Economist to the New York Times: You Should be Ashamed of Yourselves

The offense:

“In March, every Republican in the House voted against a measure to raise the minimum wage. ‘When you raise the price of employment, guess what happens? You get less of it, said Speaker John Boehner in February, espousing a party-line theory that most economists agree has been discredited.New York Times editorial, Jan. 2, 2014.

Caroline Baum replies:

This is one of the more outrageous political statements dressed up as economic theory from the editorial board of the New York Times. They should be ashamed of themselves.

The evidence:

pols_feature-37805Economists David Neumark and William Wascher reviewed more than 100 studies on the minimum wage in a 2006 paper for the National Bureau of Economic Research: “Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research.” Here’s a summary of their findings: “The oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect.” What’s more, almost all the papers they reviewed “point to negative employment effects” for the U.S. and many other countries. The effect is greater for low-skilled workers, whom the minimum wage is designed to help. Overall, the authors found very little evidence of positive effects from raising the minimum wage.

Comments (17)

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  1. Adam says:

    There’s no easy answer to this problem. Consigning people to poverty on the basis of respecting the wage market is wrong, yet forcing people into unemployment by demanding an unsustainable wage is no better.

    It seems best the minimum wages should be set at the city level, no larger. The cities have the best knowledge of on the ground living conditions. A national minimum wage is ridiculous as it supposes that the cost of living in New York is the same as in Wyoming.

  2. Billy says:

    It’s fashionable today to just say that what your opponent believes has been discredited, whether it has been or not.

  3. Wilbur says:

    The NYT lied? Say it isn’t so…

  4. Mark says:

    When the NYT publishes the truth, now THEN I’ll be shocked.

  5. Devon Herrick says:

    This is one of those theories that should be self-evident. Raising the cost of hiring people inhibits firms who may want to hire more people. This is especially true of firms that hire those who are most in need of a job because their skills are marginal.

    Something that I’ve pointed out to people is that raising minimum wage to a “living wage” of, say, $15 per hour will result in firms hiring more experienced workers. If you force Burger King to pay more, it won’t be the $7 per hour workers who get the raise. A more experienced class of worker will be willing to supply their labor for $15 per hour and the kids who are only worth $7 per hour will find the market doesn’t want them at $15 per hour.

    • Michael Moran says:

      Bingo. Maybe not more experienced, but more qualified.

      Think if you had a minimum car price of $30,000. Who then buys a Chevy Cruz that now sells for $16,000. Everyone buys Buick LaCrosses that sell for $30,000. If you raise minimum wage, not going to be current minimum wage workers that get it.

  6. Lacey says:

    Raising the minimum wage seems like a good idea – if you only look at the phrase “raise the minimum wage” and none of the evidence surrounding the issue.

  7. Steve says:

    Yeah. If we could all stick to reporting science, that would be great.

  8. John Fembup says:

    “Economist to the New York Times: You Should be Ashamed of Yourselves”

    Illustrating yet again that “All the News That’s Fit to Print” leaves a whole lotta room to print other stuff the Times really wants to print.