“Raise Maryland” Campaign Uses Discredited Research to Support Wage Mandate Claims

Discredited Sources Include List of 650 “Economists,” Card & Krueger Study
  • Publication Date: January 2011

  • Topics: Minimum Wage

Today, the Employment Policies Institute (EPI) released a new analysis showing that labor-backed Progressive Maryland is using misleading and discredited research in their attempts to raise Maryland’s minimum wage to $10 an hour.

On their website, the “Raise Maryland” campaign claims that additional wage mandates will not cause unemployment, pointing to a 1994 study by economists David Card and Alan Krueger and a list of 650 economists who endorse a higher minimum wage.

Unmentioned is that the Card and Krueger study has long been discredited, and that the list of 650 “economists” contains hundreds of signers who either lack a Ph.D. or have no experience in studying the minimum wage.

• Card and Krueger Study: The original study, conducted with flawed telephone surveys, yielded the famous result that a minimum wage increase boosts employment. But when the study was re-estimated using accurate payroll records, the results flipped—as expected, jobs were lost following the minimum wage increase. Media reports at the time described the Card and Krueger study’s conclusions as “grossly inaccurate” and “plain wrong.” A report more fully describing the study’s shortcomings is available here: http://epionline.org/studies/epi_njfastfood_04-1996.pdf.

• List of 650 “Economists”: This list, first used during the federal debate over the minimum wage in 2006, is often cited to support state and local minimum wage increases. Yet, an analysis of the list’s signatories shows that hundreds of signers lack any expertise on the minimum wage; instead, they specialize in topics like gender economics, economics of religion, and Marxian economics. Other signers even lack a Ph.D. A full analysis of the list is available here: http://epionline.org/downloads/101115_EPI_PolicyBrief_EconomicConsquencesv2.pdf.

And as for “Raise Maryland’s” claim that a higher minimum wage will “spur growth” for Maryland, the economic evidence shows otherwise. New research from the Dr. Joseph J. Sabia, an economics professor at West Point, shows that past increases in the minimum wage—at the federal and state level—have had no positive effect on economic growth. In fact, these wage mandates have had a negative effect on the output of certain industries that employ less-skilled employees—and each 10 percent increase in the minimum wage has reduced teen employment by as much as 3.6 percent. A policy brief describing the study’s finding is available here:http://epionline.org/studies/Failed_Stimulus_PolicyBrief_web.pdf.

In response to the misleading use of research by the “Raise Maryland” campaign, Michael Saltsman, a research fellow at the Employment Policies Institute, released the following statement:

The “Raise Maryland” campaign and its union supporters would have Marylanders believe that forcing higher labor costs on state employers doesn’t have consequences. Though economic research dating back to the 1940s disproves their point, they continue to cite discredited sources that tell them what they want to hear.

Not only is this dishonest, but it’s also devastating for the state job market. ”Raise Maryland’s” proposed wage hike wouldn’t raise anything except the unemployment rate. Entry-level jobs provide a valuable pathway to career stability and the wage mandate proposed by “Raise Maryland” would block those pathways by destroying those jobs.