How Raising The Minimum Wage Would Increase Economic Activity And Create Jobs

Nick Hanauer is rich. He’s an unrepentant capitalist and he’s not ashamed to tell you so. But at the same time, he has unconventional opinions for a rich guy: he wants to raise the minimum wage.

Hanauer argues that growing inequality is pushing our society to the brink, and the conditions resemble pre-revolutionary France. I don’t think his assessment is incorrect. In Los Angeles, the minimum wage is $9. Anyone in LA can tell you that $9 an hour is absolutely nowhere near enough to get by. And what our economy needs isn’t just more people who are able to get by, but more people who can get by and buy.

We can argue all day about what type of economy would best serve the people; all people, wealthy, middle class, and poor. But when it comes to the economic system we have now, consumer spending is what powers this system. If the consumers can’t spend, producers can’t produce. It’s as easy as that.

As Hanauer says in Robert Reich’s documentary, Inequality for All, a billionaire will only go out to eat so many times. He only owns so many pillows. So many pairs of jeans. Consolidating wealth doesn’t create jobs and it doesn’t power economic activity.