Monday, February 18, 2013

Some thoughts on the minimum wage: Discourse

I find comments like this from Dan Klein on Krugman's posts on the minimum wage (on David Henderson's post): "It seems to me that Paul Krugman has turned almost exclusively to rousing a low quality Democratic/social-democratic rabble, and hence will very rarely acknowledge any serious shortcomings of cows sacred to that rabble" extremely disheartening.

Comment threads and politicians are one thing. You're always going to get grand-standers in comment threads and running for election. We can pick them out and criticize them (as Krugman and Boudreaux chose to do) to neutralize that sort of discourse, or we can ignore it.

But when it comes to discussions in the community of economists, I feel like this nastiness is unhelpful to getting an enlightened public and enlightened policy. Economists don't always agree, and we ought to argue vigorously about that. We usually do. I worked with policy analysts, psychologists, and sociologists at the Urban Institute and these non-economist colleagues were always amazed at how brutal the economists would be to each other in brown bag seminars. That is a good thing.

But doing what Klein does here and acting like people who disagree with him are inciting some kind of ideological rabble is different, and it gives the impression that the arguments we have aren't informed and serious, when in fact they are. The public needs to take economics seriously and I think comments like this threaten that. In my opinion, Dan Klein spends far too much time trying to ideologically classify economists and paint them as motivated by ideology rather than actually critically addressing the arguments that are presented. I honestly have no idea what Klein thinks of the arguments for and against the minimum wage - in contrast to the very clear picture of what Henderson thinks of the arguments in the same post.

There are a couple other problems with the discourse around the minimum wage that I have a problem with. The other day I criticized the idea (expressed by Don Boudreaux) that empirical social science is indecisive, and in the last two posts I criticized the idea that economic theory somehow demands that people be opposed to the minimum wage. Another thing you hear that I think is misleading is that somehow it's just an uninformed public that thinks the minimum wage may not be bad for workers.

In fact, in 2000 only 46 percent of American Economic Association members agreed with the idea that the minimum wage increases unemployment. This is clearly a broader phenomenon than just the views of an uninformed public. Skeptics may argue that the Card and Krueger study just gave liberals cover to make such an audacious claim. Clearly Card and Krueger did make an impact (as I argued in the previous post on empirics, though, it made an impact because - regardless of what you think of the conclusion - it was a very well designed study), but it's not as large as you might think. In 1990, 60 percent of American Economic Association members thought that the minimum wage increased unemployment. That's a majority but it's hardly the sort of resounding consensus that you get on things like free trade.


Because there are excellent and very traditional, very non-fancy theoretical arguments to be suspicious of the negative employment effect and the empirical evidence seems to confirm that suspicion.

Anyone that tries to imply otherwise is either misinformed or misleading. We can have arguments, but the discourse ought to concern itself with arguments and not cordoning off minimum wage proponents as unintelligent or ideological or rebels against basic economics.


  1. The public needs to take economics seriously

    Then why don't you start doing such

    Why is the public to make of you. A few days ago you said Buchanan fabricated stuff, yet you praised him when he died.

    Now, seeing such behavior, what is the public to conclude.

    Or consider Hayek who was hired for political reasons to come up with arguments against Keynes and spent his entire life in a voyage of mendacity.


    1. If I denounced everyone that I think ever made a bad argument there'd be nobody left. I'd even have to renounce myself.

      Go away or stay on topic, please - or I'll start deleting comments. I'm tired of the trolling.

    2. Daniel,

      My comment was directly on point. You wrote, "The public needs to take economics seriously and I think comments like this threaten that."

      I was pointing out, as a member of the public, that is is very hard to take economics seriously when, for example, you charged an "economist" with fabrication.

      That is the word used by you, which was a very serious charge. You did not say he made a bad argument, you said he "fabricated." Now, I happen to agree with you. He did fabricate and not just about what you wrote.

      Now, the public is confronted endlessly with competing claims. How can they take a subject seriously when you don't? Having concluded that this "economist" fabricated, you should have bury him not praise him. But, that is not what you have done.

      Delete my comments if you want, I expect you will for you do not want to take on the core problem with why the public doesn't take economics seriously and that is that economists don't either.

      The public will take economists seriously only when economists confront and rid the business of incentive caused bias and prejudice.

      That Hayek, the shabbyist tale in economics. He was hired to go to England and do a hatchet job on Keynes by people who were politically opposed to Keynes. That is about are far from academic honesty as one could get.


  2. Nice post. I will just add this: whether the minimum wage increases unemployment or not is kind of moot. We have other policy tools, like an increased earned income tax credit, which arguably accomplish the same goal as a higher minimum wage without the downside risk of higher unemployment.

    Notice that I am using the word "arguably." I'm not so much arguing for an expanded EITC as wondering why the minimum wage dominates a discussion that should really be about keeping full-time workers out of poverty.

