HuffPo.com: Elizabeth Warren: Minimum Wage Would Be $22 An Hour If It Had Kept Up With Productivity

[Corcaigh]

you are probably right... it was such a thighslappingly ridiculous statement on its face that no tagging was needed

As someone who hails from Stalinist European countries where the top rates are 41 and 45% respectively, it would be a thighslappingly ridiculous position to claim 30.6% was such a repressive measure. Especially when some of my remuneration as a company owner is in dividends at 15%. The horror.

---------- Post added March-21st-2013 at 02:14 PM ----------

We have a salary cap in the NFL,

The negative incentive of taxation on higher earnings is clearly demonstrated by what happens to the Cowboys in December. As their game checks cross a threshold of income for the year they reach a point in the season where they are no longer motivated to try.

---------- Post added March-21st-2013 at 02:18 PM ----------

I absolutely believe he was serious. He's just lying now to look better.

I guess I've blown my cover as European socialist.

[Jumbo]

I miss nothing.

Well, that's not true.

The other day I missed my ex-wife.

So I backed up the ole hemi and tried again. :cool:

[doctorshockalu]

What about the Henry Ford approach instead of having a floor/ceiling? No member of a company can be paid more than 100-1 compared to the lowest waged worker.

[Larry]

I miss nothing.

Whereas, me? I know nothing.

Nothing.

[Jumbo]

Whereas, me? I know nothing.

Nothing.

We mentioned Spock previously, and now you're reminding me of another of my early role models.

[skinsmarydu]

If people were actually paid minimum wage adjusted for inflation, there would be even more tax revenue, because minimum wage workers pay taxes on 100% of their income, less any deductions. They would be more likely to own homes, increasing the real estate tax base.

Ceding higher profits to the 1% on the backs of minimum wage labor is real wealth redistribution in action.

Well said. And the desire to cut social programs that help our poorest is sickening. All I can assume is that the rich find it entertaining to step on the hungry and homeless as they exit their limos.:doh:

[Tulane Skins Fan]

Well said. And the desire to cut social programs that help our poorest is sickening. All I can assume is that the rich find it entertaining to step on the hungry and homeless as they exit their limos.:doh:

First, I think that's a little harsh.

But, this did remind me of History of the World when they roll the red carpet right over the beggars outside the King's castle.

[yank]

"If people were actually paid minimum wage adjusted for inflation, there would be even more tax revenue, because minimum wage workers pay taxes on 100% of their income, less any deductions. They would be more likely to own homes, increasing the real estate tax base.

Ceding higher profits to the 1% on the backs of minimum wage labor is real wealth redistribution in action.."

Well actually not. Minimum wage people dont pay income taxes. They do pay "payroll taxes" which is to say they contribute to the 'Social Security Fund."

<offsubject>All terms in quotes are euphemisms which is to say they are not what the words mean. There is no Security Fund for example. Current Social Security payments are paid for by current "payroll taxes" and other taxes. There is no fund at Ft. Knox with stacks of Ben Franklins that you contributed during your working years. What you pay now in "payroll taxes" is spent now on current Social Security benficiaries. When they say the "Fund runs out in 2030" it means that the payors in 2030 cannot afford to pay for the social secuurity beneficiaries in 2030 at that rate and volume of costs. What started off as 17 payors to 1 beneficiary is now 2.5 payors to 1 beneficiary. In 2030 is the tipping point where it goes negative. It is a publicly declared Ponzi scheme.</off subject>

[Larry]

Well actually not.

Well, actually, yes.

See, the person you're correcting said that minimum wage workers pay taxes on 100% of their income.

This is a true statement.

That's why your response, below, has to pull the old apples-to-oranges switch, of pointing out that they don't pay income tax, (which is true, but does not in any way make the person you're responding to incorrect), and then put the words "payroll taxes" in quotes, so you can try to pretend those aren't real taxes, or they don't count, or some such.

Minimum wage people dont pay income taxes. They do pay "payroll taxes" which is to say they contribute to the 'Social Security Fund."

