California’s Khanna Says Businesses that Cannot Pay $15 Wages Are Dying Anyway

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California Congressman Ro Khanna has a message for businesses that say they cannot afford to pay a $15 minimum wage an hour for their workers: Just die already. We don’t need you.

Like many supporters of the Raise the Wage Act, which would more than double the federal minimum from its current rate of $7.25, Khanna contends that this will have no significant negative effects on the economy. In an interview Sunday on CNN’s “Inside Politics,” he pointed to the case of Amazon as proof, noting that raising its rate to $15 didn’t hurt it.

Never mind that Amazon is one of the most successful companies in the country and one of the few businesses whose economic model was ideally suited to survive and even thrive in the COVID-19 crisis. Khanna’s comparison was the equivalent of pointing to an Olympic runner and saying, “See? Anybody can do a marathon.”

When pressed by CNN on how a $15 minimum would “affect mom and pop businesses who are just struggling to keep their doors open,” Khanna replied, “Well, they shouldn’t be doing it by paying people low wages.”

Khanna then added, “We don’t want low-wage businesses. I think most successful small businesses can pay a fair wage. If you look at the minimum wage it increased with worker productivity until 1968 and that relationship was severed. If workers were actually getting paid for the value they were creating it would be up to $23. I love small businesses. I’m all for it. But I don’t want small businesses that are underpaying employees. It’s fair for people to be making what they’re producing and I think $15 is very reasonable in this country.”

Note that Khanna said, “most successful small businesses can pay a fair wage.” His point appears to be that if a business cannot pay its workers a $15 wage—a “very reasonable” rate in his estimation—then it is not successful and probably dying anyway. Who needs a business that cannot pay that much? “But I don’t want small businesses that are underpaying employees.”

Well, Khanna will probably get his wish. The Congressional Budget Office (CBO) reports that 1.4 million jobs will be lost if the Raise the Wage Act is enacted. The CBO doesn’t estimate how much of that will come from businesses dying as opposed to layoffs, forgoing hiring, or increases in automation. Other studies have found direct connections, though. A 2019 National Bureau of Economic Research working paper by Harvard economists found that a $1 increase in the minimum wage leads to a 10 percent increase in the likelihood of closure for a 3.5-star restaurant, the median rating on Yelp. The National Restaurant Association, a trade group, estimated that about 10 percent of restaurants in areas with a recently increased minimum wage have closed. Of those that survived, 71 percent passed along the rise to customers by raising menu prices.

This apparently is fine according to Khanna. Like Monty Pythion’s Eric Idle, his response to struggling businesses is, “Bring out your dead!