The Myth of the Minimum Wage Myth

Every 10 years or so, it's time to bring up the question of whether we should have a minimum wage. The Democrats, getting ready to send a $1.9 trillion relief bill to Biden's desk, are also trying to hike the minimum wage to $15. The conservative response is as usual to cite a ton of papers arguing that a minimum wage is really just a tax on unskilled labor and is a barrier to entry for young people entering the workforce, as they price them out of the market and reduce demand for their labor. By that logic, a minimum wage hike would actually make poor people poorer. The most cited paper for this argument is probably Card and Krueger's 1992 paper, where they compared employment in NJ and PA after NJ raised the minimum wage and found that it didn't have the expected negative employment effects. However, when this evidence is cited, conservatives usually counter with Neumark and Wascher's 2000 paper, where they found methodological flaws in C&K's work and, using different methods, found that the minimum wage did have negative employment effects.<br><br>However, both of those papers came out decades ago. So let's take a look at some more recent work, shall we?<br><br>* A 2019 paper from Cengiz, Dube, Lindner, and Zipperer, using "data from 138 prominent state-level minimum wage changes between 1979 and 2016," found that "the overall number of low-wage jobs remaining in month 11 following a minimum wage increase is, on average, statistically indistinguishable from the number of low-wage jobs remaining in month 1." In other words, minimum wage hikes did not result in any net job losses.<br>* A 2014 paper from Dube, Jacobs, Naidu, and Suri, using "parallel trends" and "regression discontinuity designs" to analyze data from across the US from 1990 to 2006, also found that "the minimum wage causes little or no harm to the skills and career prospects of low-wage workers."<br>* A 2011 paper from Dube, also using "regression discontinuity designs," analyzed across "all Continental US states" from "1990 to 2006" and found "strong earnings effects and no employment effects of minimum wage raises" and concluded that "differing control groups, access to baseline data, and enactments in neighboring states are all crucial in estimating the effect of minimum wage increases accurately."<br><br>In short, the overwhelming majority of the evidence is that a higher minimum wage has no discernable negative employment effects on the poor, but it does have positive effects for them.<br><br>Edit: If you're gonna post without reading, stop. I've seen a ton of comments about Card and Krueger and Neumark and Wascher's work. Those papers are from 30 and 20 years ago, respectively. However, I've also seen people replying to more recent papers by saying "you know this literature was debunked, right" without citing any evidence. The burden of proof is on you.<br><br>Also, please stop commenting out of your depth. If you don't know what a regression discontinuity design is, please educate yourself before commenting on papers that use those designs. If you don't know what the difference is between a conservative SSE and a liberal SSE and what the implications of those are, please keep your ignorance to yourself. If you don't even know what an SSE is, then please just read another subreddit.<br><br>Edit2: I'm seeing a few comments about conservative SSEs vs liberal SSEs but none of them state what those conservative and liberal SSEs are, nor what the confidence intervals are around them. A coefficient without an SSE is meaningless.<br><br>Edit3: I'm seeing a few comments about SSEs but they're citing really old papers that also lack confidence intervals. If you don't know what the margin of error is for a SSE, then it's completely useless.<br><br>Edit4: I'm seeing a lot of comments about how any minimum wage hikes should be pegged to inflation. It already is. The minimum wage in 1960, adjusted for inflation, would be over $12 today.