It’s simply not true that as wages go up, jobs go down. But trickle-downers need people to believe it.
BY NICK HANAUER
Few issues have moved more quickly from fringe to consensus than the “Fight for $15.” When colleagues and I suggested at a Democratic political conference in early November of 2012 that we should raise the minimum wage to $15, people in the audience literally laughed. When New York City fast food workers first walked off the job two weeks later demanding a $15 minimum wage (more than twice the federal $7.25 rate, both then and now), the number was widely dismissed as overreaching and symbolic—a mere bargaining tactic on the part of workers who had little if any bargaining power at all. Nobody predicted what would follow. As an early and vocal advocate for $15, even I was surprised by how fast the dominoes would fall.
But as remarkable as this political progress has been, the political rhetoric surrounding the minimum wage remains surprisingly unchanged. Minimum wage opponents continue to deride every proposed increase as a surefire job-killer, while reporters and pundits reliably characterize the passage of every minimum wage ordinance and statute as a dangerous experiment that threatens to harm the very people it’s intended to help. “California makes itself a guinea pig in a massive and risky minimum wage experiment” tweeted the New York Times’s Noam Scheiber. “Raising minimum wage risky,” the Lexington, Kentucky Herald Leader’s headline tersely warned its readers following $15 victories in faraway California and New York. “Raising minimum wage hurts low-skill workers,” the Detroit News bluntly chimed in. “Even left-leaning economists say it’s a gamble,” Vox solemnly cautioned (without actually managing to cite a single left-leaning economist willing to pejoratively editorialize $15 as a “gamble”).
No one captured this conventional economic orthodoxy better than Noah Smith, a very smart economist and writer for Bloomberg. Smith, in an article titled “Finally, an Answer to the Minimum Wage Question” welcomed “the fact that, finally, we’ll have some data on how the $15 minimum wage would affect jobs.” In his article, Smith said he considered it a test because “in theory a higher minimum wage should cause increased unemployment.” Smith’s implication is that we have never run a minimum wage experiment before and that the increase is unprecedented in economic history. But the core assumption of Smith’s piece is a so-called “economic theory”—asserted as if it is a law of nature—that if the minimum wage goes up, employment must come down.
To be fair, Smith and the others above are not the first to predict economic Armageddon if the minimum wage was increased. The story of the minimum wage as a job-killing trade-off is deeply rooted in classical economics. It is the Law of Supply and Demand in action: “When you raise the price of employment, guess what happens, you get less of it,” former House Speaker John Boehner explained succinctly.
much more
http://democracyjournal.org/magazine/41/a-threat-not-a-theory/
