Jack E. Kemp
Elizabeth Warren has made a statement that liberals are saying has "been taken out of context." The 1/32 Indian (or is it one thirty-second Indian?) is reported in the Huffington Post to make this argument:
Sen. Elizabeth Warren (D-Mass.) made a case for increasing the minimum wage last week during a Senate Committee on Health, Education, Labor and Pensions hearing, in which she cited a study that suggested the federal minimum wage would have stood at nearly $22 an hour today if it had kept up with increased rates in worker productivity...
"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.
END OF QUOTE
What's wrong with this picture? Well, it is just that:
1) increases in productivity aren't generally measured in relation to untrained beginners who get the minimum wage. I speak from experience n my college days summer job at a gas station, the first customer I served resulting in me taking pump hose into my hand and squeezing it, shooting out 10 feet of gas onto the ground before I stopped squeezing. I could have been fired right there.
2) Increases in productivity are often linked to spending on more modern computerized machinery. Workers, after all, aren't any more muscular or energetic than they were in the 1960s.
3) If labor costs go up with every expensive investment in new equipment, than a business that employs many workers has a disincentive to buy new equipment. After the initial large outlay of capital, where is the offsetting longterm savings if the cost of labor per hour per person is virtually guaranteed to offset all gains in new machinery? Let's use a simple example from circa 1958. If a cab company has to consider replacing its standard shift cabs that use a clutch with cabs that have automatic drive that a less skilled driver can move quicker through traffic and thus pick up more passengers per hour, where's the incentive to buy new cabs if the company's labor costs will rise for workers operating a now easier-to-drive cab?
Elizabeth Warren isn't stupid in the general sense of the word. She knows my calculations - but she also knows her own calculations in appealing to voters' emotions. She appears to be talking to those low information voters with no experience managing the expenses of a factory or a fried chicken store. That includes most U.S. legislators and just about every undergraduate student in America.
I'm sure Sen. Warren could get an "A" on a paper making this recommendation in a Keyensian Economics class, especially if the professor was at Woodstock and gave extra credit to his students for having attended an Occupy Wall St. rally with him or her. And this $22 an hour idea of Sen. Warren's would really go over big at a late night dorm bull session or with a group of students meeting at her home. But those are hot house Ivory Tower environments. Even if the students had worked at McDonald's in their teens, they now "know" the politically correct answer to give in class and on the campus mall.
Perhaps Sen. Warren also has an equally good idea on how to return the purchasing power of the U.S. Dollar to 1960 levels, a task that would be greatly aided by figuring out how to get all those countries overseas to stop exporting the low cost goods with low cost labor to the U.S. since the 1970s. But frankly, I'd be happy if Sen. Warren could use her Harvard trained mind to increase domestic oil production so that the price of U.S. gasoline would return to the $1.84 a gallon it was on the day Obama took office in 2009.
Wait. I have a much more doable project for Sen. Warren. It is for her to take a DNA test to answer the question of whether she is, in fact, part Cherokee. And I'd consider paying two three lab assistants $22 an hour to work on that project - but I'm sure Ms. Warren would demand they get paid a figure that would insure the DNA test would never occur.