A Democrat representative has his 'let them eat cake' moment
Before the Democrats weaponized the Wuhan virus against the middle class, small businesses were one of the most important economic engines in America. Now that the Democrats are in charge, they're making a second strike against small businesses with a proposed $15 minimum wage law — and Rep. Ro Khanna, a California Democrat, thinks any small businesses that can't comply shouldn't exist.
The U.S. Small Business Administration's FAQ sheet about small businesses (that is, businesses with fewer than 500 employees) stated that in 2016, there were 30.7 million small businesses in America, constituting 99.9% of all firms, 99.7% of all firms with paid employees, 47.3% of private-sector employees (60 million people), and 40.7% of the private-sector payroll. From 2000 to 2018, they accounted for 64.9% of new net job creation. Big corporations sucked up the oxygen with advertising, political donations, and name recognition, but small businesses employed Americans.
It's hard to find current numbers on small business closures, but by September 2020, nearly 100,000 small businesses had permanently closed across America. By year's end, in New York and New Jersey alone, nearly one third of all small businesses were gone. These closures predominate in Democrat-run states, which embraced lockdowns.
So what do the Biden administration and the Democrat-controlled Congress want to do? They want to raise the national minimum wage to $15.00. Of course, as the New York Times said in 1987, the real minimum wage is zero. Whether businesses replace workers with technology or just shut down, if it becomes too expensive to hire employees, they won't. And it's the case that the Congressional Budget Office predicts that a $15.00 federal minimum wage mandate would cost 1.4 million jobs over the next four years.
The national minimum wage is also a ludicrous idea because it ignores entirely the fact that different parts of the country have different costs of living. For example, in November 2019, the average cost of renting an apartment in California was $2,542, and the average estimated income was $85,750. Meanwhile, in West Virginia, the average cost of renting an apartment was $866, and the average estimated income was $59,999. Walmart can accommodate a standardized minimum wage across the nation, but small businesses in states with low costs of living cannot.
That doesn't matter, though, to Democrats, as Rep. Ro Khanna (net worth $27 million), a Democrat representative from the San Francisco Bay Area, made clear. It's notable that the Bay Area's cost of living is extraordinarily high, even for California. Thus, during the lockdowns, with prices dropping, a two-bedroom apartment in San Francisco was over $4,300 a month.
The Bay Area's disconnect from America may explain why Khanna went onto CNN and said the equivalent of "let them eat cake." According to Khanna, small businesses that can't afford to pay their employees $15 per hour shouldn't exist:
Abby Phillip: I know that you feel very strongly like many progressives about the minimum wage issue. Right now, at the same time, businesses, both large and small, are struggling in this pandemic economy, more than 9 million jobs have been lost in the last year, and they still aren't back, and the problem is particularly acute in industries like retail and foodservice, which are more likely to pay minimum wage. I think the question that a lot of Republicans are posing and perhaps some moderate Democrats is timing. Is now the right time to increase it to $15? I should say the bill has stages, of course, but immediately it would go up about 30% right now. Is now the right time to do that?
Khanna: Abby, it's absolutely the right time to give working Americans a raise. Let's look at the facts. Amazon raised their wage to $15 nationally, not regionally. They have more jobs today. It didn't hurt job creation or business. Target followed. They also did it nationally, more jobs.
Phillip: Large businesses like Amazon and McDonald's, for example, can and perhaps should pay more, but I'm wondering what is your plan for smaller businesses? How does this, in your view, affect mom and pop businesses who are just struggling to keep their doors open, keep workers on pate roll right now?
Khanna: Well, they should be doing it by paying people low wages. We don't want low-wage businesses. Most successful small businesses can pay a fair wage. If you look at the minimum wage, it increased with worker productivity until 1968, and that relationship was severed. If workers were actually getting paid for the value they were creating, it would be up to $23. I love small businesses, I'm all for it, but I don't want small businesses that are underpaying employees. It's fair for people to be making what they're producing. I think $15 is very reasonable in this country.
Khanna and his ilk rule by sweet theories, ignoring cruel realities.
Image: Ro Khanna. YouTube screen grab.