Published January 26, 2017
This is a rush transcript from "Your World," January 29, 2014. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: I firmly believe it's time to give America a raise.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
NEIL CAVUTO, HOST: Well, you know, today, the president doubling down on hiking the minimum wage. It's easy for him. He really is not paying for it. Companies are, or will, if he gets away with it.
Jamie Richardson is the vice president of government relations over at White Castle. Jerry Storch, of course, the former big guy at Toys 'R' Us.
Jerry, it's an interesting point because we forgot that it's guys like you and companies that foot the bill for doing stuff like that.
JERRY STORCH, FORMER CEO, TOYS 'R' US: Well, it's bad for the country. It's bad for growth. It's bad for jobs.
It ships jobs overseas when you raise wage rates here. And of course there's a waterfall or cascading beyond the minimum wage. It starts applying to the next group up the ladder, the next group up the ladder and so on. Also, it makes capital investment harder to make, because it's hard to get a return on capital when the wages are higher.
And it causes you to look for ways to replace labor with automation. So, it's bad for growth and it's bad for jobs.
CAVUTO: Pushes you further into that.
You know, Jamie, there are a lot of retailers I talked to who said, you know, Neil, we would be open to raising the minimum wage, just not 40 percent and just not in one fell swoop.
Is that where you're coming from or what?
JAMIE RICHARDSON, VICE PRESIDENT, WHITE CASTLE SYSTEM, INC.: You know, Neil, when we look at it, we know that artificially raising that federally mandated starting rate doesn't create ladder of opportunity. It creates a game of chutes and ladders that makes it difficult for kids who need the jobs the most.
CAVUTO: Wait, chutes and ladders, that's -- that's his territory.
CAVUTO: You stick to food.
RICHARDSON: That's right.
But it makes it harder for these kids, especially in our neighborhoods, where we have restaurants -- it makes it harder for these kids to get that start. In Detroit, for instance, 30 percent of teens are unemployed. And these are the kids we want to give that chance to have that opportunity to learn and grow and take those skills with them or if we do our job they will stay with us and have a great career.
CAVUTO: What you if you have a situation though, Jerry, where this goes through, these federal new contractors are paid at that higher wage, $10.10, and then stores and others stand out, even though they're the vast 95 percent of majority not paying that wage? Isn't it meant to pressure Republicans or you guys to up the wage somewhat?
STORCH: Well, certainly that's the attempt.
CAVUTO: And that's the strategy, right?
STORCH: Yes. That's the objective. And if that's the law, then, of course, everyone would do it. But what the minimum wage is or isn't, in a way, it's a sideshow, because the real issue is growth, how to get growth and jobs, and the real issue is education.
You know, you can pay if someone is worth what they want to earn. So you want to pay more, they have to be worth more. And fundamentally the issue in the country really is education. And I think that's something everyone can agree on. If we focused on that, instead of arbitrarily mandating what wages can be, then employers would be happy to pay more for kids who are then worth more.
CAVUTO: But, Jamie, I thought about it. Speaking of education, just math. On a night the president was saying, all right, let's dramatically hike the minimum wage, but I also want to dramatically extend unemployment benefits, he's really zooming you guys at both ends here.
And I think that what worries a lot of your colleagues, I don't know if you feel the same, is that if the economy is so bad that it warrants extending unemployment benefits for the umpteenth time, then surely it warrants going slow on increasing the minimum wage.
RICHARDSON: You know, Neil, we have been hit three ways.
One is an ethanol policy that raises our food prices, highest feed prices ever. We have the not so Affordable Care Act that is set to be implemented 2015 that's going to increase our health care costs by 35 percent, and now we're staring down the barrel of a minimum wage increase of nearly 40 percent.
The magic number for us, $317,851,000. That's how many extra burgers we will have to sell for us just to stay even if this minimum wage goes into effect.
CAVUTO: I think you can do that. That's lunch for me. I can help you there.
RICHARDSON: We're counting on you. Get to South Plainfield. They're counting on you to come on by
CAVUTO: Don't worry about that.
But he raises a good point there, that we all want people to do better, and we all want people to earn money. All people want to earn more money. But you're worried about the boomerang effect. Right?
STORCH: Well, I think that, in the end, what it's going to do is simply cause fewer people to be employed.
CAVUTO: But Democrats say that's always CEOs' cry, and they say that it doesn't pan out.
STORCH: Well, then, again, I won't respond to anything specifically, but then they don't understand the economics of it.
If something costs more, you're going to consume less of it. That's true for everyone in the world. It's true for every business that I know.
CAVUTO: Well, I guess what I mean to say is that every time we have raised the minimum wage, these fears were raised, and the fears, they argue, were never realized. You say what?
STORCH: Well, again, I don't remember the last time we raised it by 40 percent at one time.
Additionally, we have unprecedented competition from other countries. On recent tests that was very highly publicized, U.S. students didn't do very well. And, in fact, students in Asia did far better than we did. So they cost less and they do better. Where do you think employment is going to take place?
CAVUTO: Good points, all.
Jerry, I want to thank you.
Jamie, thank you very much.
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