Minimum Wage

A History Lesson for Minimum Wage Proponents

March 16, 2016
Source Publication

Today, labor advocates are celebrating the 20th anniversary of David Card and Alan Krueger’s controversial book Myth and Measurement. The best-known research it contains found that a wage hike increased employment in New Jersey relative to neighboring Pennsylvania.

It’s a convenient story for proponents, but it’s also incomplete: This infamous study was eventually refuted in the same academic journal where it was originally published. In the Wall Street Journal today, we make this point in a full-page ad:

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After the minimum wage hike, the economists and their student researchers conducted telephone surveys at fast food restaurants to compare localities in New Jersey –  that now had higher labor costs – with similar localities right across the river in Pennsylvania. Unfortunately, the research assistants working for the economists had posed questions to restaurants that were too ambiguous in their phrasing: “Full-time” and “part-time” employment weren’t defined. The type of burger the researchers were seeking a price for wasn’t described either.

As a result, the data showed unrealistic changes in employment in stores—75 percent decreases in part-time staff, for instance, and an increase in full-time workers from 0 to 35 in a single year. At one outlet, they reported an 88 percent increase in the price of a hamburger. When the study was later re-estimated using payroll records rather than the original faulty telephone surveys, the data told a different story: New Jersey’s decision to increase the state’s minimum wage in 1992 had in fact caused job loss.

Read the full story in our op-ed in The Hill.