In The New York Times, Arindrajit Dube, a celebrated expert on the economics of the minimum wage, has commentated on the recent study from the University of Washington on the effects of Seattle’s increased minimum wage. In short, Mr. Dube argues that the study’s conclusion that there were big job loses is much more opaque than public commentary would have one believe. I agree with his general sentiments: Empirical claims about something as complex as the minimum wage can only be evaluated at the level of the overall literature, not a single study. By itself, the UW study proves nothing. One study can never prove a broad empirical point. Only a broad population of studies can do so.
However, it is not Mr. Dube’s general argument that draw my interest, but his conclusion:
"Putting all of those together, along with our evidence from past increases, will give a much more complete picture of how high the minimum wage should go to improve the lives of people at the bottom of the wage scale without throwing lots of people out of work."
To me, this is quite the startling admission: That the minimum wage will throw some people out of work. After all, “throwing lots of people out of work” implies that “throwing few people out of work” is a marginal improvement that is acceptable for public policy. I entirely disagree. Let me quickly go through my reasoning:
We can be reasonable confident that among those people who can no longer find jobs will be among the least advantaged in society. For instance, the people who are going to be priced out of the markets are not the children of the rich who can afford to be sent to unpaid internships to build their resumés. Instead, they are going to be the children of the poor who have no way to build their resumés, as there are very, very few unpaid internships for, say, being a clerk or plumber. There may even be a few poor people of working age whose skills simply do not add enough at the margins to be employable at the minimum wage. Whatever the scenario, I think that it is very unlikely that the marginal effects of increasing the minimum wage do adversely affect some of the most vulnerable in society, for among the most vulnerable will be people whose skills cannot add a lot of value to a business at the margins. They will be at the chopping block first, in the name of economic efficiency.
Moreover, the economic profession have not been able to agree about how much benefit is accrued to society as a result of minimum-wage policies. It is telling that the economics profession has not been able to agree about the effects of an increase in the minimum wage in its literature.I don’t think we should blame this problem of measurement on politics. Instead, I think that we should see the labor market as being so complex and so adaptive that any attempt at measuring the effects of this variable are fraught with difficulty and are also going to reflect local circumstances that will frequently vary from local to local. So, the average effects of the minimum wage are uncertain and we should expect them to always be uncertain, given the limits of measuring complex systems.
To me, combining these two considerations lead to the crux of the minimum-wage debate: The minimum wage harms some of the least advantaged people in society for uncertain benefits to others who are more advantaged. How can we pretend that's just? Economic policy is not only a matter of average effects, but also of justice and of who pays the costs at the margins. Contra Mr. Dube, I don’t believe throwing a few people out of work is good enough. Those people also deserve the right to sell their labor and thereby improve their lives by virtue of a natural right to self-preservation. A just minimum-wage policy throws nobody, let alone some of the least advantaged, out of work; hence justice calls for a $0.0 minimum wage.
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