Monday, November 16, 2009

Minimum Wage Regrets?

A couple of years ago, a number of "leading economists" endorsed the federal minimum wage law that legislated the current minimum of $7.25/hr:

Henry Aaron The Brookings Institution
Kenneth Arrow Stanford University
William Baumol Princeton University and New York University
Rebecca Blank University of Michigan
Alan Blinder Princeton University
Peter Diamond Massachusetts Institute of Technology
Ronald Ehrenberg, Cornell University
Clive Granger University of California, San Diego
Lawrence Katz Harvard University (AEA Executive Committee)
Lawrence Klein University of Pennsylvania
Frank Levy Massachusetts Institute of Technology
Lawrence Mishel Economic Policy Institute
Alice Rivlin The Brookings Institution (former Vice Chair of the
Federal Reserve and Director of the Office of Management and Budget)
Robert Solow Massachusetts Institute of Technology
Joseph Stiglitz Columbia University

[read the longer list here. Interestingly, the University of Chicago does not appear on the list.]

They all said: "we believe the Fair Minimum Wage Act of 2005’s proposed phased-in increase in the federal minimum wage to $7.25 falls well within the range of options where the benefits to the labor market, workers, and the overall economy would be positive."

and

"the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment."

An ambitious journalist might ask them whether they still believe these things, and in particular whether that they believe this July's increase had "positive" effects.

6 comments:

Crampton said...

You'll have a hard time asking Sir Clive, who passed on this year.

DWAnderson said...

As the original statement seemed like a well hedged wish, I suspect the answer (like the aspirations giving rise to it) of the signers will not have changed.

thinkmarkets said...

What mystifies me is their underlying theory of wage determination? Do they think the labor market is one big monopsony? Or are they making some value judgment that the benefits to those whose wages rise offset the losses (in utility terms) of those who lose employment? Or are they just trying to show that economists can also be "good" people?
Mario Rizzo.

Greg said...

I'm quite proud that my alma mater does not appear on that list.

TGGP said...

Econ Journal Watch surveyed them on why they supported it.

Sheng said...

When you search "Chicago", you find the other two schools with Chicago in their names. So we can rule out the region fixed effect!