Letter to the editor: Professor’s minimum-wage views more political than economic

Posted on March 24, 2016

Re: “Researcher says business groups used wrong data to back $10 minimum wage”(March 14):

Talk about a delayed reaction. The supposed minimum-wage math error that incensed University of California-Berkeley professor Michael Reich was published over six months ago, in a Press Herald article he was interviewed for (“Minimum wage hike has limits, study says,” Aug. 30, 2015).

Reich apparently had no problem with the article at the time, given that the media people at his university promoted it on their Twitter account.

The 2015 article’s claim that Maine’s minimum wage should be closer to $10 (based on Reich’s methodology) was not clarified until 4 p.m. March 11, one business day before Reich participated in a campaign conference call to make hay of the issue. It appears Reich was trying to make a political point, not an economic one.

If the business community in Maine erred, it was in taking Reich’s 60 percent median wage-minimum wage threshold as gospel truth. Reich’s work is an outlier in the minimum-wage literature, with most credible studies showing that negative employment effects kick in at a much lower threshold. This suggests that any minimum-wage hike in Maine will be counterproductive.

Still, if a yardstick is needed, Reich’s colleague at the University of Massachusetts-Amherst, Arindrajit Dube, has suggested that 50 percent of the full-time median wage is the number to use.

Here, the appropriate Maine minimum wage in 2020 is roughly $10.60 an hour. This number is still very high, but it’s closer to the alternative proposed by some in the business community, and a more responsible approach if policymakers are concerned about significant job losses.