Elizabeth Warren: Hey, why isn’t the minimum wage $22/hour?

posted at 1:21 pm on March 18, 2013 by Erika Johnsen

Oh, minimum wage — the simple- and friendly-sounding yet actually regressive and economy-damaging populist throwback that just refuses to die. President Obama once again resurrected the timelessly terrible idea in his State of the Union speech in February, and it’s been percolating among the Democrats as a potential 2014-oriented rallying cry for how those obstructionist Republicans must really, really hate poor people because there’s no other possible explanation for their opposition (except that, you know, minimum wage hikes are actually counterproductive to an inclusive and prospering economy, but let’s just rid ourselves of any lingering school-girl notions that facts are what matter here, shall we?).

Last week in a hearing of the Senate Committee on Health, Education, Labor, and Pensions, Sen. Elizabeth Warren wondered, “If we started in 1960, and we said that, as productivity goes up — that is, as workers are producing more — then the minimum wage is going to go up the same. And, if that were the case, the minimum wage today would be about $22 an hour. So, my question, Mr. Dube, is what happened to the other $14.75?” National Review picked up on it:

Oof. Last month, HuffPo pointed out a 2012 ‘study’ that concluded pretty much the same thing:

President Obama’s call to increase the federal minimum wage to $9 an hour was one of the more significant proposals he laid out in his State of the Union address Tuesday night. But $9 an hour is still a far cry from what workers really deserve, a 2012 study finds.

The minimum wage should have reached $21.72 an hour in 2012 if it kept up with increases in worker productivity, according to a March study by the Center for Economic and Policy Research. While advancements in technology have increased the amount of goods and services that can be produced in a set amount of time, wages have remained relatively flat, the study points out. …

Between the end of World War II and the late 1960s, productivity and wages grew steadily. Since the minimum wage peaked in 1968, increases in productivity have outpaced the minimum wage growth.

I’m calling shenanigans. That is one wildly flawed premise, because the value of productivity is not a constant. As HuffPo’s writeup cedes, “advancements in technology have increased the amount of goods and services that can be produced in a set amount of time,” not to mention with fewer resources and at a lower cost — should in the increase in crop yield from a farmer using a donkey and plow versus a farmer using a tractor be directly proportional to an increase in those crops’ market worth because of some sort of imagined moral law about productivity and wages? No, because the market value of those crops has diminished as the ease of production has increased, and if that was the way the world worked, we’d all be paying a heck of a lot more for food right now.

Again, raising the minimum wage to some arbitrarily-determined level of ostensible just deserts is just another way of throwing market signals under the bus in exchange for more top-down control, which might benefit a few in the short run, but bogs down the entire economy in the long run. As Christina Romer, former head of President Obama’s Council of Economic Advisers, put it:

Raising the minimum wage, as President Obama proposed in his State of the Union address, tends to be more popular with the general public than with economists. …

First, what’s the argument for having a minimum wage at all? Many of my students assume that government protection is the only thing ensuring decent wages for most American workers. But basic economics shows that competition between employers for workers can be very effective at preventing businesses from misbehaving. If every other store in town is paying workers $9 an hour, one offering $8 will find it hard to hire anyone — perhaps not when unemployment is high, but certainly in normal times. Robust competition is a powerful force helping to ensure that workers are paid what they contribute to their employers’ bottom lines.


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It was customary for people to always walk around with cloth bags too. The purpose was you never knew when some small amount of bread or meat would suddenly arrive at the grocery store. So you always had to be prepared to run to the store and buy food. The shelves were never stocked. The food came in.. the mob hit the stores and the food would run out. That was how they lived.

JellyToast on March 18, 2013 at 1:38 PM

I knew someone from Romania who had relatives visiting. They went to the local market and the woman began grabbing chicken out of the meat case. When asked why she said soon they’d all be gone and there would be nothing. She couldn’t understand that tomorrow there would be more chicken and every day there would be chicken to buy.

vityas on March 18, 2013 at 8:45 PM

Idiot. There is no other $14. That so called missing money never materialized cause I the consumer never paid for that. When I buy stuff, I pay for x wage plus fringe & benefits plus overhead plus profit. That’s it.

