Washington already has the nation’s highest state minimum wage at $9.19 an hour. Now, there’s a push in Seattle to make it $15.
KIRO Radio’s Dori Monson has made little secret of the fact he’s against the proposed increase, but he wanted to hear from the other side.
“I very much disagree with you on this $15 an hour minimum wage, so convince me, make your case,” Monson said inviting Seattle venture capitalist Nick Hanauer, a strong voice in the $15 minimum wage campaign, to the show.
Hanauer began by explaining that while the trickle-down thinking has done plenty to line his pockets, and others of the super-rich, there hasn’t been a lot of runoff.
“The thinking goes that if you pour money into rich people,” said Hanauer, “prosperity will squirt out of them sort of like donuts. And of course, the last 30 years we have instantiated that thinking into policy and all that has happened is the rich have gotten richer.”
The fundamental law of capitalism, Hanauer said is “if workers have no money, businesses have no customers.”
But Monson suggested perhaps there was an even more fundamental idea they should be thinking about.
“Isn’t the more fundamental law of economics the simple one of supply and demand? And if a company determines labor is worth $9 to $10 an hour, and somebody is willing to do the job for $9 to $10 an hour, then without government artificially setting a minimum wage, you have basic laws of supply and demand at work there.”
Hanauer said that relationship has more to do with power differential than economics.
“This idea that if you can get people to work for 50 cents an hour, this is a just, natural and righteous thing that is good for the economy, is totally ridiculous,” said Hanauer. “If there was a shred of truth to this idea, then the places in the world with the lowest paid workers would be the most prosperous.”
“There are 205 countries in the world running a simultaneous experiment in how to create prosperity. Twenty of them are prosperous. They’re the G-20. And in every single one of those countries, they have things like the minimum wage and robust labor laws.”
But what about the business owners that say they’ll go out of business with a government mandate to pay employees more, asked Dori.
“I find it morally repugnant for government to come in and tell a private business owner whose risked their capital, maybe put their home on the line, put all the effort into the business, for government to say ‘This is what you must pay somebody.’ When they’re saying ‘I can’t afford to pay them that, especially in this economy.'”
Hanauer said while business owners may believe that, they might not be thinking of a potential upside of the minimum wage increase.
“What they’re not accounting for is if you had a national increase in the minimum wage, then every business would have to raise their prices, and every business would have more customers.”
While business owners might have to raise prices, say on their burger, pizza, or latte product, the rise in the minimum wage would also give them more customers, said Hanauer.
A national increase of the minimum wage to $15 an hour would impact 64 percent of the American workforce, according to Hanauer.
“That means that 64 percent of the people in the country have a lot more money to spend on your burger, on your pizza and on your lattes,” he said.
To the role government should play in business, Hanauer explained it’s already false to say any of these businesses are operating in a totally free market.
“There is no such thing as a free market. Businesses don’t operate in a country like ours freely. Businesses depend on the government roads to bring customers to them. They depend on the police to maintain order. They depend on the military. They depend on our courts. It’s just ridiculous to say you’re operating in a free market.”
While businesses get plenty from the infrastructure, Dori also made the point that businesses also give to government.
“The tax revenues, the job base, the income tax, it comes from all of these business owners that have put their life blood on the line to start these businesses,” said Dori, who also expressed concern for the individual.
Dori told a story about when he was 17, working for minimum wage, at $2.50 an hour. He said he had the choice between a warehouse job making $18,000 a year, which was a lot for him, or going to college. Dori turned to a teacher he trusted.
“[The teacher] said, ‘Look at what your upside is if you do that. Look at how you’re limiting your upside if you don’t go to college, if you don’t finish your college degree. You’re limiting yourself,'” said Dori. “I think this push for a $15 minimum wage is an effort by government and labor unions to limit the upside potential, to make people feel the economic handcuffs of barely getting comfortable.”
Dori thinks he might have been just comfortable enough to remain in the position at the warehouse and would have missed out on exploring his potential.
“I think we’re trying to put handcuffs on people by getting them barely comfortable with this.”
But Hanauer quickly pointed out the $2.50 minimum wage Dori was making then would be a higher minimum wage for that time than what people are making now in today’s dollars.
“That $2.50 is like $12.50 to $13 in today’s dollars,” said Hanauer. “You need to know that on a comparative basis it was much higher then, than it is today.”
“Raising the floor to the same level that it was historically isn’t retarding freedom. The minimum wage, if it had tracked inflation, would be $10.50 an hour. If it had tracked productivity, it would be $21.72.”
The discussion finally reached a final impasse at whether there was a statistical correlation between a state’s minimum wage and unemployment. But Dori and Hanauer concluded in agreement on one thing.
“Dori, you’re doing God’s work,” said Hanauer. “This is a conversation we need to be having about how to create prosperity. We need to be thinking outside the box and having a robust debate about it.”
“I absolutely agree, and I’d like to talk to you more about it,” said Dori.
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