Let physicists play with a few models involving particles that can oscillate wildly between fear and greed; when they get a handle on that, they can give the economists a call.

And not just wildly, but randomly.

economists have known for centuries that the minimum wage increases unemployment? centuries? really??

A few years ago, a single study in the fast food industry gave an indication that minimum wage increase doesn't increase unemployment. According to critics, this was not a strong study, technically. Over the years, any number of studies have shown the opposite. However, this one mediocre study received more media coverage than all the others put together.

That is not balanced coverage.

When economists come up with something as cool as string theory, then they can complain.

If politicians were routinely advised on policy by physicists, I think it's pretty clear the results would be much improved.

We all know the old joke about how many opinions you get if you put ten economists in a room. All things considered, it seems to me they get treated reasonably well (if not always very accurately) by the media.

Nonsense Kevin. Supply-Side economics is constantly attacked by reporters in the liberal media and gets no respect even though it was proved true by the rapid revenue gains caused by the Reagan tax cuts in the early 80's.

Link

"Supply-siders asserted that cutting taxes on the wealthy -- and especially on savings and investment -- would help everyone, including the poor, by promoting economic growth."

"For many of us, this whole argument was always a highfalutin rationalization for giving the rich what they wanted, and often even more."

Ex Lib...I want to believe in you. Give me some leads on the studies that show min. wage increases cause increased unemployment that you have read.

This proves that the theoretical physicists are wrong. The universe has 12 dimensions, not just 11. The 12th dimension is occupied by right wing neonuts who believe that human constructs like the concept of the free market have more status as immutable universal laws than such trivialities as relativity, quantum mechanics, and - yes - evolution.

aa

On the economic front, it's true that most news reporting about the efficacy of the minimum wage is fairly balanced, but that's because there's solid economic evidence on both sides of the question.

I disagree. I challenge anyone to show me the data that an increase in the minimum wage has ever hurt the economy.

One of the key points that Hanson is missing is evidenced by another one of his quotes (from a discussion with Michael Mandel of businessweek): "P.S. Could we at least agree that a minimum wage of $200 an hour, if vigorously and broadly enforced, would have an devastating effect on employment, and on the economy?"

It isn't hard for an economist to predict that a sufficiently high minimum wage will have devastating effects on employment. No one seriously doubts that no matter how high you make the minimum wage, it won’t have any negative effect on unemployment. However, there is no universal law that says what the effect on employment of a small increase in the minimum wage will be. In particular, there is no reason why monotonicity must hold (monotonicity would mean that if a very large increase in the minimum wage will increase unemployment a lot, then any minimum wage increase must increase unemployment by some amount).

Even if monotonicity did hold, this still wouldn’t reveal how much an increase in the minimum wage increases unemployment. For that you need data, and there’s no a priori reason why the result would be the same in all places and situations. It’s just easier to come to conclusions when working with the laws of physics than it is in economics.

Whatever. They don't even have a real Nobel Prize.

The difference? Economics is like most social sciences, only scientific in the vaguest of ways. (Psychology springs to mind as the second-worst offender.)

In the past decade or so, both social disciplines have FINALLY started making the effort to be social sciences, precisely by having members of their profession learn relevant facts from fields like neuroscience.

The problem is, the political partisan economics hacks who make their anti-minimum wage pronouncements all stem from the pre-scientific era of economics. Since they're not scientists, they're fair game for making empirically unsupportable statements.

That said, string theory is NOT all it is cracked up to be, and more and more science journalists will take the kid gloves off soon enough.

Ex-liberal: That fast food study was actually pretty good. It's been criticized, but then followed up with other studies that have confirmed its results. Other economists have published further studies that also suggest minimal or no negative effects from an increas in the minimum wage. Historical evidence suggests the same thing.

However, there's also contrary evidence. It goes both ways, and there's simply no consensus. However, as near as I can tell nobody has presented any evidence for a seriously negative effect from a modest minimum wage increase. The worst anyone has done is argue for very modest unemployment effects, and even those are mostly among teenagers.

I'd like to see some evidence that the media is skeptical towards statements by economists. The debate in the media seems to me to vary in a very narrow range -- from the craptastic analysis by the likes of Thomas Friedman (the world is flat, globalization is always better for every single person) to wingnuts like Larry Kudlow (tax cuts always increase govt revenue, no matter what).

If it is the case that the media is skeptical about economics, is that surprising? To the extent that economics is a "science" it isn't true -- based as it has been on ideas that we know are fictions (rational economic man, perfect markets, etc.). Yet economists are in the position to make policy recommendations.

Economists making policy recommendations based on their "scientific" models is like physicists making recommendations on the wisdom of the Iraq war based on their knowledge of the properties of metal in the guns our troops are using.

This doesn't mean that economists shouldn't speak, or don't have more useful knowledge than the rest of the population, but that we shouldn't be surprised if economists get challenged when they make conclusions that go WAY beyond what their evidence and science supports.

I suspect that it is because economists make such a regular practice of going beyond their evidence that there is so much room for them to disagree with each other

Hmm, since no one has said it yet I will:

Assume a can-opener!

You should read the comments at the Becker-Posner blog, as most commentators are having it out with them because both of them are against raising the minimum wage to $7.25 and Posner at least, cited almost zero sources. I tell ya as a law student, I read Posner's opinions and analyze them but from a political standpoint he's falls into some wrong-headed supply side thinking alarmingly quickly.

You wanna know why people treat economists like idiots ?

Because if you win the nobel prize in Physics you have an idea that has withstood being torn down by brightest minds and in the world for years.

In Economics people regularly win the nobel prize with ideas that no-one is really sure are worth spitting on. You don't have to have an idea that works in economics, just something interesting.

Economics is so uninterested in testing their ideas in the real world that that they have become in the words of Galbraith "intellectually bankrupt". And its not because as they like to pretend, its impossible and unethical to do experiments in economics. Its not easy to do experiments in geology, geophysics, astronomy, paleontology and a hundred other sciences either, but somehow they have made a bit of progress. And you don't get adulation in those fields for ideas that are indistinguishable from BS too often.

When you get right down to it, economists do models and theory, and don't do experiments or FIELD WORK. If Physics worked the same way we'd still be refining models of the music of spheres, which is about where economics is today. The little bit that is done only highlights how tiny it is compared to fields which do real science.

To add to still working it out's above, the physics that wins Nobel prizes is not the empty-calories-for-thought that brings the crank quantum theorists out of the woodwork, as happened the other day on Kos, after a post by DarkSyde.
We can have fun with extra dimensions because we can be damn sure the universe won't be calling us on it anytime soon.

I think a better comparison is between economics and chemistry.

In both fields, results are often unpredictable, but a chemist can do thousands of small scale experiments and unequivocally determine what would happen in the future.

An economist may have a theory on the benefits of free trade, for ex., but there is no way he can perform a small scale mock up to test his theories, and there are so many uncontrollable variables, any observed results may be subject to opinionated analysis.

So we see liberal economists crediting Clinton with the 90's boom, and conservative economists telling us that the Reagan tax cuts were just kicking in. That is why one-armed economists were so valued by Harry Truman.

I know I shouldn't respond to Al but,...

Actually, after Reagan's big tax cut of 1981 he followed on with two massive tax increases in 1982 and 1983 (payroll tax). As a share of GDP the 1982 tax increase was larger than Clinton's of 1993. Reagan raised taxes four times just between 1982 and 1984. The Tax Reform Act of 1986 raised taxes on industry and cut taxes on the poor. I believe he also signed smaller tax increases each of the following years of his presidency.

It was easy for Reagan to increase tax revenues every year after his tax cut, he raised taxes.

Part of the success of physicists is that they deal with relatively simple regimes. This is not controversial. You attack problems you think you have a chance of solving. This is not an apology for economists but the problem of predicting the behavior of millions of people and corporations and all of their interactions is a far sight more complicated than calculating something like the energy states of a single hydrogen atom.

From my point of view the mimimum wage issue is not an economic argument but a moral one. Will an increase in the mimimum wage increase unemployment? Probably. But the small increases we're talking about would have little effect. Societies are judged by how they treat their lowest classes. You can't live on $5.15 an hour. The moral values of the right wing don't include compassion for the poor. What they're really concerned about is the profit margins of the wealthy.

Although I agree with trublu on the political side of the issue, I belive Kevin is wrong in his claim that the employment effects are unclear. This paper does a pretty good job in surveying the evidence.

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research
by David Neumark, William Wascher #12663 (LS)
NBER Working Paper No. 12663
Issued in November 2006

---- Abstract -----
We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the "new minimum wage research" beginning in the early 1990's. The wide range of existing estimates makes it difficult for us to draw broad generalizations about the implications of the new minimum wage research. Clearly, no consensus now exists about the overall effects on low-skilled employment of an increase in the minimum wage. However, the oft-stated assertion that this recent research fails to support the traditional view that the minimum wage reduces the employment of low-skilled workers is clearly incorrect. The overwhelming majority of the studies surveyed in this paper give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects. Moreover, the evidence tends to point to disemployment effects of minimum wages in the United States as well as many other countries. Two potentially more important conclusions emerge from our review. First, we see very few - if any - cases where a study provides convincing evidence of positive employment effects of minimum wages, especially from studies that focus on broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, when researchers focus on the least-skilled groups most likely to be adversely affected by minimum wages, we regard the evidence as relatively overwhelming that there are stronger disemployment effects for these groups.

Inflation is a a measurable phenomenon that most economists recognize, whether they be liberal or conservative. So why isn't the minimum wage indexed to the rate of inflation? Why isn't a constant dollar minumum wage that was appropriate 10 years ago for an economy with under 5% unemployment appropriate today?

Whenever the issue of raising the minimum wage comes up why do the poorest people get accused of fueling inflation and not the titans of industry and government who have driven up the cost of energy, housing, transportation and health care over the preceding years?

Furthermore, conservatives always ignore the full picture: minimum wage earners spend their money faster, creating immediate benefits for the economy, like more jobs. And these are largely American jobs -- not jobs for ski lift operators in St. Moritz.

Everyone on the the planet knows that a $100.00/hour minimum wage would cause significant unemployment. That an economist thinks he should be highly respected for pointing this out says a lot about the profession.

Everyone on the planet knows that a $0.01/hour minimum wage would cause no unemployment (as compared with no minimum wage). That an economist would still expect to be paid after spending a career ignoring this fact says even more about the profession.

