Patrick Tuohey of the Show-Me Institute recently testified before the Kansas City City Council on the topic of minimum wage.
In the video Councilwoman Cindy Circo challenges Tuohey about a chart that was shown by the speaker prior to his testimony. Here is his response to her:
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: http://www.showmedaily.org/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