Minimum wage debate: Former McDonald's CEO on higher pay fallout

Independent Vermont Sen. Bernie Sanders is reintroducing legislation that aims to double the federal minimum wage to $15 an hour. However former McDonald’s CEO Ed Rensi says state minimum wage is needed to reflect the economy.

“[Sanders] does not understand that small businesses generate the vast majority of jobs in this country and they are the anchor of local economies,” he told FOX Business’ Maria Bartiromo on Tuesday. “And the federal minimum wage of $15 does not recognize the difference between living in New York City and living in Keokuk, Iowa.”

Rensi also said that raising the minimum wage would have a substantial impact on inflation. The current inflation rate in the U.S. is 1.9% for the 12 months ended December 2018, according to the Labor Department.

“A $15 minimum wage will drive inflation like crazy because small businesses will have to increase prices dramatically,” he said. “Agriculture products will go through the roof.”

Rensi added that higher pay also puts managers in a position to make decisions based on what’s best for business, including firing employees and restructuring business.

“We had to go to technology to replace people,” he said. “We had to create systems, processes and procedures that did not need human interaction. I think overall face-to-face service went down. We moved money around in ways we never wanted to.”

Rensi spent more than three decades at McDonald’s before becoming chairman of FAT Brands.