We all know that raising a $0.01/hour minimum wage to $0.02 (doubling it, by God!) would not have any effect on unemployment. Thus it is NOT a continuously increasing function.

Because of this, it becomes a matter of considerable interest to most of us at what rate does it become an increasing function and how steep that curve is for -- say -- the first $5.00 of that function's increase. The fact that economists have not answered that question with any degree of reliability is the REAL reason economists are held in such low regard.

If Robin Hanson is capable of saying otherwise with a straight face AND he is an economist, I suspect the most productive use of his time would be the consideration of what HIS contribution to the low level of respect accorded to his profession by the media.

There are two aspects here: One is a discussion of the latest research (Card et al.). The other is the widespread opinion of professional economists. Of the latter group, I've read surveys which say that around 90% or more believe that increases in the minimum wage cause unemployment. And that consensus is indeed obscured by the Card-said/no-he's-wrong-approach to these issues.

"But if economists say, as they have for centuries, that a minimum wage raises unemployment, reporters treat them skeptically and feel they need to find a contrary quote to "balance" their story."

Because that is an obviously stupid and simplistic result. It is as true as saying that if you Kevin Drum, know after taking Physics 101, that if you push on a ball, it will move forward forever.

Economists claim to be physicists these days, but every physics class, immediately after talking about Newton's law, will say, THAT IS TRUE IN THE CASE OF NO FRICTION but we live in a world of friction.

Most Econ classes are taught in a frictionless world. Most economists never move themselves into a frictionful world. Economists (like Brad) think of themselves as Physicists, though they have no ability to run experiments to observe their behavior.

Economists are foolish and stupid people, that is, if they want others to believe them.

This is all ridiculous. As alluded to earlier, if we list biology, physics, chemistry and economics and ask which of these does not belong, we would have either unanimity or a method to cull out some ill-informed ideologues.

To even equate physics and economics at any level is intellectually dishonest or ingenuous (to be kind).

colorless green ideas -
Yes, really, they have known for centuries.
Marie Antoinette was a supply-side pioneer, you know.
You're probably more familiar with the public dissatisfaction regarding her seminal ideas, more proof of liberal media bias.

Every time the minimum wage has gone up, unemployment has soared, the economy has collapsed, more scary brown people have frightened my wittle Allykins, etc.

So the economists are only reporting on the history of reality. What else do you need?

Probably because physicists' ideas are based on experiment, and economists' ideas are basically pulled out of their asses.

The last AP story I read about the minimum wage only quoted rightwing sources. The story ended with the suggestion that most economists thought raising the minimum wage would increase unemployment.

When I checked that out a little, I found that numerous studies have been done and almost all economists think raising the minimum wage does not increase unemployment.

Sadly typical of the unfair and unbalanced reporting by the AP.

I'm reminded of a recent piece on To The Point discussing a book, Adam's Fallacy, that argued that Economics can lead to theological disputes. The essence of the argument seems to be that Economic research is focused on describing the world as it is, but is then used to describe the world as it ought to be. This translation is not valid. To stick with the minimum wage argument: even if increasing the minimum wage reduces employment (at the margin) that does not mean that we should not do that, it merely means that raising the minimum wage has consequences--is that really so surprising? A more interesting question is if the benefits that accrue to those people who benefit directly from a minimum wage increase outweigh the burden borne by those people who lose their jobs. Where is that research?

the problem for economists is believability:

Physics consists of theories proven in repeatable experients by actual facts and observations.

Economics consists of ideas agreed to by surveys.

see the difference.

Economics is closer to religion than science - its existence and ideas du jour, depend on acquiring believers.
.

When a counter-argument is given to string theory, that argument is given by another respected physicist.

When a counter-argument is given in respect to minimum wage, it is just as likely given by a politician (or some pundit) as by an economist.

Obviously Hanson knows very little about science and string theory. There are many who doubt string theory is even science. It is more akin to religion.

Then again Hanson does know about religion. He is, after all, an economist.

A more interesting question is if the benefits that accrue to those people who benefit directly from a minimum wage increase outweigh the burden borne by those people who lose their jobs. Where is that research?

Whoaa feller, hold on to your briches. Next you'll want to do a cost benefit analysis for all 6 billion people. Best to slow down and keep it simple. Pick a simple measure, say an equity market over a time period of 3 to 6 months. There will be plenty of time to complicate your model later.

Some interesting stats from today's Washington Post (Michael Rosenwald, "Who's Afraid of a Higher Minimum Wage"):

1. Only 520,000 workers nationwide earn the federal minimum wage of $5.15

2. Workers in most major metro areas already make more than the federal minimum wage and many already earn more than the new, proposed $7.25 minimum.

3. Right now there are about 132 million people in the US workforce total. About 10%, or 13 million of them would be affected by a raise in the minimum wage.

4. Of this 13 million, about 21 percent, or 2.73 million, are under age 20.

According to most economists and policy experts interviewed for this article, the employment and inflationary impacts of the proposed increase in the minimum wage to $7.25 is either irrelevent or miniscule.

So, why all the fuss? These dire unemployment warnings sound like recycled economic scare tactics jotted down on the back of an old Signatures luncheon napkin.

After all, NAFTA has already driven many of the minimum wage jobs to Mexico and from there on to China.

The general consensus among economist is that a 10% incrrease in the minimum wage causes a 1% increase in unemployment.

That means if you raise the minimum wage by 10%
99 people get a 10% raise and one individual loses their job.

So what we see is a wealth of economic studies that demonstrates that the job lose occurs.

But we see essentially no economic research about the impact of the 10% income growth for the other 99 individuals.

So what we have is cost-benefit analysis that shows the cost but at the same time ignores the benefits.

That is what is call balanced research and/or reporting.

The minimum wage debate is more emotion than reason.

From memory, the figures show that around 90% of those on the minimum wage are the 3rd ranked person in a household (i.e. a child of the parents ranked 1 & 2) and that within 12 months more than 80% have advanced to roles/salaries above the minimum wage.

What the minimum wage does is increase the barrier to entry of the young and particularly those that have not done so well academically.

heh

"Hmm, since no one has said it yet I will:
Assume a can-opener!" - MNPundit

I know a variant where the punchline is "Assume a ladder.' Same result.

Fewer than 10% of the American pubic has any exposure to economics in their educational background and that does indeed leave fertile ground for acceptance of flat-out crapola like the 'Laffer Curve' and other justifications for greedy to the point of pathological economic behavior.

"Of course I believe in the free enterprise, but in my system of free enterprise, the Democratic principle is that there never was, never has been, and never will be room for the ruthless exploitation of the many for the benefit of the few." - President Harry S. Truman

NOte: I've been beset by trolls using my handle - Kevin, please do something about this impersonation problem.

If increasing the minimum wage increases unemployment, then decreasing the minimum wage must decrease unemployment - sending the minimum wage to zero would result in full employment, no?

Bring back slavery!! It's good for the economy!!

Well, if economists want more respect, they can start by questioning their assumptions.

Does the universe have 4 dimensions, or more?

Why is the universe dominated by matter, and not antimatter, or a mix of both?

Are the laws of physics the same depending on position, on direction, on rotation, on velocity?

Etc., etc. The fundamentals (and some of them are very deep; I've left them off because they're hard to state accurately in layman terms) are given a lot of hard scrutiny. If you don't believe me, check for yourself: The Particle Data Book, the sections under "Searches" and "Tests of Conservation Laws".

Yes, these are (at least partly) open questions. But you don't get answers without asking questions, and economics seems to really be poisoned with dogmatic ideology.

The #2 item for economists to get respect is to make a theoretical prediction that is experimentally verified to...oh, I dunno..10 or 12 decimal places (cf. electron electromagnetic 'g' factor).

I'm not holding my breath, however.

Dear Robin Hanson,
Beacause the laws of physics and the laws of man have different standards and consiquences that require different responses.

Also the laws of man are notoriously corruptable by ideological interpretation and application such as you are doing in your comment on the minimum wage. And, a change in the laws of man can have a rapid effect on the welfare of millions of people as policy makers act on these new ideas. Economist have been proven wrong before and millions have suffered for it. Caution and skepticism is inherently called for.

If the laws of Physics are changed in the next month, we wont see food stamp programs being cancelled next year. Not so if we accept every libertarian economic incite as "truth"

Repectfully yours,
Nemesis.

Physics: predictions, regardless how weirdly phrased, that are ultimately testable by experiment. If not testable, generally looked down on by real physicists. Effects on the world if fancy theories are wrong: minimal. (If the fancy theories are right, you get atom bombs or transistors, but that's another issue entirely.)

Economics: predictions that are ultimately not testable except in highly attenuated form because of all the other things that aren't equal. Basic assumptions (such as rational self-interest and perfect information) known not to be true. Effects on the world if theories are wrong: millions of people thrown into poverty, other millions unjustly enriched.

I'm shocked, shocked that anyone could treat the pronouncements of any economist (or set of economists, even if their pronouncements are diametrically opposed) with anything but perfect reverence.

Wow, there sure are a lot of early risers around. Let me clarify three things:
1. I was only claiming that economists mostly agree that the effect of minimum wage on employment is non-positive. This is consistent with a small effect, and with a belief that a minimum wage is a good idea.
2. http://www.nber.org/papers/w12663 is a fine review of the data, which supports my claim.
3. I have a masters in physics and have published two physics articles in the last few years.

Effects on the world if fancy theories are wrong: minimal.

Come on, if people listened to bad physicists like they listened to bad economists we'd have all sorts of problems.

Many people wouldn't even survive "bullets fly backwards day"

Kevin Drum: However, as near as I can tell nobody has presented any evidence for a seriously negative effect from a modest minimum wage increase. The worst anyone has done is argue for very modest unemployment effects, and even those are mostly among teenagers.

Which teen-agers ar harmed? Mostly underclass teen-agers. Minimum wage keeps these kids out of the workforce, when a regular job would be terrific for their development.

BTW most minimum wage earners are 2nd or 3rd earners in families that are not poor. What good does the minimum wage do? Has anyone seen studies showing that raising the minimum wage does good.

Will any economist listening speak up and declare themselves as claiming that our best estimate of the total effect of a minimum wage is to raise employment?

Will any economist listening speak up and declare themselves as claiming that our best estimate of the total effect of a minimum wage is to raise employment?

Is that the intended effect of an increased minimum wage?

I don't really think that the minimum wage increase is all that necessary, but then again, I also think we should go back to the tax brackets of 1945-50. But whatever, economic discussions outside of keeping a balanced budget, like religion, are wastes of time and energy.

