# The evidence concerning the effects of minimum wages **URL:** \ **Category:** Great Debates\ **Created:** [March 7, 2013, 12:52am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245 "2013-03-07T00:52:16Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Frylock](https://avatars.discourse-cdn.com/v4/letter/f/ce7236/32.png) [@Frylock](https://boards.straightdope.com/u/Frylock)\ **Post date:** [March 7, 2013, 12:52am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/1 "2013-03-07T00:52:16Z")
There’s another thread where this has been mentioned a few times, but I want to make a dedicated thread about it. I’d like to know what the _empirical evidence_ says concerning the effects of minimum wages. By emphasizing “empirical evidence” what I mean to request is that you don’t present me with an armchair analysis, telling me what you figure is a natural or obvious implication of a minimum wage. I want to know what actual measurements have actually been taken which represent the difference made by a minimum wage in the actual world. Thanks in advance… I put this in GD because though it’s kind of a GQ-ish question, I anticipate… conflict… ---
**Author:** ![Trinopus](https://avatars.discourse-cdn.com/v4/letter/t/2bfe46/32.png) [@Trinopus](https://boards.straightdope.com/u/Trinopus)\ **Post date:** [March 7, 2013, 2:33am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/2 "2013-03-07T02:33:54Z")
The most interesting thing about the establishment of the minimum wage, and about every time it has been increased: it did not lead to an increase in unemployment. Many people had predicted that unemployment would follow, and backed this up by standard supply-and-demand curves from basic economics. But the facts are, it doesn’t have that effect. It also doesn’t seem to lead to significant inflation. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 7, 2013, 3:35am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/3 "2013-03-07T03:35:50Z")
[Here](http://davidcard.berkeley.edu/papers/njmin-aer.pdf) is the Card/Krueger paper that was the first to buck conventional wisdom (that minimum wage increases negatively affected employment). After Card and Krueger, there were lots and lots of rebuttals that showed the expected effect, but analyses of them have allegedly suffered from “publication bias” (according to Card and Krueger, anyway). If there’s a conclusion to be drawn, it’s that minimum wage increases have no (or insignificant) negative effects when the equilibrium point for unskilled labor is close to the minimum. Think of it like the Laffer Curve. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 7, 2013, 3:42am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/4 "2013-03-07T03:42:38Z")
> [@Really\_Not\_All\_That\_Bright](#): > > [If there’s a conclusion to be drawn, it’s that minimum wage increases have no (or insignificant) negative effects when the equilibrium point for unskilled labor is close to the minimum. Think of it like the Laffer Curve. No, that is not the conclusion of that stufy. The conclusion concerns small increases, not any arbitrary increase. [url=[Minimum wage - Wikipedia](http://en.wikipedia.org/wiki/Minimum_wage)]Here is the wikipedia article on the subject.]([http://davidcard.berkeley.edu/papers/njmin-aer.pdf](http://davidcard.berkeley.edu/papers/njmin-aer.pdf)) Card/Krueger is hardly the last word on the subject. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 7, 2013, 3:56am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/5 "2013-03-07T03:56:38Z")
> [@John\_Mace](#): > > No, that is not the conclusion of that stufy. The conclusion concerns small increases, not any arbitrary increase. …which I pointed out in the last sentence of the post you responded to. > [@](#): > > [Here is the wikipedia article on the subject.](http://en.wikipedia.org/wiki/Minimum_wage) > > Card/Krueger is hardly the last word on the subject. …which I pointed out in the second sentence of the post you responded to. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 7, 2013, 4:27am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/6 "2013-03-07T04:27:45Z")
> [@Really\_Not\_All\_That\_Bright](#): > > …which I pointed out in the last sentence of the post you responded to. > > …which I pointed out in the second sentence of the post you responded to. Yeah, but where did you point out that minimum wage increases have no (or insignificant) negative effects when the equilibrium point for unskilled labor is close to the minimum?? Can you tell me THAT??? BTW, what you are describing is sort of like a Laffer Curve… ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [March 7, 2013, 6:25am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/7 "2013-03-07T06:25:47Z")
