When Douglas J. Holtz-Eakin, an American economist, former Director of the Congressional Budget Office and former chief economic policy adviser to U.S. Senator John McCain’s 2008 presidential campaign decided to debate a minimum wage increase with Senator Bernie Sanders (I-VT), we think he got a little more than he bargained for.
During the interview Holtz-Eakin commented, “You and I both spend time in D.C. We know that it could stand a great deal downtown. How does the minimum wage proposal that drove Wal-Mart out of building six stores took low income D.C. residents out of low prices and out of those jobs help develop the center city?”
Sanders quickly shot back,
“First of all, I don’t know what Wal-Mart will end up doing, but we cannot continue to be blackmailed just because they are the wealthiest family in this country. You tell me that you think it’s right that their workers, their workers are supported by taxpayers in this country in terms of Medicaid, food stamps — paying a living wage. You think that’s right?
Holtz-Eakin returned fire with another question, asking, “Are you proposing that we take people off the social state camp because they’re associated with a company you don’t like? Is that really your proposal?”
“I’m proposing that the wealthiest family in this country, the Walton family, that owns Wal-Mart, not be subsidized by the middle class in this country. They’ve got to start paying their workers a living wage, not starvation wages, provide health care to their workers, not allow them — not enable them to go on Medicaid. That’s what I’m proposing.”
Watch the exchange here:
BLITZER: A lot of Democrats think the president’s call for a higher minimum wage is long overdue. It stood at the $5.15 at the end of the Clinton administration. Then between 2007 and 2009, it was raised in stages, until it hit $7.25 an hour. It hasn’t budged now in four years.
President Obama would like to raise it to $9 an hour. Some groups think it should be even higher and they’re taking their demands to the streets right now.
Let’s bring in Brian Todd.
He’s got the latest on what’s going on — Brian.
BRIAN TODD, CNN CORRESPONDENT: Wolf, part of this wave of protest is a fast food walkout. It’s already occurred in New York, St. Louis and other places. More of them are planned for tomorrow.
With Congress unlikely to address the minimum wage any time soon, these protesters hope their actions will boost the story line and their flat-lining paychecks.
TODD (voice-over): They walked off the job in New York. In St. Louis, they told McDonald’s what it could do with its fare.
TODD: Fast food employees and their supporters say their wages, averaging less than $9.00 an hour, are too small to live on.
FRANKLIN LAPAZ, MCDONALD’S EMPLOYEE EARNING $7.25: Transportation, high taxes, food. Everything is just so like expensive here, especially rent.
TODD: For many, that pay is below the poverty line, supporters say, and an industry that earns billions can afford to pay workers better. These protesters are part of a nationwide movement to raise the federal minimum wage from $7.25 an hour to between $9 and just over $10 an hour.
Advocates say it would provide a much broader lift to the economy.
JACK TEMPLE, NATIONAL EMPLOYMENT LAW PROJECT: If we were to raise the federal minimum wage to $10.10 per hour, that would generate about $32 billion in increased consumer spending. You put money in the pockets of workers, they’re going to spend it, often at the very establishments that they’re working at. It’s going to fuel a positive cycle.
TODD: Protests this week were planned in seven cities, calling for wages as high as $15 an hour for fast food workers.
(on camera): It could also drive up prices. This Big Mac cost me $3.99 before taxes. But if minimum wage went up to $15 an hour at a place like this, according to one study, the cost of a Big Mac would go up about $0.68 and a Big Mac Meal could jump almost $1.
(voice-over): The other risk, critics say, employers will hire fewer workers or won’t expand into cities that need them. In DC, a proposal requiring higher wages at big box real retailers has Walmart saying it will cancel construction on three of its six new stores.
One conservative analyst says that would mean less construction at sites like this one and fewer jobs.
MICHAEL SALTSMAN, EMPLOYMENT POLICIES INSTITUTE: You lose out on those positions for those entry level employees, those teens who are filling those jobs, and maybe actually hurt those people you were intending to help who are living maybe in poverty.
TODD: And Michael Saltsman warns more employers could turn to automation instead of hiring.
(END VIDEO TAPE)
TODD: And he says they could do what the Chile’s Restaurant chain is doing and cut out an entire segment of the workforce. In recent years, Chili’s started to eliminate the bus boy position, instead, having servers do the bussing. Last year, a top official at Chili’s parent company said that saved $25 million in labor costs — Wolf. BLITZER: Brian Todd reporting.
Thanks very much.
So will raising the minimum wage help workers?
Will it kill jobs?
Independent Senator Bernie Sanders of Vermont would like to see the wage increase.