<offsubject>All terms in quotes are euphemisms which is to say they are not what the words mean. There is no Security Fund for example. Current Social Security payments are paid for by current "payroll taxes" and other taxes. There is no fund at Ft. Knox with stacks of Ben Franklins that you contributed during your working years. What you pay now in "payroll taxes" is spent now on current Social Security benficiaries. When they say the "Fund runs out in 2030" it means that the payors in 2030 cannot afford to pay for the social secuurity beneficiaries in 2030 at that rate and volume of costs. What started off as 17 payors to 1 beneficiary is now 2.5 payors to 1 beneficiary. In 2030 is the tipping point where it goes negative. It is a publicly declared Ponzi scheme.</off subject>

Your "definitions" aren't true.

Yes, there is a Social Security Trust Fund.

It is not located in Ft Knox. I seem to recall reading that it's located in a filing cabinet in Washington. It does not consist of stacks of Ben Franklins. If consists of a folder, containing US Treasury bills.

(According to the article I read, the filing cabinet isn't even locked. The t-bills in the folder are special t-bills that aren't valid in general circulation. Like the $100,000 bill, which is printed US currency, but it's only used for transfers between one Federal Reserve Bank and another, and isn;t valid in general circulation, the t-bills in the filing cabinet are special, large-denomination, bills, which are only valid for use by the US Government. If stolen, then they're simply collector's items.)

According to the trustee's report for 2012, (PDF), which reports on the year 2011, at the end of 2011, the fund consisted of $2.5T worth of treasury bills. (That data is on page 14, as the PDF numbers the pages.)

When they say the "Fund runs out in 2030", they mean that the fund runs out in 2030.

Now, most of your payroll taxes go to pay current beneficiaries. I think, now days, it's like 98% of what they take in, that goes right back out the door.

In fact, we've recently had at least one year, where 100% of the money that came in, went out the door.

Curiously, though, the amount of money in the trust fund went up that year, anyway. That's because the trust fund earns interest. It's not much interest (t-bills don't pay much interest). But the amount in the trust fund was so large that even the piddly interest earned on t-bills was small enough to cover all of that year's shortfall, and still go up, anyway.

2011 was one such year. At the begining of the year, the trust fund held $2.4T. At the end of the year, it was $2.5T. (Again, page 14 of the PDF.)

----------

:secret: If you're going to try to tell people that words don't actually mean what they say, and to try to offer up your own definitions, instead, it really helps if the definitions you're offering up aren't untrue. Makes you look bad.

[skinsmarydu]

Then what is "Federal Withholding", if not a tax?

[ncr2h]

:secret: If you're going to try to tell people that words don't actually mean what they say, and to try to offer up your own definitions, instead, it really helps if the definitions you're offering up aren't untrue. Makes you look bad.

This Masters of Accounting graduate is very interested in the "secret" as to what she meant by "deductions" if she was talking about payroll taxes.

If people were actually paid minimum wage adjusted for inflation, there would be even more tax revenue, because minimum wage workers pay taxes on 100% of their income, less any deductions. They would be more likely to own homes, increasing the real estate tax base.

---------- Post added March-22nd-2013 at 10:36 AM ----------

Then what is "Federal Withholding", if not a tax?

It's technically not a tax if the Feds take money from you as long as they give it back the next April.

[Tulane Skins Fan]

Think you misread that. She was talking about paying income taxes, "less any deductions."

[Larry]

Think you misread that. She was talking about paying income taxes, "less any deductions."

I agree, the sentence can be interpreted two ways.

Although, I will point out that, even if you alter the phrase to "minimum wage workers pay

income

taxes on 100% of their income, less any deductions", it's

still

true. Just not really relevant, much.

(I also have a problem associating increased minimum wages with people earning minimum wage buying houses. Me, I could see an association with "increasing minimum wages" >>>>====> "increased home ownership", I think that it's because there's a step in the middle, "Increased minimum wages causes an increase in the wages of other workers, whose wages are close enough to the minimum wage for their wages to be affected".)

IMO, even if min wage were increased to, say $10 (I think that's one of the proposals), I don't see people making $10 an hour buying homes.

But I could see:

• Min wage goes from $7.50 to $10.
  
• Worker X, (CNA? Truck driver? Plumber?) who used to make $12, gets a raise to $16
  
• Worker X, who was not making min wage, before or after, can now consider buying a house.

