Wednesday, February 20, 2013

Minimum Objectivity

In the President's State of the Union speech he extolled raising the minimum wage. A "family with two kids that earns the minimum wage still lives below the poverty level. That is wrong." It is wrong, i.e. slightly untrue. The average family income of a household with a minimum-wage worker is about $47,023—which is far above the poverty line of $23,550 for a family of four. And, more important, most minimum-wage earners are not the primary bread winner. Nearly 40% live with a parent or relative. But if you are twenty, with two kids and working at McDonald's, you will be below the poverty level. The problem in that situation, however, is not the wage; it is much, much deeper than that. This seems to be a sticking point: having children with no education, no evidence of responsibility and no real future prospects is not going to be solved by a thirty cent raise. But the quality of that scenario can not be quantified and, thus, discussed.

There is another point: Does raising the mandatory wage on jobs that are essentially entry-level jobs or supplemental jobs for school age kids influence their availability? Fixing the price of a work at a low level makes the worker go away, does fixing the price of work at a high level make the work go away? According to a White House memo, "A range of economic studies show that modestly raising the minimum wage increases earnings and reduces poverty without measurably reducing employment." That is reassuring. Accept for" modestly" and "measurably," two words that would not be accepted in any reasonable study. And, worse, this from David Neumark, an economist from the University of California at Irvine who looked at over 100 studies on the minimum wage. He wrote that the White House summary of job loss from minimum wage "grossly misstates the weight of the evidence." About 85% of the studies "find a negative employment effect on low-skilled workers."

Studies and numbers can show a lot of things; the devil does quote scripture. But this seems like a  more simple economic question than most. And it seems that people with good intent might be able to get some evidence one way or the other of the value of such an approach.

The fact that that has not happened is telling.

No comments: