Elizabeth Warren Wonders: Why Aren’t Employers Paying $22-an-Hour Minimum Wage Rates?

[Teh One Who Knocks]

Becket Adams - The Blaze



http://www.youtube.com/watch?feature=player_embedded&v=mwAQwItEjUo

Democrat Senator Elizabeth Warren during a hearing of the Senate Committee on Health, Education, Labor and Pensions last week asked why the current federal minimum wage rate is only $7.25 and not $22 an hour.

“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,” the Massachusetts senator said during the hearing.

“And, if that were the case, the minimum wage today would be about $22 an hour. So, my question … is what happened to the other $14.75?” she asked University of Massachusetts professor of economics Arindrajit Dube.

In her apparent support for an increase in the federal standard, Sen. Warren joins President Barack Obama in suggesting that the current minimum wage rate should be increased.

The president during his State of the Union Address in February called on Congress to raise the federal minimum rate to $9 an hour.

“We know our economy’s stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong,” he said.

“That’s why, since the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs even higher,” he added. “Tonight, let’s declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty — and raise the federal minimum wage to $9 an hour.”

However, as many, many economists argue, whether it’s $9 or $22, an exponential increase in the federal standard could have a disastrous effect on the economy (not to mention the deleterious effect the minimum wage itself already has on the free market).

First, a higher rate would force employers to cut back on hiring. Second, do you have any idea what an increase in the cost of labor would do to the cost of products/services? Third, the argument itself for blindly increasing the rate, with disregard for regional cost of living, leaves something be desired: If merely raising the rate from $7.25 to $9 or $22 would solve “income inequality” and unemployment problems, then why not just increase the rate to $50, $100, or even $1,000?

Lastly, if increasing minimum wage is a cure-all for unemployment and “income inequality,” consider this list of the top 10 states with the highest unemployment rates in the U.S. (the states with minimum wages higher than the federal standard are in boldface):


10. GEORGIA (Unemployment Rate/Minimum Wage Rate: 8.7/$7.25)
9. SOUTH CAROLINA (8.7/$7.25)
8. MICHIGAN (8.9/$7.40)
7. ILLINOIS (9.0/$8.25)
6. MISSISSIPPI (9.3/$7.25)
5. NEW JERSEY (9.5/$7.25)
4. NORTH CAROLINA (9.5/$7.25)
3. NEVADA (9.7/$8.25)
2. CALIFORNIA (9.8/$8.00)
1. RHODE ISLAND (9.8/$7.75)

Just some food for thought.

[FBD]

yeah price those kids right out of the job market, they dont need to learn good work ethic while they're young.

[Softdreamer]

Yeah because putting more profits into shareholders pockets is a better benefit to the economy than paying workers more.

Those minimum wagers would only use loopholes and offshore accounts to hide their money anyways :-k

[FBD]

:lol: its decidedly not, but that's apples and oranges.

[perrhaps]

Memo to "Lieawatha":

The minimum wage was never designed to be a so-called "living wage". Instead, it's an introductory wage. prove yourself, and in a few months you'll either get a raise, or have the bona fides to get a higher-paying job elsewhere.

Here's a thought. Why don't we pay EVERYBODY $22.00 an hour, including teenagers and Ivy league professors who repeatedly lied about their ethnicity to rise through the hallowed ranks of academia? All wages currently above and beyond that will be confiscated by The Nanny State and used to fund White House tours; universal cradle-to-grave health care and free internet and cell phones for all, etc.

Ok by you, FBD?

[Teh One Who Knocks]

I wish we paid a $22/hour minimum wage, it would be awesome to pay $12 for a loaf of bread and $16 for a gallon of milk :)

And then we could go over to McDonalds and get a $8 cheeseburger :thumbsup:

[FBD]

sure perrhaps, so long as those practicing law without a license and using some other academic trickery as an excuse for not needing one are subjected to it also ;) :lol:

[Acid Trip]

Yeah because putting more profits into shareholders pockets is a better benefit to the economy than paying workers more.

Those minimum wagers would only use loopholes and offshore accounts to hide their money anyways :-k

:facepalm:

Every time the minimum wage is raised it negatively affects the uneducated and unskilled.

If you really want to see people understand this fact then require ALL LABOR (including babysitting, daycare, waitresses, yard mowers, etc) be paid the minimum wage. That would get millions of people to understand that minimum wages are bad.

[Softdreamer]

So you would rather have all the poor get better paid jobs?
Then who would serve you at your next drive thru?

You would rather have them paid below a living wage?
And then have your tax money spent on their health care?

I don't believe that it is as simple as a wage rise makes then worse off.
The underlying imbalance that led to the rise was probably the root cause of them being worse off in the end.

A poor persons wages are 99% recycled back into the economy. Fact.

[FBD]

we appreciate your heart, but that cold heartless data superlatively disagrees with you about the effects of min wage laws.

[Acid Trip]

Incoming Wall of Facts in 3...2...1...

Has boosting the U.S. minimum wage from $4.25 per hour in 1994 to today's $7.25 per hour helped or hurt the U.S. economy?

