The minimum-wage debate has two sides

Original Article:

  • Author: Michael Saltsman

  • Publication Date: July 2015

  • Newspaper: Pittsburgh Post-Gazette

  • Topics: Minimum Wage

Today the minimum wage is one of the most debated public policies. This is particularly timely for Pennsylvania, where the Legislature is considering a proposal to increase the state-mandated minimum wage by 39 percent to $10.10. Unfortunately, some proponents would rather silence debate than engage in it.

A prime example occurred recently in the Post-Gazette opinion pages, where economics professor Sean Flaherty attacked those who point to the unintended consequences of minimum-wage increases as “just whistlin’ into the winds of economic progress” (“The Winds of Progress,” June 21 Forum). Whatever that means.

Mr. Flaherty tries to smear my organization, the Employment Policies Institute, by insinuating that we receive funding from the tobacco industry. EPI has never received such funding. Ironically, a group that Mr. Flaherty cited, the union-backed Economic Policy Institute, used to receive tobacco money to criticize excise taxes that negatively affect the industry’s bottom line.

Mr. Flaherty is not simply an unbiased economist commenting on the minimum wage: He has spoken, for instance, at a “Raise the Wage” rally and engaged in other advocacy on the issue. With that in mind, his suggestions that opposition to the minimum wage is merely a talking point made by corporate interests warrant examination.

Mr. Flaherty does make some substantive arguments about the minimum wage. He points to last year’s Congressional Budget Office analysis, which found that a $10.10 federal minimum wage would cost 500,000 jobs and lift 900,000 people out of poverty, as part of his justification for a minimum-wage hike. This logic is peculiar, however, given that most reasonable observers would consider one person losing their job for every two lifted out of poverty as not a particularly good deal.

He also appeals to the oft-cited “600 economists” who signed a petition to President Barack Obama claiming that minimum-wage increases have “little or no negative effect” to make his point. Beyond being somewhat self-serving, considering that he is one of the signers, Mr. Flaherty may want to reconsider his deference to this list when he examines the backgrounds of those on it in more detail. It includes some Marxists and even a 9/​11 “truther.”

Mr. Flaherty’s most substantive argument is that the long-standing consensus among economists that minimum-wage hikes cost jobs has been turned on its head by the “newest and best research.” But a review of the best research on the topic by economists from University of California-Irvine and the Federal Reserve found that 85 percent of the best minimum-wage studies over the past two decades conclude that wage hikes cost jobs.

Regarding Pennsylvania’s $10.10 proposal, an EPI analysis, conducted by economists at Miami University and Trinity University and using the CBO’s methodology, estimates that more than 30,000 jobs would be lost statewide if the wage becomes law.

Rather than overlooking such conclusions as “just whistlin’ into the winds,” a more productive approach to the minimum-wage debate would be to admit that both sides share the same goal of raising incomes for low-income Pennsylvanians but disagree about how to get there. If the side pointing out the limitations of the minimum wage is silenced, it’s all Pennsylvanians who suffer.