First assume a market operates in a vaccuum and add only the variables we want to study ... then extrapolate that to real world policies and wonder why things aren't working as intended.

"Although I agree with trublu on the political side of the issue, I belive Kevin is wrong in his claim that the employment effects are unclear. This paper does a pretty good job in surveying the evidence.

Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research
by David Neumark, William Wascher "

Well, Bill Bernanke doesn't think the debate is settled, and neither does Robert Solow.

http://www.epi.org/content.cfm/bp178

'Even Benjamin Bernanke... has noted that “economists disagree about …whether increases in the minimum wage reduce employment of low-wage workers”

Further, Neumark and Wascher are on the other side of the academic debate from Card, and have been for a decade. There's a critique of the Meumark's meta-analysis here:

http://www.epi.org/content.cfm/bp178

'Since their 2000 report, Neumark and Wascher have written minimum wage literature reviews to argue that the minimum wage has adverse employment effects (Neumark 2006; Neumark and Wascher 2006). In a forthcoming paper, they rehash their disputes with Card and Krueger and highlight 19 studies they deem “more reliable tests of employment effects”—the majority of which agree with Neumark and Washer’s own conclusions (the primary exception being one of the Card and Krueger studies). Ten of the studies are analyses of other countries, including Indonesia, Columbia, and Mexico. Of the eight U.S. studies they cite as agreeing with Neumark and Wascher’s conclusions, Neumark is an author of six of them. An objective criterion for selecting the 19 studies is not readily evident, although they are somewhat dismissive of the natural experiment approach (see discussion of Card and Krueger on p. 4).'

'With 22 states now having higher-than-federal minimum wages, if such wage levels did lead to job loss or other adverse economic effects, then there has been ample opportunity to observe them. In particular, if the elasticities being used in the Employment Policies Institute studies were true, we would have seen hundreds of thousands of jobs lost in recent years as state minimum wages have increased. Simply put, there is no evidence that the job losses predicted by these studies have ever materialized. If anything, over the past decade, state minimum wage increases have boosted the income of low-wage workers without causing negative economic effects.'

Urinated, the quotes you give are people who say it is not clear there is much of a negative effect on employment; they are not people saying the effect is positive.

Will any economist listening speak up and declare themselves as claiming that our best estimate of the total effect of a minimum wage is to raise employment?

Globally or nationally?

I'm not an economist but I'm pretty sure 99.9% of the money going to minimum wage earners goes directly back into the US economy. Raising the income level of upper management by the same total amount will result in significant direct international investment. That's the LouDobsian argument anyway.

It's somewhat silly to compare physics and economics. Physics is a science and economics isn't. It really is as simple as that.

It really is very simple. Raise the price of something and the demand for it goes down. The reason that the changes in employment are modest is because the increases in the minimum are also always modest. However, I am quite willing to support an experimental increase in the minimum to $15/hr. Then we can end this debate.

Also, Physics is a real science.. Economics isn't a real science. It doesn't study a natural occurance. It doesn't del in absolutes or hard set laws. Economics doesn't really have laws like gravity, it has laws like psychology. It can predict, sometimes and if you have nearly omniscient levels of information, what people will do 3 times out of 5.

The minimum wage thing is a glaring example. Economics have said that raising the minimum wage will lead to an increase in unemployment. We've raised the minimum wage very often at both a federal and state level. Yet these mass firings and lay-offs never coincide with increases in the minimum wage. If it did lead to unemployment, it could be demonstrated because we've raised the minimum wage several times... and we still can't prove anything. A person who doesn't already want to believe that minimum wage increases= unemployment has no reason to believe it does.

Physicists only needed on chain reaction to prove they knew what they were talking about. Economists predict things that never happen, and seem to be making shit up as they go along.

It really is very simple. Raise the price of something and the demand for it goes down.

Uh, Yancy, not necessarily. You might want to check out what economists mean by the elasticity of supply and the elasticity of demand.

re: $15.00/hour minimum wage, check out what economists mean by monotonicity.

Economics is a competition for finite resources, so it creates political factions based on how those resources will be distributed. Physics has no such problem.

If these economists were to jump up and down just as much to complain that the Stolper-Samuelson theory doesn't get adequate coverage in the press then I might be more prepared to listen.

Of course, to whining right-wingers who always see themselves as victims, any analysis that doesn't proclaim every single bit of scripted conservative dogma as the absolute truth is "biased".

So we get to do this one again. First, I would recommend everyone go to Dean Baker's site for further illumination.

And try this link:

http://en.wikipedia.org/wiki/Minimum_wage

It is a good summary, including Card and Krueger.

The last time this topic surfaced I went digging throught the literature and discovered that the original national minimum wage was a quarter in the '30s. It has been raised many times, forgive me for no link. Many state and local governments have minimum wages that exceed the federal level.

Minimum wages have literally been raised thousands of time in this country, affecting hundreds of millions of people. Theory says they should have had a negative effect on employment, but from what I have read the negative effects are, at best, extremely small, and often non-existent.

Given the very large number of data points over a very long duration one would think those opposed to minimum wage increases would have a slam dunk of an argument. They do not, not even close. From what I have read the employment situation +/- is all but a push.

And asking for someone to produce an opinion that it raises employment is just silly.

The measure of the value in increasing the minimum wage, like any economic policy, must be taken including the full range of results. People with more money in their pocket feel better and live better. They spend it and boost the economy. Sometimes that actually leads to more jobs. How's that for an assertion?

So, show me a measureable drop in GDP that can be attributed to a raise in the minimum wage and I might be more sympathetic to these arguments.

Anyone here read Jared Diamond's excellent 1987 Discover article, "Soft Sciences Are Often Harder Than Hard Sciences"? Seems pretty relevant to a comparison of how physics and economics are regarded.

Maybe it's because phsycisists don't have political ideologies that require them to argue that string theory is a fraud(or vice versa), whereas economists do and will say what they wish regardless of the actual evidence.

(1) As to the claim "Raise the price of something and the demand for it goes down," that is generally but not universally true. Sometimes people use price as a signal of quality. Sometimes goods are valued for the fact that others can't afford them. So it is an empirical question.

(2) I've never met anyone who favored the minimum wage because it *increases* employment. We favor it because it increases the returns to employment for the relatively poor. So if it doesn't *decrease* employment, or if the employment effect is trivial, it is a good idea.

(3) There is genuine disagreement among economists. From Wikipedia: "A 2003 survey by Dan Fuller and Doris Geide-Stevenson reports that 46% of academic economists in the US fully agreed with the statement, 'a minimum wage increases unemployment among young and unskilled workers', 28% partly agreed, and 27% disagreed."

(4) I am amazed at the animosity directed at economics from people who know only the slightest bit of it. It is easy to criticize a caricature of economics rather than economics.

Econophysics, physicists address economics,

http://www.physorg.com/news84123814.html

Jose Padilla,

The demand is not perfectly inelastic, which is what would be required for the demand to remain unchanged by price increases for a commodity. It is perfectly reasonable that elasticities are different for different commodities, but true inelasticity does not exist-you can't pay for something if you have nothing to pay with. Want can be inelastic, but one must have the means to have demand. For any large market, there will be consumers on the margin who cannot afford the increase, or for whom a substitute becomes economical, and their demand for the original commodity falls to zero.

As I wrote before, the past measured employment effects are drowned out by all the other factors involved because a small percentage of the employed population earns the minimum wage, many of whom are teenagers who may simply drop out of the work force altogether.

I realize it is uncomfortable to have to acknowledge that some are unemployed because of minimum wages, but it is far better to simply acknowledge this and start making argument for why minimum wage increases are still desirable despite this uncomfortable truth.

What's worse, economics deals with questions that often have important non-economic dimensions, which means that even when economists do agree on a "correct" answer, people may legitimately disagree with them for reasons of social justice, practicality, personal preference, or a hundred other things.

This is, at best, poorly phrased. Like any science, economics properly deals with questions of fact, on which disagreement on the basis of of personal preference (including "social justice" and likely most of the rest of the "hundred other things") is fallacious, and disagreement on the basis of practicality is nonsense.

Which policy choice is "correct", except in the context of given preferences, is not the province of either economics nor any other empirical science. The assumption that certain economic ideas (e.g., particular operationalizations of "efficiency") are policy ideals is outside the scope of economics as a science.

As to the original quote, the biggest problem I see—bigger by far than the rather optimistic presentation of how physics is presented in the popular media—is the outright lie that there is some kind o well-established, still-existing, multi-century consensus that minimum wages cause unemployment in the real world among economists.

"Supply-Side economics is constantly attacked by reporters in the liberal media and gets no respect even though it was proved true." ~Al

The notion that the sun goes around the earth, proved by simple observation every day, is also constantly attacked by reporters in the liberal media. Get pissed about that one, Al.

Physicists don't get cushy jobs at think-tanks as a reward for pushing theories that support policies that make their bosses richer.

Economics is nothing more than a thinly veiled propaganda effort pretending to be a fake science.

"Will any economist listening speak up and declare themselves as claiming that our best estimate of the total effect of a minimum wage is to raise employment?"

Professor Hanson, here you are not distinguishing between a point-estimate and a confidence interval. If you ask an economist about their best estimate for a parameter that is allowed to vary continuously, they should also tell you that their best estimate is correct with probability 0. For this reason, confidence intervals are a more accurate measure.

If your probability distribution over various outcomes is continuous (this is of course an assumption- there's no reason why it has to be this way), then a confidence interval that includes 0 should have essentially the same confidence-level as an identical confidence interval that includes some very small number greater than 0. So if a “continuous economist” has a 95% confidence interval for the effects of an increase in the minimum wage on unemployment and that confidence interval includes 0, then the economist’s estimate is consistent with an interval of slightly greater confidence level that includes some number slightly greater than 0.

Of course, slightly greater than 0, slightly less than 0, and 0 are all approximately the same, which goes to show that the sign itself isn't that important when the magnitude is small. Going back to your question, I think economists would all agree that their personal 95% confidence level does not consist entirely of positive numbers. But I am sure that there are also economists who would claim that their personal 95% confidence interval does not consist entirely of negative numbers.

By the way, raising attorneys' base rates to around $250 per hour hasn't put any lawyers out of work as far as i can tell.

And since when have administration economists become so concerned about America's minimum wage earners? Just in the last four weeks, it appears.

It's even worse in medical science. Have you noticed that not one single article about Litvinenko has included any quotes about how Polonium 210 might actually be good for you?