Economist and former Congressional Budget Office director, Douglas Holtz-Eakin, doesn’t think it’s a good idea.
Let’s have a good debate right now.
And, Doug, let me begin with you.
It’s been four years, $7.25. Inflation has gone up. Cost of living has gone up.
What’s wrong with raising the minimum wage?
DOUGLAS HOLTZ-EAKIN, FORMER DIRECTOR, CONGRESSIONAL BUDGET OFFICE: It sounds great until you ask the question, where does the money come from?
And when an employer has to pay that higher minimum wage and doesn’t hire somebody as a result, you basically have said let’s transfer money from the unemployed to the employed. I can’t favor that.
BLITZER: What about you, Senator?
I know you disagree totally.
SEN. BERNIE SANDERS (I), VERMONT: You know who the major welfare recipient in the United States of America is, Wolf?
BLITZER: All right —
SANDERS: It’s Walmart. Walmart Corporation, which is owned by the Walton family, which is the wealthiest family in America, worth some $100 billion, they are paying their workers $7.25 an hour, $8.00 an hour, $9.00 an hour, without benefits.
And you know who’s subsidizing Walmart?
The taxpayers of America, because many Walmart workers and their kids are on Medicaid, they’re on food stamps, they’re in affordable housing.
HOLTZ-EAKIN: Well, Senator —
SANDERS: It is time for employers in America to pay workers a fair wage —
HOLTZ-EAKIN: Senator —
SANDERS: — $7.25 an hour —
HOLTZ-EAKIN: — the question —
SANDERS: — is not a fair wage.
HOLTZ-EAKIN: — the question becomes, who do you think you’re going to help if you raise the minimum wage?
Everyone always thinks that this is an anti-poverty tool, but you’re going to give the higher minimum wage to the children of affluent people like me.
Why don’t we do something that’s targeted on poverty if we’re worried about —
SANDERS: Wait, wait, whoa, whoa —
HOLTZ-EAKIN: — (INAUDIBLE)?
SANDERS: — what are you talking about —
SANDERS: — the children of affluent people?
SANDERS: The fact of the matter is —
HOLTZ-EAKIN: The minimum wage applies to everybody —
SANDERS: — (INAUDIBLE) —
HOLTZ-EAKIN: — and you know that.
SANDERS: That’s right.
HOLTZ-EAKIN: So why don’t —
HOLTZ-EAKIN: — we have a — a policy that doesn’t hurt jobs?
And let’s face it, it’s really hurt teenagers. That raise in the minimum wage in 2008 and 2009, you had 24 percent teenage unemployment rate.
SANDERS: All right, first of all — HOLTZ-EAKIN: Forty percent of them black African-Americans.
SANDERS: — first of all, let’s —
SANDERS: Can I get a word in here?
HOLTZ-EAKIN: Let’s be realistic —
BLITZER: All right, go ahead, Senator.
SANDERS: All right, let’s be real.
HOLTZ-EAKIN: Yes, let’s be real.
SANDERS: And the real factor is that most people who are working for low wages are not children. That’s a bogus argument. The reality is that most low-wage workers are adults. And if you want to help kids, make sure their parents are earning a decent wage.
And by the way, let me take something a step further. Most Republicans now, Wolf, we have reached such a right-wing degree that most Republicans now, they’re not only opposed to raising the minimum wage, they want to abolish the minimum wage.
BLITZER: Let me ask Douglas Holtz-Eakin, do you want to abolish the minimum wage?
DOUGLAS HOLTZ-EAKIN, AMERICAN ACTION FORUM: No, but I see no reason when the national unemployment rate is 7.6 percent, teen unemployment is 24 percent. And, to pick a tool that’s likely to hurt job growth doesn’t target the right people. This is not targeting on poor people. (INAUDIBLE) does that. We have lots of programs that do that.
And, which in the end, it does not answer the question where does this money come from? The setup was great. It said $32 billion in additional spending. But where does that money come from?
SANDERS: First of all, let’s be clear. What we are seeing now and what raising the minimum wage would do. It’s not only people going from 7.25 to $10 an hour. It’s people going from $9 an hour to $9 an hour. The great crisis in our country today is income inequality. Top one percent is doing well (ph). Low income workers are doing terribly well.
Now, the gentleman here talks about the need for jobs. Look, I have a proposal, others have proposals to create millions of jobs in many areas including our infrastructure, putting out people back to work. Does our friend agree with that? No, it doesn’t probably.
SANDERS: Let’s ask the wealthy to stop hanging their fair share of taxes, put people back to work and raise the minimum wage.
