Minimum Wage Increase Is Still Bad Policy

By Matt Powers on March 10, 2014

For the past two years, President Obama has proposed raising the federal minimum wage in his State of the Union address. The main arguments for raising the minimum wage have typically ignored economic arguments against it, and relied upon more politically charged arguments. This time around the argument is a bit different because progressives are now using new studies in economics as intellectual ammunition. Shortly before the State of the Union address, 600 economists signed a letter to the president endorsing a raise in minimum wage,citing the new studies. These studies have argued that moderatelyincreasing the minimum wage would have a negligible impact on employment levels.

Obama himself relied on these revisionist economists in his announcement of the executive order:

“Just last month, 600 economists, including seven Nobel Prize winners, wrote the leaders of houses of Congress to remind them that the bill before Congress would have little or no negative effect on hiring, on jobs. So it’s not going to depress the economy. It will boost the economy.”

The mistake being made by using these studies is that 79 percent economists have not actually changed their longstanding consensus against a high minimum wage, and are skeptical of the new studies. The 600 signatories do not necessarily represent the field as a whole, and their suggestions, as such, should be taken with caution.…..To Read More….