During a committee hearing last month, Sen. Elizabeth Warren pointed out that
If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour...
Dr. Arindrajit Dube, who was testifying, added that had the minimum wage kept up with the pace of income growth among the 1%, it would be closer to $33/hr.
Wages reflect the value set by the marketplace on work performed. This is not, however, the same as the value of the work, which is a function of productivity. Profit can be thought of as productivity less the value of the work performed.
Karl Marx thought that this was a measure of exploitation. In a capitalist society marked by widespread prosperity, the difference might also be thought of as a premium paid by workers in exchange for a decent wage or salary, job security, and the promise of upward mobility. Between the end of WW2 and 1980, American workers accepted this as a reasonable bargain -- and it was, at least for the white American males who had been born in the sweet spot of history.
Today, though, is a different story. A widening income disparity combined with a struggling economy means that American workers pay an ever-increasing premium and in return get reduced security and -- practically speaking -- no mobility. Instead, income has been redistributed up.
Consider the minimum wage. If a worker making minimum wage produces $22/hr, his employer pockets $14.75 of that ($22.00 - $7.25 = $14.25), a return of 303%. (Under Dr. Dube's scenario, the return is 455%). Conservatives don't oppose an increase minimum wage because it threatens jobs: They oppose it because it threatens ROI.
How much? Why, an increase to $10/hr reduces the Return on Investment to a lousy 220%. With the prime at 3.25%, you can see why conservatives are outraged: Increasing the minimum wage drains water from their swimming pools.
But an increase to $10/hr or $15/hr or even $20/hr wouldn't change one thing: Minimum wage workers would still be makers and Mitt Romney would still be a taker.