Nick Hanauer is a member of the one percent, with an estimated net worth of $1 billion. He’s well behind Warren Buffet and the Koch brothers but wealthy enough that he will never wonder where his next meal is coming from. He is also a realist who understands that those at the top cannot keep taking more and more stashing it away and not create unintended consequences which in this case would be the collapse of the entire economic system.
In a recent article for Politico Magazine entitled “The Pitch Forks Are Coming…For Us Plutocrats” Hanauer comes out in support of raising the minimum wage and ridicules the very idea of “trickle down” economics.
Hanauer begins by pointing out how simple it is to understand why higher wages are good for the economy. Workers earning the current federal minimum of $7.25 an hour put very little money into the tills of local businesses. They may be able to pay rent and buy groceries, but are unlikely to shop for clothing or eat out in local restaurants. After covering food and shelter, their scanty paychecks are gone.
“Is this issue more complicated than I’m making out? Of course. Are there many factors at play determining the dynamics of employment? Yup. But please, please stop insisting that if we pay low-wage workers more, unemployment will skyrocket and it will destroy the economy. It’s utter nonsense. The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy. It’s believing that if the poor get richer, it’s bad for the economy.”
Hanauer is not the only voice trying to make the case that raising wages does not increase unemployment, and that “trickle down” doesn’t even ooze down. Unfortunately, it is rare for a member of the one percent to take his position, and even more unusual is his willingness to name names. He praises employers such as Costco and Gap for leading the way, but points out that when the bad actors such as Walmart and McDonalds hold their pay down to the bare minimum, what they are saying is that they would pay less if they could get away with it
He does not think that anyone should be compelled to pay their workers more than the competition pays theirs. But he does believe that it is poor business to pay so little that employees can’t survive without government subsidies, such as food stamps, rent assistance and Medicaid. Hanauer notes that in many states, Walmart workers make up the majority of Medicaid beneficiaries.
“Walmart could, say, pay each of its 1 million lowest-paid workers an extra $10,000 per year, raise them all out of poverty and enable them to, of all things, afford to shop at Wal-Mart. Not only would this also save us all the expense of the food stamps, Medicaid and rent assistance that they currently require, but Wal-Mart would still earn more than $15 billion pre-tax per year.”
He admits that many who have been born to wealth have been taught their entire lives that they are the “job creators,” when in fact they are not and never can be. He uses himself as an example of why there can never be enough super wealthy people to fuel a growing economy.
“I earn about 1,000 times the median American annually, but I don’t buy thousands of times more stuff.”
He points to Henry Ford, a man who was not a philanthropist, but who paid his workers more than his competitors. Ford pay wages his contemporaries considered to be outrageous because he wanted to share his success with them. Ford just realized that if his own workers couldn’t afford to buy his cars, he would have a very limited customer base. By paying his workers more, and putting upward pressure on his competitors’ wages, Ford cannily broadened his customer base.
‘What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.”
Hanauer is not a newcomer to this sort of thinking he has been trying to get his fellow entrepreneurs to open their eyes and see the world as it really is for some time as in the video below from last February.
h/t: Daily Kos