Minimum wage-would be $26 an hour if it had grown in line with productivity

[KPN]

If the minimum wage had kept pace with gains in the economy's productivity over the last 50 years, it would be nearly $26 an hour today, or more than $50,000 a year in annual income, one economist notes. "That may sound pretty crazy, but that's roughly what the minimum wage would be today if it had kept pace with productivity growth since its value peaked in 1968," wrote Dean Baker, senior economist at the left-leaning Center for Economic and Policy Research, in a recent blog post.

Productivity rises, wages fall: Since the late 1960s, increases in the minimum wage have lagged growth in workers' productivity. (Chart)

Productivity — how much income someone generates in an hour of work — is critical for the economy because it helps determine a country's standard of living. Yet rising productivity is no guarantee of a healthy economy. Equally important is how the fruits of productivity are divided. To that end, "Having the minimum wage track productivity growth is not a crazy idea," Baker said.

“Dean makes an important point. Whether or not you should argue it should be $26, it is a very strong point illustrating what has been happening with our economy," said Ken Jacobs, the chair of the University of California, Berkeley Center for Labor Research and Education. Since the 1970s, "We have seen that complete divorce between wages and productivity and massively increased inequality with most gains going to people at the top."

A $26 an hour minimum wage might strike some as unrealistic, with Baker noting that his analysis is more of a "thought experiment" than a practical proposition. For one, more than tripling the federal baseline wage would result in a host of undesirable economic effects, from a spike in unemployment (as employers would need to cut jobs in order to pay the workers they could afford to keep on) to higher inflation.

More at link …

[link:https://www.cbsnews.com/news/minimum-wage-26-dollars-economy-productivity/]

[fescuerescue]

2. Tying it to overall productivity is an interesting idea

The challenge is that not all jobs increases in productivity.

A cab driver for instance, can drive at most 60 miles in an hour. That hasn't increased since about the 1950's. In fact productivity in cab driving has gone down.

would we really want to REDUCE cab drivers pay to that of 1950's levels? I hope not.

hair dressers. About 1 customer an hour. Their productivity has been the same for a century.

I think that tying it to inflation make the most sense, although no solution is perfect.

[Otto_Harper]

4. Don't be fooled into becoming too simplistic

The example you use for the cab driver is a good example. While it is true that the number of miles driven per driver has not increased, the technology of the job has still increased the productivity for a driver.

In the early 1950's phone requests and radio dispatch of cabs was just at its early stages. Now, with cell-phone and GPS based dispatch systems, cabs can be directed (or redirected) to closest customers, reducing vehicle miles and fuel expenditures for the same fare. Similarly, vehicle fuel efficiency has dramatically improved over that of 70+ years ago, again, resulting in a productivity increase, despite the number of miles driven per hour.

[KPN]

5. Tying it to aggregate productivity avoids the issue of productivity change disparity.

Frankly, I don't care what it is tied to provided it is fair and balanced. My sense is that tying it to inflation is subject to just as many issues -- just the metrics used for determining "inflation" alone creates problems in our political system.

The problem is human nature (i.e., greed) first and, second, a political system corrupted by that greed. I question whether we have it in us to make the kinds of corrections needed to foster the healthy social, economic and natural environment needed to sustain our population. Most of the the 1% don't give a sufficient damn about any of that ... which makes me pessimistic about our chances over the next generation or so absent an outright revolt against the wealthy class. Even that would probably be stifled given money's grasp on our political systems.

That doesn't mean I lack optimism entirely, but any optimism I do have comes from my sense of our youngest generations not my generation (Boomer) or Generation X. Millennials and Generation Y and Alpha may pull it off eventually, but on the economic front that will take at least a couple decades.

[fescuerescue]

7. Once it's tied to GDP

GDP would be subject to the same gamesmanship.

Inflation is simple right? The cost of "stuff". But then we started eliminating things. Mostly the things that actually go up, while keep in the things that stay stable or decrease in cost.

The same would happen with GDP. First thing to go, anything automated.

Before you know it, GDP would only be based on picking crops, driving cabs and doing hair.

[KPN]

9. Seems that way. We are a docile society on the whole.

[Hoyt]

3. Clearly min wage has not kept up. But most of increase in productivity nowadays is due to technology

and investment in equipment, etc.

[KPN]

6. Federal minimum wage has declined significantly relative to inflation

over the past 5 decades. That has nothing to do with productivity. We need enlightenment, not metrics. Could be a depressing thought depending on one's outlook...

[rownesheck]

8. Stop allowing CEOs to make

thousands of times more than the average worker and reinvest that amount back in to worker pay. We have to quit allowing this obscene difference in pay between top and bottom. Either that, or we need universal basic income.

[WarGamer]

11. That sounds good.

But what's the point?

I can explain this, please don't doze off as I Know it's boring.

Let's look at Ford. They recently hired a Chief Executive from Apple named Doug Field as their new Chief Advanced Tech Officer.

He will make an enormous amount of money.

You see... a publicly traded Corporation like Ford has a fiduciary responsibility to it's shareholders. Those shareholders might include you and I... they most certainly include millions of American retirees and "soon to be" retirees who either own the stock directly or through their retirement plan at work OR the State pension plan.

Putting an experienced guy like Field on the team looks good to the investors. It's seen as a coup to steal a guy from Apple. The guy's a rock star. He was brought on to add VALUE to the company. He will help the price of the stock go up and make investors happy.


Back to your point, is it OK with you for a guy who throws a leather wrapped rubber ball though a metal ring strung with a net to be paid millions of dollars a year? Tens of millions even?

Or an actor who makes $40 Million for a single movie?

Is there REALLY value there? Should the top NBA player make no more than 300% the average salary of the typical fan who buys tickets to the stadium?

Silly, isn't it?

CEO pay is decided by the Board of Directors who DIRECTLY represent the investors of the company and investors of a company want "rockstar" executives brought onboard because it's good for the bottom line.

Plus... if a company saved $300 million on a hire... you actually think they'd sink it back into salaries?

Trust me. I'm with you 100% on economic equality but this is the wrong tree to bark up.

It's simple. TAX PEOPLE.

Make $300M a year as a CEO? Get hammered in taxes.

Problem is... politicians are afraid to tax their rich donors.

[KPN]

13. Yup. Return to a real "progressive" tax system at the

federal level — which will likely only happen when we reform federal campaign finance law. How likely is that? Not very, as long as we have the Murdoch “news” network dominating viewership on cable tv and right-wing talking heads massively dominating the talk-radio across the nation and spewing misinformation/lies and fomenting anger and hatred
toward others.

[WarGamer]

10. Makes sense...

In the early 80's I made 3.35/hr in California.

I remember gasoline was 99c a gallon.

A couple years later I moved out of the house and split an apartment with a friend for $625/mo. He paid 325 and got the larger bedroom and I took the smaller one for 300.

A similar apartment in the same part of town runs 3000/mo now.

Gasoline is $4.50/gallon

I'd say modern day COL is about 5X what it was in the early to mid 80's.

I clearly remember that in the late 80's I was working my first "real job" making $10/hr with 5-10 hrs OT a week and I was freekin' loaded.

Had a cool car, went out a few times a week... always had cash in my pocket.

[LanternWaste]

12. As late as 1985, I could work a part time job and pay for college

Full time in the summers and part time during the semesters paid my tuition, books, fees, etc. at the local state university campus.

I'd be surprised if minimum wage could do that anymore.