Seattle CEO pushing for $28 minimum wage, only pays $9

May 13, 2016, 6:28 AM | Updated: 8:43 am

Nick Hanauer, big business...

Nick Hanauer. (AP Photo/Ted S. Warren)

(AP Photo/Ted S. Warren)

Nick Hanauer’s career as a businessman and venture capitalist is something most entrepreneurs would love to boast of. He was an early investor in Amazon and has run — and sold — a number of online businesses.

He has also been a proponent of raising the minimum wage to $15. Yet, it surprised many in the business community to hear him say this week at a Museum of History and Industry event that he believes the minimum wage should be raised even higher — to $28.

“What I said was that if the minimum wage had tracked the wages of the top 1 percent, today it would be $28. If the minimum wage had tracked the increases in productivity in our economy over the last 30 years it would be about $22,” Hanauer told KIRO Radio’s Jason Rantz. “As high as $15 sounds, my instinct is that you could push it all the way to $28 over time and society would look a lot better than people think it would.”

“In the audience, people shook their heads,” he said. “I know that sounds completely insane. But how we feel about the future is gated by our imaginations. The (federal) minimum wage today is $2.13 plus tips … so $28 is a long ways from there.”

Related: It’s still too early to make any conclusion about Seattle’s minimum wage

The federal minimum wage for people who do not receive tips is $7.25.

Hanauer has a lot of information to back up his opinion — that minimum wage was raised 22 times since it was initiated in 1938; and that statistically raises in the minimum wage have shown no negative effects to employment or business (there are five examples of a negative effect when the wage was raised during a recession).

“What you can conclude from that is that we have never raised the minimum wage enough to actually show systemic job losses,” he said. “Now there has been a ton of micro-economic analysis that’s been done over the past 10 years that has proved, in my opinion, conclusively on a micro-economic level that there is no effect on employment level from raising the minimum wage.”

Rantz, however, does not agree with Hanauer. He believes that businesses will be negatively affected by minimum wage raises. He argues that wage increase over large areas don’t make sense — there are different economic conditions in different regions.

“The cost of living in Kelso is much different than Seattle, whether we are talking about a state minimum wage or federal it seems unfair to that small business in Kelso,” he said.

But Rantz also had another point.

“You don’t pay your workers $15 an hour,” Rantz told Hanauer. “If you go into business in North Carolina, reports are that you pay your workers $7.25.”

“We pay more than that, but it’s true that we don’t pay $15. We pay like $9,” Hanauer responded. “It’s a fair point. We don’t pay $15 and I advocate for $15.

“We cannot have a high functioning economy by the strength of the kindness of a few well-meaning CEOs.”

Hanauer argues that business benefits when wages are higher — that’s more money to spend with businesses. But he also said that wages need to rise on a large scale — not just by a handful of companies.

“Until business people unite around the idea that the country and business would be well-served by a higher minimum wage, it’s just not going to be up,” Hanauer said. “I don’t hold individual business people accountable for paying wages that are massively higher than standard – it’s not fair or reasonable. What I do think is reasonable is that business people should unite in getting Congress to solve this collective action problem, and pushing the minimum wage up nationally.”

Jason Rantz on AM 770 KTTH
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