REFLECT: A Wealthy Capitalist on Why Money Doesn't Trickle Down

Our prosperity does not all come home in our paycheck. Living in a community of people who are paid enough to contribute to your community, rather than require its help, may be more important than your salary. Prosperity and poverty are like viruses. They infect us all — for good or ill.

By Nick Hanauer - Yes Magazine

The fundamental law of capitalism is: When workers have more money, businesses have more customers. Which makes middle-class consumers—not rich businesspeople—the true job creators. A thriving middle class isn’t a consequence of growth—which is what the trickle-down advocates would tell you. A thriving middle class is the source of growth and prosperity in capitalist economies.

Our economy has changed, lest you think that the minimum wage is for teenagers. The average age of a fast-food worker is 28. And minimum wage jobs aren’t confined to a small corner of the economy. By 2040, it is estimated that 48 percent of all American jobs will be low-wage service jobs. We need to reckon with this. What will our economy be like when it’s dominated by low paying service jobs? What proportion of the population do we want to live on food stamps? 50 percent? Does this matter? Should we care?

Businesspeople tell me they cannot afford higher wages. Not true. They can adjust to all sorts of higher costs. The minimum wage is much higher here in Seattle than in Alabama, and McDonald’s thrives in both places. Businesses adjust to higher costs, even when they say they can’t.

Our economy can be safe and effective only if it is governed by rules. Some capitalists actually don’t care about other people, their communities, or the future. Their behavior, if left unchecked, has a massive effect on everyone else. When Wal-Mart or McDonald’s or any other guy like me pays workers the minimum wage, that’s our way of saying, “I would pay you less, except then I’d go to prison.” READ MORE

PHOTO: July 29, 2013 protest at McDonald's in New York City by Annette Bernhardt


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