Sen. Elizabeth Warren (D-MA) has been a vocal proponent for a higher minimum wage, and not just the $10.10 figure that President Obama has supported. In a commentary for ABC News written earlier this year, Warren argued that if the “minimum wage had kept up with increases in productivity, it would be $22 an hour today.”
Like most misleading arguments in favor of a higher minimum wage, this one’s built on a kernel of truth: It’s true that economy-wide productivity has been increasing in the past few decades. But in industries more heavily affected by new wage mandates, like the food service industry, it’s a very different story.
Consider the chart below: The red line shows gains in economic productivity from 1990 through 2010. This includes dramatic gains in technology-related industries like computers, software design, and telecommunications. (Think of the computer or cell phone you used 15 years ago versus the one you use today.) But the chart also shows that the productivity gains in an industry that actually hires people at the minimum wage (e.g. the food service industry) have been small or nonexistent. It’s not surprising: You can only bus a table or serve a meal so fast.
That’s the message of our full-page ad today in Politico. The food industry will adjust to higher mandated labor costs if forced. But those adjustments mean fewer jobs for the very people earning an entry-level wage.