    Case in point, I'm seeing too many people on the left jump from "a $9 minimum wage won't increase unemployment" to "the minimum wage should be $9," and also too many people on the right jumping from "a $9 minimum wage might increase unemployment" to "a $9 minimum wage is a bad idea... period, end of story, next issue, freedom rules."

    Why is there not more discussion of the EITC, or any other tools that might keep full-time workers out of poverty?

    1. I think this is a good point.

      There's been some discussion on Krugman's blog about how the minimum wage makes the EITC more effective. That's worth considering. But I personally greeted the SOTU call for an increase by being unimpressed. It's a pretty blunt tool.

      I've since learned that the call was apparently to raise and then index it? That could make more sense. Then we can stop worrying about it so much!

      I think the EITC is getting less press now because it's a labor supply policy and most people (not all) don't think labor supply is the issue right now. Even people that think structural unemployment is substantial don't think it's a labor supply choice problem per se.

  3. I too have seen a lot of appeals to "basic economics" as an attack on the minimum wage. I don't know about you, but it's convinced me that we have to be a lot more careful about how we teach these topics in our intro courses. I really don't want my future students being the ones claiming that econ 101 deadweight loss from minimum wages, taxes, etc. is an obvious reason not to enact these policies.

    Also, if I were more cynical, I'd point out that Dan Klein has pretty strong incentive to paint every other economist as ideological, because pretty much all of his work is blatantly ideological and he needs to defend it.

    (by the way, sorry for all the comments--woke up way too early this morning and it seems like you did too!)

    1. Ideology is not in and of itself bad. Dan Klein does a lot of work on the idea of libertarianism, which is an ideology obviously. So I want to agree with you but make the clear point that that's not in itself a criticism. There are left and conservative theorists too.

      The concern for me comes in when science gets treated like it's all ideology. That bothers me a lot.

      re: "(by the way, sorry for all the comments--woke up way too early this morning and it seems like you did too!)"

      Oh yes... I am trying to figure out humane ways to remove my cat's vocal chords (kidding animal rights activists - just kidding!). He's been waking us up very early and my wife doesn't do as well on low sleep as I do, so drag him into the study with me and get some work done to let her sleep... practice for kids one day I suppose, where I imagine I will take a lot of the odd-hour duties.

      Glad to have you commenting.

    2. This thread and our thread from the empirics post are converging...

      "The concern for me comes in when science gets treated like it's all ideology. That bothers me a lot."

      Agreed. Bias might exist, but there are very clear, objective-ish standards that we can use to critique empirical studies. In fact, that's probably one of the most important thing to come out of the economics work of the last two or three decades, ESPECIALLY in labor!

      To be fair, it's hard to imagine Klein, or Boudreaux, or Henderson, as being particularly up-to-date on empirical work or being able to critique it properly. I can't find any academic publications at all from the latter two, and most of the former's publications are about ideology, which as you said may be useful, but certainly doesn't give you any expertise in critiquing something like Card-Krueger. I'm willing to accept that they're better-informed than the average person, but I don't really know what makes them any more credible than, say, Matt Yglesias.

    3. I'm not saying you have to be regularly featured in the AER to say anything about the minimum wage, but if you're going to critique the empirical work, you should probably use the term 'identification' at least once...

  4. One can study the ideology of libertarianism, and do it badly. Cf. Dan Klein's unwillingness to see Bastiat for what he was:

    Brad DeLong

    1. Very true!

      Just because having and investigating an ideology is legitimate does not guarantee it is done well. What is illegitimate, in my view, is tarring science as ideology.

    2. What is illegitimate, in my view, is failing to tar a scientist who fabricates because of his or her ideology or incentive caused biaa


  5. I worked with policy analysts, psychologists, and sociologists at the Urban Institute and these non-economist colleagues were always amazed at how brutal the economists would be to each other in brown bag seminars. That is a good thing.

    So true. Before heading back to start a postgrad I worked various private sector jobs, during the course of which I had to present my work and research to top management a number of times. (I'm talking leading financial institutions and Fortune 500 companies.) I was tested by smart, experienced people who asked probing questions. However, nothing came close to the scrutiny that I experienced in the academic environment. At first I was fairly startled by how sharp, persistent (and seemingly aggressive) the questioning in an economic seminar could be. I quickly realised that nothing was meant personally -- it was simply due to an overarching insistence on trying to find the right answers.

    While my plan at this stage is still to return to the private sector after my studies, I wish people who lazily trot out dismissives like "those who can't, teach" would attend just one brown bag seminar, or better, an economics job market talk. It would be an eye-opener if nothing else.

  6. Klein has a very Althusserian-Marxist view of the world: he is science, and all others are ideology...

  7. "Extremely disheartening."

    Indeed it is. Paul Krugman used to be a very interesting economist. No longer.


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