National Bureau of Economic Research, has called this study the most important minimum 

wage paper since Card and Krueger's in the 1990s3 

The second and also very recent important advance in the minimum wage literature involves the new 

availabilily, at/east for Census Bureau researchers. of data obtained from income lax filings that are then 

linked to Curren/ Population Surveys. These data permit much greater statistical precision because the 

number of tax filings is so much larger than the sample size of the CPS. Studies by Census Bureau 

economists using this newly-available data do not find negative employment ~fleets. even five and ten 

years qjier a minimum wage increase (Rinz and Voorheis 2018: Toddy and Zipperer 20I8). 

2 http://www. igmchicago. org!surveys/minimum-wage 3 Another important study --Cengiz (2018) --uses Machine Learning methods to identify about 75 percent 

of all minimum wage workers. This innovative approach alsofinds no effect of minimum wages on 

employment. 
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The highest minimum wage levels in the US. today are found at the city level. San Francisco was the first 

city to implement a citywide minimum wages-at $8.50 in 2004 and current~y at $15. Dube, Naidu and 

Reich (2007) studied the San Francisco policy effects through a survey of affected and non-affected 

restaurants in San Francisco and the East Bay. They fimnd no employment decreases. Dube, Naidu and 

Reich (20 14) updated the San Francisco study, also with similar results. 

A new wave of ci(vwide minimum wage policies began to be enacted in 2014, with Los Angeles, San 

Francisco and Seattle leading the way among large cities, and Oakland, San .Jose and many other cities 

following shortly thereqfter. By the end of2016, minimum wage levels in Oakland, San Francisco, Seattle 

and San .Jose had reached $13. These levels are higher in 2019 dollars /han !he minimum wage levels in 

HR 582. 

Two sludies of the Seattle minimum wage appeared in June of 2017. In a food services industry study, 

Reich, Allegre I/o and Godoey (2017) found that minimum wages raised pa}J and did not adversely affect 

employment. To isolate the causal4fecl of/he policy, Reich eta/. compared Sea/lie's experience to a 

"synthetic" control group drawn ji-om urban metro areas across the US. In contrast, Jardim eta!. (20 17) 

found that reduced hours and employment left Seattle workers worse off ajier the minimum wage 

increasedfrom $12 to $13. .Jardim eta/. also drew upon a synthetic control, but theirs was drawn 

exc/usive~v ji-om other urban areas in Washington State. However, Seattle experienced an economic 

boom---related to the expansion of Amazon-,-atthe same time that the minimum wage was implemented. 

Other areas of Washington did not experience a boom in those years, undermining the validity of using 

those areas as a control woup. 

Jardim eta/. were thus criticizedfor not having an adequate controlfor business cycle conditions (Schmitt 

and Zipperer 2017). The boom-related wage growth in Sea/1/e was well above wage growth in the rest of 

Washington. Thus .Jardim eta/. 's data contained fewer low-wage jobs, but because of the boom, not 

because oft he minimum wage policy. Jardim et al. revised their study in 2018, with estimates that were 

about half the size of their previous numbers, but they did not expand their control group, continuing to 

leave open the credibility of their finding. A second study by .Jardim et al. (2018), using longitudinal data 

and the same control groups, found positive effects overall, but again did not address the issue of how to 

control for the economic boom in Seattle that did not occur in the rest of the state.' 

Fina/Zv. Allegretto eta/. 2018 and Nadler eta!. (2019) expanded their previous work to examine high 

minimum wages in the six large cities that were early adopters: Chicago, District of Columbia, Oakland, 

San Francisco, San Jose and Seattle. Using a variety ofstate-o,f-the-art statislical methods and checks, 

and again with control woupsfrom around the entire US., they found that pay increased in food services, 

that employment did not change, and that there was no evidence that employers switched their hiring to 

more-educated workers. 5 

To summarize, our most credible evidence comes from studies that carefully check that their treatment and 

control woups exhibited similar trend.1· prior to the minimum wage policy treatment, that their effects on 

pay line up with the size of the mandated increases, and that the methods do not find results where they 

should not-such as among the co/lege-educated or in high-paying industries. The studies that meet these 