Currently the macro-physics side of the field has a universe which began at a point, expanded to many times its visible size in a fraction of a second, slowed down immediately, is currently speeding back up again and is mostly invisble to everything but the theory. All because the only possible reason for the intergalactic redshifting of the light spectrum can only be due to recessional velocity, even though they are perfectly willing to accept that gravity causes the opposite effect by what amounts to a lensing effect. I would like to be able to ask them one question: If space is expanding, why doesn't C increase along with it?
Which is to say that if you want someone to do your taxes and not have the IRS calling, stick with an economist.

From my point of view the mimimum wage issue is not an economic argument but a moral one. Posted by: trublu on December 4, 2006 at 5:13 AM | PERMALINK

One cannot serve two masters.
Economic issues are issues of prosperity.
Moral issues are issues of Obeying God's Law.
Using lies, the Republican Party has managed to build a coalition, by conning one group into siding with the other.

Will an increase in the mimimum wage increase unemployment? Probably. But the small increases we're talking about would have little effect.

Probably? Fact is - we have no fucking idea - because the economy is a very complex system - there does not exist enough computing power on the face of this 21st Century planet to accurately model the behavior of this system. There are factors here that are not being considered, and there are factors here that probably no person alive has any clue about.

But such complex systems can be abstracted and simplified to some degree to get a pretty good idea where things will head.

A simple "supply/demand" model on labor as a commodity is an over-abstraction that distorts the situation beyond absurdity.

It is not a well-known fact, but it is a fact that when you increase the minimum wage, these minimum wage earners immediately sock these extra earnings away in secret tax-sheltered swiss-bank accounts.

This means that this is a net drain on the economy, that money just disappears *poof!* and businesses have less money to work with, so they hire less people. Right?

Societies are judged by how they treat their lowest classes.

Judged by whom? God? And what exactly is this "lowest class"? The people who make $5.15 an hour? Or the people who lose their jobs because their former co-workers had to get a raise? Or the people who couldn't get a job even if there were no minimum wage?

And who shall God judge? The whole society, including those who couldn't even get a job if there were no minimum wage? Or just the top 5%? Or just the people who vote for politicians who don't support minimum wage increases?

My point?: This statement about "societies are judged. . .." is just hyperbole, and does not contribute to an intelligent debate on this subject.

You can't live on $5.15 an hour.

Oh, you most certainly can.
What was the hourly wage of Native Americans before the white-man came?

The moral values of the right wing don't include compassion for the poor. What they're really concerned about is the profit margins of the wealthy.

As I said before; Moral Values is a red-herring. It's irrelevant to a discussion on economics. It's not a certainty that one must sacrifice prosperity for morality. But one must at the very least be willing to make that sacrifice.

We must look at this problem in a purely pragmatic, mechanical way: Labor can be treated as a commodity, but that is a dishonest oversimplification, because human beings are not machines.

While there are exceptions, most economists are about at the stage of development that Aristotle was when he asserted, based on what was thought at the time to be sound reasoning, that men have more teeth than women. He could have looked into a bunch of random mouths and counted, but this was thought to be beneath him. Besides, since at the time most adults were missing some teeth, the data would be noisy, and maybe he had more teeth than his wife.

When a physicist finds that observations don't match theory, and this is repeated enough times to be sure that the observations aren't in error, she knows that the theory must be modified or discarded. Economists, on the other hand, typically close their eyes or attack the human beings for behaving "irrationally" (to an economist, "rational" behavior is behavior that agrees with economic theory, in which people seek to maximize value as an economist computes it).

Which is to say that if you want someone to do your taxes and not have the IRS calling, stick with an economist.
Posted by: brodix on December 4, 2006 at 12:35 PM | PERMALINK

Screw that noise. Give me a tax accountant.
An economist can't help me with that.

When I need something to blow some hot air, I'll switch on my air compressor.

Joel, point-estimates and confidence intervals are both valid ways to describe beliefs. You say "I am sure that there are also economists who would claim that their personal 95% confidence interval does not consist entirely of negative numbers"; I'd like to hear from such a person.

Given the level of hostility displayed here to economics, both absolutely and relative to physics, it would be very surprising if reporters did not treat economics claims very skeptically, and physics claims less so.

Isn't it strange? The same people who laugh at gypsy fortune-tellers take economists seriously.

Economics is now presented as though it were a hard science, like physics. Since it really does not account for human factors, except by means of incredible gyrations, economics has become an exchange of "he said-she said" to the general public.

And the economists that appear on TV simply seem to be finding excuses for why the learned predictions of yesterday never actually pan out.

otto wrote: "The other is the widespread opinion of professional economists. Of the latter group, I've read surveys which say that around 90% or more believe that increases in the minimum wage cause unemployment."

It's closer to 60% in recent surveys, if I recall correctly. It's been declining for several years now. Moreover, the question on the survey I saw was so vaguely worded that it was impossible to draw any significant conclusions.

I'd say there is a massive difference in the meaning to policy analysis of the questions:

Do minimum wages in general decrease employment by any amount, no matter how small?

and:

Do minimum wages as commonly implemented in developed nations and as proposed by the incoming US Democratic congress cause population-welfare significant employment decreases relative to the increased income they provide to low wage workers?

I suspect most economists would answer yes to the first question, and no to the second.

I beleive that reporters lazily tend to ask the first question when they mean the second, and reasonable economists (eg not right wing pundits) tend to answer the second question out of frustration of constantly being asked the wrong question.

I don't know which side of ignorance is more represented here -- ignorance about science or ignorance about economics. Let's consider one little bit about science to start with. Some physical constants have been measured to a precision of many decimal points. It is of interest whether the charge on the proton is exactly equal to the charge on the electron, and whether the speed of light varies, and so on, and ingenious researchers figured out ways to make their measurements more and more precise. But in everyday laboratory research, the results are much less precise for lots of reasons -- for one thing, you are just starting on a line of inquiry; for another, it may not be important to know some value to better than a factor of two, or perhaps ten percent. For another, your experimental capabilities may only be good to ten percent, or even two-hundred percent.

In everyday biochemistry, there are some measurements that can be very precise (weighing a sample, measuring the thickness of a microscopic section, finding the wavelength of maximum absorption, etc) and other measurements that are not so precise. For example, the binding coefficient of a hormone for its cell-surface receptor is determined using experimental variables that change over several orders of magnitude, and it is not uncommon for different labs to publish measurements that vary by a factor of two or more, and not unusual to find factors of five or so. That doesn't make these findings any less scientific, nor their practitioners less the scientist; it merely indicates that the practice of science involves experimental limitations just as it may involve theoretical limitations at any one time.

By the way, Newton spent a great deal of time analyzing and then predicting the movements of celestial bodies, thereby creating a framework by which later people could calculate and predict the observed movements of stars and planets through the sky. There is no evidence that Newton worked experimentally by changing the orbit of the moon, yet some of the postings here would, in effect, downgrade Newton's contribution as "unscientific" on this basis.

And finally, economics. Most of the limitations of economics discussed in various postings are or were suffered by astronomy and biochemistry to some extent at some time. There are practical limitations on doing experiments in the real world, yet they are done. The interest rate is varied, government spending is increased, etc, and data are accumulated. Yes, it is difficult to control variables quite so well as I can on the lab bench, but governments intervene and data are collected. One observation is that post-Keynes, the kind of crippling depression that paralyzed the U.S. and led to another world war in Europe has been avoided. The comparative affluence and stability of post-WWII economies correlates with various measures, and in particular with measures and techniques specified by Keynes. What seems to drive critics nuts is the inability of current techniques to promise steady growth without difficulty for ever and ever. Biochemistry can't help all of you lose weight without hunger or other side effects either, and it is still a science.

And finally, as several posters have mentioned, economics works in areas that involve moral questions, such as whether it is better to raise the wages of ten or twenty percent of the population while risking the loss of jobs by half a percent. This is a value judgement; the value of having a science of economics is that it can provide some guidance in terms of the parameters: We can be fairly certain that the proposed increase in the minimum wage will not result in immediate mass unemployment (whereas we could be fairly sure that some techniques government used to use might very well do so, as our experience of the 1930s demonstrated). One last point: right wing pundits such as Larry Elder like to say that something (like the minimum wage increase) is "just econ 101." As another pundit pointed out recently, econ 101 is generally a very oversimplified treatment in which wages are treated like other variables such as the cost of wheat vs barley, but econ 102 treats such questions at a more sophisticated level. Too bad Elder didn't take a few more classes.

"I realize it is uncomfortable to have to acknowledge that some are unemployed because of minimum wages, but it is far better to simply acknowledge this and start making argument for why minimum wage increases are still desirable despite this uncomfortable truth.

Posted by: Yancey Ward on December 4, 2006 at 11:42 AM"

Gee, we accept that 'free trade' causes job loss to individuals and we tell those individuals to get job training on their own nickle. We accept that outsourcing causes job loss, but we chalk it up to creative distruction and the invisible hand of the market. We accept that early retirement, union busting and benefit rollbacks are all part of America's need to stay competitive. We swallow huge dispalcements in the social fabric that benefit corporations but we quibble about a raise in wages that helps 99 people because one might lose a job.

Amazing how all of the same folks that told us to buck up and get some training when we lost good paying jobs are the same ones concerned about that one guy that becomes unemployed because of an increase in the minimum wage. Why is it I don't believe them?

kevin,

It's and entirely results based prejudice, and well deserved. Physicists make billion dollar requests and several years later produce CERN or some other such supercolider and then do lots of experiments and publish the results. Economists make billion dollar requests to help places like Russia and then several years later we see massive corruption which leads to the rise of Putin. Or in Boivia and Argentina we see people rioting for water or rioting for decent salaries.

If a physicist got millions or billions of dollars for elaborate experiments that then exploded into colossal messes, and the people responsible continued to have successful careers, physics would be looked at as the joke science that economics is.

Case in point Paul Krugman-advocating sensible policy for 6 years on many things an he is REVILED by fellow professional were as Paul Wolfowitz one of the architects of the current foreign policy disaster is now running the world bank. It's like asking why Noam Chomsky is more respected than Rush Limbaugh.

ex-liberal wrote: "A few years ago, a single study in the fast food industry gave an indication that minimum wage increase doesn't increase unemployment."

This is false. There have been numerous studies.

"According to critics, this was not a strong study, technically."

This is also false. You're talking about the Card-Krueger study of data from New Jersey after that state raised its minimum wage. Their analysis showed no effect on jobs from the raising of the minimum wage. The study was challenged by Neumark and Wascher, whose initial follow-up study reached the opposite conclusion. Card and Krueger were also criticized for their methodology in obtaining their data.

