Charles Koch: Help the poor by eliminating the minimum wage

In an interview in my old mater The Wichita Eagle (I worked there from January 1980 – January 1982 as a staff reporter), billionaire Charles Koch talks about an ad campaign he’s bankrolling — and suggests a nice way to help the poor would be to eliminate the minimum wage:

Charles Koch, who runs Koch Industries and contributes to political groups and campaigns, said he will launch a new campaign on Wednesday to laud economic freedom and warn the public about government overreach.

He knows this means he will again draw fire from political critics. His memory of the 2012 political campaign is still fresh. People said he tried to buy elections, and he recalls critics calling him names.

“Evil Koch brother,” he said. “Greedy and stuff.”

In that campaign, conducted mostly out of the limelight, he spent millions (he has not said how much) helping 2012 candidates oppose President Obama and support conservative and libertarian economic policies.

The effort beginning this week will cost the Charles Koch Foundation about $200,000 and run as a media campaign in Wichita for four weeks, he said. If people like it, he said, he might expand it to other cities.

The point of it, Koch said, is that he believes prosperity grows where economic freedom is greatest, where government intervention in business affairs is kept to a minimum. He hopes his ideas will help the country grow, he said. In his interview he emphasized several times that he believes his ideas on economics will help disadvantaged people. Government regulations – including the minimum wage law – tend to hold everyone back, he said.

“We want to do a better job of raising up the disadvantaged and the poorest in this country, rather than saying ‘Oh, we’re just fine now.’ We’re not saying that at all. What we’re saying is, we need to analyze all these additional policies, these subsidies, this cronyism, this avalanche of regulations, all these things that are creating a culture of dependency. And like permitting, to start a business, in many cities, to drive a taxicab, to become a hairdresser. Anything that people with limited capital can do to raise themselves up, they keep throwing obstacles in their way. And so we’ve got to clear those out. Or the minimum wage. Or anything that reduces the mobility of labor.”

It’s always interesting to hear someone who is a millionaire, or billionaire, or someone who gets free government medical coverage and eats bean soup in the Senate dining room, or who has a talk show and jets to cities in a private jet for lunch talk about reducing money for the poorest of Americans. It is talking to the choir. The folks who’ll enjoy these ads and want to see more of them will be within Mr. Koch’s existing political constituency.

To other Americans, it will just be one more example of what we are seeing each day: the utter flip side of “compassionate” conservatism.

Ed Kilgore:

Conservatives have long argued against minimum wage laws on grounds that they kills low-end jobs. Still, it’s a bit shocking to hear David Koch, whose net worth is around $47 billion, sanctimoniously argue that we need to eliminate minimum wage laws (along with regulatory conditions on starting or running a business) to help po’ folks….Technically, downward mobility is still mobility, you see. When you shake the money tree, somebody’s got to fall out.

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  • http://www.americaincontext.com Barky

    Seeing as how you can’t live on the minimum wage now, paying any less is equivalent to slavery. I think the 13th Amendment has something to say about that.

    Oh wait, I forgot. The only amendment that matters is the 2nd. My bad.

  • cjjack

    Seeing as how you can’t live on the minimum wage now, paying any less is equivalent to slavery.

    Barky, that’s the idea.

    Anybody who has ever worked a minimum wage job can tell you that the employers who pay that wage don’t give a rat’s behind about whether you can “live” on it or not. It is the absolute bare minimum they can offer, and if they could pay less, they would.

    I’m reminded of the time I worked in a restaurant for near-minimum wage, and those of us who worked the hardest had a way of getting out of work at the end of the week. If it was the end of the week, and you were approaching 40 hours, all you had to do to go home early was point out this fact to the nearest shift manager. “Hey Jeff, I’m coming pretty close to overtime…just thought I’d let you know…”

    I actually had a manager walk me downstairs to the time clock, punch out my time card, and send me home in the middle of one of the busiest dinner rushes I’d ever seen. Not because he cared about whether or not I could live on my wage, but because the extra dollar fifty I’d have earned by staying on station an extra hour would have warranted a meeting with his boss about “excessive overtime pay.”

    When I became a manager myself, I learned to feel his pain…getting dressed down over literally one dollar in overtime pay.

    So when someone tells me eliminating the minimum wage will help, I am less than convinced.

  • Chickenfarmer

    Charles Koch and his like minded apparently know nothing about this country’s economic history. The reason we have laws protecting labor and providing for minimum wages is that in the late 19th and early 20th century conditions were so bad for the average worker that some had to resort to violence to attempt get laws protecting workers in place. Does Mr. Koch really think that the Gilded Age was such a terrific time for the average American that we are all eager to repeat that experience?

  • JSpencer

    I have no doubt there are plenty of people in this country (including movers and shakers) who would be just fine with a return to slavery if only they didn’t have to take any flak over it. The minimum wage as it sits today is shameful.

