For those of you who are familiar with modern economics, you may have noticed that a few months ago, a few hundred economists signed a petition backing Bernie Sanders’ proposal for a $15 national minimum wage.
You may also be aware of the discussions and debates within the profession about the effects of the minimum wage on employment. If not, you need to be.
A few notes on the first link: of course Bernie Sanders, being the ranking member of the Senate Budget Committee, uses the Committee’s blog as a sounding board for his own campaign. These are just some economists. I wouldn’t use the phrase “top economists” without consulting this list here of the IGM panel.
You’ll notice that most of the economists who think employment effects will be small tend to also be quite uncertain in their confidence, and no one strongly disagrees that employment would be lower. Nearly everyone strongly thinks that the “stimulus” effect of a minimum wage isn’t a viable expectation, particularly on a macro level.
Then there is always the question of regional price variation, which is often entirely ignored in the debate when you ask economists living in high-cost areas like the Bay Area or New York for their response. For them, a minimum wage shift is quite low in comparison to current wage rates, as some areas already have minimum wages or market wages approaching the target $15. But for the rest of America (the entire Midwest, most of the South, and those outside the coastal Megapolis), the change is far larger, which may exacerbate employment effects, especially in areas with smaller labor markets. This would be especially concerning for areas in which the median incomes in the area are close to the minimum wage.
If you want a longer, more technical explanation, here is a summary of an outstanding anonymous commenter:
Minimum wages represent the most glorious political tool that anyone can utilize.
- It galvanizes your base.
- You get to demonize another class or political opposition as being unfeeling, selfish, and out of touch.
- The nuances of why the idea could backfire are lost on most voters, particularly in light of the fact that minimum wages are awkwardly blunt policy instruments to push against poverty.
- You get to repeat the process every few years during presidential election cycles as price levels increase (perhaps precipitated by the previous wage increase). It’s the political fountain of youth.
I don’t have patience for politicized stuff. I like the meat of the discussion.