Minimum wages are grossly understated for the modern economy, at least according to Massachusetts Senator Elizabeth Warren in a statement released on March 18, 2013 and reported to the Huffington Post and other news outlets.
Warren, the soon to be senior U.S. Senator from Massachusetts, said that minimum wages would need to be $22 per hour if they kept up with worker productivity. She noted this during a hearing last week with the Senate Committee on Health, Education, Labor, and Pensions.
Warren derived her $22 minimum wage by taking the 1960 minimum wage and then indexing it for increases in worker productivity from that point to 2011. At $22 per hour, the minimum wage would be more than three times higher than its present $7.25 per hour.
With so many gains in productivity, someone had to reap the benefits, and that “someone” was not the American worker, according to Warren and others. The winners in the productivity game were, not surprisingly, corporate CEO’s and other executives who have enjoyed sharp gains in salaries, bonuses, and other incentives over the past fifty years. The result is a less equitable distribution of wealth that has favored those near the top.
So, could a higher minimum wage be in America’s future? If Warren and other Democrats have their way, the answer is yes, but it wouldn’t be anywhere near the $22 per hour minimum wage suggested by the Senate Committee on Health, Education, Labor, and Pensions. An increase like that would demolish the economy and lead to widespread unemployment and other issues. Rather, some politicians, including President Obama and top- ranking Senators such as Tom Harkin, have proposed increasing the wage by more reasonable levels.
“We don’t want minimum-wage workers left behind and left out of this recovery,” Harkin said last week, after introducing legislation to increase the minimum wage to $10.10 per hour. President Obama has expressed similar sentiments, but has proposed a more moderate minimum wage increase to $9.00 per hour, as suggested during his State of the Union speech.
Increasing minimum wages is always a tough sell with Republicans and it is going to be particularly difficult to get legislation through the Republican- controlled House. With the fragile state of the economy, a sharp increase in the minimum wage could lead to increased unemployment and a possible double- dip recession. Regardless, Warren, Harkin, and others will continue to push for higher minimum wages as part of their plan for a fuller and more equitable economic recovery for all.
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