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

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

" ... as workers are producing more -- then the minimum wage is going to go up the same."

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.


Follow Becket Adams (@BecketAdams) on Twitter

(H/T: Washington Free Beacon). Featured image Getty Images.

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