Abolish the minimum wage

• Volume 72, Presented On: April 03, 2013
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From the Panel

• For: James Dorn

• Obama’s Minimum Wage Hike: A Case of Zombie Economics
  James Dorn, Forbes.com, February 20, 2013The United States needs to abolish the minimum wage, not increase it. Workers who are willing to work at free-market wages should have the right to do so, and employers should have the right to hire them.
• James A. Dorn Discusses the Minimum Wage on CNBC’s Morning Call
  Morning Call, January 8, 2007Watch the video here.
• Will the Increase Make a Difference?
  James Dorn with Farai Chideya, NPR, July 24, 2007The minimum wage increase will leave small businesses feeling the pinch.



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• For: Russell Roberts

• The Empirical Literature on the Minimum Wage
  Russ Roberts, Cafe Hayek, January 25, 2007There have been dozens of articles in the academic literature on the impact of the minimum wage on employment, particularly on the employment of low-skilled workers. Virtually every one of these articles finds that an increase in the minimum wage reduces employment.
• Imagining a World of Minimum Wages
  Russ Roberts, Cafe Hayek, February 19, 2013When the government requires that wages be higher than what they would otherwise be, that creates an increase in the number of people who would like to work and reduces the number of opportunities available.
• Munger on Shortages, Prices, and Competition
  Host Russ Roberts with Mike Munger, Econ Talk, October 19, 2009Mike Munger of Duke University talks with EconTalk host Russ Roberts about the limits of prices and markets, especially in the area of health. The discussion concludes with a discussion of how markets respond to price controls, particularly minimum wages.

• Against: Jared Bernstein

• Minimum Wage Increase: $9 Is Log Linear
  Jared Bernstein, On the Economy, February 17, 2013The system tends to offer up minimum wage increases that it can absorb without distortions.
• Raising the Minimum Wage: The Debate Begins…Again
  Jared Bernstein, On the Economy, February 14, 2013Analysis of the historical record shows that increasing the minimum wage has its intended effect of raising the earnings of low-wage workers who need the raise without harming their employment prospects.
• The Minimum Wage: Time to Start Working on the Next Increase
  Jared Bernstein, On the Economy, February 7, 2012I’ve always thought the national minimum wage is a lot more important than most people tend to think.
• Tax Credits or Minimum Wages? We Need Both
  Jared Bernstein, ViewPoints, March 15, 2007Which helps low-income people the most–the minimum wage or the Earned Income Tax Credit? It’s a false choice. Together, these two programs balance the social cost of low-wage work between taxpayers and low-wage employers.

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• Against: Karen Kornbluh

• Families Valued
  Karen Kornbluh, Democracy, Fall 2006Creating a twenty-first-century social insurance system for today’s “juggler families.”
• The International Mommy Tax
  Karen Kornbluh, Atlantic, November 30, 2012Across developed nations, women with children earn significantly less than men compared with childless women—on average a 14-percent difference.
• Running Faster to Stay in Place
  Jared Bernstein and Karen Kornbluh, New America Foundation, June 2005An examination of the number of hours worked by families and the link between wage growth and work hours in families of different incomes.
• Family Friendly for All Families
  Ann O’Leary and Karen Kornbluh, October 16, 2009Our current laws and government programs are woefully out of date to help families cope with the rapidly changing economic and social realities of the 21st century.

ARTICLES FOR & AGAINST

• FOR

• Why We Shouldn’t Raise the Minimum Wage
  Kevin Hassett and Michael Strain, Los Angeles Times, March 10, 2013Raising the wage will make it more expensive to hire younger and low-skill workers. There are better ways to help the poor.
• The Myopic Empiricism of the Minimum Wage
  Bryan Caplan, Library of Economics and Liberty, March 12, 2013From the standpoint of public policy, the minimum wage is a symbol of the view that "feel-good" policies are viable solutions to social ills.
• Minimum Wages
  Linda Gorman, Concise Encyclopedia of Economics, Library of Economics and LibertyMost economists believe that minimum wage laws cause unnecessary hardship for the very people they are supposed to help.

