The unsettled science of the minimum wage

The federal minimum wage is $7.25 per hour. In search of a talking point for Democrats to rally around in lieu of Obamacare, President Obama seeks to raise the minimum wage precisely to $10.10. He and his spokesmen say it will do no harm. They cite studies. RCP’s Alexis Simendinger even appears to take the spokesmen and the studies at face value.

It used to be one of the few uncontroversial propositions among economists that raising the minimum wage adversely affected employment. Thomas Sowell put it this way last September: “One of the simplest and most fundamental economic principles is that people tend to buy more when the price is lower and less when the price is higher. Yet advocates of minimum wage laws seem to think that the government can raise the price of labor without reducing the amount of labor that will be hired.” In a follow-up column, Sowell observed: “A survey of American economists found that 90 percent of them regarded minimum wage laws as increasing the rate of unemployment among low-skilled workers.” The science, so to speak, was settled.

Obama and the Democrats want to raise the minimum wage substantially, and common sense suggests that doing so would do a lot of damage. One wonders, however, if Obama is to be taken seriously, why he his munificence is so limited. Obama even postulates that an increase in the minimum wage has positive effects on employment. C’mon, man, why not a minimum wage of $11.11? Or $12.12? Or $13.13? Or $25.25? Why not the best? I could go obviously go on.

Will someone please ask the White House chairman of the Council of Economic Advisers at what level the minimum wage will have adverse effects on employment, and on what basis he has arrived at that conclusion? It is an unsettling question, but let’s go for it.

UPDATE: David Harsanyi has more here.


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