Yesterday I gave you
the
research case for a minimum wage increase. The starting point for the
research case against a minimum wage increase should be David Neumark and
William Wascher's book
Minimum Wages which makes a full-bore case that
minimum wage rules are perverse. That starts with findings of short-term
disemployment effects, but continues with the argument that the impact is
particularly severe on the youngest unskilled workers who suffer lasting damage
by failing to get inside the world of formal paid labor quickly. They also argue
that minimum wages are poorly targeted policy. Many of the workers who earn more
as a result of the minimum wage are not poor, and many poor families receive
little help from the minimum wage.
This is precisely the line of research that Arindrajit Dube and his
co-authors are critiquing in their "new minimum wage" research that I referenced
yesterday. Naturally Neumark & Wascher have (with J.M. Ian Salas)
a
critique of their critique of their work. Something worth noting is that in
principle policymakers could actually design minimum wage policies that are
meant to shed light on the issue. We could, for example, randomly assign
counties different minimum wages on a spectrum of $5 an hour to $15 an hour and
see what happens.
Meanwhile, though this cuts against the general charts-and-NBER-abstracts
tendencies of the wonk blogosphere, the clearest case against a minimum wage
hike has (in my view) more to do with freedom than with research. You've got a
guy who wants to give someone $8 to do something that'll take an hour and
another guy who wants $8 and is happy to do the thing in exchange for the money.
Now Barack Obama's going to fine them for agreeing to trade $8 for the work?
Seems perverse. In the real world, obviously, the perversity of this is greatly
mitigated by the
existence of formal exemptions and weak enforcement. If you
pay a neighbor's son $10 to mow your lawn and it takes him 70 minutes, you're
going to be able to get away with it even in a world of a $9 minimum wage. Which
is probably as it should be.