On the other hand if it’s true that the franchise owner is squirming away $14/hrs per employee, then I’m an idiot for not getting me a franchise. Imagine, 25 employees to operate 24/7 and I could pocket $30k per head per year over and beyond expenses and profit. A cool 750k per year and it’s all mine on the backs of my minimum wage salt shakers and burger flippers.
Idiot. Why don’t you first run a business then open your mouth.

AH_C on March 18, 2013 at 9:37 PM

I always giggle when the smartest people in the room elect idiots like Warren. Nice job Massachusettes.

Ellis on March 18, 2013 at 10:18 PM

“If we started in 1960, and we said that, as productivity goes up — that is, as workers are producing more — then the minimum wage is going to go up the same. And, if that were the case, the minimum wage today would be about $22 an hour. So, my question, Mr. Dube, is what happened to the other $14.75?”

She’s brilliant. I’m going to have to give up my silly Austrian views of economics. I’m now a Warrenesian; raise the minimum wage all the time! The Warrenesian motto? ‘We have to pass it to find out what’s in it.’

You know, you libertarian/free market/laissez-faire types focus on mathematics way too much. Who liked math in high school? No one. So give it up, guys, and join the Warren train.
/s

Nephew Sam on March 18, 2013 at 10:46 PM

Eliminate the minimum wage. Not needed.

nazo311 on March 18, 2013 at 10:50 PM

Why not make it $100/hr? In fact, since we’re borrowing 40 cents of every dollar the government spends, why not borrow the other 60 cents and stop taxing us altogether? Why that would be very Keynesian indeed.

Heh.

theCork on March 18, 2013 at 11:04 PM

Most of the increased productivity mentioned in he article is due to companies investing in technology and eliminating workers. Most of the benefits of the gain in productivity then goes to the owners of the company and not the workers.

Those workers that do remain are due increased pay only to the extent that their jobs require higher level skills or there is some other indication that their own work rather than the technology contributes to increased production.

Nomas on March 18, 2013 at 11:12 PM

Lets just make the minimum wage 10 million dollar an hour, after one or two days at work, everyone could retire with a mansion, yacht, Lamborghini and their own private jet.

Well, my five year old seems to think it would work.

Wallythedog on March 19, 2013 at 1:11 AM

If companies were as powerful as you typical liberal thinks they are why isn’t everyone not in a union earning only the minimum wage? And before there was a minimum wage or in countries without a minimum wage why isn’t everyone earning next to nothing? In any event, pricing unskilled workers out of the market for unskilled labor hardly helps their situation.

Staying unemployed is a rung up on exactly which career ladder? Actually, It’s the equivalent of your local fire department ripping out the first two or three rungs on its ladders because, really, after all, how much help do such low rungs give you when you are trying to climb to the roof of a burning building?

Fred 2 on March 19, 2013 at 1:23 AM

If we started in 1960, and we said that, as productivity goes up — that is, as workers are producing more — then the minimum wage is going to go up the same.

Picture a janitor back in the non-productive days of the 1960′s… actually physically pushing a broom.

That labor sadly required no skill; and wasn’t very efficient; so he didn’t get paid much.

But today’s janitors… push the same brooms. They’re not faster, better, or more efficient.

Why should they get paid more?

OH, the “average” efficiency went up, so everyone should get the “average” increase regardless if they are more efficient or not?

