Ep. 182 Hooray for the Minimum Wage? How Economists Went Off Track

30 March 2019     |     Tom Woods     |     8

In paying his respects to the recently deceased Alan Krueger, author of the widely discussed 1994 Card-Krueger study on the minimum wage, Krugman praises him for changing the way economists think about that subject. According to Krugman/Krueger, the labor market is more complicated than we thought, and increases in the minimum wage appear to have little to no effects on employment. Here’s our reply to all this.

Krugman Column

Mourning the Loss of Alan Krueger” (March 19, 2019)

Contra Columns

Economists Debate the Minimum Wage,” by Bob Murphy

Large Increases in the Minimum Wage Are Likely to Destroy Jobs,” by Bob Murphy

The 20th anniversary of the myth that won’t quit,” by Michael Saltsman

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  • davegrille

    5th grade arithmetic will tell that employment is lost from raising the minimum.

    • Cynthiacurran

      True. The left pushes for the most minimum wage at 15 an hour in the US . About 7 years ago it was only 10 an hour under Obama..When Bernie Sanders pushed Amazon to bumped to 15 an hour, lots of workers ended up making less because bonus were eliminated. Whole Foods that were brought by Amazon cut the hours of the workers when they were bumped to 15 an hour. There was an article on this in the guardian about the cutback of the hours. Most of the left unfortunately doesn’t support the gradual bumps that they did in the past but much higher ones that cuts hours or jobs. One can see service workers in many states like Arkansas voting for this stuff since they think its going to increase their pay, but liberal programmers in the tech industry should know better. Maybe, they don’t want the workers to make more money with longer hours, but work less hours and received a basic income like Andrew Yang supports.

      • Cynthiacurran

        Also, Obama’s bail out of the auto industry put Michigan, Pa, and Wisconsin into play with the Republicans. If Obama didn’t support bailing out the car companies, Michigan would have lost thousands of manufacturing jobs to places like South Carolina and Kentucky, since if they were force into bankruptcy, the car companies would have been force to moved to the south. Also, the 2010 census then would have seen drops in the upper Midwest population of Michigan, Pa, and Wisconsin would have lost 3 electrical college votes to the south. Obama set up the important of the upper Midwest by bailing the car industry. This means that Republicans now have to support the overtime rule which is the only reason why manufacturing pays better than restruant jobs. Trump will not rise the minimum wage but likes to keep the overtime rule because of his wins in Wisconsin, Pa, and Michigan. Now, a state like South Carolina that does car manufacturing is not beholden to the labor unions like Michigan is. Obama cursed the Republican Party.

      • davegrille

        The people the left alleges will benefit from minimum wage laws very rarely do.

  • mh

    You know where you won’t hear implausible arguments?

  • The NAPster

    I was surprised that Bob didn’t conclude by explicitly tackling the epistemological point that economic laws are not something that we can discern from empirical analysis, but rather come from logical deduction. I appreciate that, within the mainstream, things get decided by the “battle of the studies” (and Bob and Tom did a good job of summarizing that battle), but that’s not the Austrian response.

    • Bill

      Bob is an Austrian. Being able to refute a New-Keynsian argument using their own framework lends more credence to the Austrian approach.

  • MDBurk2754

    Whether a raise in the min. wage causes an increase/decrease/no change in employment along w/whatever study says it does so, is of LESS than no relevance to the fact that a govt. imposed min. wage removes the freedom the employee, employer and consumer would otherwise have to negotiate the wage at which the employee is willing to work, the employer is willing to pass on and the consumer is willing to pay for the good/service produced.