This week, after sending a letter to Berkshire Hathaway shareholders, Warren Buffett appeared on CNBC to discuss an array of economic and political matters, such as bitcoin, the Keystone XL oil pipeline and the economy. One of the issues that garnered buzz was his stance on the minimum wage.
Buffett, who endorses a minimum tax on millionaires and a higher tax rate for top income earners, said he would love to see the minimum wage increase to $15, a rate that would be more than double the current federal minimum wage of $7.25. President Obama has recommended it be increased to $10.10.
He conceded that the suggestion isn’t feasible because of the way the overall economy is. “If you could have a minimum wage of $15 and it didn’t hurt anything else, I would love it,” Buffett said. “But clearly that isn’t the case.”
One idea he supports to help the poor is an earned income tax credit, a government program that would give tax money back to individuals that earned an income below a certain level. Essentially, it’s pretty much similar to Milton Friedman’s concept of a negative income tax (NIT).
There was a moment in the interview that was important to highlight. When asked how many employees earn the minimum wage at Berkshire Hathaway, he said that he didn’t know the precise number but noted that it was a small amount.
Berkshire Hathaway employs approximately 330,000 workers. Let’s say that the Omaha, Nebraska-based investment firm maintains two percent of workers that earn the minimum wage of $7.25, which would amount to 6,600 employees. If he thinks the minimum wage should be $15 then why doesn’t he increase their wages to $15 automatically without the government?
In addition, there are likely other workers who earn $10, $11, 12 and so on. Why not increase their wages to $15 as well? Also, why is he being stingy? Why make it $15 when the government could mandate employers to pay their workers a minimum wage of $25, $50, $100 or $250 per hour?
Also, what if small businesses can’t afford the $15 minimum wage? Berkshire Hathaway, a company that has holdings of more than $117.5 billion in stocks, can certainly afford a minimum wage, but some mom and pop shop certainly could not.
No wonder why billion-dollar corporations endorse the minimum wage and higher rates: to hurt their smaller competition.