Prominent Hillary Clinton supporter and Democrat economic heartthrob, Warren Buffett, recently appeared on the Fox Business Network and was asked about a federal $15 minimum wage.
Clinton, using New York’s business-killing wage model as an example, has voiced support for legislation that would implement the $15 rate federally “if pay rose gradually and if the law included escape clauses.”
Buffett disagrees, saying low-income workers ‘don’t necessarily need a higher wage.’ He argues the best way to help workers increase their wages would be to raise incomes through an earned income tax credit.
Here is a transcript of the exchange:
LIZ CLAMAN: What do you think it is about him? Look, he’s said that he really wants to help people pay for education. Minimum wage, he seems to be driving that conversation. You’ve got more than 90 businesses under this umbrella at Berkshire Hathaway and among them some that do pay minimum wage, I believe depending on the state, maybe Dairy Queen, for example. There is this push to go to $15 an hour in many states. It’s going to happen sooner rather than later. Will it hurt your numbers out of, say, Dairy Queen if it does go to $15 an hour?
WARREN BUFFETT: Well Dairy Queen, like a number of the other fast foods, it’s all franchised so those people are not employees of ours, but they are employees of people that are our franchisees, and I personally think the earned income tax credit will do a lot more in terms of people who really aren’t earning enough to have a decent living. And the problem with people in many jobs these days is that their market rate really on 40-hour weeks, they can’t support a family and what they need is not necessarily a higher wage, but they need a higher income and the earned income tax credit, in my view, is the best way to attack that problem without raising wages to the point where people lose their jobs. And we have, we’re spending $60 billion a year in this country on the earned income tax credit now, and I think we could use a lot more and better direction and get rid of some of the fraud, and that’s the best answer.
In one brief exchange, Buffett has argued that a higher minimum wage is not the manner in which to increase overall incomes for the poor or middle class. And, he’s pointed out that raising the wage to $15 might be a “point” at which “people lose their jobs.”
New York’s Governor Cuomo, who helped usher the $15 wage into his state and is the model Hillary wishes to emulate, inadvertently admitted that raising the minimum could negatively impact jobs.
“You’re saying the businesses that employ a large number of minimum wage workers, your payroll is basically going to double,” Cuomo explained. “That could have a negative impact.”
Expanding the Earned Income Tax Credit (EITC) is more of a conservative economic concept to help low-income workers than one you’d expect from a Hillary supporter.
Two economists at the American Enterprise Institute have suggested that “expanding the earned income tax credit is a much more efficient way to fight poverty than increasing the minimum wage.”
Expansion of the EITC, as the Center on Budget and Policy Priorities explains, not only increases wages, it encourages people to choose work over welfare.
The EITC is designed to encourage and reward work. As noted, a worker’s EITC grows with each additional dollar of earnings until reaching the maximum value. This creates an incentive for people to leave welfare for work and for low-wage workers to increase their work hours.
Urging people to get off of government dependence, increase their work output, and be rewarded by improved wages, goes against everything Hillary and the Democrats stand for. Yet one of their own economic experts is suggesting it as policy.