The Minimum Wage Debate

I was looking forward to a good debate about the merits of a minium wage increase, but unfortunately some of its proponents do not seem up for the challenge. From a Palm Beach Post writer:

The House passed a bill raising the minimum wage last week. If the Senate also approves, trade association lobbyists have told us what they think will happen.

Nobody actually is paid the minimum wage, they told us. Only high school students in their first jobs get the minimum wage. And most of them, according to the lobbyists, are from suburban families with BMWs. If the wage is raised, employers won't hire as many people for minimum-wage jobs, so the working poor will lose opportunities. If employers pay minimum wage, they will raise prices, so the poor people in the minimum-wage jobs will be worse off.

That can't all be true. The spiel is inconsistent from one sentence to another. If high school students are the only people with minimum-wage jobs, killing the jobs can't affect the working poor. Adding a weak argument to a weak argument doesn't strengthen a weak case. It puts a spotlight on the weakness in the first argument.

If what they are saying is true, raising the minimum wage should lead to more unemployment and more inflation. In fact, we have been raising the minimum wage, off and on, since Congress set it at 25 cents an hour in 1938. The same trade association lobbyists made the same dire predictions they make today in 1938. They repeat them every time the subject comes up. Not only has no one been able to show the ominous predictions coming true, there is some evidence that raising the minimum wage actually creates a few jobs through its (mildly) stimulating effect on the bottom of the economy.

The last time Congress raised the minimum wage, in two steps, was 1996 and 1997. What happened? The economy grew and created jobs faster than it has created them lately. That is not to say one caused the other. The minimum wage is too inconsequential to have that much effect. But if events had gone the other way, the lobbyists still would be shouting, "Told you so."

Rather than address the core issues, the writer obsures them in a number of ways. First, he mis-characterizes the other side's statements. For example, he has opponents saying "[o]nly high school students in their first jobs get the minimum wage," and he then notes in response, "[i]f high school students are the only people with minimum-wage jobs, killing the jobs can't affect the working poor." Certainly it has been argued that many minimum wage earners are high school students, but nobody is arguing that they all are.

He also states: "The last time Congress raised the minimum wage, in two steps, was 1996 and 1997. What happened? The economy grew and created jobs faster than it has created them lately. " But the argument is not that a minimum wage increase will have a significant impact on the overall economy. Rather, it is that employers of low-wage earners, and the low-wage earners themselves, will be hurt.

And he says, "[e]very time Congress raises the minimum wage, business lobbyists say the sky will fall." In reality, nobody is saying the sky will fall. What they are saying is that some small businesses and many poor people will be adversely affected.

Somewhat predictably, this kind of article indicates that we're not going to have a real debate about the issue. Many of the proponents will simply avoid any type of logical thinking, preferring to cover their ears and ignore the other side's arguments.