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Ben Shapiro, co-founder and editor emeritus of The Daily Wire, debated Rep. Ro Khanna (D-CA) on the costs and benefits of hiking the federal minimum wage to $15 on Monday.
Khanna asked to appear on Shapiro’s radio show, “The Ben Shapiro Show,” after Shapiro mentioned Khanna last week while discussing the minimum wage. The host agreed and argued in favor of leaving the minimum wage as is or scrapping the federal minimum wage altogether, while Khanna asserted that the current federal standard of $7.25 an hour should be roughly doubled.
Khanna began the discussion by granting that hiking the minimum wage would be a relatively heavier burden on small businesses rather than large ones such as Amazon, Target, or Walmart. To make up for that, the Democratic lawmaker said that the federal minimum wage should be increased gradually and the government should provide tax credits and other assistance to ease the burden on small business.
Shapiro challenged the lawmaker to explain why the United States needs a $15 federal minimum wage. “When you’re talking about competitive job markets, especially at the lower end of the wage spectrum, isn’t it true that there is a supply and demand issue that actually develops the wage? Why do you think that [wages are] artificially low?” Shapiro asked.
“My view is in certain cases, especially where you have monopsonies, where you have a high concentration in labor markets – there are only a few buyers – it’s not a truly competitive market. It’s actually a market failure, and so you have a wage that is under the competitive market price,” Khanna said. “Second, … my view is more of a positive freedom, that people actually need basic support to be able to bargain effectively, and I don’t think that there is true equal bargaining power often.”
Shapiro pointed out that in the majority of cases, minimum wage workers are using those jobs as springboards to high-wage jobs in the future.
“The minimum wage is only being made by something like 2.3% of all wage earners in the United States. About 50% of those wage earners are under the age of 25, and when you artificially boost the minimum wage, what you actually end up doing is making it harder for people who actually need those minimum wage jobs to actually get those jobs because you have artificially created a base in the labor market from which employers are going to draw,” Shapiro said. He went on to note that “minimum wage increases have disproportionately hit black and brown people without college degrees particularly.”
In another exchange, Shapiro pointed out that while a $15 minimum wage may not have that big an impact on businesses in Los Angeles where the price of living is relatively high, such a wage mandated by the government would have considerable impact in a state like Mississippi where the median wage is currently below $15 an hour. Khanna then pressed Shapiro where he believed the price floor for labor should be set.
“Unfortunately, there is a floor and the floor is zero, and it’s going to be felt by 1.4 million people who won’t have a job come 2025” under a federal $15 minimum wage, Shapiro said. Pressed again, Shapiro said he did not support any federal minimum wage.
“I think free labor is able to bargain and if you are able to come up with a case where you have an actual monopoly that is violating labor law in its attempts to cram down a wage on a person who is unwilling to accept it, first of all, we have an amendment to the Constitution that prevents involuntary servitude,” Shapiro said. “And second of all, bargaining power is still a thing. I mean, the fact is there are wages that people cannot charge because people will not take the jobs for those wages.”
Khanna and Shapiro then closed the discussion with a few final points.
“The broader point in my view, Ben is I believe in entrepreneurship, I believe in innovation, I believe in capitalism,” Khanna said. “When we are producing such incredible wealth, trillions of dollars in my district, the ability to have people earn a wage that allows them to live a decent life seems to be something that is good for our democracy.”
“My counterpoint is that we are not producing incredible wealth, these businesses are producing incredible wealth because they know how to run the business better than [members of government] who are, you know, getting their salary from me, frankly,” Shapiro said.