Bill Gates: Raising Minimum Wage Can Destroy Jobs

Ericka Andersen / January 23, 2014

Microsoft founder Bill Gates said yesterday that raising the minimum wage can “cause job destruction.” Gates’s comment in an appearance on MSNBC’s “Morning Joe” surprised some because of his generally liberal political leanings.

Here’s what Gates said when co-host Mika Brzezinski asked his thoughts on raising the minimum wage, including paying employees “a lot more”:

Well, jobs are a great thing. You have to be a bit careful: If you raise the minimum wage, you’re encouraging labor substitution and you’re going to go buy machines and automate things — or cause jobs to appear outside of that jurisdiction. And so within certain limits, you know, it does cause job destruction. If you really start pushing it, then you’re just making a huge trade-off.

The remarks come in the run-up to the State of the Union address next Tuesday night, when President Obama is expected to call for an increase in the national minimum wage.

“You’re going to see a big push in Congress to get it done,” said Jason Furman, chairman of the president’s Council of Economic Advisers, in an AP interview.

Obama has endorsed a Senate proposal to raise the minimum wage to $10.10 an hour.

James Sherk, senior policy analyst in labor economics at The Heritage Foundation, is wary of such an increase, noting that most benefits of the minimum wage come at the cost of reducing entry-level jobs. Sherk writes:

Employers respond to higher labor costs by hiring fewer workers. Higher minimum wages eliminate entry-level positions that provide unskilled employees the opportunity to gain experience. Less experience makes it harder for workers to become more productive and earn higher wages.

The Obama White House has made “income inequality” a major focus for 2014, and raising the minimum wage is a key action item.