Ted Simons: Good evening and welcome to "Arizona Horizon," I'm Ted Simons. Is it time for the minimum wage to be increased? President Barack Obama thinks so. He says the current rate of $7.25 is too low. The President is proposing an increase to $9 an hour and made his case last week during his state of the union address.
President Obama: We know our economy is stronger when we reward an honest day's work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we put in place. A family with two kids that earns the minimum wage still lives below the poverty line. That's wrong. That's why I sense the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs higher. Tonight, let's declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty. And raise the Federal minimum wage to $9 an hour. This step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank. Rent or eviction. Scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. And a whole lot of folks out there would probably need less help from Government. And in fact, working folks shouldn't have to wait year after year for the minimum wage to go up while the CEO pay has never been higher so here's an idea that Governor Romney and I agreed on last year. Let's tie the minimum wage to the cost of living so that it finally becomes a wage you can live on. [Applause]
Ted Simons: Joining me now is Glenn Hamer, the President of chamber commerce and industry, which opposes the increase and in support is Senator Lopez, the assistant Minority Leader. Good to have you here.
Both: Great to be here.
Ted Simons: Glenn, we'll start with you, why not increase the minimum wage to $9 an hour?
Glenn Hamer: Because it will make it more difficult for employers to hire workers, particularly, those on the lowest end of the, the, of the, of the skills situation. We have to keep in mind that, that most workers, 25 and over, are making more than the minimum wage. When we're talking about the minimum wage we're talking about a lot of teenagers. We're talking about a lot of students who live in households, and as we, we increase the minimum wage, we simply have, have fewer employment opportunities for those individuals.
Ted Simons: Why should the minimum wage be increased?
Sen. Linda Lopez: Frankly, people need to be able to earn a decent living, and I do disagree with the premise that it's only teenagers and, and students who are doing that. And the research indicates that there are a lot of folks out there who are supporting the families on the minimum wage, or less than the minimum wage, so if we can get more money into their pockets, they are going to be able to support their families better, and they are going to be able to spend money. Once we put more money into the pockets of these folks at the lower end of the scale, they will be able to spend more money and help to grow the economy.
Ted Simons: Back to the idea that most of the people that make the minimum wage are not necessarily bread winners in families, what do you do for those who are?
Glenn Hamer: Well, we need to have, to have -- we certainly want to make sure that people who are the bread winners for their families have the opportunities to provide for their families, and the best way to do that is to make sure that we have an educational system, and that they have a skills that are such where they can, they can earn a decent living, Ted. But, the difference sometimes is between, you know, when the President talks about increasing the minimum wage to $9 an hour, if, if it, an employee's labor is not valued at $9 an hour, it could be the difference between $9 and zero. I mean, the key is we want to make sure that people are working, and as you increase the minimum wage, you simply have fewer employment opportunities. So, a lot of times it's not a choice between $7.25, which is the Federal minimum wage, or $7.80, which is Arizona's minimum wage. And $10, it's that minimum wage and no job.
Ted Simons: The idea that raising the wage would cut jobs. How do you respond?
Sen. Linda Lopez: That's not true. There are studies that show that's not true. That has no impact on the number of jobs available. And you know, the employer may pass along the cost to their consumers, but, it's going to be spread out over that group, and the people that are working for that employer are able to buy on their own. You know, Henry Ford said he wanted to pay a decent wage so his workers could buy the cars that they were building. Why can't we do the same thing now.
Ted Simons: The idea, that, that more money in the pockets more people means more people are buying things and us, more jobs and more Production.
Glenn Hamer: But again, Ted, they need to have a job in the first place. And the research is clear, about 85% of the studies find a negative employment effect on low skilled workers. The youth unemployment rate in this country now about 24, 25%, before, before the, the Federal minimum wage was last increased, it was about 14% or 15%, it has been a dramatic increase. A lot of times, it is a choice between having a job for, for, for an entry level worker, or that individual will not have any employment opportunities whatsoever.
Sen. Linda Lopez: And yeah, and again, there are studies that show that, that it does not have an impact, a negative impact on employment.
Ted Simons: The idea, though that, the minimum wage jobs are not designed to support families and not designed to support careers, and these are training jobs, get your feet wet kind of jobs, how do you respond?
Sen. Linda Lopez: They are not. The minimum wage is not designed for that, but that's the reality for many of our working families. Here in Arizona, and across the United States. They are having to support families working two or three jobs to, at minimum wage trying to support their families, and the other, the other issue is, is when a person is making minimum wage, they qualify for, for Federal benefits, which then, in turn, cost all of us as taxpayers.
Ted Simons: The President mentioned that, as well, the idea after higher minimum wage means fewer people getting Government assistance, do you buy that?
Glenn Hamer: There are other programs for, for lower wage workers. The earned income tax credit which has more bipartisan support, is, is one such program. But, again, I will point to a White House memo that found that even modestly raising the minimum wage, increases earnings and reduces the poverty without measurable reducing employment. Now, I would not consider a 25% increase in any sort of wage a modest increase. And notice how they use the language, without measurable reducing employment. So, you can take it to the bank that there will be fewer employment opportunities if the minimum wage on the Federal level were to be raised.
Sen. Linda Lopez: I would just say that, that the minimum wage increase would be, would be phased in, it would not come overnight, it would be phased in, and there would be an opportunity for businesses and the economy to adapt to that.
Ted Simons: And back to you, Glenn, the idea that keeping up with inflation, the President talked about this, and candidate Romney did, tying it to the cost of living. Tying it to inflation, and more so than it already is. Can that be done?