• AGAINST

• Why We Need to Raise the Minimum Wage
  Andy Stern and Carl Camden, Los Angeles Times, March 10, 2013A higher wage will lift hardworking Americans out of poverty and break their link with government assistance.
• Higher Minimum Wage Is Imperfect Idea Whose Time Has Come
  The Editors, Bloomberg View, February 24, 2013Both the minimum wage and the tax credit subsidize low-wage labor. The difference between the two is that the minimum wage puts the cost of the subsidy on employers, whereas the EITC puts it on taxpayers.
• Minimum Wage 101
  Arindrajit Dube interview with Mike Konczal, The American Prospect, February 14, 2013Dube discusses the minimum wage as a policy mechanism.

RELATED ARTICLES & LINKS

• HISTORY/BACKGROUND

• Fair Labor Standards Act of 1938: Maximum Struggle for a Minimum Wage
  Jonathan Grossman, U.S. Department of LaborA history of the Fair Labor Standards Act of 1938.
• History of Federal Minimum Wages Rated Under the Fair Labor Standards Act, 1938-2009
  U.S. Department of LaborA table of federal minimum wage rates under the Fair Labor Standards Act, 1938 – 2009.
• Minimum Wage Laws in the States
  U.S. Department of Labor, January 1, 2013Minimum wage and overtime premium pay standards applicable to nonsupervisory, nonfarm, private sector employment under state and federal laws.

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• EMPLOYMENT

• Revisiting the Minimum Wage-Employment Debate: Throwing Out the Baby with the Bathwater?
  David Neumark, J.M. Ian Salas and William Wascher, September 2012Much of the new minimum wage research is flawed. The authors conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind.
• The Effects of Living Wage Laws on Low-Wage Workers and Low-Income Families: What Do We Know Now?
  David Neumark, Matthew Thompson and Leslie Koyle, Journal of Labor Policy, 2012Living wage laws reduce employment among the least-skilled workers they are intended to help. But they also increase wages for many of them.
• Using Federal Minimum Wages to Identify the Impact of Minimum Wages on Employment and Earnings Across the U.S. States
  Yusuf Soner Baskaya and Yona Rubinstein, October 2011The authors find that a rise in minimum wage has an instantaneous impact on wage rates and a corresponding negative impact on employment.
• Why Does the Minimum Wage Have No Discernible Effect on Employment?
  John Schmitt, Center for Economic and Policy Research, February 2013The weight of evidence points to little or no employment response to modest increases in the minimum wage.
• Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data
  Sylvia A. Allegretto, Arindrajit Dube and Michael Reich, Industrial Relations, April 2011Minimum wage increases—in the range that have been implemented in the United States—do not reduce employment among teens.
• Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties
  Arindrajit Dube, T. William Lester and Michael Reich, The Review of Economics and Statistics, November 2010There are no detectable employment losses from the kind of minimum wage increases we have seen in the United States.
• Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania
  David Card and Alan B. Krueger, The American Economic Review, September 1994The authors studied a rise in New Jersey’s minimum wage and found no indication that it reduced employment.

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• POVERTY

• Can Raising the Minimum Wage Reduce Poverty and Hardship?
  Joseph Sabia, Robert Nielsen, Employment Policies Institute, April 2012Across all measures, the authors find no statistically significant evidence that a higher minimum wage has helped reduce financial, housing, health, or food insecurity.
• Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?
  Joseph Sabia and Richard Burkhauser, Southern Economic Journal, 2010The authors show that raising the federal minimum wage continues to be an inadequate way to help the working poor.
• The Contribution of the Minimum Wage to U.S. Wage Inequality Over Three Decades: A Reassessment
  David Autor, Alan Manning and Christopher Smith, November 2010The minimum wage reduces inequality in the lower tail of the wage distribution but impacts are typically less than half as large as those reported in the literature and are almost negligible for males.
• How Raising the Federal Minimum Wage Would Help Working Families and Give the Economy a Boost
  Doug Hall and David Cooper, Economic Policy Institute, August 14, 2012The multiple positive effects that would result from a higher minimum wage are clear: It would boost the earnings of working families hardest hit by the Great Recession, spur economic growth, and create about 100,000 net new jobs.
• Declining Value of the Federal Minimum Wage Is a Major Factor Driving Inequality
  Lawrence Mishel, Economic Policy Institute, February 21, 2013Setting the minimum wage at an appropriate level can help spur broad-based wage growth and move us toward an economy where workers benefit from productivity growth.

