Mr. President, I yield myself 3 minutes. Mr. President, I rise today in support of the amendment offered by Senator Snowe, Senator Landrieu, and others, to provide regulatory assistance to our Nation's small businesses. This amendment…
Mr. President, I yield myself 3 minutes.
Mr. President, I rise today in support of the amendment offered by Senator Snowe, Senator Landrieu, and others, to provide regulatory assistance to our Nation's small businesses.
This amendment requires that when Federal agencies issue new rules and regulations that impact small business, they also must issue compliance guides for small businesses. The amendment also requires that the compliance guides be written in plain English and made available in a timely manner.
I think this is a commonsense requirement. It not only reduces the administrative costs for small business, but it also increases the level of compliance with such new rules and regulations. I think the work opportunity tax credit is an example. That isn't a program that a lot of small businesses have taken advantage of. Part of it is because they don't know about it, and part is they don't know how to comply with it. They don't have the opportunity to hire the specialists that might be needed to understand it or to do the recordkeeping on it. So they don't take advantage of it to the level they could. It is a provision in the tax bill that could make quite a difference to small employers.
Many small employers simply lack the resources, the outside consultants, the experts necessary to continually advise them of changes in Federal rules that impact the way they must run their business. As it now stands, smaller businesses currently pay disproportionate per employee compliance costs when compared to larger employers. The average per employee cost for Federal regulatory compliance in a business with less than 20 employees is 45 percent higher than the same cost for a business with 500 or more employees. So it is about $7,600 for a small business to comply versus $5,200 for a big business to comply. Those numbers stagger me--the cost for small business to comply with Federal rules and regulations. That doesn't count the cost of complying with the Tax Code, which is a whole other range of costs.
Cost mandates, such as a minimum wage increase, impose significant financial burdens on our small employers. We must do everything we can to help alleviate this burden and ensure that small businesses remain the well-run engine of our economy, and providing the kind of compliance assistance called for in Senator Snowe's amendment is one of the ways we can assist small businesses in meeting the administrative costs associated with Federal regulation.
I commend Senator Snowe for her efforts on behalf of small businesses and am proud to be a cosponsor of this legislation with her. She has put in diligent efforts to hold hearings and get this into place in the committee that she chaired, the Small Business Committee, on which she is now the ranking member.
I urge my colleagues to support this amendment that not only provides assistance that reduces employer costs but also assistance that increases employer compliance. That is two goals. This amendment will do both of those. I ask for your support.
I yield the floor and suggest the absence of a quorum, and I ask unanimous consent that the time be equally divided between the sides.
Mr. President, how much time is remaining on our side?
I thank the Chair.
I appreciate the comments of the Senator from Massachusetts and the diligence with which he has worked on this issue and the number of times we have debated it. I appreciate the majority leader making it possible for us to consider amendments on this bill. I understand how some people would like
to have this as a clean amendment, that we just do the increase. The debate the last three times we have done it has been about whether we can have some provisions for small businesses to offset the impact of the raise in the minimum wage.
I want to bring a more personal face to this small business. We confuse that sometimes even with General Motors and some of the airlines. Those are big corporations. In fact, the ones I am particularly concerned about are the ones with 50 employees or less, and even more concerned about the ones that only have 2 or 3 employees. The impact and their ability to adjust is much more limited. We are talking about the inventors in their garages who have an idea and who will employ another person to help put their product together and market it. We are talking about the corner grocery store. We are talking about the laundry. We are talking about the little shoe store, the independent one.
These are families that are eking out a living. These are not families that are getting rich. These are families that took on a lot of risk for the American dream. They are hoping that with all of the loans they put in place to be able to do this business that they always dreamed of doing, they might make a return on their investment and enough to keep their family going. But there is no guarantee.
These are the people who--and I know; I used to be a small businessman. I used to own shoe stores. One of my definitions of a small businessman is the guy who wakes up, sits up straight in bed in the middle of the night and says: Tomorrow is payday; how do I meet payroll? And they figure out a way because the employees get paid first.
These are people worrying about how to stay in business, how to make a living, and taking on a whole lot of risk to make sure other people have jobs.