Case closed, right? Not quite. The Neumark-Wascher study was flawed because it depended on information from the fast food industry, an industry that was hardly unbiased in this matter. Card and Krueger also defended their methodologies, but ultimately decided that their time would be better spent in performing a study that answered their critics' objections.

So several years later, Card and Krueger published an update. This time, they had federal minimum wage data to include in their study since the federal minimum wage had been increased, an increase that affected Pennsylvania but not New Jersey. Using standard federal data this time, they reached the same conclusion, that there was no evidence that raising the minimum wage causes unemployment to rise in the sector most likely to be affected by that wage hike.

Card and Krueiger also reviewed the initial Neumark-Wascher study and found that the differences between that study and both the Card-Krueger studies came from a "small set of restaurants owned by a single franchisee." Removing that skewed data from Neumark-Wascher, they found agreement with their own studies.

Case closed, right? Not yet. Neumark and Wascher did a new study, this time using data not acquired directly from the industry, and this study found that there had been no statistical effect on employment as a result of the minimum wage hike.

Case closed.

patience: If a physicist got millions or billions of dollars for elaborate experiments that then exploded into colossal messes, and the people responsible continued to have successful careers, physics would be looked at as the joke science that economics is.

Being an economist means never having to say you were wrong - it was exogenous events.

Nat wrote: Minimum wages have literally been raised thousands of time in this country, affecting hundreds of millions of people. Theory says they should have had a negative effect on employment, but from what I have read the negative effects are, at best, extremely small, and often non-existent.

The black teen-age unemployment rate as of July was 31.6%. Minimum wage rates prevent significant numbers of poor blacks from getting a toe hold in the workforce.

When I was a liberal, we opposed measures that would hurt poor black people.

"Case closed."

Sorry, I should have been more precise. This is "case closed" only with respect to the criticism of the original Card-Krueger study, not "case closed" with respect to the entire debate about minimum wages.

ex-liberal wrote: "Minimum wage rates prevent significant numbers of poor blacks from getting a toe hold in the workforce."

Really? Then you should have no problem providing the evidence to support this assertion, right?

"When I was a liberal, we opposed measures that would hurt poor black people."

Well, personally I oppose bullshit arguments that are a) unsupported and b) classic logical fallacies. Have those changed since you were a "liberal," too?

ex-liberal on December 4, 2006 at 2:11 PM:

The black teen-age unemployment rate as of July was 31.6%.

Citeless, but I'll buy that. However, you haven't made any correlation between that stat and your next statement, ex-liberal:

Minimum wage rates prevent significant numbers of poor blacks from getting a toe hold in the workforce.

Cite? No?

Here's some for you then:

There is no evidence of job loss from the last minimum wage increase.

- A 1998 EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. In fact, following the most recent increase in the minimum wage in 1996-97, the low-wage labor market performed better than it had in decades (e.g., lower unemployment rates, increased average hourly wages, increased family income, decreased poverty rates).

- Studies of the 1990-91 federal minimum wage increase, as well as studies by David Card and Alan Krueger of several state minimum wage increases, also found no measurable negative impact on employment.

- New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.

- A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses.

Much more at the link...Including that "$5.15 today is the equivalent of only $3.95 in 1995 — lower than the $4.25 minimum wage level before the 1996-97 increase."

When I was a liberal, we opposed measures that would hurt poor black people.

Yeah, you probably practiced more intellectual honesty back then as well.

Apologies for the off-topic post, but ex-lib's rhetoric isn't supported by evidence.

Paul B,

The way to close the debate is to simply and immediately triple the minimum wage on a trial basis. Then we can observe effects that can be differentiated from the normal cycles of the labor market.

Yancey Ward wrote: "The way to close the debate is to simply and immediately triple the minimum wage on a trial basis. Then we can observe effects that can be differentiated from the normal cycles of the labor market."

Since that will never happen, the debate will likely continue indefinitely. That raising the minimum wage has some effect on unemployment is undeniable. How much of an effect, and what other ripple effects there might be, is very much open to debate.

We may soon have more data, since Congressional Democrats have said that this is one of their priorities and it is very popular with the American people. It will be interesting to see if Bush vetoes it.

Considering how many states have higher minimum wages than the federal wage, this debate should be more advanced than it is. One has to wonder why there have not been more studies.

Yancey Ward: The way to close the debate is to simply and immediately triple the minimum wage on a trial basis.

Similarly, there are many useful pharmaceuticals that, if administered in 3x the recommended dose, can kill the patient. Heck, you can kill people by overdosing them with water. Does that mean I should stop drinking it, or would it be safer to assume the effect is non-linear?

grape_crush wrote: "Citeless, but I'll buy that."

The statistic is correct, although it's lower now. For the full breakdown, including more recent numbers, see this table.

Given the level of hostility displayed here to economics, both absolutely and relative to physics, it would be very surprising if reporters did not treat economics claims very skeptically, and physics claims less so.

Robin, Try some economics with less of the human element involved. Say oil economics in the face of severe and increasing resource constraints. No one is talking about that, except Kevin and a few others.

I started out at Stanford as an econ major, decided it was all bullshit and went to physics instead. Why? Economics actually probably does have some place in academia. But the first problem is though that there are so many confounding variables making its questionable economic assumptions and models very hard to verify (and yet they are still held in high esteem!)

This wouldn't be bad necessarily in itself; lots of sciences have to deal with complex cause-effect relationships. The bigger problem is that economic theories have immediate and direct political implications, and as a result you get hordes of people and funds working only to justify an already held ideology instead of arguing purely in the pursuit of scientific knowledge and willing to admit error. Hence you get people dishonestly suggesting stuff like "triple the minimum wage" to perform a verifiable experiment, even though that's analogous in the physics world to measuring a macroscopic sphere's velocity and position at the same time and declaring quantum mechanics invalid.

By the way, it's true that yes, economics has to deal with more variables. That doesn't mean it deserves more respect; it only deserves respect if it handles them realistically and scientifically. Just because coming up with a very finessed model takes lots of time and effort doesn't mean that the person who made it is at all a scientist. Next you'll have people who make intricate origami as a hobby demanding respect for their science in the academy. (Though incidentally I did read an interesting paper on group theory in origami a long while back. But that's slightly different from what I mean.)

The way to close the debate is to simply and immediately triple the minimum wage on a trial basis. Then we can observe effects that can be differentiated from the normal cycles of the labor market."

We do not need to do this, because Europe has kindly done it for us. The European minumum wage was about $9.00 an hour during the Paris Riots, when unemployment for young muslim men was as high as 40%. The Case Against the Minimum Wage.

The cutting edge "unpublished" research that is driving the minimum wage movement shows that small increases in the minumum wage only result in small increases in unemployment. Increasing the EITC is a far better solution than increasing the minimum wage because it won't have any significant increase on unemployment *or* drive up the cost of goods.

Justin wrote: "We do not need to do this, because Europe has kindly done it for us."

No. It's an apples-to-oranges comparison that tells us very little about what would happen if we were to raise the minimum wage here.

No. It's an apples-to-oranges comparison that tells us very little about what would happen if we were to raise the minimum wage here.

Pray tell, why?

Simplistic discussions of the effect of the minimum wage remind me of Martin Gardener’s devastating critique of the “Laffer Curve”. Gardener’s NeoLaffer curve, like the original, was well behaved at the extremes, but a hopelessly tangled muddle in between. Martin’s point was that just because a curve is well behaved at the extremes does not imply it is smooth and well behaved in between, or that such a curve provides any meaningful input in forming public policy. (Wikipedia has a short discussion of the NeoLaffer curve under the Laffer curve entry)

Fair enough. So if you were in France you'd be on the side of lowering the minimum wage from about $9.00 (US) to about $7.50 or so?

grape_crush and PaulB want cites. Here's an article 50 Years of Research on the Minimum Wage
which cites numerous studies for its conclusions. Each conclusion is supported by up to half a dozen studies. Some of its conclusions are

-- The minimum wage reduces employment.

-- The minimum wage reduces employment more among teenagers than adults.

-- The minimum wage reduces employment most among black teenage males.

-- The minimum wage helped South African whites at the expense of blacks.

-- The minimum wage hurts blacks generally.

-- The minimum wage hurts the unskilled.

-- The minimum wage hurts low wage workers.

-- The minimum wage hurts low wage workers particularly during cyclical downturns.

-- The minimum wage increases job turnover.

-- The minimum wage reduces average earnings of young workers.

-- The minimum wage drives workers into uncovered jobs, thus lowering wages in those sectors.

-- The minimum wage reduces employment in low-wage industries, such as retailing.

-- The minimum wage hurts small businesses generally.

-- The minimum wage causes employers to cut back on training.

-- The minimum wage has long-term effects on skills and lifetime earnings.

-- The minimum wage leads employers to cut back on fringe benefits.

-- The minimum wage encourages employers to install labor-saving devices.

-- The minimum wage hurts low-wage regions, such as the South and rural areas.

-- The minimum wage increases the number of people on welfare.

-- The minimum wage hurts the poor generally.

-- The minimum wage does little to reduce poverty.

-- The minimum wage helps upper income families.

-- The minimum wage helps unions.

-- The minimum wage lowers the capital stock.

-- The minimum wage increases inflationary pressure.

-- The minimum wage increases teenage crime rates.

-- The minimum wage encourages employers to hire illegal aliens.

-- Few workers are permanently stuck at the minimum wage.

-- The minimum wage has had a massive impact on unemployment in Puerto Rico.

-- The minimum wage has reduced employment in foreign countries.

P.S. The fact that we're all familiar with that fast food study, but not the dozens of studies cited here shows the bias of the media coverage.

Let me put it this way: it does not surprise you that a nation with a $9.00 an hour minimum wage (France, in US dollars) has unemployment rate of 40% for young members of minority groups. Young members of minority groups in the United States already have higher unemployment rates than average in the US.

But you think that raising the minimum wage to an intermediate point will help them?

Zephyrus: Economics actually probably does have some place in academia. But the first problem is though that there are so many confounding variables making its questionable economic assumptions and models very hard to verify (and yet they are still held in high esteem!)

Worst of all, anything that casts doubt on the reigning ideology is put into the closet along with the other skeletons.

Sure, people will say that the more sophisticated literature discusses these issues, but undergrads are not told of such difficulties. And if you want to make it through grad school, you'll keep your mouth shut.

