The Minimum Wage Muddle
Once upon a time there was a near consensus among economists that raising the minimum wage was a bad idea. The market is really good at setting prices on things, whether it is apples or labor. If you raise the price on a worker, employers will hire fewer and youβll end up hurting the people you meant to help.
Then in 1993 the economists David Card and Alan Krueger looked at fast-food restaurants in New Jersey and Pennsylvania and found that raising the minimum wage gave people more income without hurting employment. A series of studies in Britain buttressed these findings.
Today, raising the minimum wage is the central piece of the progressive economic agenda. President Obama and Hillary Clinton champion it. Cities and states across the country have been moving to raise minimum wages to as high as $15 an hour β including New York State just this week.
Some of my Democratic friends are arguing that forcing businesses to raise their minimum wage will not only help low-wage workers; it will actually boost profits, because companies will better retain workers. Some economists have reported that there is no longer any evidence that raising wages will cost jobs.
Unfortunately, that last claim is inaccurate.
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Read the article “The Minimum Wage Muddle” on nytimes.com.