On Thursday night, I attended a panel on minimum wage at Dartmouth College. The panelists were Don Boudreaux (George Mason University), Arindrajit Dube (UMASS – Amherst), and Lara Shore-Shepard (Williams College).
The debate was very interesting. I am obviously a fan of Don Boudreaux, but I also highly respect Dr. Dube, who always presents interesting information on the minimum wage. I’d like to share my thoughts on the debate (and limit it to the debate, as I think my personal thoughts on minimum wage are well-known).
- I wish more people had attended the debate as I think it showed the disagreements of the experts (that is, the economists) are not where the politicians and pundits claim they are. It was universally agreed by all three panelists that the minimum wage does have costs. Both Drs. Dube and Shore-Sheppard’s research showed the same thing: Dr. Dube presented his finding that a 10% raise in MW resulted in a 0.1% decline in employment, and Dr. Shore-Sheppard demonstrated that the MW can work against those who are childless. The discussion, rather, was whether or not the costs were sufficiently low enough to justify minimum wage (or, at least, a hike in the wage).
- All three panelists also dismissed the argument used by many political proponents on minimum wage that the hike wouldn’t cause issues because of increased demand.
- Dube discussed some of the theoretical examples of when a MW would have a limited impact, one of those being an imperfect labor market. However, the rest of his presentation and research indicated this theoretical situation doesn’t apply. He mentioned several times in his presentation that MW jobs are “high turnover.” That would mean that workers are NOT constrained by their jobs, that imperfect competition isn’t a major characteristic of the MW labor market.
- Both Dube and Shore-Sheppard offered testimony that didn’t seem to jive with the evidence they were presenting. For example, both testified that the EITC (Earned Income Tax Credit) compliments the MW, but then offered evidence that it actually makes things worse. Shore-Sheppard showed that workers who did not qualify for EITC actually had to take a lower wage than they otherwise would have to because the EITC held down wages. Of course, the argument was then that the MW would be enacted to raise the wage floor so that wouldn’t happen, but that still results in the disemployment effects.
- There were also some issues of fact with Dr. Dube’s presentation. I’m willing to give him a pass as this was some of a “think of your feet” thing, but still. For example, he testified that “a few” MW workers were teenagers. The US Census Bureau data, however, says otherwise: about half of MW workers are under the age of 25.
- All three presented evidence that the MW is, at best, a poor anti-poverty tool.