We have to remember that the small businessman will be forced to come up with additional funds to pay his or her workers on what we are mandating today. Those funds don't come from a money tree or some pot of gold at the end of the rainbow. They come out of the pockets of the Nation's small businessmen. It is the penalty they pay for taking the risk associated with running a small business.
I have about 3 minutes. I yield the remainder of the time to the Senator from Maine.
Madam President, I echo what the Senator from Massachusetts said, that this does provide for authorization. There is room for that to be included, and we can help look for the resources to do something on that.
I commend both Senator Roberts and Senator Dodd for their tenaciousness and their active work to be able to bring this to the Senate at this point in time. I note that Senator Roberts has been working on this for about 10 years. Six years is the average for a bill around here. That should qualify.
I ask we make this part of that package.
Madam President, on behalf of Senator Ensign, I call up amendments Nos. 152, 153, and 154.
Madam President, I ask unanimous consent that the reading of the amendments be dispensed with.
Madam President, in a while, we will take some action on Senator Sessions' amendment. I would like to make a couple comments on that amendment before we get to that point. This might be an appropriate time.
Last year, Congress undertook the most sweeping changes to pension law since the enactment of ERISA. It was a major milestone and resulted in the most comprehensive change to workers' and their families' pension and retirement savings in the past 32 years.
The Pension Protection Act could not have been enacted without bipartisan cooperation, but it took more than Republicans and Democrats working together. The Pension Protection
Act resulted from a deep commitment toward cooperation between the Finance Committee, which oversaw the tax provisions of the bill, and the Health, Education, Labor, and Pensions Committee, which oversaw the pensions provisions.
On the Health, Education, Labor, and Pensions Committee, we had previously taken a strong bipartisan look at retirement issues and retirement savings as part of our pension oversight duties. The new chairman of the committee has stated he will continue the committee's strong pension oversight responsibilities in order to protect and strengthen the retirement savings so that workers and their families may prosper long into their retirement years.
The sense-of-the-Senate resolution before us expresses the sentiment that saving for retirement is important. We all agree with that point. The fact is that savings opportunities are available almost everywhere, but many workers do not take advantage of it. By this sense-of-the- Senate resolution, we are not advocating any particular retirement programs or initiatives over others on the books already or proposed to be introduced. We are simply saying that people ought to save enough to maintain their standard of living during their golden years, and they ought to invest prudently so that their savings will be safe when they do retire.
Better financial education and investment advice is needed. Automatic enrollment rules that were enacted in the Pension Protection Act will help people learn to save. New default investment regulations, when finalized, will help too.
In that respect, progress has been made in saving for retirement, but much needs to be done.
I am happy to join with my colleagues in reiterating the commitment by supporting the sense-of-the-Senate resolution.
I yield the floor.
Madam President, I ask unanimous consent the order for the quorum call be rescinded.
Madam President, too often when we debate the issue of minimum wage, we focus on abstract ideas and proposals and fail to consider the impact of our actions on the small business community that lives and breathes in the real world. I appreciate the cooperation with Senator Reid and others, focused around Senator Baucus and Senator Grassley, working in a very bipartisan way to put together a package that would help to relieve some of the impact of the minimum wage increase. I hope everyone has noticed that in the minimum wage debate we have been having, the debate has not been over whether to raise the minimum wage. The debate has been on what we can do to alleviate some of the impact on small business. I hope that is the way we can continue the discussion on this, too.
I mentioned earlier today that you need to meet some of these small businessmen. They are in your neighborhood. You can meet them easily. They run the laundry, corner grocery, little retail stores. For the most part they are families who are eking out a living while they are taking on a lot of risk. They do have these moments that they wonder why they undertook that risk and how they are going to continue to fund that risk. Sometimes they are paying employees when they can't even afford to pay themselves, and their families are relying on the business to support them as a family, too, particularly considering all the risks they are taking.
Sometimes they are forced to come up with additional funds to pay their workers on what we will be mandating. Those funds do not come from a money tree or some pot of gold at the end of the rainbow. They come out of the pockets of the Nation's small businessmen. It is the penalty they pay for taking the risks associated with running a small business.
