Should the minimum wage be $22 an hour? That’s what Sen. Elizabeth Warren (D) of Massachusetts suggested at a recent hearing of the Senate Committee on Health, Education, Labor and Pensions.
Here’s her logic: If you took the minimum wage from 1960 and indexed it for workers’ gains in productivity, it would be $22 an hour today. And why shouldn’t employees reap the benefits of their own improved labor practices?, she asked at the hearing, rhetorically. Today, the actual minimum wage is $7.25 an hour.
“What happened to the other $14.75? It sure didn’t go to the worker,” Senator Warren said.
Those gains went to corporate and top-executive profits, said a witness at the hearing, Arindrajit Dube, an economist from the University of Massachusetts, Amherst. That’s simply more evidence of how income inequality has grown in America, he said.
“It is quite remarkable that had the minimum wage kept up with overall productivity, it would have been $22 per hour in 2011,” Dr. Dube said in his prepared remarks. “Had it kept up with the growth in income going to the top 1 percent, it would have been even higher, at $24 per hour; and the wage would have exceeded $33 per hour at its peak in 2007.”
Hold on a second there, economic conservatives: Neither Warren nor Dube was actually suggesting raising the minimum wage that high as a matter of public policy. Doing so in one go would crash companies and destroy jobs.
“Rather, the exercise demonstrates how different the growth rates have been for incomes going to those at the bottom of the labor market as compared to the economy as a whole and to those at the top end of the distribution,” Dube said.
The fact is that even tacking a few bucks on to today’s $7.25 minimum wage would be a hard political lift. It’s almost certain to face stiff opposition in the GOP-controlled House.
President Obama in his State of the Union message suggested raising the rate to $9. He’s still pushing that, saying Monday at the introduction of his new nominee for secretary of Labor, Thomas Perez, that “a minimum wage should be a wage that you can live on.”
Sen. Tom Harkin (D) of Iowa has introduced legislation that would push the minimum wage even a bit higher, to $10.10.
“We don’t want minimum-wage workers left behind and left out of this recovery,” he said last week when introducing the legislation.
But those who employ many low-wage workers are adamantly opposed to something that they say would cost some employment.
Going from $7.25 to $10.10 is almost a 40 percent wage increase, noted David Rutigliano, a partner in SBC Restaurant Group of Shelton, Conn., at the Senate Health panel hearing.
“At a time when many businesses are struggling to keep their doors open and in some cases employers are forgoing their own paychecks to avoid laying off employees, mandating wage increases will only hurt those employees which his proposal seeks to help,” he said in his own prepared statement.