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TANSTAAFL (still)

July 28, 2015

Here’s a David Brooks column in The New York Times.

The Minimum-Wage Muddle

Once upon a time there was a near consensus among economists that raising the minimum wage was a bad idea. The market is really good at setting prices on things, whether it is apples or labor. If you raise the price on a worker, employers will hire fewer and you’ll end up hurting the people you meant to help.

Then in 1993 the economists David Card and Alan Krueger looked at fast-food restaurants in New Jersey and Pennsylvania and found that raising the minimum wage gave people more income without hurting employment. A series of studies in Britain buttressed these findings. […]

Some of my Democratic friends are arguing that forcing businesses to raise their minimum wage will not only help low-wage workers; it will actually boost profits, because companies will better retain workers. Some economists have reported that there is no longer any evidence that raising wages will cost jobs.

Unfortunately, that last claim is inaccurate. There are in fact many studies on each side of the issue. David Neumark of the University of California, Irvine and William Wascher of the Federal Reserve have done their own studies and point to dozens of others showing significant job losses.

Recently, Michael Wither and Jeffrey Clemens of the University of California, San Diego looked at data from the 2007 federal minimum-wage hike and found that it reduced the national employment-to-population ratio by 0.7 percentage points (which is actually a lot), and led to a six percentage point decrease in the likelihood that a low-wage worker would have a job.

Because low-wage workers get less work experience under a higher minimum-wage regime, they are less likely to transition to higher-wage jobs down the road. Wither and Clemens found that two years later, workers’ chances of making $1,500 a month was reduced by five percentage points.

I wonder if Governor Cuomo reads the Times — or Forbes.

Via Coyoteblog

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