[LadySkinsFan]

If they own a home with a mortgage, they are paying interest and until the Congress takes away the real estate mortgage interest deduction, deductions for children and all the other deductions available to those who are employed (as opposed to those who own corporations etc.). And I certainly recall paying income taxes on top of the FICA while employed and making $40K a year and below. I think it was in the 28% range, and that was before I ever had mortgage interest to deduct.

Only the very working poor get to claim an earned income credit to reduce their taxes and perhaps get a refund. If we were paying a $22 minimum wage, there would be no need for the earned income credit (except for part timers maybe), those receiving that amount of minimum wage would be paying income tax and FICA, they wouldn't be draining the Treasury and many more benefits. Right now, the 1%ers are raking in the excess profit and investing in capital gains holdings that are subject to only a 15% tax rate.

When I was making $38K I bought a house for $99K. There are lots of properties all over the US that are for sale at that price or less. It's called building the middle class, they in turn buy houses, spend more, etc. all increasing the tax base. By allowing excess profit to be held in the hands of the relative few who won't generate the taxes that will be raised if in the hands of those with a higher minimum wage, we have what we have now, a decreasing tax base, increased government costs due to an increasing population.

It just makes no sense to concentrate the wealth of our nation in the hands of the few. The rest of us are suffering.

[Riggo#44]

Can you define "living wage"?

If the minimum wage were $22/hour, the value menu at a fast food restaurant would not be $.99, it would be $3.99. Milk? About $10/gallon. Gas? About $15/gallon. Bread? About $9/loaf. Why? Because every person that works in creating/making/delivering these product would make at least $22/hour. Every employee you have that makes $23/hour doing something skilled will now demand a raise proportional to those that are unskilled just got. Management? Double their salaries. Anyone proposing seriously that the minimum wage should be $22/hour is living in la-la land. There are wide-ranging ripple effects of raising minimum wage so drastically.

There's a word for it. It's called inflation.

[mcsluggo]

We mentioned Spock previously, and now you're reminding me of another of my early role models.

Sgt schutz

have i ever mentioned... i am now related to Colonel Klink (sorta, by marriage--- and of course, he is dead)

[Popeman38]

There's a word for it. It's called inflation.

More like stagflation.

[Larry]

Can you define "living wage"?

If the minimum wage were $22/hour, the value menu at a fast food restaurant would not be $.99, it would be $3.99.

Just picking the first of the many claims that I suspect have all been pulled from the same bodily orifice, could you provide us with some further insight into your theory that increasing the minimum wage by 200%, would cause a 300% increase in the price of the value menu?

Have you, say, support for your claim that labor represents 150% of the cost of the value menu?

----------

Me, I'll freely grant that I'm no economist. And I think it's glaringly obvious that increasing the minimum wage is guaranteed to produce some inflation.

OTOH, my expert analysis (which, I'll admit, doesn't seem to have a whole lot more support to it than yours. It's the difference between an opinion with a tiny bit logic behind it, and an opinion which seems mathematically impossible.) says that:

1. Increasing minimum wage by X% will produce inflation.
   
2. But said inflation is guaranteed to be less than X%. Because
   
   1. When minimum wage increases by X%, other wages will also go up. But by slightly less than X%.
      
   2. Therefore, wages, as a whole will increase by some number which will be slightly less than X%.
      
   3. And almost every single good that is sold, contains less than 100% labor.

In short, yes, I think that increasing min wage is guaranteed to produce inflation.

(And I agree with you that increasing it to $22 an hour would really hurt the eonomy, at least short term. IMO, it would be a bad idea.)

(Good thing that I don't think anybody is seriously proposing it. Although I'm not certain about at least one poster.)

But I think that your claims that increasing min wage by some amount (in this example, tripling), would lead to price increases of a larger amount (in this case, quadruple), Certainly appear to be mathematically impossible.

[yank]

Not to be a dead horse (Warren) but coudnt have said it better (though I was pretty close):

http://www.realclearmarkets.com/articles/2013/03/26/elizabeth_warrens_acquired_economic_stupidity_100222.html

Elizabeth Warren's Acquired Economic Stupidity

By Robert Tracinski

The problem with a reductio ad absurdum argument is that sometimes your opponent accepts the absurdity and just runs with it.