Someone please explain some basic math, statistics, and logical thought to this person before she speaks again. It actually hurts my brain to realize some people are really this stupid.

gekkobear on March 19, 2013 at 2:42 AM

If we paid some of the politicians what they were worth it would be below the minimum wage. I can buy a diploma, and some diplomas aren’t worth the paper they are printed on. When I graduated HS back in the middle 50′s there were those that just made it and of course there were those that were brilliant that went further in the educational field. For those that didn’t make the grade or made it by the skin of their teeth tried in vain to acquire a cash flow and many ended up working some government job and at that time we felt sorry for them because it was almost welfare. The shocking part was when a familiar name popped up as a politician. Sure enough they were making some great bucks but that sure didn’t change their intelligence. The same is true today. We have criminals serving in the Congress and other government offices that don’t have the intelligence of a frog and Elizabeth Warren fits that position very well.

mixplix on March 19, 2013 at 4:25 AM

The sad thing is, in a debate with a progressive a month ago, I asked the same question; If the minimum wage is a good thing, then why not make it $25 an hour and solve poverty? Why not make it $50 an hour? $100? Shoot, if a minimum wage works without consequences then we should really go for it.

It clearly would just mean things would continuously become more expensive, even more dramatically than they are today. So the minimum wage would have to rise every 3, 6 and 12 months to keep up with the continue rise in prices. As businesses raise prices, then pay their employers more, there will be more cash in the economy and as this happens prices and wages will just continue to raise without any increase in general productivity. This will be massive inflation.

It’s like this – let’s say we gave every American $500,000 tomorrow. Guess what that would do to the price of EVERYTHING? Everything would have to skyrocket in order to meet or even push down demand. Because suddenly everyone can go to Best Buy and almost buy them out otherwise. Not even getting to the effects that the minimum wage has on the younger, less trained and less skilled.

fatlibertarianinokc on March 19, 2013 at 6:18 AM

I believe his title is Dr. Dube, Sen. Warren. Was he able to answer your question? Did you receive the smack down you deserved? I’ll bet the answer went right over the feathers in your hair and brain.

Kissmygrits on March 19, 2013 at 9:12 AM

Yep, if demand-side economics works so well, then send me a 100% refund of all the taxes I ever paid and the economy will explode!

22044 on March 19, 2013 at 10:12 AM

To a moonbat like Granny Warren, the increased productivity since 1960 has nothing to do with advances in technology (like Al Gore’s internet for example)

shanimal on March 19, 2013 at 10:45 AM

We have criminals serving in the Congress and other government offices that don’t have the intelligence of a frog and Elizabeth Warren fits that position very well.

mixplix on March 19, 2013 at 4:25 AM

Yup – far too many. The Demtard legislator in Colorado who sponsored most of the gun control bills has a pretty good criminal record that would disqualify her from a concealed carry permit, and possibly even a simple gun purchase – maybe why she doesn’t want anyone else to have guns.
But that’s apparently a resume enhancment for Dems.

dentarthurdent on March 19, 2013 at 11:18 AM

Is it true that in the Bakken Oil Fields area in ND that McDonald’s is paying $15 an hour for workers? I read that somewhere and it makes sense. People want to work the oil fields where the big money is so the scarcity of labor for other jobs drives up the wages offered. No need for minimum wage.

IdrilofGondolin on March 19, 2013 at 11:31 AM

Warren’s a native-American liberal woman from Massachusetts. What else would anybody expect from such marxist trash?

HiJack on March 19, 2013 at 1:04 PM

Feel stupid, but can’t we say that at least part of it was passed on to the consumer in lower prices?

FineasFinn on March 19, 2013 at 1:21 PM

Suppose the minumum wage was &10.00 an hour, what about the waiters and waitresses that work for tips only? If there is an exception to the law then it’s not a law.

mixplix on March 19, 2013 at 5:48 PM

Raising the minumum wage is a very stupid plicy..Pocahontus does not get it..:)

Dire Straits on March 19, 2013 at 8:43 PM

Raising the minumum wage is a very stupid policy..Pocahontas does not get it..:)

Dire Straits on March 19, 2013 at 8:43 PM

Fixed..:)

Dire Straits on March 19, 2013 at 8:50 PM

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