Best book I ever read on this is Debunking Economics. The author is an economics professor who pulls the skeletons out of the closet, discussing the numerous problems and contradictions of standard economic models. General equilibrium. Oops, did we forget to mention that over 40 years ago it was shown mathematically that the standard equilibrium models are inherently unstable? Pay no attention to that man behind the curtain!

I could create a modern rephrase of Godwin's law:

Justin's Law: As the length of an economics thread on a liberal blog increases, the probability of someone mentioning 'Debunking Economics' approaches 1

There are some valid criticisms of some neoclassical economics in the book. There are some criticisms that are towards extremely abstruse issues that are not very relevent. And there are some things that are simply wrong. The amazon reviewers are a good starting resource.

But economics, being more closely tied to objective measurement, has stayed much closer to the truth than other social sciences like anthropology and psychology. It has earned its position as emporer of social sciences, regardless of whether it deserves to be elevated to the hard science level.

Justin wrote: "Pray tell, why?"

Because there are so many differences between the countries that straightforward salary comparisons are virtually impossible, of course. This isn't exactly rocket science.

"Let me put it this way: it does not surprise you that a nation with a $9.00 an hour minimum wage (France, in US dollars) has unemployment rate of 40% for young members of minority groups."

When the U.S. has an unemployment for that same age range of the high 20s to low 30s? Not at all, particularly considering that the U.S. and France do not measure unemployment the same way (U.S. figures are always lower), which means that the unemployment rates are likely quite comparable.

"But you think that raising the minimum wage to an intermediate point will help them?"

Sigh.... The evidence to date is decidedly mixed, but there is very real reason to believe that a modest increase in the minimum wage will have only a small impact on unemployment, an impact that is likely outweighed by other factors in the economy. Given the number of people that will be helped by the raising of the minimum wage, I'm fine with that small impact.

ex-liberal wrote: "grape_crush and PaulB want cites. Here's an article 50 Years of Research on the Minimum Wage which cites numerous studies for its conclusions. Each conclusion is supported by up to half a dozen studies."

Oh, good grief.... That's what you're going by? A Clinton attack? And one that doesn't even attempt to determine just why differing studies get different results, not to mention focusing heavily on older studies that have been replaced by newer models? Give me a break....

The report gets it wrong from the very beginning, when it tries to pretend that those who support minimum wage hikes claim that there is absolutely no impact on jobs, something that is rarely claimed. What is claimed instead is that the impact appears to be minimal, that it is overshadowed by other factors, and that the benefits outweigh the harms, particularly when the raise is nominal, as has been true every time.

The report also gets it wrong when it claims that there are only three studies that show minimal impacts on minimum wage increases. And the report is old enough that it omits over 10 years of additional research, including the research that vindicated Card and Krueger.

What is hilarious about these comments is that there is tremendous bashing of "economists" (all economists?) for being supposedly ideologically driven -- even though data suggests they are not -- by people who are...who are the angry commenters here? Scientists? Non-ideologues? Please.

When the U.S. has an unemployment for that same age range of the high 20s to low 30s? Not at all, particularly considering that the U.S. and France do not measure unemployment the same way (U.S. figures are always lower), which means that the unemployment rates are likely quite comparable.

On no! Not the Hidden Unemployment defense again!. There are four major organizations that track unemployment: the BLS, the OECD, Eurostat, and the ILO. They have all harmonized their methods. At any level of unemployment, be it the standard of U-3 or the more comprehensive U-6, Europe has substantially higher unemployment than the United States.

Youth unemployment in the United States is about 10%, much lower than the 20% or so you get in Europe. Black youth unemployment is slightly higher - historically it was slightly lower than whites, but that was before we had a minimum wage.

ex-liberal wrote: "The fact that we're all familiar with that fast food study,"

Well, obviously not all of us, since you got the basic facts wrong.

"but not the dozens of studies cited here shows the bias of the media coverage"

Not at all. There was a sea change that took place in the 1990s. Prior to that, the conventional wisdom was that "obviously" raising the minimum wage cost jobs. The studies in the 1990s, however, cast real doubt on that, which has caused quite a few economists to re-evaluate and to question the old data and the old conventional wisdom, including the 650 economists (including 5 Nobel Prize winners and 6 past presidents of the American Economic Association) who have signed a petition requesting that the minimum wage be increased.

So of course more attention has been paid to more recent data. Why would anyone be surprised by that?

Justin wrote: "Youth unemployment in the United States is about 10%"

We're talking about minority youth, remember?

"Black youth unemployment is slightly higher"

No, it's a hell of a lot more than "slightly" higher. Did you not see ex-liberal's cite above of 31.6%, a cite I confirmed?

PaulB, you challenged me to find a cite when I asserted that minimum wage laws hurt the poor and minorities, particularly teen-agers. I have provided numerous cites.

Rather than check out the dozens of studies I cited, you want to ignore them by claiming that they're too old. Well, the Card/Krueger study is over 10 years old, too. Anyhow, do you really want to assert that the Law of Supply and Demand worked until 1994, but man's economic behavior has radically changed since then? Or, that economists only figured out how to evaluate economic models in 1994? I don't think so.

The bottom line is that there is a great deal of evidence that minimum wage laws hurt the poor and minorities -- the very groups liberals are supposed to be helping.

Justin, your site times out, so I cannot see just what your evidence is about the leveling of the various measures of unemployment. My point about the comparison of apples to oranges between the two economies still stands, though.

By the way, a quick Google search shows me that France does not have the highest EU minimum wage, although it does appear, at the moment, to have one of the weaker economic performances. You wouldn't be cherry-picking your data, now would you? Why not compare, say, Ireland, to the U.S. and see what you get?

PaulB,

You are correct about black youth unemployment - I should have looked it up. But it only supports the case against the minimum wage:

Bureau of Labor Statistics unemployment data confirms the economic prediction about minimum wage effects. Currently, the teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.

By the way, a quick Google search shows me that France does not have the highest EU minimum wage, although it does appear, at the moment, to have one of the weaker economic performances. You wouldn't be cherry-picking your data, now would you? Why not compare, say, Ireland, to the U.S. and see what you get?

Whoa! At least France is representative of the EU as a whole. Ireland is a statistical outlier that has adopted free markets and reaped the rewards economically (although it still has a rather high minimum wage, at about 90% of that of France)

ex-liberal wrote: "PaulB, you challenged me to find a cite when I asserted that minimum wage laws hurt the poor and minorities, particularly teen-agers. I have provided numerous cites."

Not really. You posted a single cite to an obviously biased source. A source, moreover, that got a couple of key facts wrong and omits the more recent data.

"Rather than check out the dozens of studies I cited, you want to ignore them by claiming that they're too old."

Given the limited amount of time that I have and the lack of ready online availability of these studies, I would say that mine is a reasonable point of view. Obviously, you are free to disagree.

"Well, the Card/Krueger study is over 10 years old, too."

The original? Yup. The follow-ups that have been done since then? Nope. Again, you're showing your lack of knowledge about the current state of research on this issue and on Card-Krueger, in particular.

"Anyhow, do you really want to assert that the Law of Supply and Demand worked until 1994, but man's economic behavior has radically changed since then?"

Sigh.... Nice little strawman argument. No, I want to assert that the state of the art in economic research, the development of economic models, and the understanding of human economic behavior, has advanced since the 1970s, when many of those studies were done. As for "The Law of Supply and Demand," it is never that simple when it comes to economic matters.

"The bottom line is that there is a great deal of evidence that minimum wage laws hurt the poor and minorities"

And a great deal of evidence that minimum wage laws hurt no one, something that a growing number of economists are starting to accept.

"-- the very groups liberals are supposed to be helping."

Nice logical fallacy.

Justin wrote: "Whoa! At least France is representative of the EU as a whole."

Is it? Why so? Why should any country in the EU be considered any more "representative" than any other?

"Ireland is a statistical outlier that has adopted free markets and reaped the rewards economically (although it still has a rather high minimum wage, at about 90% of that of France)"

So? This just proves both of my points -- that economic comparisons between countries are usually apples to oranges comparisons and that other factors more heavily affect unemployment than does the minimum wage.

Justin wrote: "But it only supports the case against the minimum wage:"

No. The only thing it supports is that black youths have trouble finding a job. This may or may not have anything to do with the minimum wage.

Thre are something like 18 states with minimum wages higher than the federal minimum wage. If the assertions about unemployment vs. minimum wage are correct, then every single one of these states should have higher unemployment figures than its neighbors. And every single one of these states should have seen its unemployment rise when their minimum wages rose. Show me that data and I'll be more inclined to accept the direct correlation.

Ireland is a statistical outlier that has adopted free markets... in the midst of a minimum wage that's 90% of France's? Isn't that a contradiction?

Or perhaps it comes down to economics is in fact a subject with lots of variables and where simple answers like "price floors bad" or "free trade good" just don't cut it?

The bottom line is that there is a great deal of evidence that conservatives will do anything to destroy lower income families, re-institute black slavery, and eat babies, the very groups conservatives are supposed to be helping. Because I say so, I don't need to provide good evidence.

I had written: "No, I want to assert that the state of the art in economic research, the development of economic models, and the understanding of human economic behavior, has advanced since the 1970s, when many of those studies were done."

To clarify, the sea change I talked about that took place in the 1990s was that some economists started to question the value of the time-series analysis of minimum wage data, a technique that had been used in much of the studies of the 1970s and 1980s. Instead, they began using new methodologies, methodologies which yielded different results. The debate over which methodologies yield more accurate results is not even close to being over, but the fact is that there has indeed been a change and there is very real reason to question any study that's more than, say, 15 years old.

One other point worth noting: if you triple the minimum wage, of course you're going to see an impact on the unemployment rate, along with a likely ripple effect of any number of unintended consequences. But nobody is talking about tripling it. The current minimum wage is at near-historic low levels, inflation-adjusted. We have survived all of the previous minimum wage hikes just fine; there is no reason to believe that we will have any significant trouble with this one.

Former Federal Reserve Vice Chairman Alan Blinder, in his economics textbook:

"Elementary economic reasoning...suggests that setting a minimum wage...above the free-market wage...must cause unemployment....Indeed, earlier editions of this book, for example, confidently told students that a higher minimum wage must lead to higher unemployment. But some surprising economic research published in the 1990s cast serious doubt on this conventional wisdom."

None of this is definitive, of course, and for every study I can find to support my point of view, ex-liberal can find one that will support his. But to pretend, as he does, that the science is complete and overwhelming on this, is simply false.

