Minimum Wages and Job Loss

Economics Labor Organizing Minimum Wage

            New Orleans      Well, well, David Card, Professor of Economics at Berkeley, won a share of the Nobel Prize for work he did with the late Alan Kruger, on the minimum wage.  The Nobel folks talk about all three US-based economists as part of the same tribe, because they demonstrated a different way to determine factual events than might be achieved by random studies.  Their similar work was based on comparisons of equivalent data from situations that were different in handling the same economic policy.  At least that’s what they say.  For my money, I think in Card’s case, it was really about the minimum wage’s impact.  His groundbreaking discovery of the truth behind the effect of wage increases has meant more money for millions and has driven campaigns, including our own, for many decades.  It’s hard to think of a single study in the last number of years that has had more impact on working people, especially those making lower wages.

Here’s the skinny, from the Associated Press wire story:

In a study published in 1993, Card looked at what happened to jobs at Burger King, KFC, Wendy’s and Roy Rogers when New Jersey raised its minimum wage from $4.25 to $5.05, using restaurants in bordering eastern Pennsylvania as the control – or comparison – group.  Contrary to previous studies, he and his late research partner Alan Krueger found that an increase in the minimum wage had no effect on the number of employees.  Card and Krueger’s research fundamentally altered economists’ views of such policies. As noted by the Economist magazine, in 1992 a survey of the American Economic Association’s members found that 79% agreed that a minimum wage law increased unemployment among young and lower-skilled workers.  Those views were largely based on traditional notions of supply and demand:  If you raise the price of something, you get less of it.  By 2000, however, just 46% of the AEA’s members said minimum wage laws increase unemployment, largely because of Card and Krueger.

Their research was central in the work done in ACORN’s Living Wage campaigns in New Orleans, Houston, and elsewhere by Professors Robert Pollin and Stephanie Luce, then at the University of Massachusetts Labor Center.  In New Orleans, Pollin testified in court for our coalition including Local 100 and the GNOAFL-CIO, that a one-dollar increase in Orleans Parish would likely only lead to the loss of 100 or fewer jobs in fast food to neighboring Jefferson Parish.

That was more than 25 years ago, but fast forward now and the kind of research done by Card, Krueger, Pollin, Luce, and others has helped provide the defense for the Fight for Fifteen campaign and the persistent drive for an increase in the federal minimum wage from $7.25 per hour where it has been stuck for almost a dozen years now.  By some reports, 80% of American workers are now at or above $15 per hour.

Most Americans can give some thanks to these labor economists who pointed out some simple comparative truths, and along with all of the rest of us have proven repeatedly now that raising the minimum wage does not mean that the sky has fallen., only that the bottom is rising.