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Our Jan. 28 hour on economic mobility and the current state of 'The American Dream' featured a fascinating closing segment on an unusual campaign for a higher minimum wage in California.
The advocate? Conservative millionaire Ron Unz, chairman of the Higher Wages Alliance and part of a growing number of figures on the right side of the political spectrum asking for a higher minimum wage. Unz is advocating for a state wage as high as $12 an hour in the Golden State. He was joined on our air by Mercatus Center economist Tyler Cowen, who thinks a higher minimum wage is a step in the wrong direction.
TOM ASHBROOK: President Obama will announce tonight that he is ordering the minimum wage for federal contracting to be raised from $7.25 to $10.10 an hour. There's a push on in Congress to raise the minimum wage for all Americans to $10.10 an hour. A millioniare conservative in California, Ron Unz, is pushing a state ballot measure for a $12 minimum wage in California. Unz says it's time to stop allowing big companies to pay so little that the government has to step in with services to support the working poor. What do you think? Does a conservative argument for a higher minimum wage make sense to you?
Ron Unz joins me now from Stanford, California. He's chairman of the Higher Wages Alliance. Ron Unz, welcome to On Point. Thanks very much for being here.
RON UNZ: Great to be here.
TA: We've heard you make the case, but make it for us right now: why a $12 minimum wage for California?
RU: Well The situation right now is that so many tens of millions of low-wage workers in the United States can't get by on their own paychecks. Therefore, they receive vast numbers of dollars form the taxpayers andthe government. The total around the country is $250 billion a year in social welfare spending going to the working poor. If the working poor were paid a reasonable wage by their employer, they would no longer be eligible for many of those programs, and the taxpayers would save tens of billions of dollars a year. What we have right now is a system where many of these businesses have privatized the benefits of their workers, they get the work, and socialized the cost and shifted the expense to the rest of society and to the taxpayers, and I don't think that makes sense.
TA: How are your fellow conservatives responding to your idea of a $12 minimum wage in California?
RU: Surprisingly open to the idea. I mean the minimum wage is an issue that really dropped off the American radar screen 10, 20, 30 years ago. It hasn't been one of these hot-button ideological issues. The main concerns conservatives have is whether a higher minimum wage would cause massive job less. The evidence is that it wouldn't, very few workers would lose their jobs, their in the non-tradeable service sectors. All that would happen would be that the extra costs would be passed along to the consumer. And the price rises would be very small. Wal-Mart could cover a $12 minimum wage by raising their prices one percent, one time.
TA: Onepercent, one time, at Wal-Mart and just keep it there, on out, and that would cover all this? If you had a 12 minimum wage in California what would that mean if you had a two income family — where would it put their annual earnings?
RU: It would be a life changing difference. A single worker, at $12 a hour minimum wage, would make $25,000 a year. A couple would make $50,000 a year. $50,000 a year doesn't make you affluent, it doesn't make you rich, but you can generally get by on something like that. And the tax-payers would save tens of billions of dollars each year nationwide if something like that were generally adopted.
TA: There's the argument from millionaire Ron Unz. He's former publisher for the American Conservative, he's saying higher minimum wage for California, $12 an hour.