Glenn Hamer: It's another bad idea because what could happen is we could be in a very tough economic spot, and we could have a situation where, where, for whatever reason, inflation is still increasing, and employers have fewer dollars to invest and, and regardless of the state of the economy, they are forced to pay more for, for workers. We all want to see workers have a chance and employees have a chance to move up the, the, the, the employment chain, and to have all the opportunities in the world to, to earn more. But, this is a bad way to do it. And I will just say, for a lot of small businesses, that, that have to deal with, with all these new regulations, all the, the costs associated with the Federal health care act, this is just another one that's going to make it much more difficult for these businesses to do well, and to hire more employees.
Ted Simons: Another burden for business, especially small business.
Sen. Linda Lopez: Well, I think that, that the, that actually, it will help them. Again, as I said before, when folks have more money in their pockets, they are able to spend more, and that's going to help the small business owners. And I just want to go back to this whole inflation piece of it. You know, I think that it's important to have that in there. The last time that the Federal minimum wage was raised, was in 2006, and I might add it was under President Bush, and it had bipartisan support. We have not had an increase in the Federal minimum wage since 2006. $7.25. There is no way that that's something that anyone can live on.
Ted Simons: And it sounds like if it were just for inflation, adjust we would be up at the $11 range, and there was a study that this productivity increases were factor in, they had it all the way up to 20 something dollars an hour. Of course, that does not factor into how much, how much engineering AND -- better productivity has happened.
Glenn Hamer: The average -- the average hourly wage in this country, is around $19 or $20, when you artificially increase the, the minimum wage, you are making it more difficult for employers to, to hire workers, and I don't know how one could look at the, at the pretty dramatic increase in the youth unemployment over the last three or four years since we last increased the minimum wage, and say that increasing the minimum wage wouldn't be harmful to, to, to young workers in particular. It, absolutely, will be. There will be fewer jobs, and I don't see how that is beneficial to, to, to anyone.
Ted Simons: Too high of minimum wages can be argue, as well, and would kill initiative. I have heard that argued. And are you buy that go?
Sen. Linda Lopez: No, I'm not buying that at all. I don't think that hurts initiative, and in fact, the studies have shown in that, that, that paying folks a decent wage increases productivity, and I think it improves the initiative, and the efficiency, and I guess, I just want to say, you know, folks don't have any problems, you know, within the big corporations, raising the, the salaries and the benefits and that sort of thing for their executives, but, when it comes to a few pennies for the folks at the bottom end of the scale, they somehow can't afford that.
Ted Simons: The President mentioned that, income disparity with the CEOs making a tremendous increase in the last decade or so, and we're talking about a couple dollars an hour here, how do you respond to that?
Glenn Hamer: Again, if it's a choice between someone making, making $.25, $7.85, $9, $10, or zero, why would we not want to make sure that workers have the chance to earn a wage at all. I mean, if the jobs are not there, they are not -- a minimum wage only means something if an employee has a job. If they don't have a job, they are not earning anything for their family.
Ted Simons: So, but, I guess the argument --
Glenn Hamer: And also, I mean, we still have a very high, a very high unemployment rate in this country, and it's, it's still right around 18%, when you add in all the people looking for jobs, it's about 14%, and now, we're going to make it even more difficult to add jobs to this economy, that's, that's, that's awful public policy.
Sen. Linda Lopez: Can I just say, that, that the, the minimum wage was first introduced and passed in 1938 during the great depression. There was a reason for that, and there is a reason now for us to continue to improve the minimum wage. We needed to support our people working out there at the, at those levels.
Ted Simons: Will this just mean, though, that, that we would see more part-timers as opposed to full-timers?
Sen. Linda Lopez: I don't think that that's necessarily the case. I don't believe that will happen.
Ted Simons: Do you think that will happen?
Glenn Hamer: Of course it will.Because, if employers don't have the resources, to stay in business, the only entity pretty much in the country, that seems to be able to operate at a deficit situation, without, without any sort serious repercussions is the Federal Government. For most businesses, for all businesses, if they are not earning a profit, they go out of business. So, when I talk to different small businesses, if you have a dramatic increase in the Federal minimum wage, they are going to have fewer workers, and those workers that remain very likely will work fewer hours.
Ted Simons: Last question, how does this not mean that businesses will cut jobs?
Sen. Linda Lopez: Because as I said before, folks who are earning more money and those are at the lower end, they are going to spend the money that they get. The people who are making a lot of money, the big corporations, executives, they are not, not spending their money, they are banking their money. And instead of re-investing it into their companies, and so, I just feel like the whole disparity, the inequality in terms of wages, is really something that, that needs to be addressed.
Ted Simons: Last point, the idea, again, of someone getting a few more dollars and they can spend a few more and thus, the company can, produce a few more things for that increased demand, why would that mean fewer jobs?
Glenn Hamer: We want workers to earn more, that's why we put a lot of time at the Arizona Chamber of Commerce and industry and into proving our educational system. But, for a number of jobs, if you increase the minimum wage by 25%, that's a pretty big increase during a, still, a fairly difficult economic time, employers are going to, to have to cut back.
Ted Simons: Very quickly, is $7.25 too high of a minimum wage?
Glenn Hamer: We believe that the automatic escalator in Arizona needs, needs to be turned back. Our minimum wage in the state is higher than the, the Federal average, and we believe that, that is a mistake.
Ted Simons: And last question for you, what is too high of a minimum wage?
Sen. Linda Lopez: I would think that too high of a minimum wage would be higher than the living wage. And we're talking about minimum wage here, there is also the living wage. What does it take for the average family, the average individual to, actually, live, to pay their bills and their rent and for a car payment, those things, and we don't have that.
Ted Simons: Even if many those workers are not necessarily bread winners in families?
Sen. Linda Lopez: Exactly.
Ted Simons: All right, good to have you both here. Thanks for joining us.
Both: Thank you.