January 8, 2013 By: Mark Glennon
Last week Bloomberg ran a wonderful article titled ‘Someone please help the New York Times with Econ 101.‘ It should have been directed it to us in Illinois, too.
It summarizes the evidence that, if you increase the minimum wage, you help those who keep their jobs but you also cause others to lose theirs. As a then-liberal-leaning Econ student long ago, it seemed clear to me that it was pretty much a wash and we had to find better ways to help the poor. The evidence and research since then are still more overwhelming, which is what the Bloomberg article covers.
If you could simply outlaw the scourge of low wages, why not raise the minimum to $11 instead of $10? Or to $30 for that matter?
Can we please move on to debating things to help the poor that might actually work better than this? If you ask somebody about raising the minimum wage, a rational answer would be,”meh, OK, but it only helps a little.” But that won’t do for too many on the left. Righteous indignation is required. Unintended consequences be dammed. And, most importantly, never, ever miss a chance to label those who see the facts differently as selfish.
Bruce Rauner’s position on the minimum wage is consuming the media today. His biggest mistake was a political one — underestimating how many people subordinate reason to self righteousness. He should have ignored the issue. That’s among the biggest lessons I learned studying Econ: The world is full of folks happy to ignore even its simplest lessons, like supply and demand.
Meanwhile, the poor stay poor.
UPDATE 1/14/14: A letter signed recently by six Nobel Prize winners, reported today, who support a minimum wage increase reflects the reality that opinions split on this issue. As reported here, those economists even claim the weight of authority is on their side. Plenty of economists say there’s no consensus, including Nobel winner Edmund Phelps, who discussed the question nicely here.