If you want to make some new friends and just as many enemies, here’s a helpful shortcut: take a position on raising the federal minimum wage. The question of how much workers at the bottom should be paid is fast becoming one of the most divisive issues in Washington. Liberals say a wage hike is the most immediate and fair tool we have to address growing inequality; conservatives argue that such a move would destroy jobs, throwing America’s wobbly recovery off its axis for good. Get ready to hear a lot more about it between now and the November midterms as Democrats and Republicans fight over the merits of an increase, which 76% of Americans favor, according to Gallup.
To really grasp why the minimum wage has become the mother of all policy fun-house mirrors–big is small, small is big, and our economic future depends on how much the guy who assembled your Big Mac is making–consider what happened on the morning of Feb. 18. The nonpartisan Congressional Budget Office released a report assessing a Democratic proposal backed by President Obama to raise the federal minimum wage to $10.10 from $7.25–a nearly 40% increase–over two years. The report sent politicians on the left and right scrambling to find the nearest network camera.
The CBO estimates that the Democrats’ plan would eliminate 500,000 jobs by the end of 2016 while also lifting some 900,000 families out of poverty. Jason Furman, chairman of the White House’s Council of Economic Advisers, parsed the CBO’s results by saying it was reasonable to conclude that the impact of the measure on employment would be “zero.” Republican Senate minority leader Mitch McConnell threatened that Democrats driving for a higher minimum had better be “prepared to explain why up to a million Americans should be kept from having a job.” And Democratic House minority leader Nancy Pelosi dismissed the CBO’s prediction on job losses even as she touted its estimates on the benefit to the poor.
But the voice that may matter most is one many Americans have never heard of: Richard “Rick” Berman, a public relations guru and former lobbyist who claims to speak for the small-business owners who run the nation’s diners and corner stores. Berman has been arguing against the minimum wage for years on the grounds that it destroys jobs. He’s used a network of nonprofits to bludgeon his ideological opponents.
Dubbed Dr. Evil by his enemies, Berman uses rhetoric so brash that it polarizes even within the industry he’s been hired to defend. The television and newspaper advertisements he devised on behalf of industry have helped lay the groundwork for the minimum-wage fight in 2014. In a debate that lends itself to spin, Berman may be the most vilified spinmaster. But he may also be the key to understanding how disagreement over raising a wage earned by a mere 4.7% of the hourly workforce can send politicians into a paroxysm of recrimination and contradiction.
If you watch Fox News, you may have already seen the latest ad. A couple are dining at a restaurant when their waiter suddenly evaporates, leaving an iPad in his place. “Every time you use a self-checkout lane or even a touchscreen ordering system, it’s a task that used to be part of someone’s job description,” a narrator explains gravely. “When you raise the minimum wage, a new government report confirms that up to 1 million jobs will disappear,” the voice continues, referring to the CBO.
The ad, produced by his eponymous public relations firm, is classic Berman. Which is to say blunt. At 6 ft. 3 in., Berman cuts an imposing figure, with his wide-set shoulders and pitched, hairless dome. The 71-year-old speaks in declarative bursts–the sound bites seem to come without effort–with a hint of his native Bronx accent. Supporters think of him as the Wayne LaPierre of the restaurant industry, a true believer unafraid to talk straight. “People are not paid based on what they need,” Berman says. “They are paid based on what they can contribute.” He complains about the backlash against unpaid internships: “Quite frankly, I think people should be allowed to work for nothing.”
As a young man, Berman worked at his father’s gas station, pumping fuel and hustling for tips. After the New York Supreme Court struck down a law prohibiting self-service in 1967 he was surprised, he says, by how few people, when given the choice, were willing to pay for service. “Women would show up dressed for business in heels” and wait in line to pump their own gas, he recalls. After college, Berman earned a law degree from William and Mary and took a position as a labor lawyer at Bethlehem Steel. The experience of watching his employers haggle over contracts with labor unions thriving during boom times for American manufacturing sharpened his ideology. Unions, he says, tend to be self-righteous, and they overreach–often to the detriment of their members.
Berman went to work for the restaurant industry in 1975, eventually opening his own public relations shop in the late 1980s. Over the years, the industry has come to rely on his spin-doctoring during times of crisis–efforts to enact stricter drunk-driving laws in 1999 (“a prohibitionist rage sweeping through public life,” Berman wrote), a 2006 E. coli outbreak (which actually showed “just how safe our food supply generally is”) and more-recent attempts to restrict calorie counts (“busybody nannying”). Near the door to Berman’s Washington, D.C., office, there’s a framed copy of one of his firm’s ads depicting then New York City mayor Michael Bloomberg as a nanny.