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• EARNED INCOME TAX CREDIT

• The Business of the Minimum Wage
  Christina Romer, New York Times, March 2, 2013The economics of the minimum wage are complicated, and it’s far from obvious what an increase would accomplish. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time.
• Optimal Minimum Wage Policy in Competitive Labor Markets
  David Lee and Emmanuel Saez, January 29, 2010The authors’ results imply that the minimum wage and subsidies for low-skilled workers (such as the EITC) are complementary policies.
• The Earned Income Tax Credit and Expected Social Security Retirement Benefits Among Low-Income Women
  Molly Dahl, Jonathan Schwabish, Thomas DeLeire and Timoth Smeeding, Congressional Budget Office, March 5, 2012The results of this simulation suggest that the EITC leads to an increase in the share of less-educated women that will be eligible for Social Security retirement benefits and leads to an increase in their monthly benefit amount.
• Studies Show Earned Income Tax Credit Encourages Work and Success in School and Reduces Poverty
  Jimmy Charite, Indivar Dutta-Gupta and Chuck Marr, Center on Budget and Policy Priorities, June 26, 2012Studies have found that the EITC encourages work, reduces poverty, helps families meet basic needs, and improves children’s achievement in school and likely increases their earnings as adults.
• A Fish Is Not a Fowl: Tax Credits and the Minimum Wage
  Max B. Sawicky, Economic Policy Institute, February 27, 2007Tax credits are worthwhile in their own right, but they are not plausible substitutes for an increase in the minimum wage.
• Does a Higher Minimum Wage Enhance the Effectiveness of the Earned Income Tax Credit?
  David Neumark and William Wascher, Industrial and Labor Relations Review, July 2011Whether the policy combination of a high Earned Income Tax Credit (EITC) and a high minimum wage is viewed as favorable or unfavorable depends in part on whom policymakers are trying to help.
• Congressional Budget Office
  January 9, 2007Response to a request by Senator Grassley about the effects of increasing the federal minimum wage versus expanding the earned income tax credit.
• Tax Credits, the Minimum Wage, and Inflation
  Elaine Maag, Urban-Brookings Tax Policy Center, January 2007Failure to index the minimum wage makes workers worse off each year as inflation erodes the purchasing power of each dollar. Despite proposals to the contrary, using the tax system to augment wages could make workers even worse off.

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• POLLS

• If No Deal Is Struck, Four-in-Ten Say Let the Sequester Happen
  Pew Research Center, February 21, 2013By a wide margin (71% to 26%), the public favors increasing the minimum wage from its current level of $7.25 per hour to $9.00 an hour.
• Minimum Wage
  Chicago Booth IGM Forum, February 26, 2013A panel of 38 economic experts respond to questions about the minimum wage.

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• IN THE NEWS

• $22 Minimum Wage: Could It Pass Congress?
  Peter Grier, Christian Science Monitor, March 19, 2013$22 minimum wage, per hour, is an idea that Sen. Elizabeth Warren raised at a recent hearing. President Obama has suggested raising the rate from the current $7.25 to $9.
• Liberals Call for $10.10 Minimum Wage—More Than Obama Requested
  Daniel Strauss, The Hill, February 28, 2013The White House is coming under pressure from liberal Democrats in the House and Senate to press for a minimum wage hike as high as $10.10.
• Minimum Wage in Europe Offers Ammunition in U.S. Debate
  Liz Alderman, New York Times, February 13, 2013Now that President Barack Obama has proposed an increase in the U.S. minimum wage, people on both sides of the debate in Washington might want to look to Europe for ammunition.
• Costco’s Profit Soars to $537 Million Just Days After CEO Endorses Minimum Wage Increase
  Huffington Post, March 12, 2013Less than a week after Costco CEO Craig Jelinek spoke out in favor of raising the minimum wage, the big-box retailer’s earnings showed that paying workers a living wage doesn’t always hurt business.
• The Handful of Countries Without a Minimum Wage
  Heather Brady, Slate, February 21, 2013A map of minimum wage laws around the world.

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