Minimum wage muddle: Part 2 – Dueling Washington Post columnists; Samuelson gets it right

One thing nearly everyone who follows politics understands intuitively is that it’s rarely a good idea to take advice from someone who wants to see you lose. So it’s unlikely that many conservatives will pay much attention to E. J. Dionne’s column telling them that “raising the minimum wage is the right idea for the right.” He correctly identifies the proper virtues.

There is a magnificent public policy that achieves many of the goals conservative politicians regularly extol. These include promoting work over dependency, reducing the cost of social welfare programs, fostering economic growth and strengthening families.

The policy in question is raising the minimum wage.

And he cites some recent polling showing a slight majority of conservatives support boosting the minimum wage, including California business leader Ron Unz who supports a $12 wage in that state.

Unz has argued that a minimum wage hike “would function as a massive stimulus package.”

…He also pointed to the fact that government — through wage subsidies in the tax code, Medicaid and food stamps — is now conferring substantial benefits on employers of low-wage labor.

While not altogether wrong about the subsidies or the merits of putting a little more money in the hands of low-wage workers, the proponents studiously refuse to acknowledge the loss of jobs, businesses placed in jeopardy, and rising prices at venues typically patronized by low-income workers. Even if we concede, and some research indicates that we should, that modest increases in the minimum wage have only a modest negative impact on employment, when talks turn to a wage of $12-15 an hour, we’re no longer talking about a modest wage hike.

Dionne’s WaPo colleague Robert J. Samuelson get it right in this column from last month.

First he cites relevant research.

…economists David Neumark and J.M. Ian Salas of the University of California at Irvine and William Wascher of the Federal Reserve conclude that higher minimums do weaken low-wage employment. Under plausible assumptions, even a small effect (say, a 1 percent job loss for each 10 percent increase in the minimum) implies nearly a million fewer jobs over three years.

Then he looks at current business realities.

The Great Recession and the 2008-09 financial crisis spawned so much fear that [businesses] changed, at least temporarily, behavior. Firms are more cautious.

Would employers take the minimum’s steep costs in stride — or react by cutting hiring and automating more low-paid jobs (example: supermarket checkouts)? That’s the crucial question. Which matters more for low-income workers: added jobs or higher incomes? There’s a powerful symbolism to raising the minimum, but the notion that it can be boosted sharply without any job penalty may be a mirage.

It’s a mirage.

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