This brief video clip shows my testimony before the City Council of Kansas City on an effort to raise the minimum wage to $15 per hour.
Following my remarks, Councilwoman Cindy Circo asked me about a chart they had been shown by a previous speaker. The chart, which I had not seen in the hearing, showed worker productivity and real minimum wage tracking with each other until about 1970, when worker productivity jumped and minimum wage stayed flat. Councilwoman Circo asked what might have explained that change.
After some research, I was able to speak to the chart to which Councilwoman Circo referred. Here is the email I sent:
Dear Councilwoman Circo and City Council:
Thank you for the opportunity to testify before the Committee as a Whole today regarding the minimum wage. You may find an electronic copy of Michael Rathbone's testimony here: http://showmeinstitute.org/publications/testimony/red-tape/1298-on-the-enactment-of-a-living-wage-in-kansas-city.html.
Furthermore, a 2012 study that is the source for my claim that only 13% of minimum wage earners live in households at or below the poverty level is here: http://showmeinstitute.org/document-repository/doc_download/356-full-policy-study-pdf.html.
You asked about a slide that showed worker wages and worker productivity parting ways about 1970. While I was not in the hearing at the time that was presented, I believe it is from the Center for Economic and Policy Research (CEPR), published in March 2012. A copy of a memo from CEPR that discusses the graph is here: http://www.cepr.net/documents/publications/min-wage1-2012-03.pdf.
My colleague Michael Rathbone has written about that memo and the attention it received from U.S. Senator Warren. He writes:"The study... talks about average productivity. Average workers do not earn the minimum wage. This study does not track changes in the productivity of workers who make at or below the minimum wage. Isn’t it possible that the largest increases in productivity have been among more skilled employees who already earn above the minimum wage?"
A copy of his post on the memo is here: /2013/03/the-22-an-hour-question.html.
In short, because CEPR did not separate out minimum wage workers from others, the data is not very helpful. It is entirely possible, for example, that the increase in worker productivity shown the their chart after 1970 is the result of the introduction of computer technology used by white collar workers. These workers would not have made minimum wage.
Michael's post is also helpful because it links to Christine Romer's piece in The New York Times in which she indicates that minimum wage increases are not the best way to address poverty.
I hope this addresses your question. If you or any of your colleagues have additional questions, I will do my best to address them or find someone who can.
Thank you for your time and attention.
Regards, Patrick Tuohey