' The Jardim et al. data also did not include most o.f the multi-location employers in the state, also limiting 

the validity of their study. 5 Nadler eta/. (20I9) further examined a claim made by Jardim eta!. 2018--thatusing industry-based 

averagesfrom Quarterly Census of Employment and Wages data attenuated employment effects that 

would be detected in individual-based data. Their evidence refutes the attenuation argument. 
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criteria do unanimously find no negative employment effects. 6 

The Cengiz eta/. paper constitutes our most d~finitive study ofpast minimum wage increases. As I 

discussed above, the increases they study are not so different from those that would occur with a federal 

S/5 minimum wage by 2024. Allegretto eta/. (2018) and Nadler eta/. (2019), study minimum wages that 

are already as high in real dollars or exceed Sl5 in 2024. They also find that they do not cause adverse 

employment eflixts. The weight of the evidence in car~ful empirical minimum wage studies increasingly 

has tilted toward finding small to zero negative employment effects of citywide, state and federal minimum 

wages. This conclusion has been reinforced by the results in the newer studies that used improved methods 

and data. These newer studies supersede the older ones. 

Professor Reich, what are the impacts of raising minimum wages on aggregate 

demand, including consumer spending, in the U.S. economy? 

Cooper, Luengo-Prada and Parker (2017) find that past minimum wage increases had a modest positive 

stimulus effect on local economies. In particular, theyfind that/ow-wage workers purchase more fiJod 

away ji-om home and more cars. in other words, /ow-wage workers spend their increased incomes locally, 

stimulating the local economy modestly. 

Professor Reich, why is it that the minimum wage increases proposed in H.R. 582 would 

have a stronger stimulus effect in low-wage states or states with a $7.25 an hour minimum 

wage? 

Since wage increases are greater in /ow-wage states, the stimulus is also greater there. Reich eta/. 2019 

quantify how much the stimulus effect increases with higher minimum wage increases, taking into account 

how consumption propensities vary by household income. They find that stimulus effects will be stronger 

in the low-wage states. 

Professor Reich, what impact would a regionalized federal minimum wage have on lowwage areas'! Would we see contiuued or widening gaps between these low-wage areas and 

the national economy? 

Some observers suggest that minimum wage policy should not maintain a single federal standard. Such 

recommendations usually reflect concerns from employers and policy makers in lower-wage areas. They 

can also reflect a concern aboutfairness among workers: Why should workers in low living cost areas 

have a higher rea/minimum wage than workers in high living cost areas? We take up this issue briefly 

here. 

There is surprisingZv little recent research on the advantages and disadvantages of regional wage 

standard.>. Congress discussed including a Southern differential in the debates leading up to the Fair 

Labor Standards Act of 1938. In I938, wage and living cost differentials between the South and the nonSouth were much greater than they are today. But in the end, Congress decided to establish a single 

national minimum wage floor. 

By establishing a single national floor at a time of other major economic tramiformations. Congress set in 

motion a series of substantial positive economic changes in the South (Wright 1997). In particular, the 

isolated economies of the rural South became more linked to the national economy. The South prospered 

in succeeding decades, and the southern regional wage differential became much smaller. A similar 

development occurred as a result of the civil rights revolution and the associated extension of Fair Labor 

Standard Act coverage to more of the South's industries (Wright 2005, 2015; Derenencourt and 

Montia/oux 2018). 

6 Appendix A discusses these issues in more detail 
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Congress did authorize states to set higherfloors. States began to do so in the 1980s and with increasing 

.frequency, especially as Congressional inaction has allowed the real value of the minimum wage to 

decline over time. The patchwork of state minimum wages today allows states to adjust their minimum 

wages to reflect living cost differences among the states. 

The key disadvantage of regionalizing the federal floor concerns the potential dynamic effects that high 

minimum wages can exert on low-wage areas. Minimum wage policy cannot by itself transform a 

stagnating economic region into a dynamic one. But it can contribute to such a tran~formation. 

