Some of this is good and some of this is bad.
Obviously no one thinks demand curves aren't downward sloping, for example (although I admit this is a catchy rhetorical device, used by Borjas in the past). If you think this is the argument you are not understanding the claim. Bob also shares this graph which has been going around:
I'm a little surprised this is even making the rounds. Put this in real dollars instead of nominal and give me something like an inverse GDP gap and let me know what you think. I swear something else was going on around this time I just can't put my finger on it...
In my view, monopsony is Econ 101 logic - albeit a little later in the semester, and it does not require some kind of cartel, and the whole reason why nobody wants to be an unskilled worker is precisely that they can't work just anywhere! He's also concerned about disentangling state policies from minimum wage changes, which is odd - that seems trivial as long as you're not working in the cross-section. I may be obtuse, but I also don't think the point of monetary policy is to lower real wages, although money illusion type stuff is related to the upward sloping SRAS. I'm sure there are several other problematic claims in there too, but let's get to the good points:
1. He makes the point that this is not good policy in a depression. I tend to agree which was why I was not supportive the day after the State of the Union. I actually do think it's very plausible that it could on net boost aggregate demand. I think the employers "can afford it", that we are likely bargaining over surplus here, and that teenagers spend money. But you are probably going to be balancing an AD effect on a plausibly (although not very large) negative effect on teenage employment. We have much better options at our disposal than that. It does make me wish we had better research on the impact of the minimum wage over the business cycle.
2. He brings up an important point about contamination of the counterfactual - what if firms move across state lines. I imagine the argument is that in the short run this is not a major factor, and I'd probably be convinced of that myself. But if you have price effects or if people just seek out better service in the restaurant that's not understaffed - and they go across state lines to remedy it - then you would have a contamination problem. Practically speaking, in the short run, I doubt this is a problem. But I am sensitive to the contamination of the counterfactual issue - it's something that bugs me about a lot of job training evaluations where it's potentially a more serious problem. In the long run you might have serious firm relocation effects if the minimum wage is set too high. That would be interesting to study.
A final note. Anyone who says something like this: "I’m sorry, I just get the feeling that the story changes to fit the progressive policy of the day" needs to realize that although they may honestly think this is what's going on, they shouldn't be surprised when people stop taking them seriously. Bob is usually great at appreciating the thought process of the other side but not agreeing with it, so I'm not singling him out... it just seems like I'm hearing this way too much lately.
Another book project...
2 hours ago