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Bill Gates Gets Schooled in National Debate Over Raising Minimum Wage

Tsedeye Gebreselasse

Tsedeye Gebreselasse

While President Obama has been pushing a higher minimum wage since 2013’s State of the Union address and economists have been debating its merits for the past year, a labor expert went on MSNBC to school one of the richest men in the world, Bill Gates, about the labor market.

Gates, the billionaire founder of Microsoft and one of the world’s biggest philanthropists through the Gates Foundation, recently told the hosts of MSNBC’s “Morning Joe” that, while an increase in the minimum wage would not be economically devastating, too high an increase could create an incentive for businesses to automate and would decrease the number of low-skill jobs available.

“You have to be a bit careful that if you raise the minimum wage you’re encouraging labor substitution,” Gates said. “You’re going to go buy machines and automate things or cause jobs to appear outside of that jurisdiction.”

That didn’t sit well with the National Employment Law Project’s Tsedeye Gebreselassie. On MSNBC, she said that Gates doesn’t know what he’s talking about.

“With all due respect to Bill Gates, the weight of the economic evidence is against him,” Gebreselassie said. She added that a variety of economists recently signed a letter supporting a minimum wage increase and that fast food establishments, for example, “are not going to leave.”

“They are servicing local economies,” she added. “I think he’s a little bit out of touch about the realities of the modern day low-wage workforce.”

Last year President Obama first proposed the wage increase, urging Congress to raise it by almost $2 and bring the federal rate to $9 an hour by 2015. The administration has said 15 million workers would benefit from the change and that it would offset inflation.

“Right now, a full-time minimum wage worker makes $14,500 a year – which leaves too many families struggling to make ends meet, with a family of four with a minimum wage worker, still living below the poverty line,” the statement read.

Advocates for minimum wage workers argue that the current rate of $7.25, and even Obama’s proposed increase, is inadequate for employees hoping to sustain a family. The federal poverty line is set at $11,170 for an individual and $23,050 for a family of four, which would place a four-person family with two minimum wage workers just barely over the poverty line.

The increase would also affect workers making above minimum wage, because employers would be forced to adjust those pay scales. Critics of Obama’s proposal believe that this could lead to fewer jobs, if employers cannot cover the increase in labor costs. House Speaker John Boehner was among those against raising the minimum wage.

“When you raise the price of employment, guess what happens? You get less of it,” Boehner told reporters last year. “At a time when the American people are still asking the question, ‘Where are the jobs?’ why would we want to make it harder for small employers to hire people?”

Though states are not required to adhere to the federal minimum wage, only Georgia, Arkansas, Wyoming and Minnesota have lower pay rates. Washington has the highest minimum wage of any state, at $9.19.

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