I had lunch with a couple of Republican Congressmen a week or so ago. They said the Democrats are desperate to talk about anything other than Obamacare, and have decided that their best distraction is the minimum wage. So we can expect to hear a lot about raising the minimum wage over the next ten months.
The New York Times editorial board, a reliable mouthpiece for the left wing of the Democratic Party, joined the chorus in an editorial on Thursday:
Aided by a vast flow of corporate and right-wing money, Republicans have spent years persuading the public that the deficit is the nation’s biggest financial problem and that austerity is the answer to it.
Of course, the Times doesn’t mention the vaster flow of corporate, union and left-wing money; nor does it mention the in-kind contributions that it, and virtually every other newspaper, make to the liberal cause–which in this case, apparently, is the Democrats’ theory that unprecedented trillion-dollar deficits are nothing to worry about.
Their success in making that argument — keeping taxes and government investment low — has helped increase American income inequality to crisis proportions: 95 percent of the income gains since 2009 have gone to the top 1 percent. The majority of the country has stagnated or lost ground, leaving the economy sluggish.
Sure: the complete failure of the Democrats’ economic policies is the Republicans’ fault! But now we get to the point:
Last week, [the Democrats] announced a nationwide campaign in 2014 for a higher minimum wage, showing how it would help the economy and reduce inequality, while highlighting the cost of the adamant Republican opposition to the idea. They also plan to press for wage-increase referendums in states with crucial Congressional races this November.
It’s smart politics. …
But more important, it’s good economics, and it would benefit tens of millions of people.
The Times dismisses Republican objections to increasing the minimum wage:
“When you raise the price of employment, guess what happens? You get less of it,” said Speaker John Boehner in February, espousing a party-line theory that most economists agree has been discredited.
The Times editorialists failure to mention that until very recently, they themselves (or their predecessors on the editorial board) agreed that the minimum wage hurts employment–the “party line theory” that is now “discredited.” David Boaz of the Cato Institute recounts the Times’s history on the issue:
The New York Times gets the prize for its stark decline in economic understanding. …
[F]or decades the Times’s editors knew better. Sure, Henry Hazlitt wrote some of their editorials back in the 1930s. But that doesn’t explain the paper’s continuing criticisms of the minimum wage into the 1990s. Bruce Bartlett reported some of the history in 2004:
When I first began clipping Times editorials on the minimum wage back in the 1970s, they were unambiguous in their condemnation of it as misdirected, inefficient, and having negative consequences for most of those it was supposed to help. For example, an August 17, 1977, editorial stated, “The basic effect of an increase in the minimum wage … would be to intensify the cruel competition among the poor for scarce jobs.” For this reason, it said, “Minimum wage legislation has no place in a strategy to eliminate poverty.”
In the 1980s, the Times became even more aggressive in its denunciations of the minimum wage. Rather than simply argue against increases, it actively campaigned for abolition of the minimum wage altogether. Indeed, a remarkable editorial on January 14, 1987, was entitled, “The Right Minimum Wage: $0.00.”
Everything in that editorial is still true today. “There’s a virtual consensus among economists that the minimum wage is an idea whose time has passed,” it said. “Raise the legal minimum price of labor above the productivity of the least skilled workers and few will be hired,” it correctly observed. In conclusion, “The idea of using a minimum wage to overcome poverty is old, honorable — and fundamentally flawed. It’s time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little.”
Even in the 1990s, the Times remained skeptical about the value of raising the minimum wage. An April 5, 1996, editorial conceded that a proposed 90 cent increase in the minimum wage would wipe out 100,000 jobs. It said that Republican critics of the minimum wage as a “crude” antipoverty tool were right.
One would think that the Times owes its readers an explanation of why it has done a 180-degree turn on this issue, but none has ever been offered.
How about the Times’s current claim that the arguments against the minimum wage have been “discredited”? Caroline Baum responds:
Economists David Neumark and William Wascher reviewed more than 100 studies on the minimum wage in a 2006 paper for the National Bureau of Economic Research: “Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research.” Here’s a summary of their findings: “The oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect.” What’s more, almost all the papers they reviewed “point to negative employment effects” for the U.S. and many other countries. The effect is greater for low-skilled workers, whom the minimum wage is designed to help. Overall, the authors found very little evidence of positive effects from raising the minimum wage.
Neumark and Wascher responded to an “unbalanced” Sunday Review article on the effect of the minimum wage in a Dec. 8, 2013, letter to the editor. And the Washington Post’s Fact Checker gave President Barack Obama two Pinocchios for his repeated assertion that “there’s no solid evidence that a higher minimum wage costs jobs.”
Baum notes that the Times’s position (and that of the Democratic Party) amounts to a denial of the law of supply and demand. Maybe we should start calling them “economics deniers.”
But I do give the Times and other liberals this much credit: they are consistent in their economic ignorance. The same liberals who think they can increase the cost of labor without impacting the demand for labor, also think that they can increase the supply of labor without reducing its price. This is why they fervently endorse the Senate’s immigration bill, which would bring tens of millions of new unskilled laborers to the U.S. The law of supply and demand dictates that this vast influx of unskilled labor will drive down wages, just as increasing wages via legislation will diminish the demand for unskilled labor. People who don’t understand such basic principles are too ignorant to be making laws to govern the rest of us.
STEVE adds: Economist Richard McKenzie, an old pal, wrote a short book about this about face by the Times back in the early 1990s, called Times Change: The New York Times and the Minimum Wage. It is is out of print though available secondhand. Richard is more or less retired these days, but the book could use a second edition about now.