When smokers were suing cigarette companies and the FDA was proposing to regulate tobacco, we thought it was a devastating retort to say, "What next, are they going to sue fast food restaurants and ban sugary drinks?" Hello, Michael Bloomberg.

For years, we've argued against the minimum wage by taking its premise to the logical conclusion: if you can make people better off by mandating a higher wage, why stop at $7.25 an hour--why not make it $25 an hour? Hello, Elizabeth Warren.

The new senator from Massachusetts, the great hope of the Progressive left, just proposed exactly that.

"Sen. Elizabeth Warren, Massachusetts Democrat, suggested raising the minimum wage to $22 per hour is only logical if you look at the numbers.

"'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,' the senator said."

Did I talk about embracing absurdity and running with it? Here was the response to Senator Warren.

"One of the panelists, Arindrajit Dube, an assistant professor at the Department of Economics at the University of Massachusetts-Amherst, said by that logic-by going back even further in time-the minimum wage could rightly be $33 per hour."

Now there has to be some twisted internal logic to this idea, and it seems to be the notion that all productivity gains made by businesses should go to increase the wages of workers.

"The current minimum wage is $7.25 per hour. Ms. Warren wondered, in a YouTube video of the hearing posted by her staff: 'What happened to the other $14.75?' She answered her own question: 'It sure didn't go to the worker.'"

Leave it to an academic to be totally ignorant of the workings of the economy. So let's clue in Senator Warren about where those productivity gains came from and where the profits went to.

If we're talking about productivity gains across the entire economy, some of those gains came from higher-level skills acquired by workers. But that's not the case for minimum-wage workers, because they are by definition unskilled. (The possession of a skill is precisely what makes it possible for a worker to command a higher wage.) For minimum-wage workers, productivity gains are the result of investment in new technology that allows businesses to get more value out of the same amount of unskilled labor. Think of a supermarket scanner versus the old system--which people over 40 can still remember--in which all prices had to be pasted manually onto grocery packaging and entered manually into a cash register by the cashier. In that old system, it took a lot more labor for the same unskilled or low-skilled worker to check out a customer.

The profits from these productivity gains went mostly to the people who created them: the businesses who adopted new technologies and the inventors and entrepreneurs who developed them. Put simply, if Senator Warren wants to know "what happened to the other $14.75," she might start by taking a stroll around Silicon Valley. The money went (among other places) to reward the inventors of productivity-enhancing computers and software. By the same token, if we were to mandate that all productivity gains must go to unskilled workers, we would eliminate all of those profits and kill any incentive to invest in higher productivity.

We can take this point further. Practically everyone who does not actually perform unskilled manual labor is engaged in a job whose goal is to increase the productivity of that labor. If you don't twist a wrench on the assembly line, chances are that you are engaged in an activity whose purpose is to magnify the value of that wrench-twist: financing it, marketing the end product, building better machines, or streamlining production. The minimum-wage worker is just about the only person in the economic system whose job is not to magnify the productivity of his labor. Yet in Warren's world, he is the only one who is entitled to gain from that increase in productivity--and every other worker is to be deprived of the gains they created.

But there is hardly much point in further refutation of this idea. What is astonishing is the very fact that we have to refute it, that supposedly highbrow Harvard scholars like Warren are so seemingly helpless when it comes to observing reality and correcting their own errors.

I've spent all of my adult life hanging around with really smart people, and I can tell you that there's nobody as dumb as a smart person. That's because, when they decide to adopt a dumb idea, they don't just bumble their way into it. They build whole systems of other dumb ideas to support that one central dumb idea, and because they're smart, they build complex and sophisticated systems of dumbness. They write dumb plays and dumb novels and dumb poems. They create dumb theories about psychology and economics. They originate entire dumb new philosophies.

So yes, Elizabeth Warren is a good example of taking a dumb idea to extremes. But she ain't got nothin' on guys like Karl Marx and Immanuel Kant.

The issue here isn't native intelligence; it's irrationality. The Warrens and Marxes and Kants follow stupid ideas to their absurd extremes because they are committed to maintaining a belief in a fixed idea regardless of evidence. Kant wanted "to deny reason in order to make room for faith." Marx wanted to smear Europe's rising new capitalists as parasites and exploiters. In Elizabeth Warren's case, she is just following up on her resentful rant about how entrepreneurs "didn't build that." She already gave us fair warning that she wants to ignore the productivity-enhancing investments of the capitalists and entrepreneurs and attribute the entire product of their effort to the hapless "little guy" (and his government champions). Her absurd pronouncement about a $22 minimum wage is the logical result.

