I've been in what seems like a never ending argument over the last couple weeks with some conservatives, and one economist in particular, on a message board I hang out on. There's an unbelievable level of certainty on the right, especially with economists on the right, that the minimum wage's impact is not only significantly negative on employment, but significantly negative on the net welfare of the people having those jobs.
Like most people who've actually worked minimum wage jobs for significant amounts of time, and experienced the seemingly complete carte blanche employers have to abuse their workers, I find this completely outlandish. There seem to be some common components to the argument which come up every time. They seem to provide an impregnable wall of circular references.
The Economics
. The model proves unemployment goes up! Unfortunately, we can't explain to you why in a Krugman-style readable fashion, other than either ludicrously simplifying down to a simple supply/demand curve, or asserting the low wage payers are implausibly competitive. Just go read giant piles of the literature, then you'll agree we're right.
. When examples of said literature are provided, they read like research from another planet. Rather than experiments, they're heavy on bazillion-variable regressions.
. Alternatively, they have models that don't seem to match the reality of earning a low-wage at all. McDonald's jobs "training" people for better employment? On what planet?
. Overall welfare estimates for the group in question never come up - it's always "raises unemployment, so it's bad."
. There's some rather obvious analogous situations where the answers provided are completely different. Enforcing safety standards in slaughterhouses "raises the cost of labor", yet you rarely hear complaints about how putting in guards to keep peoples limb's attached results in unemployment. Continuing the analogy, if the EITC is so much more efficient than the minimum wage -having the government directly subsidize the poor is much more efficient than enforcing a minimum bound on wages! - how come they don't call for the government to pay for labor safety equipment? After all, it's much more efficient than making the businesses do it. There's probably some fun other examples I'm missing.
The Psychology
. To hear conservatives talk about this, you'd think the minimum wage grinds up the poor and small business owners into 5-star meals for limousine liberals. The rhetoric way, way outstrips any plausible estimate of impact they can provide. They're leery of providing net welfare impacts assessments in the first place in the discussion.
. The professional sneering, even inside the profession, is even more insufferable than when discussing international trade. "Demand curves slope down," "you're ignoring the research," or the University of Chicago types flipping out at Card when he published his contradictory study: "I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole." http://www.minneapolisfed.org/pubs/region/06-12/card.cfm
So what's the analysis trick, alternate model, or outlandish assumption to kick out that explains this conundrum? How can something so self-evidently stupid have built such a giant wall of rationalizations around itself? Alternatively, god forbid, am I and everyone else who's had a minimum wage job wrong, and they really just need to explain it better?
Jason McCullough
"Are you telling me you don't see a connection between government and laughing at people?"
- MBM, Your Mind Belongs to the State
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