REPRESENTATIVE .JAHANA HAYES 

Professor Reich, what are the costs associated with employee turnover'! \Vhy docs a 

higher minimum wage decrease employee turnover'? 

Employee turnover generates vacancy, recruitment, retention and training costs for employers. In general, 

low-wage industries experience the highest employee turnover rates, often in excess of 100 percent per 

year. Modern economic models oft he labor market recognize that employers can choose between two 

equally profitable strategies: a /ow-wage/high-turnover human resource management model or a highwage/low-turnover model. In the low-wage industries, many employers, but not all, opt for the first model. 

Higher minimum wages can then move these employers closer to the high-wage model. Employers then 

save on vacancy, recruitment and retention and costs and they have greater incentives to provide training 

to their workers. These adjustment mechanisms reduce negative effects on their demand for workers 

(Manning 2003). Dube, Lester and Reich (2016)find that minimum wage increases do indeed reduce 

turnover. 

REPRESENTATIVE SUSAN DAVIS 

Professor Reich, do we have any historical examples of substantial increases to the 

minimum wage? What do we know about the impacts of those increases? How do those 

increases compare to those under H.R 582'! 

777efederal minimum ·wage increased hy over 75 percent in 1950, Increases t~( over 50 percent 

occurred in.fhrmer~v uncovered industries with FLS'A extension:•; and minimum 1.vage increases 

in 1965 and soon after. 

REPRESENTATIVE MARCIA L. FUDGE 

Professor Reich: In your testimony you say that minimum wage increases arc absorbed 

through higher prices. What do these price increases look like'? 

Price adjustments provide a principal adjustment mechanism for employers in low-wage industries to pass 

on their increased labor costs to consumers. The research studies show that a ten percent increase in the 

minimum wage results in a price increase <!f about 0.5 percent. However, such price increases appear only 

forfood consumed away fi·om home. Such an increase does not deter restaurant customers. Smaller, price 

increases are alw detectable jiJY grocery s10res (Leung 201 8; Renkin, Montialoux and Siegenthaler 20 19), 

but not more generally. The effect on inflation is therefore extremely small. 

If we're gradually increasing the minimum wage from $7.25 to $15, does that mean the 
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price of a hamburger or other widely purchased item is going to double'? 

The price of a hamburger might increase by about 2 percent per year over six years. Food prices 

increase about 2 percent per year, on average. 
393 

[Mr. Spriggs response to questions submitted for the record follow:] 


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Compromises reached in passing the National Labor Relations Act that excluded agricultural, 

domestic and certain service industries were extended to protections in the Fair Labor Standards 

Act (FLSA). The result was to lower the share of workers who were organized in the same states 

where high shares of African American workers lived. This lack of unions weakened an 

organized voice for workers in those regions. In those states that had higher union density, state 

minimum wage laws were enacted to provide some protection for workers who were excluded 

from the FLSA. Without the presence of an organized voice for workers, when the 1966 Fair 

Labor Standards Act amendments extended protections most of the Southern states where the 

heavier concentration of newly protected workers lived were also states that did not have state 

minimum wages protecting those workers. 

The proposed regional minimum wage approach targets specific metropolitan areas for having 

the lowest minimum wage and the slowest path to reaching a federal minimum wage of $15 an 

hour. Those metropolitan areas arc in ''Right-to-Work'' states, again mirroring the same low 

union density areas that had been hampered by lower wages until the 1966 FLSA amendments. 

Thus, these areas are not really low-cost areas, but low-wage areas. As the analysis of the 

Economic Policy Institute's Family Budget Calculator indicates, $15 an hour is needed in every 

county in the United States to maintain a modest living. 1 A family budget analysis is the correct 

way to understand the needs of low-income households, since they cannot afford to live on the 

average family budget implicit in calculating metropolitan cost-of-living indices. These are low 

wage areas, because of differences in labor protections. These targeted areas are where workers 

have the least bargaining power and the least levels oflabor protections and the weakest state 

labor inspectorates to enforce labor laws. They are also areas least likely to have extended 

1Family Budget, https:/!www.epi.org/resources/budget/ 
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Medicaid coverage or access to public transportation to improve worker mobility in finding and 

maintaining jobs. 