There's another old saying, attributed to Voltaire, that if we believe absurdities, we will commit atrocities. We need to shoot down Elizabeth Warren's economic absurdity before it becomes an economic atrocity.

[AsburySkinsFan]

If only minimum wage kept up with inflation.

[Larry]

Not to be a dead horse (Warren) but coudnt have said it better (though I was pretty close):

Wow, look. An article that tries to claim that Warren proposed raising the minimum wage to $22 an hour. (She didn't). Then runs with it from there. And then uses the things they made up, by extrapolating the things they made up, to try to claim that she is taking things to extremes.

(And to support their position, that a minimum wage shouldn't exist at all.)

Now, who's proposing extreme positions, and building "systems of dumbness" to support it?

[AsburySkinsFan]

Wow, look. An article that tries to claim that Warren proposed raising the minimum wage to $22 an hour. (She didn't). Then runs with it from there. And then uses the things they made up, by extrapolating the things they made up, to try to claim that she is taking things to extremes.

(And to support their position, that a minimum wage shouldn't exist at all.)

Now, who's proposing extreme positions, and building "systems of dumbness" to support it?

Wow, you actually addressed that article as if it were worthy of a serious response, I read it and when I got to the part when they put words in her mouth and then I knew pretty well that the rest of the article was going to be a Rightwing strawman...I hate being right.

[Larry]

Actually, there is a valid argument, kind of hidden in the article.

Hypothetical: I own a business.

My minimum wage employee makes 40 widgets an hour.

I buy a robot. With the robot to help him, the employee now makes 80 widgets an hour.

I'm supposed to double the employee's salary, to reward him for his increased productivity?

If I wanted to make 80 widgets an hour, for twice the labor cost, I would have hired a second employee, and not spent the money on the robot.

----------

This is kind of analogous to the argument about why the US jobs are being outsourced.

Used to be, the argument was that yeah, US workers made a lot more money than Korean workers, but the US worker was twice as productive.

But, the reason why the US worker was more productive, was because the US worker was supervising 12 robots.

Give the Korean worker 12 robots, and he's a lot more productive, too. And he's still cheaper than the US worker.

[jpyaks3]

Wow, you actually addressed that article as if it were worthy of a serious response, I read it and when I got to the part when they put words in her mouth and then I knew pretty well that the rest of the article was going to be a Rightwing strawman...I hate being right.

I found this part of the article absolutely hysterical if only for the irony

I've spent all of my adult life hanging around with really smart people, and I can tell you that there's nobody as dumb as a smart person. That's because, when they decide to adopt a dumb idea, they don't just bumble their way into it. They build whole systems of other dumb ideas to support that one central dumb idea, and because they're smart, they build complex and sophisticated systems of dumbness. They write dumb plays and dumb novels and dumb poems. They create dumb theories about psychology and economics. They originate entire dumb new philosophies.

The fact that the author worships Ayn Rand and Objectivism and yet wants to attack ideologues is rich.

[yank]

Wow, look. An article that tries to claim that Warren proposed raising the minimum wage to $22 an hour. (She didn't). Then runs with it from there. And then uses the things they made up, by extrapolating the things they made up, to try to claim that she is taking things to extremes.

(And to support their position, that a minimum wage shouldn't exist at all.)

Now, who's proposing extreme positions, and building "systems of dumbness" to support it?

Well she said if the minimum wage had gone up as productivity had gone up it would be $22 an hour. The rest of the q and a was such that it was such as shame that the minimum wage hasnt gone up "as workers produce more". See the video here and decide for yourself if she and her straight man arent speaking Washington ("Oh the humanity of it all") for raising the minimum wage to $22.

http://www.huffingtonpost.com/2013/03/18/elizabeth-warren-minimum-wage_n_2900984.html

Your argument is specious and typical. The point of the article is that the unskilled worker who makes the minimum wage is not the cause of the productivity increase over the years. Nothing in the replies refutes that point which makes Warren still look lame.