The bad news is that 74 percent of these surveyed economists either disagreed, were “uncertain,” or expressed no opinion that such a huge hike in the minimum wage would cause substantial shrinkage of low-skilled workers’ job prospects.
My stream-of-consciousness reaction was this:
1. These economists must be mood-affiliating with sociologists, or other left-wing academics.
2. I’ll bet that non-academic economists would think about this question in a more detached, business-informed way.
3. This sounds like a project for Daniel Klein. Conduct a large survey of economists affiliated with academia and economists affiliated with businesses, and find out questions on which they differ. Interesting questions would include the one on the minimum wage, whether Obamacare is lowering health care costs, whether more inflation would be lead to better economic growth, . . .
Economists who didn’t express an opinion? Has anyone done a pulse check on them lately? Maybe they aren’t just deep in thought.
But seriously, Boudreaux assumes that the Federal minimum wage is marginally biting now such that increases in the minimum wage will have significant effects. I honestly don’t know if that is the case. And if it is biting it will be, as it should be, in marginal regions. If a Federal minimum wage has a legitimate existence it is to be set just below the lowest paid region to say that “America does not advicate pay below this wage.” I imagine the proposed survey of academic and business economists will have large regional differences depending on the “incidence” of the respective minimum wage bite. Maybe the economists who “don’t know: are actually being good two-handed economists.
I am indeed assuming that the minimum wage has bite – and, by implication, that a more-than-doubled minimum wage would have an even more vicious bite.
According to the BLS, 1.6 million workers today (2014) are paid the national minimum wage of $7.25 per hour. I don’t know off-hand how many other workers are now paid hourly wages between $7.25 and $15.00, but I’ll bet that it is at least 1.6 million. Indeed, the number is almost certainly higher – but let’s go with 1.6 million.
The proposed 107 percent hike in the national minimum wage will therefore raise employers’ cost of employing 3.2 million workers – and in at least half of these cases more than doubling that cost. While I recognize that the word “significant” has different shades of meaning, it’s difficult for me to believe that, on any commonly understood shade of the meaning of “substantial,” that a doubling of the wages of at least 1.6 million workers will not have a substantial effect on the employment prospects of low-skilled workers.
I concede that the University of Chicago’s survey question can serve well as a model of how NOT to write a survey question. But given that the raging debate over the minimum wage centers on the question of whether or not raising that wage will reduce the employment prospects of low-skilled workers, it’s fair to presume that each of the surveyed economists understood the question to be asking if the standard prediction of basic economics about the minimum wage holds if the minimum wage is more than doubled (even if that doubling occurs “gradually” over the course of five years).
Sorry economists, I tried 😉
But even if the results from such a survey were exactly as predicted, the interpretation by the press wouldn’t be ‘mood affiliation’ leading to bias by academic economists but rather business economists ‘bought and paid for by their corporate masters’ (as opposed to the inherently unbiased views of academics).
Thanks for the shout-out Arnold.
I think that the results of the other min-wage question, Question B, are even more astonishing:
Question B: Increasing the federal minimum wage gradually to $15-per-hour by 2020 would substantially increase aggregate output in the US economy.
To this, our new Nobelist replied “Agree”, and 31% of responses said “Uncertain”!
Only 19% gave the obviously correct answer, which is “Strongly Disagree.”
I am a semi-retired business economist with no attachment to academic economists.
I know the theory about the minimum wage, but I have to go with the overwhelming research and data that shows reasonable increases in the minimum wage has little or no impact on minimum wage employment.
Your referring to a huge increase just reflects your biases.
As I understand it the theory is that the demand for labor is a downward sloping curve. OK, but remember it also makes the standard assumption that everything else is equal. But let me try to use the theory elsewhere — if there is any validity to the theory it should apply elsewhere, not just to the minimum wage. We have data on labor compensation going back to 1948 and it has increased in each and every year since 1948. Applying your theory I would conclude that US employment should have fallen every year since 1948.
Remember,it is your theory, not mine and I think it is a really, really bad theory
because the demand for labor is a function of many thing, not just wages or compensation and in the real world everything else is not always held constant.
Tel me what is wrong with my analysis. Opponents of the minimum wage usually just ignore my comments.