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Minimum Wages and Lefty Science Denying

June 28, 2017

My default stance is to say only a small fraction of what I think when it comes to politics. There’s usually no way to come out ahead. But this is my blog, designed for me to write about what I want to write about. So eff it. Of course I’m really not altogether qualified to evaluate the research first-hand, but I’ve had enough economics training to talk out of my ass in a vaguely informed-sounding way.

The Seattle Minimum Wage Study has come out with an NBER working paper (meaning, as I understand it, the results are somewhat preliminary and peer review, among other things, has not been completed) analyzing the effects of the recent minimum wage hikes in Seattle. (Here’s a brief summary of the findings.) 

The short version is: according the study, upping the minimum wage to $13/hour in Seattle has meant significantly less money overall going to hourly workers. Like $125 less per month on average. The findings can be quibbled with, sure. And in fact they should be. Particularly at this stage in the publication process. “Come at me bro” is how science gets to the truth.

Still, from what I can triangulate from various sources more qualified than I, this is pretty solid evidence we’re working with here. Which makes me roll my eyes at the squirming and downplaying I’m seeing from news outlets seemingly catering advocacy groups pushing for a national $15/hour minimum wage. And yes, I am most certainly looking at you, Vox.

The effects of minimum wage laws has been a central topic of debate for economists since well before I was an econ major in college. Basic supply and demand models obviously suggest increasing the minimum wage will also increase unemployment, especially for those making the minimum wage, like teenagers and others (hopefully) just starting out as job holders. But the empirical data has been less clear, with a lot of research (not all) indicating that small increases have little if any detrimental effect, and perhaps even a net gain.

So it seems the real-world results tell us that at the levels we’ve seen in the past, basic supply/demand models may not be sensitive enough to describe what’s going on. Which I guess is the economic theoretical foundation for a group like Fight for $15. Though their reasoning seems to be more like, hey, supply and demand obviously don’t apply at all–today, $15/hour, tomorrow, $50/hour!

Anyway. From an economics perspective (well, my economics perspective, at least), the interesting thing here is that we seem to have discovered that yes, there are limits to how big a modest minimum wage increase can be before looking pretty much exactly like we’d expect from our supply/demand model. And those limits are somewhere lower than going from $9.47 to $13/hour in just a couple years.

That’s the takeaway described by economist Jonathan Meer (see here, at Marginal Revolution). And FiveThirtyEight presents a take that pretty much backs up that interpretation, even if there’s certainly an effort to show some counterpoint. Which is cool. Vox’s supposedly neutral explainer (I think? Isn’t that the whole point of explainers–to be neutral and show an objective but realistic point of view) reads completely differently. “Controversial” is the first word in the headline. It talks about a “fierce” debate. It implicitly calls this wage hike “modest,” and tries to say it therefore contradicts all the research saying small increases have little negative effect. It says this recent study is probably the best we have for now, “despite its flaws.” The piece concludes with a pro-minimum-wage-increase economist saying the media will call it an “unresolved dispute.”

Um, okay.

So I guess this is where I’m ending up: I had such high hopes for Vox when it was launched. I always thought Ezra Klein and Mathew Yglesias were some of the more interesting and thoughtful technocratic-leaning leftists out there. A website explaining the news seemed like a great idea. I’ve been feeling it reveal itself as a trojan horse operation, equating “progressive” with “objective” as of late. Which bums me out. Because for the side that insults people who disagree with them on climate change by calling them science deniers, this is getting awfully close to some science-denying of their own.

From → Politics

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