Thre are something like 18 states with minimum wages higher than the federal minimum wage. If the assertions about unemployment vs. minimum wage are correct, then every single one of these states should have higher unemployment figures than its neighbors. And every single one of these states should have seen its unemployment rise when their minimum wages rose. Show me that data and I'll be more inclined to accept the direct correlation.

PaulB, you sound sophisticated, so I imagine you're aware of the difficulties of making this deduction. One is that the minimum wage accounts for only a portion of the unemployment level. Many other factors are at work, some more significant than the minimum wage level.

Note also that the minimum wage should be compared to the state average wage to be meaningful.

Another difficulty is that the inference goes the other way, to a degree. That is, reverse the dependant and independant variable. States with high unemployment are less likely to raise their minimum wage, and vice versa. So, one might deduce that states with lower unemployment are apt to choose higher minimum wage levels, a conclusion that your figures support.

ex-liberal wrote: "PaulB, you sound sophisticated, so I imagine you're aware of the difficulties of making this deduction."

Yup, that's why I'm calling it out, because it's an effective way to highlight that your claims above are likely untrue -- that there are number of caveats and other factors that can and do come into play when considering this issue.

"One is that the minimum wage accounts for only a portion of the unemployment level."

But if this portion is significant, as many people claim and as you have been implicitly claiming above, then this should be visible in the data. If it's not visible in the data, then there's something wrong with your assumptions.

"Many other factors are at work, some more significant than the minimum wage level."

Bingo. That's precisely what I've been saying. Raise that minimum wage by a huge amount and, sure, you'll see a correlation. Raise it by a relatively nominal amount, as we're discussing in this case, and you'll likely see little effect. And that negative impact, in my opinion, is far outweighed by the benefit to all of those people currently making at or near the minimum wage. I'll accept a tradeoff of (pulling a figure out of thin air) a rise in unemployment of .1% if in return I get a significant increase in the minimum wage.

"Note also that the minimum wage should be compared to the state average wage to be meaningful."

And bingo again. This is another point that backs up my point of view, that raising the minimum wage could very well have no impact at all. Keep in mind that the current minimum wage is at historically low levels when adjusted for inflation.

"Another difficulty is that the inference goes the other way, to a degree. That is, reverse the dependant and independant variable. States with high unemployment are less likely to raise their minimum wage, and vice versa."

Perhaps, but I would say that you'd have to have a fairly significant difference before that factor comes into play. In any case, it should be easy to correct for.

"So, one might deduce that states with lower unemployment are apt to choose higher minimum wage levels, a conclusion that your figures support."

I don't have the state by state figures on this. That's why I was asking for them. I do have the figures on some states, including my home state of Washington. The figures here, as you might imagine, support my claims.

Let me publicly note that after 125 comments here, 40 comments at Becker-Posner, 27 at Angry Bear, and 33 at Overcoming Bias, no one has found a single economist who says that our best (point, long-term, all else equal) estimate of the effect of a higher minimum wage is to raise employment.

Robin Hanson wrote: "Let me publicly note that ... no one has found a single economist who says that our best ... estimate of the effect of a higher minimum wage is to raise employment. "

Let me publicly note that the point you are making is entirely irrelevant to the debate since nobody has claimed that it would raise employment.

ex-liberal on December 4, 2006 at 4:13 PM:

Here's an article 50 Years of Research on the Minimum Wage

Not 'article'...10-year-old Talking Points. It says so at the top. Right next to 'House Republican Members'. Just curious: Any Dems in that list of 6?

Just askin'.

which cites numerous studies for its conclusions.

Such as:

The minimum wage encourages employers to install labor-saving devices.

That's a devastating conclusion. Not that industries employing workers at much more than minimum wage ever install labor-saving devices...I love using my manual typewriter at my present well-paid job.

Justin on December 4, 2006 at 4:34 PM:

Justin's Law:

Grape's law: As the length of a thread on a political blog increases, the probability of a conservative goofball mentioning Bill Clinton approaches 1...Case in point: ex-lib's linky.

Justin again at 5:10 PM:

In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.

Oh, but it's never that simple, idn'it?

A significant portion of the post-1950 decline appears to have been a continuation of a downward trend whose origins can be dated to the early 1900s. In turn, the long-term downward trend in participation was the mirror image of a long-term upward trend in black school enrollment.

Each successive generation of southern black males was more likely to be in school between the ages of 16 and 19 than out of school and in the labor force. Further, the labor force participation rate of black male teens simultaneously enrolled in school declined over time, especially before 1950.

Because the factors that were responsible for the long-run increases in black schooling had not yet run their course by mid- century, a post-1950s decline in labor force participation of black male teens in the South would have happened anyway, even if mechanization in cotton agriculture had not occurred in the 1950s and had the level and coverage of the minimum wage not been increased in the 1960s.

...half remembering something about how numbers don't lie, but...

Thanks PaulB and others for making this thread highly substantive and informative. If members of the media slogged through this, they would write better articles on the minimum wage.

As for the discipline of economics, it is so vast and varied that the critical comments here strike me as the equivalent of making strong generalizations about, oh I don't know, those who comment on blogs.

For a detailed look at this from an unabashedly pro-minimum wage site, check out the Economic Policy Institute. A search for "minimum wage" on that site yields this result, including this article, which gives a pretty good overview of the current state of the research and this guide, which is a fairly comprehensive look at the issue. As always, consider the bias and take the figures with a grain of salt.

That is not balanced coverage. ex-liberal at 1:22 AM

If one were to think about the results a moment, raising the minimum wage puts more money in the hands of such earners. These people are not wealthy, extra money doesn't stay in their pocket as it does with the rich, it is spent immediately on necessities of life, which is the background of the multiplier effect . It is too bad, and to our economic detriment, that so much of the American economy now depends on imports.

Minimum wage keeps these kids out of the workforce, when a regular job would be terrific for their development.... ex-liberal at 10:06 AM |

It really is very simple. Raise the price of something and the demand for it goes down. ... Yancey Ward at 10:45 AM

Yancey Ward wrote: "It really is very simple. Raise the price of something and the demand for it goes down."

No, Yancey, it isn't even remotely that simple. It depends on any number of factors. In a plain economic model, devoid of any real-world context, where everyone has perfect knowledge, perfect judgement, perfect access to information, unlimited mobility, where the "something" isn't a mandatory requirement, and so on, you may well be right. But in the real world, economists have discovered that your little truism is simply not true in many cases. And the relationship between unemployment and the minimum wage is one of those cases.

Among other things, Yancey, as already noted above, raising the minimum wage puts money into the hands of those most likely to spend it right away. That spending increases the demand for some goods and services, including those provided by the very workers who are the beneficiaries of the increased minimum wage. And that's just one of the ripple effects that happens when you increase the minimum wage.

Is the increased money flow sufficient to offset the extra cost of those workers? Damned if I know. All economists can do is try to develop better and better models, adapting them as they get new data. Suffice to say that what's "simple" to you is only simple because you haven't really thought it through.

Antagonism toward economists?

Not really. It's just a stupid analogy.

String theory isn't the basis of policy decisions and most newspaper readers just consider it a curiosity. The place for debate on the subject is in a scientific journal.

Paul B writes "Let me publicly note that the point you are making is entirely irrelevant to the debate since nobody has claimed that it would raise employment."

These are comments on a post where in Kevin Drum took issue with my claim that "a minimum wage raises unemployment," because it "is simply not a settled question." In response I ask if anyone can find any economist thinks the opposite sign is our best estimate. I don't see how you can think that is not relevant.

Robin, here's what Kevin actually said:

"The overall effect of modest increases in the minimum wage is simply not a settled question among economists"

Personally, I don't understand your comment:

"I don't see how" "nobody" "think" "employment" "is" "opposite" "minimum wage" "entirely" "not relevant" "in response"

Physicists don't get cushy jobs at think-tanks as a reward for pushing theories that support policies that make their bosses richer.

Have you ever tried telling a liberal activist that depleted uranium is almost harmless?

You can think of that as an illustration that physicists are also disrepected when they're saying the "wrong" things.

Robin Hanson wrote: "These are comments on a post where in Kevin Drum took issue with my claim that 'a minimum wage raises unemployment,' because it 'is simply not a settled question.'"

That's correct. Your flat assertion, "economists say ... that a minimum wage raises unemployment," is false. Many economists disagree with the claim that minimum wage raises unemployment and the claim is contradicted by quite a few studies. In short, you said something stupid that you could not back up and you got called on it.

"In response I ask if anyone can find any economist thinks the opposite sign is our best estimate. I don't see how you can think that is not relevant."

Because it's not relevant. Nobody has claimed that it enhances employment. There are three choices: it can increase unemployment, it can reduce unemployment, it can have no significant effect on unemployment. That's why your little attempt at a "gotcha" wasn't relevant: you forgot that there were three choices, not two.

What has been claimed by many economists, and borne out by several studies, is that raising the minimum wage does not (necessarily) raise unemployment (all suitable qualifications apply, of course). There may actually be some benefit from raising the minimum wage in some circumstances, but if there is, it is likely overwhelmed by the other economic factors, some of which are discussed above. I believe that some of the studies do show some reduction in unemployment but, to the best of my knowledge, nobody has argued that this was a result of the minimum wage hike.

In short, Kevin's was right: you were simply wrong in your assertions, and reporters are absolutely correct to treat claims about the minimum wage with some skepticism. At this time, that particular topic really does require a balanced approach.

I agree with PaulB completely. Nonetheless, I just noticed that Duncan Black, aka Atrios, states today at http://atrios.blogspot.com/: "Look, unless you believe that the labor market is accurately characterized as perfectly competitive then not only is it the case that the minimum wage doesn't necessarily, reduce employment, it's actually quite possible that small increases in the minimum wage will increase it." Black has a Ph.D. in economics from Brown. That's only one, but hey, I wasn't even trying to find it.

"Cause droids don't pull your arms off if they lose"

Gee, I wonder if that study showing psychopaths voted for Bush was controversial.

Paul B, my claim was intended with the usual sort of qualifiers that economists use. That is, my estimate was a point estimate, all else equal, about the average effect to be expected. It is not a claim about exact result in every situation, or a "necessarily" claim. If a consensus estimate is any weighted average of individual estimates, and if no individual estimates has a positive sign, and many have a negative sign, the consensus must have a negative sign.

When I breath out I have a net positive effect on global carbon dioxide concentrations. I think you'll have a hard time finding any global climate scientist who thinks I have an effect of the opposite sign.

