Warren Buffet says $15 minimum wage would hurt jobs, Speaker Chopp says no vote on $12 minimum this year, and more

Warren Buffett weighs in on the federal minimum wage.

“If you could have a minimum wage of $15 and it didn’t hurt anything else, I would love it,” he said. “But clearly that isn’t the case.”

However, he added, he wouldn’t argue with President Obama’s proposal for a more modest increase, to $10.10 an hour from $7.25 an hour currently.

While Buffett goes on to see he doubts most of the impact studies being circulated, he clearly recognizes the likelihood of negative economic and employment consequences associated with the bump to $15.

Earlier this year in Olympia, some House Democrats introduced legislation to increase the statewide minimum wage to $12 an hour. House Speaker Frank Chopp says the time is not right.

Washington Speaker of the House Frank Chopp supports a minimum wage hike, but he says the issue wasn’t ready for a vote on the House floor this year.

“I think it was important to start the conversation and have a good discussion and figure out where there’s consensus over moving forward because if you’re working you shouldn’t be poor,” said Chopp.

Last week, on Bloomberg, Joni Balter wrote of Washington state as a place where a higher minimum wage hasn’t killed jobs. She may be protesting too much. Washington Restaurant Association president Anthony Anton points out one clear impact.

Long before the recession began, Washington restaurants had made major adjustments to their businesses to survive the fallout of operating in the highest minimum wage state in the country, with no reasonable exceptions. U.S. restaurants average more than 17 employees per unit. Washington? We average just over 14. There are more than 13,000 restaurants in our state, equaling 39,000 jobs that we effectively have eliminated for just the cost of a few dimes.

There’s more. Anton’s article is worth your time.

Finally, James Pethokoukis asks the question others should be asking: Why are minimum wage proponents dismissing automation risk?

As MIT’s Erik Brynjolfsson and Andrew McAfee, authors  of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies told me recently: “There’s no economic law that says everyone’s going to benefit from technological progress, even as the pie gets bigger. It’s possible for some people, even a majority of people, to be made worse off.” While some low-skill jobs might be automation proof, what about retail and fast food? Indeed, Brynjolfsson and McAfee support helping workers via a greatly expanded EITC. Subsidize work, don’t raise the cost of hiring.

Pushing for an unprecedented boost in the minimum wage given both the weak economy and automation risk seems like foolhardy public policy.

Makes sense.

Does CBO underestimate job losses caused by minimum wage increase? Former Labor Dept. chief economist thinks so.

People – and by people I mean pundits and economists – can’t seem to quit talking about the CBO minimum wage report. Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, has one of the tougher takes on the analysis. In Market Watch, she suggests that CBO seriously underestimates the job losses that would be caused by raising the federal minimum wage to $10.10. She directly takes on the argument that raising wages for the lowest-paid workers will boost demand and stimulate the economy.

The report continues, “Low-wage workers generally spend a larger share of each dollar they receive than the average business owner or consumer does; thus, when a dollar from business owners or consumers is shifted to low-wage workers, overall spending increases.”

But spending by upper-income consumers helps to employ low-wage workers. The Labor Department’s consumer expenditure data for 2012 show that the highest fifth of income earners was responsible for 52% of spending on personal household services, and 56% of spending on fees and admission to entertainment. These are all local businesses that employ low-wage workers. Reducing the incomes of the top fifth will result in less spending on these categories, and less domestic employment.

In contrast, the lowest fifth of income earners spend a higher than average percent of their income on apparel, footwear, and nondurables, which are more likely to be imported. A substantial percentage of goods sold at superstores — where low-income individuals tend to shop — are made overseas.

She contends that a higher minimum wage puts is precisely the wrong prescription.

CBO’s conclusion that approximately 96% of workers will keep their jobs, even with substantial increases in their wages, suggests that these workers have been underpaid. The only way this could be the case is if labor markets in the United States were profoundly out of balance. CBO presents no evidence that this is the case. Indeed, CBO does not address the millions of unemployed Americans who seek work, especially teens and low-skill workers. This is evidence that entry-level wages are too high, not too low.

CBO does not address the biggest losers of increasing the minimum wage: low-skill teenage workers who will be denied the right to work in the United States. They may be willing and able to provide a prospective employer with services that are worth $5 an hour, or $7 an hour. If the hourly minimum wage rises to $10.10, they will miss the first rung on the career ladder to success. Sitting idly unemployed, they may take solace in knowing that CBO calculated that they would be better off.

Former U.S. Chamber of Commerce economist Richard Rahn also weighs in.

Many of those advocating a higher minimum wage are the same folks who correctly claim that higher taxes on tobacco will reduce smoking over time and argue that higher taxes on carbon will tend to reduce such emissions over time. If higher prices for smokers and carbon emitters change behavior and result in less tobacco and coal being produced, why would not higher labor costs result in fewer workers being hired?

Good question.

Campaign for higher minimum wage inspired by the Occupy movement?

That’s one conclusion that could be drawn from this excellent NW News Network story by Austin Jenkins.

But David Rolf of the Service Employees International Union says there was something missing: “Occupy didn’t have a long term theory of how to make change and it didn’t have very crisp demands.”

Rolf says that started to change about a year after the occupiers were chased out.

In November 2012, his union – SEIU – was involved in organizing a fast food workers strike in New York. Their demand: a $15 per hour wage.

There are very few spontaneous mass movements. The drive for “$15 now” is no exception. And speaking of the 1 percent, there’s a must-read in today’s Wall Street Journal debunking many myths associated with high earners. I’ll jump to the conclusion. RTWT

The shift in incomes in favor of the wealthy has been due to several large forces, including a world-wide boom in asset prices, the rise of global markets, and technological innovation that has increased the earning power of the well educated. These have been positive—not negative—forces that have elevated living standards around the globe.

At a time of slow economic growth, mounting government debt, a stalemated politics and the impending retirement of the “baby boomers,” the attacks on the “one percent” look more and more like a diversion from the nation’s real problems.

Offering an alternative, James Pethokoukis notes an AEI colleague’s proposal to cut the minimum wage by half for the long-term unemployed and pair it with a wage subsidy. The plan would reduce the employer’s hiring risk and accelerate the transition from unemployment to holding a job. Not popular, perhaps, but it tackles the right issue. As Gallup reports, unemployment rises to top problem in the U.S.