To answer this question, we'll be tapping the U.S. Census Bureau's data on the incomes earned by 15 to 24 year old Americans in 1994 and 2011 (which until this September represents the most recent year for which this data is available). Specifically, we'll be considering the size of the Age 15-24 population, the number of 15-24 year olds with incomes and, of course, the federal minimum wage that applied in each of those years.

Because we're spanning so much time, we'll also need to account for the effects of inflation on the effective level of the U.S. minimum wage. Our first chart shows the original and inflation-adjusted levels of the U.S. federal minimum wage for both 1994 and 2011 in terms of constant 2011 U.S. dollars:

http://i.imgur.com/b55eWwM.png

Our next chart illustrates the change in the number of 15 to 24 year olds who were either counted as having incomes, or having no income, in both 1994 and 2011:

http://i.imgur.com/CoRmOVP.png

This data provides enough information for us to construct a supply and demand diagram that will allow us to estimate if any deadweight loss occurred in the U.S. economy as a result of the change in the U.S. minimum wage from 1994 to 2011:

http://i.imgur.com/OTZ61vW.png

A deadweight loss is said to occur whenever economic activity that might otherwise have occurred is prevented from occurring because of policies that interfere with the natural functioning of a market economy. In this case, the policy in question is whether the minimum wage has been set too high, which then prevents people from being able to accept work at wages below the level set by the federal government, except under some very limited conditions permitted by the government.

Using our tool's default values, our tool estimates that the deadweight loss to the U.S. economy as a result of the increase in the U.S. federal minimum wage from $4.25 per hour in 1994 to $7.25 per hour in 2011 is $485,430 per hour (in terms of constant 2011 U.S. dollars).

Americans between the ages of 15 and 24 worked an average of 19.2 hours per week in 2011. Multiplied over a 52 week year puts the estimated deadweight loss of the minimum wage from $4.25 per hour in 1994 to $7.25 per hour in 2011 at $483,391,573.

In other words, if not for the increase in the minimum wage, the U.S. economy would be nearly half a billion dollars bigger today.

And then, there's the little matter of the 6,092,685 increase in the number of teens and young adults from 1994 to 2011 who have no income.

Here, we measured the "surplus" of teens and young adults without income as being the difference between the number of 15-24 year olds with incomes in 2011 and the number of teens and young adults in 2011 who might have income if only the same percentage of those Age 15-24 that had incomes in 1994 also did in 2011. This makes our estimate of the surplus of 15-24 without incomes in 2011 fall on the conservative side, as the actual size of the increase in the non-income earning Age 15-24 population from 1994 to 2011 was 7,835,000.

[Leefro]

We had the minimum wage brought in around 8 years ago

Best piece of legislation EVER

[Noraf45]

I remember being in college when they were sending around petitions to increase the wage to $7.25. A girl came up to me, asked me if I think the minimum wage should be higher. It had been $4.25 for as long as I knew and it seemed low, so I said, "Sure, how much are you wanting to raise it?" She said they wanted to increase it to $7.25 and I took a step back. I said, "That's outrageous! That's too much of an increase too quickly. I just got promoted to assistant manager and my new salary is exactly $7.25 an hour." Her argument was that people couldn't support their families on the minimum wage even working 2 jobs, to which I told her, "Minimum wage isn't intended for people to support their families, they should try to get better jobs. Increasing it that much that fast is only going to drive the price on everything up" and I walked away. She looked at me like I was insane.

Several months later the minimum wage was increased to $7.25. Immediately the cost for my wife and I to pick up lunch at a fast food place went from less than $10 to nearly $20. At my job we had to let go of one extra person we had kept around after Christmas. My manager bumped me up to $7.50 because he thought I should be making more as an assistant manager than the regular employees, but he couldn't afford to give me a suitable increase. All the people who were making just over $5.00 got a 50% pay increase.

This was in Arizona, where the cost of living is incredibly low. Literally just about 4 years ago I bought a brand new house in the nicest part of town. 1800 sq ft, 3 bed, 2 bath, 2 car garage - $175k. Sierra Vista isn't some nasty ghetto area either; crime rates are low, things are generally clean and friendly, it just doesn't cost a lot for utilities or property there. $9 is one of the best pay rates you can find in that area outside of being a government employee or contractor. All the people getting that much in that area all drive around in nice new cars living it up. You increase every freckle-faced burger flipper to that much and you're going to screw everything up in places like that. Not everywhere in the country is New York or California. Even so, those places are only going to get more expensive as well as businesses try to recoup their losses from having to drastically bump up the salaries of the majority of their workforce.

[FBD]

fkn honestly, I spent SO little time at min wage (even while in min wage category positions) because I worked my ass off and earned raises. having a low enough floor allows for people to work hard and earn their raises instead of being instantly gratified with far above market value wages.

you think you're above market value? prove it!

or at least that's how it used to be.

[Hal-9000]

I wish we paid a $22/hour minimum wage, it would be awesome to pay $12 for a loaf of bread and $16 for a gallon of milk :)

And then we could go over to McDonalds and get a $8 cheeseburger :thumbsup:


we pay 8 dollars for a cheeseburger



:sad2:

[Muddy]

$45,760 a year min. wage? :lol: yeah right.