  • http://www.americaincontext.com Barky

    The reason we have laws protecting labor and providing for minimum wages is that in the late 19th and early 20th century conditions were so bad for the average worker that some had to resort to violence to attempt get laws protecting workers in place.

    I’ve been wondering a lot lately if we’re headed towards a reckoning, meaning violent demonstrations, if we don’t get this economy repaired and start getting people back to work and out of poverty. I don’t like wearing the tin-foil hat, but there is a lot of pressure on middle- and lower-income families. In physics, you can’t keep that much pressure on ad infinitum without a violent release.

  • adelinesdad

    Of course the fact that slaves got paid nothing for their work adds to the harm, but the primary injustice done to slaves was that their freedom was taken away. The civil war was fought to free them, not to raise their wages.

    So, no, a mutual agreement between an employee and an employer who pays very little is nothing like slavery. There is the question of the imbalance of power in negotiations, which unions were/are important to rectify. But even when the power is imbalanced, to compare it to slavery is absurd and minimizes the suffering that took place under that practice.

  • adelinesdad

    cjjack:

    “It is the absolute bare minimum they can offer, and if they could pay less, they would.”

    “I’m reminded of the time I worked in a restaurant for near-minimum wage.”

    I’m not trying to be a smart-alec here, but I’m curious why they didn’t pay you exactly minimum wage, since they could have and clearly, by your account, were anxious to squeeze every penny.

  • http://seniorscan.wordpress.com gregorymhughes

    Whenever there was talk of raising the minimum wage in the past there was always a cry from the right that it would hurt the country. I think is would help the country to raise the minimum wage in stages to the poverty level at least. With higher earnings, the poor would not park their extra income in offshore tax havens, but spend it in our economy. This in turn would create jobs and benefit everyone including the wealthy. This would be a trickle up approach as opposed to trickle down which has not worked for the last thirty years or more. The increasing income and wealth disparity is pushing us in the direction of a plutocracy. Some would argue that we have already arrived.

  • yoopermoose

    No minimum wage and loose regulations certainly worked well in Bangladesh. Maybe that is the paradise Mr. Koch is looking forward to.

  • sheknows

    LOL Gregory.
    Koch and his ilk are so far removed from the real world, what they see or say isn’t even relevant. No one should even publish their economic views and theories. They live in a bubble and unlike some 1% like Buffet, the last time they had any physical contact let alone verbal with anyone who made less than the $250K, was when they had to talk to their driver about the Mazzarati running rough.
    People must think because you have money, you are a SMART person and everyone should listen to you for tips. Guess that’s why so many jerks are elected.

  • JSpencer

    So, no, a mutual agreement between an employee and an employer who pays very little is nothing like slavery.

    “Mutual agreement”? People who are out of options do what they have to do in order to survive. This is called “desperation”.

  • yoopermoose

    IS, exactly

  • adelinesdad

    JSpencer,

    Before we get into the technical weeds, let me make sure I understand your position. Are you saying that if we were to do away with the minimum wage, we might as well re-instate slavery, because it’s pretty much the same thing? That a person who, in desperation, accepts a low-paying job is no different than a person being owned by another person? You don’t think that’s more than a slight exaggeration?

    If we can agree that they are completely different things and completely different degrees of injustice, maybe we can have a good discussion about this. Otherwise I’m afraid it’s hopeless.

  • cjjack

    I’m not trying to be a smart-alec here, but I’m curious why they didn’t pay you exactly minimum wage, since they could have and clearly, by your account, were anxious to squeeze every penny.

    I started at minimum wage. They grudgingly gave raises, but as I was to learn they also had a “maximum” wage. Once you hit that number, you could never make any more no matter how hard or well you worked.

    What I was trying to illustrate with my post is the madness of the “absolute lowest wage possible” business model. As I indicated, managers were taken to task for allowing employees to go into overtime. What was the terrible cost involved?

    Again, let me spell it out for you. Let’s say you’ve got a line cook making 6 dollars an hour. If he goes over 40 hours, his wage automatically hikes up to 9 dollars an hour. Great success for the cook, right? Failure for the restaurant, right?

    Yet if that newly wealthy cook stays a full hour past the end of his shift, the restaurant in question is out a grand total of three dollars.

    This was treated as if it were the end of the world for the business.

    Now let’s say that intrepid cook is bucking for a raise. An extra 25 cents an hour, for example. At the place I worked, a 25 cent raise was considered a hefty increase only bestowed upon the best employees. How much is that? Well a 25 cent per hour raise amounts to a grand total of 10 bucks per week.

    I remember sitting in a meeting where our head cook lobbied for a raise, and was told – in front of the whole staff, no less – that if he didn’t like what he was making, the front door was wide open, and he could walk out at any time.

    Management was ready to throw this guy out of the building – a guy who was the backbone of the kitchen – because they couldn’t justify giving him an extra 10 dollars.

  • bluebelle

    I have to agree with JS on this one. One side is holding all the cards and the other is trying just to survive. This person is probably unskilled, may not have graduated from high school and may have a family. What are his or her options in a country that can legally pay next to nothing to its workers??? If one company starts paying less than minimum wage, it will drive all workers’ pay down, and create increased inequality in a country that already tops industrial nations on that statistic

    Remember “The Grapes of Wrath”, where there was an oversupply of workers vying to pick crops. The employer capitalized on that– paying as little as possible for as much back breaking work as possible– while even those who worked from dawn to dusk barely made enough to eat. Is that what we want to return to??

  • bluebelle

    The point of it, Koch said, is that he believes prosperity grows where economic freedom is greatest, where government intervention in business affairs is kept to a minimum. He hopes his ideas will help the country grow, he said. In his interview he emphasized several times that he believes his ideas on economics will help disadvantaged people. Government regulations – including the minimum wage law – tend to hold everyone back, he said.

    So why is he not also objecting to corporate subsidies to Big Ag and Big Oil that also interfere with the economic freedom of businesses??? Also, I would like to see him prove his point by showing examples of other economies that “improved” the lot of the poor by eliminating the minimum wage. Most of the ones that come to my mind are banana republics– and the lot of the poor was not improved by giving business free rein. The ultimate in deregulation of business was also exemplified by the recent tragedy in Bangladesh– where profits were great and business practices were unimpinged.

  • adelinesdad

    It seems no one is willing to join me in the “slavery is way worse than poverty” camp. Well, as promised I won’t get into a long debate about it then. But I’ll state my policy preference: I don’t see why we should expect employers to act as welfare agents. Economists, even those on Obama’s team (http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html?pagewanted=all&_r=0) agree that the minimum wage is a weak and blunt tool in the fight against poverty.

    I’d prefer we abolish the minimum wage (and most other forms for welfare) and replace it with a minimum income subsidized by the government. In theory, a family with zero income would receive a paycheck from the government of the full amount. The subsidy is reduced by 50 cents for every dollar the family earns until the subsidy is 0 once the family is earning twice the minimum income level.

    The catch is that all adults in the family must work full-time or be in school full-time unless there are children in the household and then one adult may not work if they choose. This shouldn’t be a problem since the minimum wage is gone. I can think of plenty of things I’d hire someone to do if they were willing and I was allowed to pay what I’m able and what it was worth to me, which is not much. Exceptions would be granted for disability.

    I have no idea if Koch would be on board with this. My point is not to defend him, just that the minimum wage need not be a sacred cow and the defense of it as a critical anti-poverty tool is misplaced, in my opinion.

  • petew

    “It’s always interesting to hear someone who is a millionaire, or billionaire, or someone who gets free government medical coverage and eats bean soup in the Senate dining room, or who has a talk show and jets to cities in a private jet for lunch talk about reducing money for the poorest of Americans. It is talking to the choir. The folks who’ll enjoy these ads and want to see more of them will be within Mr. Koch’s existing political constituency.”

    Exactly! Billionaires like Koch, seem to claim that government regulations and policies like the Minimum wage are hurting average Americans, and holding back their rights to take advantage of truly free enterprise. what he means though, is that these things are hurting Americans like him!

    The danger of eliminating minimum wage is not just that employees at McDonalds might have to work for less pay, but that, when the lower limits are excluded, this opens the door for wealthy employers to get away with any low rate of pay that they possibly can. The very reason that concepts like a livable wage, safe working conditions, and union bargaining power, were developed, is because early industrialists literally got away with murder—since more than one Union organizer met violent and untimely ends. If a mine worker (for example) complained about working conditions, or asked for additional pay to feed his starving family, he was easily cast aside and replaced by one of the dozens of other desperate workers willing to accept the employers terms. Likewise, I think eliminating the minimum wage would only open the door to Billionaires eager to adopt libertarian philosophies, which would only be rationalizations for them to use slave labor to insanely increase their profits—at any meager rate employers desired to offer. And, we ought to know by now, especially, in today’s world— trickle down does not really trickle down!

    Adelinesdad’s proposal for a government funded minimum income program, sounds good in theory, but the .01% that actually holds the power, would vigorously resist any such a give-a-way that might be subsidized by their taxes. The only government subsidies the wealthy are likely to approve of, would be those given to large businesses like theirs, by the government–and who cares about helping the Plebeians? If those impertinents workers demand more than $5.00/hr, then that is their problem. At least a nothing wage would allow their profits to grow and thus enable the hiring of other employees at similar, or lower pay levels.

    The history or organized labor is rife with examples of how the ruling class is willing to completely oppress any cheap labor that they can hire, and, I think that deliberately eliminating any, all, or most, labor laws, would only set the ball rolling to re-establish the latter 19th and early 20th century dictatorial power held by employers. Eliminating the minimum wage, represents the first of such retrograde policies that would, in the long run, only make the rich richer, and the poor, even more poor!