Billionaire Warren Buffett
said the level of income inequality in the U.S. is “extraordinary” but that
raising the minimum wage isn’t the best solution.
“I don’t have anything
against raising the minimum wage but I don’t think you can do it in a
significant enough way without creating a lot of distortions,” Buffett, 84,
Berkshire Hathaway Inc.’s chief executive officer, said Saturday at the
company’s annual shareholders meeting in Omaha, Nebraska. Those distortions
“would cost a whole lot of jobs,” Buffett said.
Answering questions
alongside Buffett, Charles Munger, 91, Berkshire’s vice chairman, said raising
the federal minimum wage, which has been $7.25 an hour since July 2009, “would
hurt the poor.”
Some large companies have
recently announced plans to raise wages for their lowest-paid workers.
Wal-Mart Stores Inc., the
nation’s largest private employer, announced a plan in February to begin paying
all of its U.S. hourly workers at least $9 an hour in April and $10 an hour by
next February.
The move will result in raises for about 500,000
workers in the first half of the current fiscal year and cost about $1 billion,
the Bentonville, Arkansas-based company said in February.
Berkshire held 67.7
million Wal-Mart shares as of Dec. 31, a stake with a value of about $5.3
billion based at Friday’s closing price.
Senate Republicans last
year blocked legislation that would have raised the
minimum wage nationally to $10.10 an hour from $7.25.
Job
Killer
President Barack Obama and
Senate Democrats say that lifting the minimum would benefit the economy and
reduce income inequality.
Many Republicans and
business groups say the plan would cost jobs.
Buffett, the second-richest
person in the U.S., said raising the minimum wage was “a form of price fixing”
and instead favored reforming the earned income tax credit, a refund paid to
low and moderate income individuals and couples.
The nation’s jobless rate
has dropped 1.2 percentage points from the end of 2013 to 5.5 percent in March, close to the level that Federal Reserve
policy makers consider full employment.
But lower unemployment has
not translated into wage gains for many Americans.
“Everyone who is willing
to work should have a reasonably decent livelihood in a country like the United
States. How that is best achieved, I’m actually going to write something on
that soon,” Buffett said.
Tax
Credits
Buffett has said
repeatedly that tax refunds are better for the economy and workers than forcing
companies to increase wages.
“The earned income tax
credit is much clearer,” Buffett said in an interview with CNBC last year. “That puts
more money in the pockets of people who are working for low wages.”.
Almost 28 million U.S.
taxpayers received the EITC in the 2013 tax year, according to IRS data in December.
The payments totaled more
than $66 billion and the average amount nationwide was about $2,407.
Berkshire employed 340,499
workers, as of Dec. 31, according to Buffett’s annual report to shareholders.
Last year the billionaire
investor told CNBC that “very, very few” of them make minimum wage.
#JTF
Jerry - the First is a
Diversified Physician, Health Consultant, Teacher, Motivational Speaker,
Entrepreneur, Mentor, Life Coach, Plan B Income Promoter and Blogger
