Senator: US would have $22 minimum wage if pay matched productivity

Posted on: 8:23 am, March 19, 2013, by

Sen. Elizabeth Warren hypothesizes that the U.S. minimum wage would be $22 in 2012 if worker pay had kept pace with production. (Photo: YouTube / Senator Elizabeth Warren)

Sen. Elizabeth Warren hypothesizes that the U.S. minimum wage would be $22 in 2012 if worker pay had kept pace with production. (Photo: YouTube / Senator Elizabeth Warren)

WASHINGTON, D.C. – Sen. Elizabeth Warren, D-Mass., wondered out loud why the nation’s minimum wage isn’t at $22 an hour, during a Senate Committee hearing on Health, Education, Labor and Pensions last week.

“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,” Warren said. “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?”

University of Massachusetts Amherst professor Dr. Arindrajit Dube, who had been asked to testify at the hearing, confirmed Warren’s math.

“Had the minimum wage grown at the same pace with incomes going to the top 1 percent of tax payers, the minimum wage would have stood $33 an hour before the recession in 2007,” said Dube, who has studied the economic impact of the minimum wage.

While the Dube and Warrens suggestions seem logical, they appear far from a universal economic truth, according to a March study by the Center for Economic and Policy Research. The study showed that advancements in technology have increased the amount of goods and services that can be produced in a set amount of time.

As the ease of production has increased, the study found, the market value of products has shown a tendency to decrease, thus making it more difficult to perfectly align pay with productivity.

The minimum wage debates have become more widespread in the wake of President Barack Obama’s State of the Union address, in which he called for an increase in the minimum wage from $7.25 an hour to $9.