Robin Hanson wrote: "Paul B, my claim was intended with the usual sort of qualifiers that economists use."

So? It's still an incorrect claim. You implied certainty where there is none and claimed that reporters were treating the subject incorrectly when they manifestly are not.

"That is, my estimate was a point estimate, all else equal, about the average effect to be expected."

No, you made a flat claim about what economists say about a certain subject and you stated that reporters were behaving inappropriately in their treatment of the subject. That claim was incorrect, as we have shown above. Many economists claim that "the average effect to be expected" is, in fact, nothing. And reporters are, correctly, writing stories that point out that the science on this is not settled.

"It is not a claim about exact result in every situation, or a 'necessarily' claim."

Yes, actually, it is. I know what you're trying to say here, and you're wrong even on that score, a point I'll address below, but your own statement had no qualifiers. You stated that economists say ... that a minimum wage raises unemployment," period. They simply do not all say that. There is a growing body of economists, along with a growing body of evidence, that claim otherwise.

"If a consensus estimate is any weighted average of individual estimates, and if no individual estimates has a positive sign, and many have a negative sign, the consensus must have a negative sign."

No. You are once again incorrect. You're asserting that if a certain group of economists claim that there is no effect and another group of economists claim that there is a negative effect, then the "real" value must lie somewhere in between, i.e., negative. But this assumption is simply not true. It is wholly inappropriate to "average" the results like this.

If the first group of economists is correct, that raising the minimum wage has no effect on unemployment, then the second group is flatly incorrect, and vice versa. There is no scientific consensus and reporters are treating the subject appropriately.

You got caught making an error because you didn't do your homework. Deal with it.

RiMac wrote: "That's only one, but hey, I wasn't even trying to find it."

Yup, I was being a bit cautious in my remarks above. As I said, I think some of the studies have shown a net positive effect on employment, but I'm pretty sure that few, if any, economists are ready to make the claim that this was necessarily the result of raising the minimum wage. Duncan was being typically cautious in his own remarks, refusing to rule it out but also refusing to state that it was definitely the case -- merely referring to it as a possibility.

Paul B, most social claims are claims about tendencies, not exact necessarily claims. For example, the claim that women have lower incomes is not a claim that every woman has a lower income than every man. If you insist in reading every social claim as exact, you will of course find error everywhere you look.

It seems that you are all missing the point about the minimum wage. If the legal minimum wage is below the "market" minimum wage, then marginal raises won't make a large difference. However, it is only when you raise the legal minimum wage significantly above the "market" rate that you will get more significant distortions and higher unemployment.

The argument about theory, though, is moot. It is immoral to force someone to pay/work for more than they can earn in the market.

Hey, how does a constipated mathemetician solve his problem?

He works it out with a pencil.

Actually, think tanks like to hire physists too.

Before we raise the minimum wage (a policy change), there should be solid evidence that there are some kind of positive results that come from it.

On the other hand, there also are this issues:

Although wages of low-wage workers increase with increases in the minimum wage, their hours and employment decline, and the combined effect of these changes is a decline in earned income: http://www.nber.org/papers/w7519

Exposure to minimum wages at young ages may lead to adverse longer-run effects: http://www.nber.org/papers/w10656

Moreover, the Earned Income Tax Credit (EITC) is more beneficial for poor families than is the minimum wage: http://www.nber.net/papers/w7599

We don't need solid evidence, all we need is to know that it won't be very harmful. Arguing over it probably has more impact than actually doing it.

Robin Hanson writes: "Paul B, most social claims are claims about tendencies, not exact necessarily claims."

So? That has nothing to do with the topic under discussion. You're still twisting and squirming and doing everything in your power to avoid actually having to admit that you screwed up. What you are doing is transparent and, frankly, a little pathetic.

"For example, the claim that women have lower incomes is not a claim that every woman has a lower income than every man."

Sigh.... The analogy is completely irrelevant. You still cannot get your head wrapped around the fact that many economists believe that raising the minimum wage has no effect on unemployment. None. And this is a position that is supported by quite a few studies.

"If you insist in reading every social claim as exact, you will of course find error everywhere you look."

No, only in cases where there is genuine error, as there was in what you posted. I have no idea why you're having so much trouble with this simple undisputed fact: your claim was wrong, 100% verifiably wrong. You wrote: "economists say ... that a minimum wage raises unemployment." You further lamented that reporters were behaving inappropriately in displaying skepticism about this claim. The trouble for you is that there is, in fact, substantial disagreement among economists on this issue and reporters are behaving appropriately in writing their stories that way. You were wrong; get over it and move on.

Mr. Econotarian wrote: "Before we raise the minimum wage (a policy change), there should be solid evidence that there are some kind of positive results that come from it."

Done. We already know that it will give extra money lower-income workers. That isn't in dispute. What is in dispute is the secondary effects. And there, we have dueling studies.

"On the other hand, there also are this issues:"

Sigh.... As noted above, for every study you cite that shows you one side, I can respond with a study that demonstrates the other. Since I've already done this above, I'm not going to do it again.

"Exposure to minimum wages at young ages may lead to adverse longer-run effects: http://www.nber.org/papers/w10656"

This one, by the way, is just silly.

Stanford wrote: "It seems that you are all missing the point about the minimum wage. If the legal minimum wage is below the 'market' minimum wage, then marginal raises won't make a large difference."

Considering that ex-liberal raised this very issue and I responded, I don't think you can claim that we missed the point.

"However, it is only when you raise the legal minimum wage significantly above the 'market' rate that you will get more significant distortions and higher unemployment."

The data do not necessarily support this assertion. It depends on how you define "significantly above."

"The argument about theory, though, is moot. It is immoral to force someone to pay/work for more than they can earn in the market."

Forgive me if I don't allow your sense of morality determine what I do and do not support and what arguments I do and do not make.

I've tried to explain and defend myself today over at OvercomingBias.com

C'mon, Robin. I know you know better than to suggest that bit about sample claims versus universal individual claims has much to do with your argument. Kevin's claim was "The overall effect of modest increases in the minimum wage is simply not a settled question among economists, which means that reporters should present both sides. And they do."

Do you have examples of reporters pulling out bonkers frieks who claim that raising the minimum wage definitely raises employment as "balance"? I can't think of any. Usually the opinion that "there is likely no effect" or "there is a small effect that is more than compensated by beneficial effects" will be presented as the counterpoint, and each of those views is held by a sizable minority of economists.

You took issue with the statement that this is an unsettled issue. That implies that the situation is like evolution, where aside from a few cranks that most biologists don't take seriously as scientists, everybody is in agreement about it.

Is this a shibboleth for you? Can you not take seriously an economist who claims that within certain bounds (which include proposals currently under consideration), minimum wages will have too small an effect on employment to distinguish from the many other factors?

To me, the scandal here is as much the completely uncritical and uneducated treatment of physics and medicine results as gospel, as a lack of respect for economic opinions. That's not to say that there isn't a great deal of ignorance, even willful ignorance, about economics, including a lot of people who think they know much about the subject that ain't so. But the minimum wage looks like an iffy example of that, given the C&K study. Free trade would probably be a better example. In general though, economics suffers from modelitis. Most of the very clear results come from very clear models rather than mounds of empirical trials, and there is much more question about models' predictive value than there is about the models used in standard physics.

Admittedly much of what gets treated as "fact" in science journalism is not standard at all, but new, cutting edge results which are as likely to get overturned or radically re-interpreted as stand for a long time. But I'd argue that the too skeptical approach to economics is, if anything, a bit closer to optimal truth seeking behavior than is the reverence accorded physics and other disciplines.

Robin Hanson wrote: "I've tried to explain and defend myself today over at OvercomingBias.com."

Sigh.... Why bother? Robin, you are still making erroneous claims, and these are claims that you have no excuse to make at this time. I stopped at this statement of your defense: "That sign has been consistently negative for over a century, as seen in most basic economics textbooks."

No, Robin, it hasn't. Your information is out of date and you have not done your homework. This statement, along with your original statements, is unmistably and verifiably wrong. Far from defending yourself, you simply keep digging that hole deeper and deeper.

I repeat:

You wrote: "economists say ... that a minimum wage raises unemployment." You further lamented that reporters were behaving inappropriately in displaying skepticism about this claim. The trouble for you is that there is, in fact, substantial disagreement among economists on this issue and reporters are behaving appropriately in writing their stories that way. You were wrong; get over it and move on.

"and each of those views is held by a sizable minority of economists."

And the number who believe this has been growing every year.

If you're talking about string theory then I agree with the economist. Of course, if you're talking about any other kind of physics then the difference is that the empirical foundations of physics are a hell of a lot stronger.

Remember that lowering interest rates can increase employment etc., so why not have a good minimum wage but lower the interest rates?

Too late to do any good for this thread, but I discovered a highly relevant Nov. 2006 article in the Economists' Voice: Robert Whaples, "Do Economists Agree on Anything? Yes!" The minimum wage was not one of the points of consensus. The survey of randomly selected members of the American Economics Association revealed this level of disagreement: "The federal minimum wage in the U.S. should be:
a. eliminated 46.8%
b. decreased 1.3
c. kept at the current level 5.2
d. increased by about 50 cents per hour 5.2
e. increased by about $1 per hour 15.6
f. increased by more than $1 per hour 16.9"
I.e., a slight majority favored retaining a minimum wage and 37.7% favored increasing it.

I've seen that data already RiMac. On the more esoteric question that Robin is talking about, you'd have near universal agreement that raising the minimum wage would have either no (or negligible) affect or a negative affect on employment. I don't think you'd find anybody willing to say that it would have a significant positive effect.

The problem is that this observation doesn't map to the context of a political article where what people want to know is the answer to the question asked by Whaples, and an assertion that "raising the minimum wage will decrease employment" will be taken as supporting either a or b in that context, so that plugging in an economist who would have voted d, e or f (despite not disagreeing would be an appropriate counterpoint.

But it's perfectly analogous to the physicists claim (which is also highly disputable) in the same post, so the point is still interesting. A physicist will almost never be challenged in the same way that an economist would be, even when the physical theory in question is new and very tentative. This is true of other disciplines as well. It's more likely that a very mainstream economist position will be challenged by some token marxist or austrian fundy (depending on what flavor of rag is doing the publishing) than that any physics result will be examined at all closely. I think part of the issue there is that economics and journalism both have very large pollitiical components, while physics is seen as a side issue (even though some physics can have important political ramifications).