Warren Buffett—the “sage of Omaha”—has gone to great lengths to present himself as “the common man’s billionaire.” He drives a simple car, lives in a simple house, supports minimally higher taxation on the rich—in short, even though he struck it rich, he postures as one who still understands and advocates for the average person.
To the surprise of many, then, Buffet’s most recent sagacious advice—spread all across the airwaves and op-ed pages of major media—has been to decry increases in the minimum wage. In particular, he has taken aim at the $15/hour minimum wage being proposed all across the country by the broad “Fight for 15” movement.
Buffet’s opinions, however, are not new, and are shot full of traditional myths about the minimum wage. He does, however, have an alternative plan: Rather than increase the minimum wage, he promotes the expansion of the Earned Income Tax Credit.
Buffett’s essential claim, and key myth, is that expanding the minimum wage will somehow hurt businesses, and that even though it would be ideal for there to be a $15/hour minimum wage, it will destroy business opportunity, most notably for the lower end of the wage scale, because businesses won’t want to bring on new workers except at very low salaries.
The key problem with this, though, is it isn’t actually true.
In 2013, the University of Chicago Booth School of Business did a survey of leading economists and found that by a four-to-one margin they felt the benefits of raising the minimum wage outweigh the risks. This is not surprising since the overwhelming majority of studies have found zero, or very close to zero, negative impact on employment from minimum wage increases.
One study in 2009 looked at 64 studies on the minimum wage starting in 1972 and found “near zero” negative employment effects. The authors went on to say if there was a negative impact on job prospects it was so small that it couldn’t be detected statistically. There have been two studies since 2010 that have taken into account specifically the restaurant-and-bar sector around the country and found similar results.
We could literally write an entire book on all the evidence that the minimum wage does not reduce employment. The only people who still believe that are business owners who don’t want to pay higher wages, and their ideological compatriots in the think-tank world along with the occasional bitter-ender in academia.
What about the Earned Income Tax Credit? Well, there is certainly no denying an expansion of the EITC would help workers. However, a study done by the two economists most well-known for arguing against minimum wage increases concluded that an increase in the EITC combined with an increase in the minimum wage could have a significant positive effect on single mothers. They assert that for everyone else it would have a negative effect. Given how roundly disproven their hypothesis against minimum wages has become, the real suggestion there is that trying to pit the EITC against minimum wage increases is not only false statistically but reeks of capitalist poverty politics that favors lower wages to keep profits high.
We still do need socialism
So Warren Buffett has revealed himself as just as self-interested—or at least as it pertains to his class as a whole—that he willingly repeated a well-worn set of lies that are even undermined by some of the evidence that could be perceived as most favorable to him
That being said, there is something else to be taken away from this. It is that wage policies under capitalism are absolutely inadequate to create any semblance of justice or equality. Living wages are calculated around just enough to realistically get by. When we start talking about the wage levels that allow people to live with dignity we start talking about numbers like $30/hour for instance that clearly would erode profits unsustainably in a capitalist model.
The real problem is the wage model, where you are paid less than the value of your work to enrich some other person. We shouldn’t just be talking about higher wages, or exempting more wages from taxes. We need to talk about how people can live with, of course, the basics: food, clothing, shelter, health care and education but also more than the basics, living really dignified lives.
This means talking about transforming our entire system to one where work isn’t for wages. But where the physical and mental capabilities of humanity are aimed towards first meeting peoples basic needs, then building out to meet the wants and desires we are capable of meeting based on our collectively established assessment of what is possible.
A decent life shouldn’t be tied to a wage. While in the Party for Socialism and Liberation we are committed to fighting for every possible advantage for workers in this society, we know this society doesn’t offer the solutions. We need to eliminate capitalism, and ultimately wages and move toward society based on human needs, not the creation of profit.
For an in-depth look at studies of the minimum wage please see this article from the Center for Economic and Police Research.
