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Minimal Evidence?

Dec 9th, 2013 by

Last week, former CEA Chair and current Harvard economist Greg Mankiw points us to yet another rhetorical flourish by the Commander in Speech:

The CEA Fact Checkers Miss One

In his speech yesterday, President Obama said,

Now, we all know the arguments that have been used against a higher minimum wage. Some say it actually hurts low-wage workers — businesses will be less likely to hire them. But there’s no solid evidence that a higher minimum wage costs jobs.

From my perspective, the last sentence is just incorrect.

I don’t want this to be a post about the minimum wage because that ends us taking us down the rabbit hole. To have a mature discussion would forced us to have a very, very, bery long discussion on a very large body of literature on the impact on jobs (which as Mankiw points out, is clearly NOT what the Commander in Speech says it is – see for yourself by spending several hours in the literature here and here), we would have to talk about the impact on new jobs, on new business formation, on consumer prices, on capital-labor substitution, on job-training, on career-advancement, on disparate impacts for teens and adults, on disparate impacts for African-Americans and everyone else, on how many people make it, on just how many poor people are among this group, on provision of non-wage benefits, and so on. No one wants to have that discussion. No one seems to care much about any of it.
And certainly beyond studying any of those empirical effects (monopsony people, there still ain’t no free lunch) perhaps discuss the ethical impacts too. Proponents of the minimum wage seem to indicate that it’s a moral argument to pay people more without ever having the decency to tell us why it is the responsibility of certain businesses to provide charity to certain classes of people all the while the rest of us taxpayers get a break. Wouldn’t even a more consistent argument be for the government to provide wage subsidies to current minimum wage workers? It would be fairer to everyone involved, it CLEARLY would not have a disparate labor market impact (as long as we ignore how the taxes are raised in the first place to do it), it would be more progressive, it would allow us to eliminate the minimum wage laws entirely and the enforcement mechanisms that tie up resources each and every day, etc. Let’s all ignore all of that.
What hits me as either disingenuous, short-sighted, inconsistent, or perhaps even nefarious, is the suddenly new obsession with evidence and research as justification for what public policies to embrace. Now, at the risk of being entirely TOO wedded to rationalism, I think I will be on board with such a thing, particularly if the Commander in Speech and his Congregation actually read the entire corpus of literature on the areas they propose to be bold. Let’s consider a simple rewrite of the President’s speech and start asking why we do not have a similar right to demand evidence:
Now, we all know the arguments that have been used against a higher minimum wage in favor of government control of K12 schooling. Some say it actually helps inner-city students  — …  But there’s no solid evidence that public schooling helps inner-city families.

 

Or how about this one:

Now, we all know the arguments that have been used against a higher minimum wage in favor of the EPA. Some say it actually helps the environment — …  But there’s no solid evidence that the EPA has, in any reasonable cost-effective manner, on-net, improved the environment.

 

Or how about this one:

Now, we all know the arguments that have been used against a higher minimum wage in favor of the PPACA. Some say it actually “bends the health care cost curve”– …  But there’s no solid evidence that the PPACA has, or can, reduce health care expenditures.

 

This is getting fun. How about this one:

Now, we all know the arguments that have been used against a higher minimum wage in favor of the the continuation of the War on Drugs. Some say it actually keeps Americans safe from themselves and each other– …  But there’s no solid evidence that the Drug War has protected Americans, reduced drug use, saved money, saved lives and a Titanic-load of evidence on what it has done to entrenched police-prison interest groups, the poor population, the prison population, the life-career prospects of small users, etc.

 

This is getting more fun. How about this one:

Now, we all know the arguments that have been used against a higher minimum wage in favor of the Americans with Disabilities Act. Some say it actually helps Americans with Disabilities get jobs and otherwise have better lifetime career prospects. …  But there’s no solid evidence that the the ADA has helped disabled Americans, indeed it seems it has produced rather damaging outcomes for them.

 

This is getting more fun than fun. How about this one:

Now, we all know the arguments that have been used against a higher minimum wage in favor of the “Green Jobs Subsidies” and Renewable Energy Initiatives. Some say it actually generates jobs. Some say it actually cleans the environment. …  But there’s no solid evidence that government green industrial planning has either led to more jobs (as if that matters) or produced environmental gains.

 

So, I am all for this newfound appeal to what the “scientific consensus” says about the minimum wage. And it’s not because a fair reading and understanding of that policy will force one to conclude that far better ones are out there which are fairer and better for all parties, but rather because I look forward to the turning of such a thoughtful and critical eye on all of the things that our local, state and federal governments do. All in the name of sciency-goodness, right? We’re just trying to do what’s best, right? We’re all above the fray here, right?

Posted in Economic Illiteracy, If I Really Hated the Poor ..., Politics, Regulation, You Can't Have it Both Ways

5 Responses to “Minimal Evidence?”

  1. Scott says:
    December 9, 2013 at 9:26 am

    Minimum wage laws are ethnocentric.

    When I worked for minimum wage digging holes for 9-10 hrs a day, I worked beside a lot of great co-workers who were from Puerto Rico. These guys left their families at home and we’re thrilled to have the opportunity to perform manual labor. They would send most I thee payheck home, to provide for their spouse and children. After a decade or so, some could afford to have their entire family move to the states.

    When the minimum wage rises to $15, modern American pilgrims will no longer have these opportunities. There was a time when America would take the world’s tired and teeming poor and give them a chance at a better life. Now, we use legislation to mask scarcity at the expense of equal opportunity for all. What a heartbreaking transition we have endured for the sake of ‘progress.’

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