Herman Cain on Obama's call for higher minimum wage

What impact would hike have on business?

This is a rush transcript from "Your World," February 13, 2013. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: 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.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

NEIL CAVUTO, HOST: Well, President Obama wants to raise the minimum wage, but Herman Cain worries he will raise the unemployment rate while he's at it.

Check this out. Of the eight states with an $8 or higher minimum wage, look at their unemployment rates. They're all well above the national average. Only three states are an exception.

Herman's back to raise some Cain.

Herman, my friend, good to see you. What do you make of that? Now you came from the fast food industry and you know well the impact this will have. Tell some of your old colleagues and managers that they are going to have to up their minimum wage, what are they going to do?

HERMAN CAIN, CEO, THE NEW VOICE: Well, they're either going to have people work less hours or they're going to hire less people. That's typically what happens. I saw it when I was at Godfather's, when I was at Burger King. I saw it when I was the president of the National Restaurant Association.

Here's where the president is dead wrong. If you were to force a minimum wage increase from $7.25 to $9, guess what? They will still be living in poverty. Raising the minimum wage is not going to get anybody out of poverty. Most of the reliable studies out there, Neil, shows that there's going to be job reduction for the people who need those jobs the most and those are the people with the least amount of skills.

CAVUTO: I always thought that rather than put the emphasis on forcibly raising the minimum wage and putting all sorts of headaches on business and maybe resulting in fewer hires, as you pointed out, maybe just improve the business climate so there are more jobs, period, but that's just me.

But on the other thing, Herman, the argument for this is that, yes, the immediate reaction is a lot of people lose their jobs because managers, stores, restaurants, what have you then start cutting back on workers. But things settle down, they start hiring again, off to the races again. What do you say?

CAIN: Well, what I say is that's not totally accurate for the following reason.

Businesses have only one option when costs are forced on them, and that is to eventually pass it on to the consumer. Now, the median income in the last four years, Neil, as you know, being the Braveheart of business, as you are, has gone from $54,000 to $50,000. People already have less money, so now you're going to ask them to pay more for what they pay at restaurants, even fast food and quick service restaurants?

It doesn't work that way. The second thing that they're not taking into account is that most of the companies that hire a lot of minimum wage workers, they hire those minimum wage workers because they have very small profit margins. They don't have a lot of room to maneuver. People are trying to figure out how to take it -- how to basically handle ObamaCare, and they're coming up with a lot of creative things in order to try to stay in business. Their assumptions are simply incorrect.

CAVUTO: You know, obviously, it's no skin off the president's nose to push and tell businesses to hike the minimum wage, but it does put pressure on all businesses, on even those that hire beyond the minimum wage, right, because all of a sudden the floor has risen so all wages have to go up across the board.

What is the long-term impact of that sort of thing? Because the president argues backwards, people argue back, well, if business guys like Herman Cain had their way, we would be at an 85-cent-an-hour minimum wage, we would have never moved it up.

CAIN: Here's another thing that the president and his advisers are not taking into account.

In some states, they're already above the minimum wage, just like you showed with one of those opening charts.

CAVUTO: Right.

CAIN: The marketplace will determine what the wages should be. When I was at Godfather's Pizza, in some markets, we had to be above the minimum wage because of a shortage of workers, so allow the marketplace to do it.

But you see, this illustrates the president and his advisers' total lack of business literacy. That's what we're dealing with here. And that's why he throws it out there. You know, a $9 minimum wage, now, Neil, you know nine is my favorite number, but not in this case.

(LAUGHTER)

CAVUTO: I'm wondering now what Republicans do in response and, you know, because the president put them clearly on the defense, saying, well, then you're against the little guy. You're against the average Joe and Joanne.

And how do you respond to that?

CAIN: The way I respond to that is -- in fact, Senator Marco Rubio said it best. I want people to make more than $9-an-hour. How do you get people to make more than $9-an-hour? You create a robust, growing economy, which is what this president and this administration, they have not done that. So now they are trying to paint lipstick on this flawed economic canvas by saying let's raise the minimum wage and put all of those other programs out there that you talked about earlier and say it's not going to cost a dime.

Most of the American people that I have figured out, Neil, are not that stupid. Some people are, but most people are not that stupid to believe that.

CAVUTO: Herman Cain, great seeing you again. Be well.

CAIN: Thank you, Neil. Good to be with you.

CAVUTO: All right, Herman Cain.

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