A Consensus In Favor Of Wage Mandates?

  • Author: Rick Berman

  • Publication Date: January 2011

  • Newspaper: Investor's Business Daily

  • Topics: Living Wage, Minimum Wage, Teen Unemployment

Liberal advocacy groups who argue in favor of a higher minimum wage have a tough job: Faced with mountains of data countering their argument that wage mandates don’t cost jobs, they struggle to find their intellectual footing.

They often display a Potemkin village of 665 economists who subscribe to a theory that suggests labor costs don’t factor into hiring decisions. First compiled and promoted by the union-backed Economic Policy Institute, this list of 665 economists is the default appeal to authority the pro-hike activist groups rely on. The list was even inserted into the Congressional Record by Congressman George Miller, D-Calif., during the last debate over raising the federal minimum wage.

Most recently, the list was cited in a report released jointly by the Fiscal Policy Institute and the National Employment Law Project arguing in favor of a new wage mandate in New York City.

An examination of the list by the Employment Policies Institute (EPI) reveals that many of the “experts” supporting wage hikes don’t specialize in labor economics. Some aren’t even economists at all.

Since degrees and specialties of the signatories weren’t listed, we had to go looking. Of the 665, EPI was able to find sufficient academic documentation for 545 of them. The reasons for specialty unavailability vary. Some of the signers have since retired or passed on. Some worked behind the scenes for labor unions, research groups or smaller colleges. Sometimes curricula vitae and/or biographies provided no clear indication of economic specialty.

We identified a signer as a “labor economist” if they (or their school or an affiliated organization) identified it as a primary or secondary specialty. In cases where a specialty similar to labor economics was given (e.g. “jobs” or “employment”), or relevant experience was listed, EPI also counted the signer as having experience in labor economics.

Of the economists studied, 39 of them either had no Ph.D., or their Ph.D. was not specifically in economics. Examples of other Ph.D. topics include geography, political science, sociology and urban planning.

But other signers don’t even come close to having economic expertise, like the administrative assistant at a West Coast university who signed on. The obscurity of some of the other signatories forces one to ask if she was the only one magically promoted to economic expert status.

Of the economists studied with Ph.D.s, approximately 60% did not qualify as labor economists. Examples of other specialties included feminist economics, health economics, gender economics, international development, economics of religion, economics of prison, Marxian economics and Middle Eastern economics.

The list includes a number of economists who work for or have ties to labor unions, including the AFL-CIO, Teamsters, UNITE HERE, United Auto Workers and the International Association of Machinists. Also on the list are members of the Union of Radical Political Economists, a group once described as supporting an “American version of socialism.”

While it’s true there are a few big names among the 665, you can find outspoken contrarians in any academic field. The simple fact of the matter is that their opinion on the topic of minimum wage increases and the impact they have on employment is both out of the mainstream and out of line with the studies on the subject. Hence the padding of this list with so many economists without a background in labor economics.

In short, the list is riddled with ideologically motivated academics pushing an agenda. The Economic Policy Institute is not alone in this strategy: The liberal Center for American Progress just released a report on “living wage” laws, and one of its authors has a bachelor’s degree in philosophy and was previously co-director of a living wage advocacy group.

On the flip side, a comprehensive survey of two decades of minimum wage research by Drs. David Neumark and William Wascher (of the University of California, Irvine, and the Federal Reserve Board, respectively) found that 85% of the best studies on the impact of government-ordered wage hikes pointed to employment losses following an increase in the minimum wage.

Unlike those described above, Neumark and Wascher have no partisan axe to grind in the minimum wage fight, and they’re pushing no agendas. Rather, they are respected labor economists chronicling economic research on the minimum wage — the overwhelming majority of which shows a higher minimum wage reduces employment.

The Joint Economic Committee during President Clinton’s tenure came to the same conclusion. Even the very first secretary of labor under Franklin Delano Roosevelt noted that job losses were connected to the minimum wage.

You can believe decades of consensus. Or you can choose to believe the 665 “experts” who say that the minimum wage has no impact on employment. As the White Queen said to Alice, “Why, sometimes I’ve believed as many as six impossible things before breakfast.”

Berman is executive director of the Employment Policies Institute, a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment