Andy Puzder gets personal on minimum wage, automation, and withdrawing as Trump’s Labor Secretary Nominee in this in-depth, sit-down interview with Reason’s Nick Gillespie at FreedomFest 2017, the annual libertarian conference in Las Vegas.
Regarding minimum wage, Puzder explains in the interview that he’s been trying to convince the restaurant industry and the franchise industry, as well as trade groups, to get behind increasing the minimum wage, but only to the point where entry-level jobs are NOT impacted. At $15 an hour, Puzder argues, you kill jobs and he cites a study from the Congressional Budget Office that revealed how at $10 an hour the U.S. economy would net 500,000 lost jobs.
Puzder also discusses the three key impacts that could potentially occur if the minimum wage went up to $15 an hour: one is, businesses close because they’re no longer profitable; two is, they reduce labor, either by cutting people’s hours or reducing their staff; or three is, they automate.
He also highlights a recent Harvard Business School report that states how for every dollar that the minimum wage went up in San Francisco, there was a 4% to 10% increase in the closure of restaurants. What is happening, according to Puzder, is that businesses close, businesses reduce staff and automate, and businesses reduce the hours of the employees that they have. What you can’t measure, Puzder states, is how many businesses didn’t open in those cities that would’ve employed people, and this he argues is what really hurts economic growth.
Puzder further explains, if minimum wage is going up and there’s overtime regulation coming in and your business taxes are going up, well then you’re going to project higher costs which eat into your return on investment. If revenues are down and costs are up, then your margin for making a profit sinks considerably and you may not invest in starting a business at all. If you implement policies that reduce taxes, if you implement policies that reduce regulation so that you’re increasing revenues to the business, and you’re decreasing the cost of operating the business, what you see is, not surprisingly, economic growth.
Finally, in the interview, Puzder touches upon creating job opportunities for inner-city kids and our disadvantaged youth by proposing more job training programs. Getting the Department of Labor working hand in glove with the private sector so that the labor force is better trained for the jobs that exist is something Puzder would like to see happen. There are six million job openings right now, according to the U.S. Bureau of Labor Statistics. Puzder adds that we need apprenticeship programs, we need internships, and we need the kinds of things that President Trump is promoting to get these people trained for the jobs that already exist.
For more of Andy’s thoughts on minimum wage and automation, read the full interview here.