What would the US Senate be without Elizabeth Warren? She's a national treasure.
WARREN: If we started in 1960 and we said that, as productivity goes up -- that is, as workers are producing more -- then the minium wage was going to go up the same. And if that were the case, the minimum wage today would be about $22 an hour. So my question, Mr. Dube, if the minimum wage is $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker.
No, it didn't. But the best part is when she very coolly schools a business owner, David Rutigliano, who walks right into her trap.
WARREN: During my Senate campaign, I ate a number 11 at McDonald’s many, many times a week. I know the price on that. $7.19. According to the data on the analysis of what would happen if we raised the minimum wage to $10.10 over three years, the price increase on that item would be about four cents. So instead of being $7.19 it would be $7.23. Are you telling me that’s unsustainable?
BUSINESS OWNER DAVID RUTIGLIANO: Senator Warren, not all restaurants are created equal. I’m in a full service restaurant business. McDonalds has efficiencies and they operate completely differently than I do. I have many jobs, many jobs that pay well above minimum wage. We have a retirement plan. We offer health insurance to our salaried employees. So my business is a little different. I can’t raise a four cent price. I mean I don’t have, I don’t operate like a fast food restaurant. I would hope you appreciate the distinction.
WARREN: I do appreciate the distinction and I’m not going to be in the business of being a McDonald’s representatives but they would talk about having some higher paid jobs and some opportunities for management and advancement as well. But I get your point, maybe it’s only four cents on $7.19. But if your entrees are $14.40 we’ll see how fast I can do the math — are you telling me you can’t raise your prices by eight cents?
RUTIGLIANO: You know, typically, when costs rise we don't actually raise it just four cents, we might actually go a little higher. It has an inflationary effect on the economy, so, you may actually be taking away the money you just gave that employee, through the minimum wage increase on raised prices throughout the economy.
WARREN: I have to say, you've now switched your argument from what it was going to do to your business to what it's going to do to the economy, and I think Dr. Dube, you've looked at the inflationary effects of increasing the minimum wage, can you just give us a quick summary on this data?
DR. DUBE: I think it is uncontroversial amongst economists that a minimum wage increase of this sort would not have a noticeable impact on the overall price level, because just the math doesn't add up, the number of people aren't getting the raises, there's not enough for it to show up in some kind of a wage/price spiral, so the effects on the overall price level? Very small.