Monday, May 14, 2012

Typically flabby thinking about the minimum wage

The other day I posted about a David Nicklaus column explaining why raising the minimum wage would harm the very people it is intended to help.  On Sunday, the Post-Dispatch published a letter that was chock full of the tropes that pass for sophisticated arguments when it comes to the minimum wage. I don't mean to pick on the letter writer, but his contribution is just too on the nose to pass up. Here are all of the points in the letter, with my comments in italics.
Raising minimum wage doesn't hurt
  • It is so typical of David Nicklaus to trot out tired old Chamber of Commerce propaganda about raising the minimum wage ("Boost in bottom wage no solution," May 11). Every textbook in economics discusses this, and it is one of the few things that economists tend to agree on. 
  • Corporate welfare is OK, but guaranteeing people a livable wage is somehow a distortion of the economy.  No, corporate welfare is not ok, and Nicklaus never mentioned it in his column. This is one of the other few things that economists agree on. 
  • It is laughable on its face to say that raising the minimum wage would hurt poverty-stricken families. Not a very deep argument. It is laughable to think that employers would not want to hire someone whose productivity did not justify being paid the minimum wage.
  • You can always find an ideologue in academic circles like Professor Neumark to make the claim that raising the minimum wage costs jobs.  Neumark is no ideologue. Economists of all stripes have this standard argument in their textbooks. 
  • It simply isn't true. In 1996, Republicans predicted that the increase from $4.25 to $5.15 would result in millions of job losses. In fact, about 13 million new jobs were added to the American economy between 1996 and 2000. The argument isn't that millions of jobs will be lost, it is that it harms low wage workers and increases their unemployment above what it otherwise would be. 
  • Some cities, such as Santa Fe, have set a minimum wage that is higher than the national minimum with no ill effect on local job creation. Some places have higher-than-average price levels and productivity. These are not the places where the minimum wage will have big effects. How about Mississippi? Should businesses there face the same minimum wage as everywhere else? 
  • Deliberately keeping wages low exacerbates the disparity between workers and executives, a true distortion of the economy. And "experts" like Nicklaus wonder why we're not seeing expansion in the economy when the wages of the lowest-paid are kept below poverty level.  Who is proposing deliberately keeping wages low? Every economist that I know supports education to raise the productivity and wages of everyone. 
  • It's unconscionable that American society would not provide a livable wage to all working people. Society can provide for low-income people with income supports rather than by eliminating the jobs of the lowest-wage workers. 
  • The minimum wage should be indexed annually for inflation, a position a certain Gov. Romney supported at one time.  Mitt Romney still supports this, and he is wrong to do so. 
  • If the minimum wage doesn't need raising, then I want Mr. Nicklaus and Professor Neumark to live on minimum wage for a year and report back on whether it is truly sufficient to support their families.  Again, it's not about those who live on the minimum wage. It's about those who have a wage of zero because their productivity is too low to justify a firm paying them the minimum wage.