HOLTZ-EAKIN: You and I both spend time in D.C. We know that it could stand a great deal downtown. How does the minimum wage proposal that drove Wal-Mart out of building six stores took low income D.C. residents out of low prices and out of those jobs help develop the center city?
SANDERS: First of all, I don’t know what Wal-Mart will end up doing, but we cannot continue to be blackmailed just because they are the wealthiest family in this country. You tell me that you think it’s right that their workers, their workers are supported by taxpayers in this country in terms of Medicaid, food stamps — paying a living wage. You think that’s right?
HOLTZ-EAKIN: Are you proposing that we take people off the social state camp because they’re associated with a company you don’t like? Is that really your proposal?
SANDERS: I’m proposing that the wealthiest family in this country, the Walton (ph) Family, that owns Wal-Mart, not be subsidized by the middle class in this country. They’ve got to start paying their workers a living wage, not starvation wages, provide health care to their workers, not allow them — not enable them to go on Medicaid. That’s what I’m proposing.
HOLTZ-EAKIN: If there was another company in America that wasn’t run by the wealthiest family in America, do you think it’d be a good idea for them to raise the minimum wage? Does this work anywhere else?
SANDERS: Yes. Well, I think our friends at McDonald’s and Burger King can start paying a decent wage as well. Bottom line is, in America, we have to have a principle —
HOLTZ-EAKIN: Where will the money come from? Because if you actually look at the numbers, McDonald’s and Burger King are not thriving. These are not huge profit margins. It’s not like they’re sitting on piles of cash.
HOLTZ-EAKIN: I understand that people would like to make more money. I’d love to make more money, you would. But you have to answer the practical question, where would it come from and at what cost? And it’s going to hurt other low-income Americans. That’s a bad idea.
SANDERS: My state of Vermont has, I believe, the third highest minimum wage in the country. It’s $8.60 an hour. I want to see the national minimum wage at 10 bucks an hour. But Vermont has the third highest minimum wage in the country. You know what, we have the fourth lowest unemployment rate in this country.
So, this business that if you raise the minimum wage, all these jobs are going to disappear, historically, I don’t believe that that’s true and I don’t believe it’s true today. We have massive inequality in America, and it’s time to ask the wealthy, “A,” to start paying their fair share of taxes, “B,” we need a massive jobs program and, “C,” we need to raise the minimum wage. That’s what we need to do to take — to protect working families.
HOLTZ-EAKIN: You and I can agree on that. We need structural reforms that will actually get us that, there’s no question. Throughout the better income and equality of United States is education and a decent savings system for private citizens and the minimum wage is the wrong tool for these problems.
BLITZER: A quick question and a quick answer to both of you. Doug, first to you, corporations, should they do more to help the workers who are making low-paid minimum wage? We checked. McDonald’s CEO, Donald Thompson’s, salary in 2012 was $13.8 million. That was the CEO of McDonald’s. Is that fair, do you think?
HOLTZ-EAKIN: You know —
BLITZER: Because Bernie Sanders doesn’t think it’s fair.
HOLTZ-EAKIN: I’m sure he doesn’t. And when you hear these big salaries, you have to ask yourself what responsibilities do they bear? And you know, if they make mistakes, what gets lost? Well, the answer is billions of jobs around the globe. And so, there is a market for those kinds of jobs.
I understand the pay looks outrageous, but I think the serious question is whether you want to continue to try to recreate the 1930s and make our corporations the vessels of the social welfare.
BLITZER: And a quick question to you, Senator, then we’ll leave it. Are you willing to pay 68 cents more for your Big Mac if the minimum wage goes up if it’s double?
SANDERS: We can talk about the health values of a about Big Mac on another time. But the issue is, I think, you touched on, Wolf, what you have is a CEO making $13 million a year paying starvation wages to his workers. That’s unacceptable. The Wal-Mart situation is even worse. We need to make sure that nobody in this country is forced to work for starvation wages. We’ve got to raise the minimum wages.
BLITZER: Bernie Sanders, as usual, thanks very much. Douglas Holtz- Eakin, thanks to you as well. A good solid debate.
Coming up, TV, computers, even tablets all on sale inside one of the most mysterious parts of the world. Just ahead, CNNs Ivan Watson with a firsthand look at North Korea as you’ve never seen it before.
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BLITZER: All right. Let’s take a quick at some of the other top stories in the SITUATION ROOM right now.
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Believe it or not, there’s plenty of news today about the 2016 presidential race. Guess who had breakfast together this morning? Here’s a hint, they didn’t even release a picture of it, but we’ll have the latest. That’s coming up.
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