Buffett: US Needs a 'Minimum Income'
It's possible, not practical and is flawed reasoning, says one expert
The argument isn’t whether that there are economic problems negatively impacting many Americans ability to easily survive and thrive, it’s the proposed answer.
That’s the continual debate.
Warren Buffett, the billionaire CEO and chairman at Berkshire Hathaway, said in 2016 that people at lower socioeconomic levels should not necessarily have to struggle to make ends meet.
"We have to make sure that in a super rich country, anybody who's willing to work 40 hours a week has a decent living," he told CNN about a too-common way-of-life financial and emotional hardship. "That's a simple idea. If you put in the hours, you should be able to afford rent, groceries and a reasonable quality of life.”
Jeannine Mancini, writing at Benzinga, is disappointed that improvements haven’t revealed themselves.
“But the reality in 2025? The gap between the ultra-wealthy and everyday workers is still enormous,” Mancini wrote. “People are still working multiple jobs just to survive, and Buffett's words are just as relevant as they were back then."
The minimum wage, once deemed morally necessary and helpful, isn’t the solution, per Buffett. He favored the earned income tax credit, a government program that supplements low wages with tax credits.
"You don't need a minimum wage. You need a minimum income," Buffett claimed.
It’s doable, he stated, because the United States has the prosperity for it.
"If we've got an $18 trillion GDP, we can allocate enough so that anybody who works productively at 40 hours a week can have a decent life," Buffett proposed
While “enough” is vague and may inspire a new debate, he had a vision for “better.”
Not everyone believes this thinking is wise.
“This is good in principle,” says Collin Plume, the founder and CEO at Noble Gold Investments, My Digital Money — a crypto trading platform — and the co-owner and CEO at Guardian-HR, an online HR service.
“Every American that works 40 hours a week should be able to support themselves and live a decent life but the devil is in the ‘how.’”
Plume is not saying that Buffett’s idea and offering is technically out of the question. He says that there is a better thought process and actions that will accomplish more.
“Yes, it is possible. No, it’s not practical,” Plume asserts. “The US can guarantee every American working 40 hours earns a minimum income. Why not? We can always print money but that also goes to show the fundamental flaw of his proposal.”
He elaborates on Buffett’s belief to explain.
“He is hinging on numbers, not on value,” Plume says. “Meaning, you are looking at the amount of money going into a household instead of improving the value of the money that’s going into the household.”
The byproduct is not going to create favorable economic reactions.
“The result is products and services becoming more expensive,” Plume says. “Imagine if everyone is earning $100,000 net every year, everyone’s hourly value will go up. So any service they render will also go up. In the end, that $100,000 goes down in value.”
That isn’t the path through the difficulty. He offers a different line of thinking.
“The answer is in jacking up the value of the dollar by bringing manufacturing back home, making it cheaper than imports, elevating skills of Americans and nurturing technologies,” Plume argues.
“German cars are manufactured in Germany. Asian cars in Germany are way more expensive, which encourages people to buy their own cars. They invested heavily on technologies, motivating people to study high level skills.”
He stumps that America requires a different approach than the status quo.
“What we need is a country that invests in our own products, works on our own products and buys our own products,” Plume continues. “That’s what will elevate the value of the dollar and our people. As a result, anyone working 40 hours will be able to afford a decent life.”
“People could earn $100 a month — and Americans used to — and be able to afford a house, bills and daily meals,” Plume says.
The issue remains the value variable, he insists.
“It’s about what that $100 is able to buy. Mortgage should be no more than 25% of the monthly income. Healthy food should be no more than 10% and bills, including insurances, should be no more than 15%.”
The answer to the debate of how to help more struggling people and society as a whole, lift all boats, then is a smarter framing of the problem and a subsequent, consistent efforts exerted in a different, more effective direction.
“The answer is in dealing with fundamentals of the economy and that goes back to the very basic financial principle: Let’s stop looking into the quantity of the dollar and look into the value of it,” Plume stresses.
“What we should be discussing is how to improve the value of the dollar. Bring back jobs here. Prioritize American products. Invest in technologies to pass on minute and dangerous tasks to machines and Americans can shift to learning skills with higher value.”
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