The first hearing I held in Wyoming was as part of the Small Business Committee. We had a hearing on some of the problems of small business. When it was over, one of the reporters came up and said: You only had about 100 small businessmen attend this. Why do you suppose it was such a poor turnout?
I said: That wasn't a poor turnout from small business. If small business had an extra employee to send to a day's conference, they would fire him. They can't afford extra people.
With that realization, it was a good turnout and there were a lot of good suggestions. I always like to go back to Wyoming and meet with the people and actually talk to the guy on the end of the shovel because he usually has the best suggestions for changing the shovel. I found that to be true of the small businessmen.
This afternoon we agreed to an amendment that will provide for easier compliance with Federal rules and regulations, and I appreciate the bipartisan action that was taken. That will make a huge difference to small businessmen.
We could consider that the action we are about to take will be making it bad business for people to hire people who need some help and support in developing their skills by that method, making them higher wage workers. That cannot help but cost some people their jobs. In other instances, the hours they need will be cut back, hours that they need to get a good paycheck.
We cannot leave the floor today feeling better about having helped ease the income strain for many of the workers of our States but having left the employers wondering how to pay for the increases we have mandated. Once again, we have the best of intentions, but, once again, we have to remember one simple rule: It is not our money. We are, once again, reaching into the pockets of the small businessmen in our community and taking their money and telling them the amount of wages they will pay their employees without regard to the talents and abilities of the employees they can hire.
We have this huge job training corps out there. It is called small businesses. They take people who don't have the skills that are necessary for the small business they are operating and they teach them how to run a cash register, how to count change, how to interact with a customer, how to dress appropriately.
You might think these are all things that might be covered in school classes, and they are, if you take the right classes. But there are a lot of people who not only don't take the right classes, they drop out of school. They need to earn a living and they have to start somewhere earning a living. To earn that living they have to have some training, some basic job training. A lot of these small businesses are where they get that basic business training, and they kind of get it for free. The businessmen provide that information, and most of the people in the minimum wage level move up rather quickly. As they learn those skills, they get paid more. I know a lot of businesses where they have the minimum wage situation that lasts about 3 weeks if the people learn enough to advance so they can actually wait on the customer.
What we are talking about is a blanket increase that will warm the hearts of those who lack the skills for higher wage jobs as it leaves the employers out in the cold, unless we do the Reid package. Any increase in the minimum wage must be offset by a small business tax incentive package.
As a former small business owner of mom-and-pop shoe stores, let me walk through the realities of how business owners may address a mandated Federal minimum wage hike. Raising the minimum wage to $7.50 imposes a 41-percent increase in labor costs for a small employer with minimum wage workers. Every employer must face the very real issue of how he or she will deal with this increase in the costs and still meet the payroll week after week.
These are very real and difficult questions that impact our smallest employers most heavily. These increases must be paid for by employers and, as I said before, the money doesn't grow on trees. An employer must make hard decisions about how to meet these increased payroll obligations.
When costs go up, most businesses first look to cut expenses. The choices they have can be difficult and have often already been used. To meet higher mandated payroll costs, a small employer may be forced to consider cutting back on benefits such as health insurance, retirement, or leave plans--although a lot of small businesses can't afford to provide those in the first place.
It is simply too easy to forget that fringe benefits have a significant cost. Most employees don't realize the benefit they are getting when they get those. If a small employer has to reduce expenses to meet payroll, those are often the costs that go.
I know of a video store--I was talking to a young man who works in the Senate now, and he used to work in the Senate and part-time in a video store. When the minimum wage went up last time, what the video store did was instead of having two people at the store at the close of business, they only had one, and only having one isn't nearly as safe as having two. But that was the choice that the owner had to make in order to be able to meet the payroll.
We have seen some charts where, in States where there has been a raise in minimum wage, there has been an increase in number of jobs as well. I appreciate those charts and believe those charts to be accurate. What those charts are doing, though, is aggregating for the entire State. What we are doing is imposing this on one business at a time, one employee at a time. It really gets down to as local as politics ever gets. Those small businessmen believe that individuals matter, that people matter, and they are forced into some of these choices. There are not a whole lot of ways they can compensate for the change.