> [@Really\_Not\_All\_That\_Bright](#): > > [Here](http://davidcard.berkeley.edu/papers/njmin-aer.pdf) is the Card/Krueger paper that was the first to buck conventional wisdom (that minimum wage increases negatively affected employment). After Card and Krueger, there were lots and lots of rebuttals that showed the expected effect, but analyses of them have allegedly suffered from “publication bias” (according to Card and Krueger, anyway). > > If there’s a conclusion to be drawn, it’s that minimum wage increases have no (or insignificant) negative effects when the equilibrium point for unskilled labor is close to the minimum. Think of it like the Laffer Curve. I didn’t read the paper because it’s taking forever to load on my computer but can you explain what you mean by equilibrium point? It sounds like you are saying that a small increase in minimum wage has no effect when the wage is close to where it would be if determined strictly by market effects. This seems like common sense. The real question is the effect of so-called “living wages” in some cities that inflate the minimum wage significantly above the federal minimum. Am I misunderstanding you? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [March 7, 2013, 6:58am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/8 "2013-03-07T06:58:04Z")
> [@Really\_Not\_All\_That\_Bright](#): > > …which I pointed out in the last sentence of the post you responded to. > > …which I pointed out in the second sentence of the post you responded to. Not really. You made some vague reference to something completely unrelated to the MW. This is a highly contested subject, and it would behoove the debater to be clear on what he is saying. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [March 7, 2013, 8:31am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/9 "2013-03-07T08:31:25Z")
The words of Bob Murphy pretty much summarize my thoughts on the effects of a minimum wage: > [@](#): > > I am still in a mild state of shock that so many professional economists apparently doubt that demand curves slope downward. He takes a roughshod approach to the data in this [post](http://consultingbyrpm.com/blog/2013/02/i-get-empirical-on-minimum-wage.html), so take it how you want. > [@](#): > > These results are pretty striking. First of all: Notice how high the teen unemployment rate is, across the country. If minimum wage laws have no effect, why should this be so? I am not denying that Krugman could come up with some story, but prima facie this fact in and of itself is a feather in the cap of the Econ 101 textbooks. (Specifically, we’d expect 16-19 year olds to have the lowest productivity, and so they would be disproportionately hurt by an absolute minimum wage law.) > [@](#): > > Now then, if we look at the 19 states that have a minimum wage higher than the federal minimum, the average unemployment rate among teens is 25.2%. In contrast, if we look at the 31 states that have either no state-level minimum wage or one that equals the federal level, the average teen unemployment rate is 21.5%. A pretty big difference, and this is from sample sizes of 19 and 31. It’s not as if you’ve got California driving the result. ---
**Author:** ![ruadh](https://avatars.discourse-cdn.com/v4/letter/r/d2c977/32.png) [@ruadh](https://boards.straightdope.com/u/ruadh)\ **Post date:** [March 7, 2013, 9:24am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/10 "2013-03-07T09:24:03Z")
Was just reading [this article](http://www.progressive-economy.ie/2013/03/effects-of-minimum-wage-on-jobs-market.html) today. Haven’t checked out any of the links in it yet. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [March 7, 2013, 10:11am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/11 "2013-03-07T10:11:58Z")
> [@John\_Mace](#): > > Not really. You made some vague reference to something completely unrelated to the MW. This is a highly contested subject, and it would behoove the debater to be clear on what he is saying. It would also behoove debaters to think about what is being said before commenting upon it. If you did not know what the Laffler curve was, it would behoove you to look it up rather than accuse the debater of being disingenuous. And that’s just dealing with your first point, even though you quoted his response to your second point, in which he did very clearly state that the study he was referencing was not the latest one on the subject. I really do want to learn about the subject at hand, as I know little. It would be really good if people on both sides would try for a debate instead of the usual useless arguing. This goes for both of you. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 7, 2013, 2:12pm UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/12 "2013-03-07T14:12:21Z")
> [@yorick73](#): > > I didn’t read the paper because it’s taking forever to load on my computer but can you explain what you mean by equilibrium point? It sounds like you are saying that a small increase in minimum wage has no effect when the wage is close to where it would be if determined strictly by market effects. This seems like common sense. That’s exactly what it means. The non-common-sense part is that Card/Krueger found a _positive_ correlation between the MW and employment in their original study. They came up with a number of theories to explain how that was possible, but I’m neither a statistician nor an economist so I can’t say if they hold water. [QUOTE=John Mace] Not really. You made some vague reference to something completely unrelated to the MW. This is a highly contested subject, and it would behoove the debater to be clear on what he is saying. [/QUOTE] Move on, guy. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 7, 2013, 3:05pm UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/13 "2013-03-07T15:05:06Z")
[Here](http://www.nber.org/papers/w18681)is a paper from January criticising the design of some of the studies and showing that minimum wage laws do have an effect on unemployment… ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [March 7, 2013, 3:59pm UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/14 "2013-03-07T15:59:47Z")
