Speaking on CNBC Monday morning, the renowned businessman Warren Buffett, chairman and CEO of Berkshire Hathaway, said he would approve of a minimum wage hike to $15 an hour — if it hurt nothing else in the economy, which he says isn’t the case. President Obama has recently campaigned for a minimum wage hike to $10.10, and has even mandated as such for federal contracts. But Buffett would like to see workers paid more — if it didn’t also lead to job cuts.
Buffett said: “If you could have a minimum wage of $15 and it didn't hurt anything else, I would love it. But clearly that isn't the case.”
Many have argued — including the nonpartisan Congressional Budget Office (CBO) — that raising the unemployment rate could have dramatic negative impacts on the economy. The CBO said the $10.10 proposal would increase earnings for more than 16.5 million people but would also cut employment by roughly 500,000 jobs. It would lift 900,000 people above the federal poverty line by 2016, but higher costs would likely influence business owners to shed positions, and might lead to higher costs for consumers.
Clearly, these are the negative impacts Buffett spoke of Monday morning. Instead of a minimum wage hike, Buffett has instead centered his focus on raising the Earned Income Tax Credit, which gives money back to those who earn beneath a certain income level based on the number of children they have — $14,340 or $19,680 if married filing jointly, with no children, up to $46,227 ($51,567 married filing jointly) with three or more children.
He said, “I think you can accomplish way more through the earned income tax credit without negative effects.”
Despite his reservations over an increased minimum wage, he continues to advocate for deeper efforts to address income inequality, an issue he says is “something a very rich country should address.”
An increase to the Earned Income Tax Credit would have little to no impact on manufacturers, as employees would see their take-home pay increased after tax season without any additional investment. And while many manufacturing employees do make far above minimum wage, there are hundreds of thousands who earn far less — they could see marginal increases to their salary. Whether or not manufacturers would then move to shed positions is questionable at best.
Buffett did advocate for Obama’s current $10.10 proposal.