Senator: Why Does The Minimum Wage Rise So Slowly?

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Elizabeth Warren argues that if pay were tied to productivity, the minimum wage would be $22 today.

She’s not outright proposing we raise the minimum wage, but U.S. Senator Elizabeth Warren – President Obama’s first pick to lead the Consumer Financial Protection Bureau – might as well be.

Last week in a Senate hearing, she asked an expert on the minimum wage this question:  “With a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker.”

Arindrajit Dube, a professor at the University of Massachusetts Amherst, responded that since the 70s “we’ve seen a divergence between the prosperities of different sections of our population.” He then said if the minimum wage was tied to the growth of the top 1 percent’s income, it would be above $33 an hour now.

Warren then suggested that if they raised the wage to just $10.10 an hour, the cost of a McDonald’s combo would only go up 4 cents. She asked David Rutigliano, owner of the Southport Brewing Co. restaurant chain, if that were unsustainable. He responded that not all restaurants were created equal and he couldn’t afford to raise prices.

He also suggested that by raising the minimum wage, “you might actually be taking away the money you just gave that employee” because of “an inflationary effect,” but Dube quickly said that didn’t make mathematical sense.

The value of the minimum wage peaked in 1968, according to research by The Center for Economic and Policy Research.

Stacy Johnson

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