Economists Derencourt and Montialoux have examined the 1966 FLSA amendments that 

expanded FLSA coverage. The importance of the work ofDerencourt and Montialoux is their 

finding that the disparate impact of excluding agricultural and domestic workers in the 1939 

FLSA was to create a racial wage gap. Derencourt and Montialoux show that 20 percent of the 

wage gap between Black and white workers in the 1960s was from that racially disparate 

exclusion. More importantly, in understanding the dynamics of the racial wage gap, most of the 

20 percent wage gap was not between the wages of workers who had been in the protected 

industries compared to those who were not protected, but from within the industries that had no 

protection.2 In other words, when Black and white workers have equal protections under the 

law, the resulting wage gaps are smaller. Today, this is also true where workers are under the 

protection of a collective bargaining agreement, racial and gender wage gaps are smaller than 

outside collective bargaining agreements. 

Consequently, it is not surprising that taking the regional minimum wage approach and failing to 

protect the wages of workers in low-wage areas would have a disparate impact on workers who 

arc most vulnerable without labor law protection. Women of color are America's lowest wage 

workers. Women of color make up 18 percent of the American workforce. But, among the 

workers who would be designated to receive lower labor standards under the regional wage 

approach and so would be kept below the boost to $15 an hour that all other Americans would 

receive, women of color make up 36 percent of the workforce. Clearly, that is a racially and 

2 Ell ora Derencourt and Claire Montialoux, "Minimum Wages and Racial inequality" (November 2018) 

http://clairemontialoux.com/files/montialoux jmp 2018.pdf 
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gender disparate impact. The research based on the 1966 FLSA amendments shows those 

disparate impacts will have long lived consequences on race and gender wage inequality. Should 

Congress take such a racial and gender biased approach, Congress will be responsible for 

exacerbating one of the largest and cruelest wage inequalities. The regional minimum wage 

approach would be inequality by design. 
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Questions for the record 

Mr. Ben Zipperer, Ph.D. 

March 4, 2019 

Committee on Education and Labor hearing, "Gradually Raising the Minimum Wage to $15: 

Good for Workers, Good for Businesses, and Good for the Economy" 

Question from Chairman Bobby Scott: 

Although employers must ensure that tipped workers receive at least the full minimum wage in 

combined wages and tips, the reality is that many employers ignore this requirement. Sylvia 

Allegretto and David Cooper observed that in a Department of Labor investigation of roughly 

9,000 full-service restaurants, 84 percent of establishments had some type of wage and hour 

violation, and there were more than 1,100 tip credit violations. (See Allegretto, Sylvia and David 

Cooper, Twenty-Three Years and Still Waiting for Change: Why It's Time to Give Tipped 

Workers the Regular Minimum Wfillf!., Economic Policy Institute, July 2014.) 

Question from Representative Susie Lee: 

The Family Budget Calculator of the Economic Policy Institute calculates the income a family in 

a given area needs in order to pay for housing, food, transportation, child care, health care, 

taxes, and other necessities. We call this a "modest yet adequate standard of living" because 

while it accounts for expenses associated with important necessities, it does not include 

anything else, including saving for retirement, buying a home, or even allowances for 

emergencies. 

Two adults working 40 hours a week at $15 per hour will earn $62,400 per year. If these two 

adults have two children to care for, according to the Family Budget Calculator there will be no 

county in the United States in 2024 where that family can live and meet their family budget with 

wage income alone. (These estimates use Congressional Budget Office estimates of projected 

changes in the cost of living.) 

Question 1 from Representative Marcia L. Fudge: 

We are suppressing the wages of low-wage workers when we fail to raise the minimum wage. 

As I explained in my testimony, minimum wage workers today are paid 29 percent less than 

their counterparts five decades ago, after adjusting for changes in the cost of living. Moreover, 

worker's productivity has doubled over the last 50 years. The minimum wage fell in value since 

then, but had it been raised to keep pace with workers' increasing productivity, this year the 

minimum wage would be more than $20 per hour. 
397 

[Whereupon, at 5:36 p.m., the committee was adjourned.] 

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