Seattle venture capitalist Nick Hanauer and local radio host Dori Monson couldn’t disagree more about a potential $15 minimum wage law in Seattle, and that was clearly evident during a heated conversation Monday on KIRO radio.
There is a rabid debate in Seattle over the $15 minimum wage, with new Mayor Ed Murray already organizing a committee to explore the raise for city employees and newly-elected socialist councilmember Kshama Sawant rallying support for the movement.
Washington has the highest minimum wage in the country at $9.32 per hour, and $15 an hour wage would be a 60 percent increase.
Hanauer, an early investor in Amazon.com, is fully in support of raising the minimum wage across the country to $15. His argument, which he details in this article published on Bloomberg last summer, is that if workers don’t have enough money, then businesses don’t have enough customers.
“The signature feature of our economy over that last 30 years has been the increasing share of GDP that is taken up by corporate profits and the decreasing share of GDP that is going to wages,” he said. “What that has done, basically, is put the economy in this death spiral of falling demand.”
Meanwhile, Monson argued that for this particular issue, government should not be so involved.
“We have control over ourselves,” Monson said. “What you want are all these artificial governmental impositions on what is a free market otherwise.”
Hanauer said that out of 205 countries in the world, only 15 or 20 have security, prosperity and happiness — and those are the governments that have high rates of taxes, lots of regulation and more unions.
“Back out in the last 40, 50 years in this country and we’ve thrown a bunch of money at problems with no measurable impact on those problems,” Monson countered. “We have more people living in poverty right now than we have ever had in our nation’s history.”
Later in the conversation, Monson brought up the pillow company that Hanauer owns. In a recent Seattle Times piece, Pacific Coast Feather Company CEO Joe Crawford said his company would go out of business in six months if a $15 wage increase was implemented.
Monson asked Hanauer why he doesn’t raise the wages at that company to $15 an hour.
“Why don’t you live what you advocate?” Monson said.
Hanauer said it’s not about one or two companies raising their wages; rather, it’s about implementing it across the entire ecosystem.
“This isn’t a moral issue,” he said. “It’s an economic issue. When every worker earns more money, every business gets the benefits of those wages. Every business is on the same competitive ground and every taxpayer is relieved of the necessity of paying for the government programs that you dislike so much to keep these people out of poverty.”
Monson fired back, saying that if every business in Seattle was forced to raise its minimum wage, it would not only put a dent on overall profits, but also drive workers away from the city. He cited a recent CBO report which noted that a federal minimum wage lift would cost the country 500,000 jobs.
Hanauer, who called the CBO report “idiotic,” responded by saying that higher wages in Seattle would attract more talent to the region and increase competition.
“If higher wages killed jobs, then high wage places would have high unemployment and low wage places would have low unemployment — but they don’t,” he said.
The two continued bantering over what determines employee worth, with Monson saying “productivity,” and Hanauer going with “bargaining power.” Monson said that if a worker produces $8 per hour of benefit to the employer, but the artificial marketplace forces a $15 minimum, then that worker will be fired.
“Dori, you’re living in a 19th century conception of how the economy works,” Hanauer said.
“There are some things that don’t change,” Monson responded. “We have to deliver more to our employer than what they pay us, or else they don’t have a job for us.”
Hanauer then offered up Wal Mart as an example, saying that the corporate giant can afford to pay its bottom million workers $10,000 more per year each and still earn $17 billion a year.
“It has nothing to do with how much value those workers are creating for Wal Mart,” he said. “It has to do with the power the shareholders have over their workers.”
To end the debate, Monson accused Hanauer for being on mission to raise wages because of his investments in companies like Amazon, a corporate giant that Hanauer recently admitted destroyed one million jobs.
“I think you feel guilty about where you make your wealth,” Monson told him.
“You think I’m on some moral mission,” Hanauer said. “I’m not on a moral mission. I don’t think we should make these changes for moral reasons. What I’m saying is the economy that we’ve created is destroying my customer base. I want more customers with more money because when they have more money, I will be able to build bigger, more successful businesses.”
Listen to the whole interview here.
