Wages and spin: Politics vs. economics
February 23. 2014 5:40PM
No matter how many economic studies, no matter how much academic evidence, no matter how much data piled on top of data, politicians who wish to deceive the American people about the economy continue to falsely present minimum wage hikes as costless.
Last week the Congressional Budget Office released a report showing that raising the federal minimum wage to $10.10 an hour “would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects” and that “there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.”
Former U.S. House Speaker Nancy Pelosi claimed, “its conclusions contradict the consensus among hundreds of America’s top economists, who predict that a wage hike would actually stimulate the economy, raise demand and job growth, and provide help in job creation.”
There is no such “consensus.” CBO Director Doug Elmendorf responded to Pelosi, “I want to be clear that our analysis on the effects of raising the minimum wage is completely consistent with the latest thinking in the economic profession.”
The CBO backed up its report by citing about 60 economic studies. Nancy Pelosi cited zero. This is how it goes in politics.
The actual prevailing economic thinking about minimum wage increases is that they transfer wealth from some Americans to others. They produce both winners and losers, and the losers are hit very hard — they are thrown or kept out of work. In short, there is a tradeoff, and politicians who pretend otherwise are the ones deceiving the American people.