Bill Gates: Minimum Wage Increase ‘Huge Tradeoff’ for Workers in Poverty

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Microsoft founder and billionaire Bill Gates warned against raising the minimum wage Tuesday on Morning Joe, saying it results in a “huge tradeoff’ that can adversely affect households in poverty.

The problem, he said, wasn’t so much the wage level for lower-income employees, but the lack of hours they are able to work.

“You have to be a bit careful that if you raise the minimum wage, you’re encouraging labor substitution, that you’re going to go buy machines and automate things or cause jobs to appear outside of that jurisdiction,” he said. “So within certain limits, you know, it doesn’t cause job destruction. But if you really start pushing it, then you’re just making a huge tradeoff. You have to say which are the households that end up benefiting. Is it much more the teenager in a wealthy household or is it that household in poverty? A lot of the problem there is that those people don’t have many hours. It’s not the actual wage level.”

Co-host Mika Brzezinski asked Gates his views on the subject and briefly pushed back after he spoke, arguing a lot of fast food workers are in poverty.

“80 percent in non-poverty households,” he replied. “There is about 11 percent of those are from the poverty households. But, you know, these are complex issues. It’s not as simple as just saying, okay, raise the minimum wage.”

Full exchange:

MIKA BRZEZINSKI: Just curious, what do you think about the minimum wage? Should it be raised? And should we want to see models more like Costco, where companies pay their employees a lot more than minimum wage?

BILL GATES: Well, jobs are a great thing. You have to be a bit careful that if you raise the minimum wage, you’re encouraging labor substitution, that you’re going to go buy machines and automate things or cause jobs to appear outside of that jurisdiction. So within certain limits, you know, it doesn’t cause job destruction. But if you really start pushing it, then you’re just making a huge tradeoff. You have to say which are the households that end up benefiting. Is it much more the teenager in a wealthy household or is it that household in poverty? A lot of the problem there is that those people don’t have many hours. It’s not the actual wage level.

BRZEZINSKI: Like fast food workers.

GATES: Yeah. Fast food workers.

BRZEZINSKI: A lot of those people are households in poverty.

GATES: 80 percent in non-poverty households. There is about 11 percent of those are from the poverty households. But, you know, these are complex issues.

BRZEZINSKI: They are.

GATES: It’s not as simple as just saying, okay, raise the minimum wage.

Note: This post was updated at 9:28 a.m. to fix a typo.

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