Thoughts on the Minimum Wage at Steven Landsburg
Original story at The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics• 2 mentions • 1 year ago
I’ll get to those reasons shortly, but first let’s examine the traditional argument a little more closely. I’ll number my paragraphs to make it easier for commenters to respond.1. A variety of researchers have reached a variety of conclusions about the employment effects of the minimum wage. Among the most careful and thoughtful of those researchers are David Neumark and William Wascher, who in their recent book on the subject, conclude that minimum wages “reduce employment opportunities for less-skilled workers and tend to reduce their earnings; they are not an effective means of reducing poverty; and they appear to have adverse longer-term effects on wages and earnings, in part by reducing the acquisition of human capital.”2. Thus, in particular, when Paul Krugman tells you that “there just isn’t any evidence that raising the minimum wage near current levels would reduce employment”, he is, not for the first time (and not even for the first time this week) being dishonest — though this time is a little different, since he’s now relying more on his readers’ ignorance than their stupidity. 3. That having been said, Bob Murphy has just made a good prima facie case for a substantial effect on teen unemployment by observing that of the 19 states with higher-than-federal minimum wages, six are among the top-ten for teen unemployment, while only one is among the bottom ten. I calculate the probability that this could have happened by chance at just a hair under 1%. Of course, one can imagine explanations other than “minimum wages cause unemployment” (maybe unemployment causes states to raise their minimum wages?) but it’s hard to imagine one more plausible than the obvious.