National Edition

California millionaire pushes minimum wage as a conservative cause

Published: Sunday, Jan. 19 2014 4:00 a.m. MST

In this Aug. 29, 2013, file photo, protestors demonstrate outside a fast-food restaurant in Los Angeles. Thousands of fast-food workers and their supporters have been staging protests across the country to call attention to the struggles of living on or close to the federal minimum wage. The push raises the question of whether the economics of the fast-food industry allow room for a boost in pay for its workers.

Nick Ut, ASSOCIATED PRESS

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Ron Unz is a maverick millionaire on a minimum-wage mission.

The conservative Silicon Valley entrepreneur aims to push California’s mimimum wage up to $12 an hour, and like any good Californian he plans to use the state’s ballot initiative process to do it.

Unz, a one-time gubernatorial candidate, expects to start collecting signatures in the next few weeks to get his proposal on the November ballot. It’s a prospect many of his conservative allies do not relish, partly because Democrats have already signaled that raising the minimum wage will be a key issue in their 2014 election push.

Unz thinks his argument is one economic conservatives should embrace. As things stand, he argues, artificially low wages are heavily subsidized by taxpayers, with the working poor receiving $250 billion annually in social welfare payments. The $12 wage Unz advocates, if enacted nationally, would boost low-income wages by roughly $150 billion, he says. Estimates of savings to taxpayers vary, he says, but his guess is that between $40 and $50 billion would be saved in social welfare payments.

Unz argues that very low wages benefit fast-food consumers and employers at the expense of taxpayers. Taxpayers subsidize their cheap hamburgers with their own payroll deductions, hiding from the truth that they are paying for it anyway.

And by allowing government to take the credit for subsidizing low wages, conservatives play into Democrats' hands, Unz argues. Make businesses carry the true cost of their own operations, and you will weaken the link between social welfare and the ballot box, he says.

Hamburger helpers

Unz admits some jobs will be lost by higher wages. But the only real low-wage jobs at risk, he says, are the types we’ve already lost — “domestic sweat shops” that make clothing and other goods that move in international commerce. Most low-wage jobs today that remain, including service industries and agriculture, will not be widely affected, Unz argues.

If Unz is right, the price increases needed to support such a wage hike would be minor. Walmart would only need to raise prices by 1.1 percent to cover the cost of higher wages. The agricultural sector would have to increase prices paid by consumers by 2 percent, and fast food would go up 7-8 percent.

But if fast food is forced to raise prices to accommodate higher wages, some argue the robot will outbid the hamburger flipper. One company actually has one ready to go. Called Momentum, the machine can make 360 gourmet hamburgers an hour without a human hand touching it. It slices the onions and tomatoes, grinds the meat, grills the burger and toasts the bun.

And the company is not shy about what it means for cheap labor. Its website brags about how it eliminates kitchen help from the hamburger business, and the company openly offers to help retrain workers.

“An average quick service restaurant spends $135K every year in labor for the production of hamburgers. Not only does our machine eliminate nearly all that cost, it also obviates the associated management headaches,” Momentum’s online brochure reads.

In fact, the company’s sales pitch is that rather than raising prices to pay higher wages for low quality food, its machine lets its owners profitably sell gourmet hamburgers at fast-food prices.

Ron Unz is unfazed by the fancy hamburgers. “I think only a very small fraction of the McDonald's workers do that particular job,” he said. But if the makers of Momentum are right, that fraction might average $135K in wages a year.

More to the point, as an advocate of technology and free markets, Unz accepts that if — and that’s a big if, in his mind — machines can outperform people who are paid “unsubsidized wages,” then so be it.

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