$22 Minimum Wage Proposal By Elizabeth Warren Cannot Work, Would Hurt Economy

$22 minimum wage

A $22 minimum wage proposal by Elizabeth Warren is gaining notice all over the internet. More realistic Federal minimum wage proposals are considering $9 or $10 per hour, but the $22 minimum wage idea deserves a response.

As previously reported by The Inquisitr, the $22 minimum wage was brought up by Senator Elizabeth Warren in a recent Education, Labor, and Pensions Committee hearing over the national minimum wage. The $10 amount has been touted by several Democrats over the past weeks including House Minority Leader Nancy Pelosi. President Obama is also trying to raise support for a $9 minimum wage. Even a $9 minimum wage increase would affect many Americans, since 47 percent of potentially effected workers are full-timers, and 84 percent are not teenagers doing temp jobs.

“If we started in 1960, and we said [that] as productivity goes up … then the minimum wage was going to go up the same … if that were the case, the minimum wage today would be about $22 an hour,” said Senator Elizabeth Warren. “What happened to the other $14.75? It sure didn’t go to the worker.”

Still, Elizabeth Warren posed the $22 minimum wage as an example, not as an actual proposal. One of the responses in the video point out that creating a $22 minimum wage, or raising the federal minimum wage at all, creates an inflationary effect on the economy and may in fact result in overall higher cost of living where the actual worth of their income is less than it was before. Some have already argued that if faced with a $22 minimum wage, employers are only going to raise their prices to compensate for the raised minimum wage.

James Dorn argued over at RealClearPolitics that, “when the real minimum wage is pushed above the prevailing market wage for unskilled workers, jobs are lost and others never created. The government can promise a higher wage rate, but, if a worker loses her job, her income (hourly wage x hours worked) will be zero.” Some employers get even more creative to maintain their bottom line by having rapidly changing on-call work hours and pushing for even more efficiency out of their current worker base. Thus, minimum wage workers face even higher levels of stress.

But the biggest danger of the $22 minimum wage idea, or any other relatively high minimum wage, is that such a sudden change would hurt the economy. Higher minimum wages are not bad in of themselves, but, if they are implemented too quickly, the overall net effect is bad for the average worker. My home state of Florida is a good example of this. In 2006, Florida had a minimum wage of $5.15 per hour. As of January 1, 2013, Florida has a minimum wage of $7.79, which is quite a jump in only seven years. The local economy still has not recovered from the shock of this sudden rise.

Since 2007, rent for a one bed, one bath apartment in my area has risen from a minimum of around $500 to $600 and higher. Food costs have risen dramatically, never mind the gas prices (but that has little to do with the federal minimum wage). In short, there are many actual costs of living that have risen sharply in seven years but the salaries and income for wages above the minimum wage have not yet risen to compensate. For example, $10 to $12 an hour used to be plenty in the local economy but now you can’t live on that income. So, the net effect is that those who used to be middle class are suddenly poor.

What do you think about the $22 minimum wage or higher Federal minimum wages in general?

http://youtu.be/mwAQwItEjUo