I have a chart that shows how to cut costs when there are none to cut. This came from the Washington Post. It says:
We're at the bottom. If the minimum wage went up, I don't
know how we would make the cuts to cover it . . . the
employee said.
The lone salaried employee, she works 80 hours a week to make up for the lack of workers. ``I have mixed feelings,'' she continued. ``I know that people can't afford to live on $5.15 an hour. But on the business side, small businesses can't afford to pay it.''
There are examples like that that are real-life situations that do make it difficult. That is the lone employee in a store.
Beyond cutting fringe benefits, small businesses may need to consider cutting back work hours, eliminating overtime, or laying off workers. Such actions are traditional and often necessary responses to meeting increased costs--not just the increased costs of the minimum wage. Unfortunately, these actions ultimately hurt the very workers the minimum wage increase is designed to help.
Some would say raise the prices. That is not always possible in the short run. In the long run there may be some flexibility because this is going to be imposed on everybody and will drive up prices. Of course, when it drives up prices, it kind of eliminates the benefit of the increase in the minimum wage. In the real world, small employers have to consider these types of options to cope with mandated increases in wages. Small business owners who themselves favor a minimum wage increase nonetheless recognize that any increase may result in having to make these tough choices.
In a recent front-page Washington Post article, the owner of a discount store in Kansas noted that, while he felt a wage of $7.25 seemed fair, he also noted that his profit margin was thin and that wages are his biggest controllable expense. He said: If wages go up, hours will have to come down. And the question will become: Whose, his stockman who works 6 hours a day and takes care of a wife who is blind and arthritic or should it be another worker who is ill and is on a waiting list for an organ transplant and needs more hours rather than fewer or yet another employee who is 22 years old and pregnant? These are hard realities that are faced by many small employers and those who work with them.
I ask unanimous consent that an article from the Washington Post that came out recently--I congratulate the writer of that article--be printed in the Record.
The author of the article is really a master at showing how all of these things are intertwined. It is very revealing and makes a good case for the increase in the minimum wage. But it does show some of the decisions that will have to be made and how that will affect other people, some of whom will be in a similar situation.
In a similar vein, when confronted by higher labor costs, employers will naturally gravitate toward filling positions with their most highly skilled, experienced, and productive workers available. Once again, this phenomenon of replacing low-skilled with high-skilled workers in the face of rising labor costs winds up harming the very workers an increase in the minimum wage seeks to help. The minimum wage positions are very often the entryway into the world of work for those who lack skills and experience. I can't say that enough. I am hoping the Workforce Investment Act will kind of come out of this whole process, too, and provide some additional training so people with less skills can have more skills and get some of the choice jobs that this country has to offer. But mandated increases in the minimum wage run the risk of closing that entryway to many.
Another option, of course, for employers that has to be considered is automation as an alternative to a paid employee. Does this sound farfetched? Consider how the automated teller machines, the ATMs, have replaced tellers, how the self-checkout lane at many establishments has replaced the clerk, and the drive-through has replaced the waiter, and in toll booths the EZ Pass has replaced the toll collector--not all of them, but a lot of them who use the EZ Pass eliminate toll collectors. We have seen some charts on how productivity goes up when the minimum wage goes up. Sometimes productivity goes up when machines are instituted in place of people. They can work 24 hours a day, 7 days a week, 365 days a year. We don't pay them any health benefits. We may have a little bit of maintenance done on them. They don't get any vacation.
Employees are still necessary. I keep telling people that you can't outsource the fact when your toilet is plugged and you need some help or when your electric switch doesn't work, there are a lot of hands-on things that absolutely require people. But they are figuring out ways to automate a lot of these things. In Gillette, WY, where I am from, we have this huge worker shortage, and as I have said a number of times, I keep encouraging people to go west and find the new frontier and get some good jobs. But when they are pinched, they come up with some other ways of doing things. The drive-up for our McDonald's is actually handled out of California. When you drive up to the little window and you order your Big Mac, you are actually talking to someone in California who uses the Internet to send the order back to the people who are putting it all together to give to you when you get in your car. They have been able to increase the number of drive-throughs substantially using lower paid--this kind of amazes me--out of California. So automation is one of the answers.