Berman became an especially controversial figure by levying personal attacks against his opponents, such as MADD, PETA and scores of restaurant-worker advocates, including unions. The nonprofits and trade groups in his network–they include the American Beverage Institute and the Center for Consumer Freedom–have also come under fire from the left-leaning watchdog Citizens for Responsibility & Ethics in Washington for not disclosing the donors that fund them.
His tactics have at times divided the restaurant industry. Richard Rivera, a restaurant developer based in Sarasota, Fla., who worked with Berman at the casual-dining chain Steak & Ale in the 1970s, says of Berman, “Rick makes points and asks questions that are uncomfortable. That’s a good service. Not everyone agrees. People wish he would disappear both in and outside the industry. A lot are glad he’s there. We–the businesses–don’t do a very good job of telling our story.”
Berman has been publicly railing against the very idea of a minimum wage since at least the late 1980s. The tablet in his firm’s most recent ad is his newest talking point: the machines are coming for your job. The ad’s gadget plays on the anxiety Americans feel about how new technologies might eliminate employment. “This is the first minimum-wage debate that I’ve seen–and I’ve seen a lot of them–where technology is available to start doing away with these jobs,” he explains.
Berman points to the restaurant chain Chili’s, which will install tabletop computer screens for ordering at more than 800 of its restaurants this year. (A Chili’s spokesperson says the tablets are not designed to “replace” servers.) Berman argues that the Democrats’ proposal will only accelerate the march toward automation of low-end jobs. “This will only be fully appreciated in hindsight,” he says. “Technology has people pumping their own gas, getting their own boarding passes, and there’s nothing wrong with that, but there is an impact on the available jobs that don’t require high skills.”
Of course, divisions over the effect of the minimum wage run much deeper than 30-second television sound bites. The debate among economists is surprisingly energetic. Activists and researchers on the left point to 1994 as the beginning of a sea change in the economic literature on the minimum wage. That’s when David Card of the University of California, Berkeley, and Alan Krueger of Princeton examined fast-food restaurants in Pennsylvania and New Jersey before and after the Garden State raised its minimum wage. Contrary to long-accepted predictions from classical supply and demand, they found that the higher minimum wage created more jobs.
Card and Krueger have plenty of admirers–and rabid critics. In 2010, David Neumark, an economist at the University of California at Irvine, and William Wascher, an economist at the Federal Reserve Board, wrote a book called Minimum Wages that looked at two decades of research (including studies that had used Card and Krueger’s approach). They found that two-thirds of the studies showed the exact opposite of the 1994 findings: that a minimum-wage hike resulted in job losses.
Neumark and Card, who have become intellectual enemies, both make it seem as though there isn’t much credible evidence against their points of view. “Most evidence still shows disemployment. Not all of it. But not all evidence shows there is man-made climate change either,” Neumark tells TIME. “There’s all kinds of reputable scientists out there who say there’s no climate change,” Card counters. “No amount of evidence is going to change their opinion. They can always look at any studies and put up an interpretation that matches their worldview.”
Putting aside the effect on employment, many economists agree that a higher minimum wage is an imperfect tool for reducing poverty. “If you are going to make the world better for low-wage people, there is going to have to be some cost. There is always a cost. There’s no totally free lunch usually,” concedes Card. According to the CBO’s estimate, 29% of earnings from the higher wage would go to workers in families earning three times the poverty threshold. Expanding the earned income tax credit–a benefit to poor and middle-income families that is held up by opponents of the minimum wage as a better poverty-fighting tool–would be more efficient, the CBO found.
As for Berman’s argument about the threat of technology, economists say they don’t yet know how it will affect employment in the future. It wasn’t analyzed in the CBO report. “Mechanization is coming fast. That makes it a little frightening,” says Harry Holzer, a professor of public policy at Georgetown and former chief economist for the Department of Labor under President Clinton. Holzer supports Obama’s proposal to raise the minimum wage. “I’ve no doubt Berman will try to scare people,” he says, “but I can’t completely dismiss that issue. I wish friends on the left would acknowledge the possibility that the future might look different from the past.” In other words, Berman is framing the issue in terms that have yet to be fully understood.
For now, the President’s proposal doesn’t appear to have the votes in Congress to pass–though a more modest increase, say to $9.00 an hour, might succeed. But ultimately a new minimum wage won’t sink the economy. Neither is it a silver bullet for America’s inequality problem–and to Berman, anyone who suggests otherwise has a decidedly less lofty purpose. “People who are proponents of a minimum-wage hike can look very sympathetic and very compassionate,” he says. “The compassionate politicians that pass the laws don’t have their fingerprint on the outcome.”
This appears in the March 10, 2014 issue of TIME.
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