SAM: Now we all know the facts of this case. The defendant decided that he was above the
law and paid his employee a rate below the legal minimum wage. But this case is about something bigger. Income inequality. BRADLEY: Why is it that some people are so
rich and some people are so poor? That’s actually not a new question. Adam Smith raised it hundreds of years ago,
and we still see a world where people are poor, and so we have questions that need to
be addressed about what are the appropriate policies for alleviating poverty, and whether
poverty and income inequality are really related. GALBRAITH: We do have standards, and we do
enforce those standards as part of the social framework in which the employment contract
takes place. I think the way to think about that as a legal
matter is that all contracts are acts of law. They are governed by law, and they are only
valid to the extent that they comply with the law. WILLIAM: Bring it, Sam. SAM: Careful, William. I’ve got the law on my side. WILLIAM: Well, we’ve got … HOLLY: Economics. WILLIAM: Economics. BRADLEY: In a society where we see so many
people talking about income inequality, can we, by say raising minimum wages, eliminate
the gap between the rich and the poor? We can only know that when we apply good,
solid economic thinking to these questions. In the film, we see Tommy. He is one of the people that would be benefitted
by this minimum wage law, which is, again, an attempt to raise wages to help people who
are of less skills and potentially less education, not as many opportunities or experience. And I think Tommy is reflective of the type
of people that are paid the minimum wage and that experience the effects of the minimum
wage. MUNGER: Wages are the price of labor. So the way that economists describe wages
is that it results from how productive the worker is, and the price of the output that
the person is making. So an economist would say if you raised the
price of something, people are going to use less of it. BRADLEY: So when we raise the minimum wage,
we have to look at the impact on people like Tommy. Is it going to help him? It’ll increase his income, but that’s
not the only thing we’re concerned about. We’re really concerned about Tommy and his
peers getting opportunities. We want them to get their foot on the economic
ladder and be able to climb up the ladder. HOLLY: I have to ask you. Why didn’t you pay your employee the minimum
wage? CARVEL: I was trying to. It was, uh, it’s complicated. MUNGER: So, over the short run, raising the
minimum wage by the amount that we’ve done it in the past doesn’t appear to have much
of an employment effect. There are two other effects that are much
harder to measure. One of those is the delay or, in some cases,
substitution away from hiring people who have no experience. So, the paradox always is you can’t be hired
without experience, and you can’t get experience without being hired. BRADLEY: So, what we see in the American economy
is that teenagers that have less, fewer skills, less levels of education, and just less experience
because they’re younger. They tend to be disproportionately impacted
and paid the minimum wage. So, the question is does the minimum wage
help? But, certainly Tommy is one of the characteristic
people that we would see receiving the minimum wage. MUNGER: The price that we pay for the minimum
wage is mostly going to fall on the poor. Poor people who go to places where people
work for minimum wage pay a higher price. Some economists have estimated that more than
all the benefits of the wage increase from the minimum wage will be lost because of price
increases that those same poor people have to pay. The minimum wage is connected to the debate
over inequality partly because we feel that workers are being exploited by large, concentrated
corporations. SAM: You’ve all heard of the one percent. But they don’t all look like billionaire
tycoons. GALBRAITH: What we’re talking about here
is the structure of money wages, the differential between the bottom and the top. What my profession as a professor makes compared
to a doctor or a lawyer, a construction worker. There are many different factors that play
into these things. WILLIAM: There are a thousand variables that
go into the distribution of wealth in our society from people’s skill sets to their
circumstances in life. You are asking us to defend the outcomes of
the entire U.S. economy! BRADLEY: We tend to think of the minimum wage,
and when I say “we”, I mean the way we tend to talk about it in society. We think that the minimum wage is maybe acceptable
or reasonable or fair, because we’re going to take money from very rich CEOs on the top
of the Forbes list, and we’re going to ask them to give up a little bit of their earnings
and give it to people who have less skill. GALBRAITH: This has become a country whose
politics have become oriented toward a very small number of very wealthy people, rather
than a much larger mass base. That’s been true in both parties, and I
think that’s the primary reason why inequality has taken on this highly-charged political
dimension. SAM: Income inequality is a defining issue
of our time. It’s right here, right now. All of us are going to do something about
it. MUNGER: The reason that people are concerned
about economic inequality is that it seems like some people who are rewarded are not
really doing anything that’s morally, significantly better than the people who are not rewarded. And the state should step in to try to correct
these unjust differences. When we think in terms of abstractions, it’s
the very poorest workers who will receive more from the very wealthiest groups in the
United States, and so it satisfies a kind of sense of justice. BRADLEY: But what we see is that the store-owner
in the video is exactly the type of person that is paying the minimum wage. Think of someone who starts a business. If whether it’s a hardware store or a food
truck or an accounting business out of their home. That’s how must businesses start. And what we want in a society where people
can thrive, where people can have a lot of opportunities to grow their skills, is these
jobs available to them. What we see in the film is that the minimum
wage restricts this small business owner from being able to hire the people that he needs
to help run his business.