Monday, August 3, 2015

Wages vs. productivity since 1973

 I question any argument against a higher minimum wage. The plain truth is that higher wages benefit workers, lower wages benefit employers. We're way off the scale right now, since we haven't kept pace with the minimum wage since the 1970s. The minimum wage in 1968 was $1.60, the equivalent of $10.34 in 2012 dollars. (minimum wage history)

The big picture is worse than that, however, because while productivity has increased drastically since the 1960s, wages have not. Productivity has increased 74% since 1973; hourly wages have increased only 9% during that time. Productivity has increased 8 times as fast as hourly wages. If the workers of this country kept the increase in the value of their labor, wages would be 74% higher than they were in 1973. Since the minimum wage was $10 per hour in 1973 (calculating using 2015 dollars), the minimum wage should now be $17.40 per hour. (productivity vs. wage statistics)

Why is that? Since the 1960s, productivity has skyrocketed due to the introduction of labor-saving devices: computers, calculators, spreadsheets, internet, mobile phones, databases, just to name a few. The increased productivity should have gone to the workers. Instead, the employers kept all the increases in productivity for themselves.

You could argue that equality of outcomes (equal wealth) is a socialistic idea. But the Capitalists used their economic and political leverage to squeeze every bit of profit from technological advances made over the last 40 years. That is truly class warfare.

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