Bill Gates: Minimum Wage Increase Could Kill Jobs [Video]
Microsoft billionaire Bill Gates is not a big fan of raising the federal minimum wage for hourly workers.
Gates, who has made campaign contributions to both Democrats and Republicans, is generally considered a liberal who supported the reelection of Barack Obama in 2012.
As The Inquisitr previously reported, he has also warned that in the next two decades, so-called software substitution will replace low-skilled occupations altogether.
Unlike what the law classifies as non-exempt (or hourly) workers, so-called exempt workers are generally paid on a salary basis regardless of how many hours they put in and are excluded from minimum wage coverage as well as overtime pay.
Gates addressed the minimum wage issue last week at an American Enterprise Institute symposium (see embed below):
When people say we should raise the minimum wage, I think … I know some economists would disagree, but I think boy, I worry about what that does to job creation. The idea that through the Earned Income Tax Credit, you’d end up with a minimum wage that you’d receive — that, I understand better than potentially damping demand in the part of the labor spectrum that I’m most worried about.”
In a recent appearance on MNSBC, Gates also sounded a cautionary note on hiking the minimum wage:
Well, jobs are a great thing. You have to be a bit careful that if you raise the minimum wage, you’re encouraging labor substitution. You’re going to go buying machines and automate things — or cause jobs to appear outside of that jurisdiction. And so within certain limits, you know, it does cause job destruction. But, if you really start pushing it, then you’re just making a huge trade-off…”
The minimum wage is meant to be an entry level pay grade, not a source of permanent income. In the normal course of events, workers acquire additional skills (and are incentivized to do so) and get promoted or move on to other more lucrative jobs, and thereby increase their take-home pay.
In the real world, however, there are too many employers who act in an arbitrary, unfair, exploitive, or greedy manner when it comes to pay. That being said, instead of haggling over the specific dollar amount of the minimum wage for hourly workers, is it a proper role of elected officials to intervene in this nature in the first place? Even though the free market has flaws, shouldn’t marketplace forces rather than politicians and bureaucrats establish a so-called minimum wage.
Everyone wants to make more money. In the big picture, though, will a minimum wage increase actually be an upgrade for the economy or will it harm the workers that it supposedly is designed to help? Even employers that operate in good faith claim they may have to stop hiring new workers or cut back on existing workers’ hours if a minimum wage increase goes into effect.
In an open letter to Capitol Hill lawmakers, about 500 economists (including three Nobel laureates) stated that “One of the serious consequences of raising the minimum wage is that business owners saddled with a higher cost of labor will need to cut costs, or pass the increase to their consumers in order to make ends meet. Many of the businesses that pay their workers minimum wage operate on extremely tight profit margins, with any increase in the cost of labor threatening this delicate balance… According to [the Congressional Budget Office], raising the federal minimum wage to $10.10 per hour would cost the economy 500,000 jobs by 2016. Many of these jobs are held by entry-level workers with limited experience or vocational skills, the very employees meant to be helped…”
Do you agree or disagree with Bill Gates’ views on a possible minimum wage increase?