Beyond these cost-cutting measures of eliminating benefits, reducing hours, downsizing, laying off employees, reducing low-skill and entry- level employment, and automating, employers may also have to face up to the prospect of increasing the price of their goods and services. Price increases caused by mandated cost increases bring their own catalog of ills. Such increases drive inflation and cause all consumers to ultimately pay the price of these mandates. The irony is that as the cost of these labor increases is passed to the consumers, it affects everyone, including the minimum wage worker, whose recently increased wages are suddenly devalued by the increased price for goods and services that impact them as well. So on this ladder of success, we have kind of removed the lower rung of it. So it is a little bigger step to get up there, and some of them aren't going to be able to make the step because of some of the ways that it has to be adjusted.
In the same Washington Post article I mentioned earlier, another small employer who owns two convenience stores noted that he simply does not have the option of cutting hours to meet his increased payroll burden. Instead, he noted: I am going to have to raise my prices. He indicated if he had the chance to talk with Speaker Pelosi about the minimum wage, he would ask one question, and that is: Where does she think the money will come from? Of course, it can be argued that his customers, if he raises the price for the candy bar or the cup of coffee, will go somewhere where it is cheaper, and that is a good possibility. That means that in order to maintain
the business, if he is going to raise those prices, he has to have employees who give better service, quicker service, and that goes back to the on-the-job training I was mentioning that a lot of these small businesses do. They have to have the good service in order to keep their loyal customers. Sometimes that doesn't just hinge on the price of the candy bar or a cup of coffee.
I believe almost all of us recognize these economic realities and that none of us want them to come about. It is for those precise reasons that the substitute amendment contains provisions designed to enable our smallest employers to meet the obligations imposed by a minimum wage increase without resorting to the difficult personnel choices, the consumer price increases or all of the other things I mentioned.
Yesterday, I spoke briefly about the fact that in legislating, it is often important to find a third way. In this instance, the third way is one that will provide an increase in the minimum wage but also provide relief to the most affected small businesses so that they don't experience employee dislocation, a reduction in employment opportunities for low-skilled and entry-level workers or an increase in consumer prices that takes away the real value of any wage increase.
The third way is represented by the real value of any wage increase. The third way is represented by the substitute amendment that was the product of extensive bipartisan support, Democrats and Republicans working together, acknowledging the fact that mandated cost increases can have negative economic effects. So together we developed a means of addressing those concerns in the form of a bipartisan substitute amendment. I can't emphasize enough how pleased I am with the cooperation I saw as people worked out different alternatives. There were certainly a wide variety of them that were done and I think with some concentration particularly on how they would affect small business. I would reiterate the bipartisan support of that small business tax incentive package. There are key Democratic leaders who have acknowledged the need for the package to offset any wage increase in order to not disenfranchise the employers and their workers.
So I hope we won't make this partisan now. As I mentioned yesterday, the Senator from Massachusetts, Mr. Kennedy, and I have gone head to head on raising the minimum wage three times in the past several years. Each time, the votes were set up for each side to fail. This time around, we worked to come up with a third way in order to get the job done. I hope that all efforts to try and unravel this third way that will most likely result in a minimum wage increase isn't abandoned for the sake of making partisan messages. I urge my colleagues to continue to support the small business incentive package as a much-needed offset to the increased Federal wage.
I think this is a tremendous opportunity for us to do the right thing in all aspects, and I hope there will be good bipartisan support. I understand the desire to have a clean minimum wage, but that is what we have been going through for a couple of years now, and we are finally talking bipartisan. I think that was something that came out of the elections. I am pleased to see it is operating, and we will see how long it continues. I hope it continues through the entire session.
Amendment No. 108, as Modified
Madam President, I ask unanimous consent that the Sessions amendment No. 108 be modified with the changes at the desk, and I urge its adoption, as modified.
Madam President, I move to reconsider the vote.
Madam President, I ask unanimous consent that the Sessions amendment No. 107 be withdrawn.
Madam President, I yield the floor.
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
I yield back, with the consent of both sides, the 2 minutes that was to be available on both sides. I yield back that time.
I request the yeas and nays.