I doubt you’ll find any evidence that shows a strong relationship between minimum wage increases and any other economic effect. The amount of money involved and the number of jobs affected is just noise compared to the rest of the economy. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [March 7, 2013, 4:03pm UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/15 "2013-03-07T16:03:15Z")
> [@Really\_Not\_All\_That\_Bright](#): > > That’s exactly what it means. The non-common-sense part is that Card/Krueger found a _positive_ correlation between the MW and employment in their original study. They came up with a number of theories to explain how that was possible, but I’m neither a statistician nor an economist so I can’t say if they hold water. This seems to argue against having a minimum wage at all. A small increase in MW over the “organic” minimum seems to suggest that market forces are sufficient to determine what wages should be. The argument for the MW always hinges on the possibility that businesses will pay workers pennies per hour because they can. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 8, 2013, 12:46am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/16 "2013-03-08T00:46:23Z")
> [@yorick73](#): > > This seems to argue against having a minimum wage at all. A small increase in MW over the “organic” minimum seems to suggest that market forces are sufficient to determine what wages should be. The argument for the MW always hinges on the possibility that businesses will pay workers pennies per hour because they can. You should read some articles about how the publishing and fashion industries treat interns. ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [March 8, 2013, 12:59am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/17 "2013-03-08T00:59:09Z")
> [@Voyager](#): > > You should read some articles about how the publishing and fashion industries treat interns. Interns are a different game (check out how Hollywood treats their entry level positions for another horror story). Here is a 2006 paper the reviews other papers: > **[Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage...](https://www.nber.org/papers/w12663)** > > Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, and business professionals. The abstract (I added some breaks to make it easier to separate the points made): > [@](#): > > We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. > > Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. > > However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. > > A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. > > In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. > > Two other important conclusions emerge from our review. > > First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. > > Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups. ETA that Neumark and Card seem to have an ongoing battle on this subject… ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [March 8, 2013, 2:56am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/18 "2013-03-08T02:56:01Z")
> [@TriPolar](#): > > I doubt you’ll find any evidence that shows a strong relationship between minimum wage increases and any other economic effect. The amount of money involved and the number of jobs affected is just noise compared to the rest of the economy. Best post up to that point in the thread. I’m dubious of the OP, because you’re basically saying “I don’t wanna type in a few search terms to get a collection of different academic studies on the minimum wage in the United States, do it for meeee!!” I don’t play that game, but if I did, the articles you’d find mostly show very weak effects from changes in the Federal minimum wage. The OP doesn’t want “armchair analysis” so I won’t go much further than that, but it takes less than an hour to find and read 3-4 studies like you’re looking for and they all basically fall into a few camps. It’s not an overly complicated issue in economics, just not one that is well understood because there are tons of variables (ex: many States are never effected by Federal minimum wage increases, the workforce earning the Federal minimum at times of increase is usually small etc.) and it’s never been important enough to focus the kind of money and time needed for more rigorous and systemic study. That just means no one has a definitive model for how they impact the economy, but we do know it doesn’t impact the economy **much**. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [March 8, 2013, 3:06am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/19 "2013-03-08T03:06:08Z")
The controversy about elasticity of demand for minimum-wage workers seems to be between two estimates: |E[sub]d[/sub]| ≈ 0 and |E[sub]d[/sub]| ≈ 0.15 This should be kept in mind when reading the more sophomoric comments in these recent threads which implicitly assume |E[sub]d[/sub]| ≧ 1 ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [March 8, 2013, 3:50am UTC](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245/20 "2013-03-08T03:50:38Z")
> [@Voyager](#): > > You should read some articles about how the publishing and fashion industries treat interns. Well I guess existing MW laws don’t seem to be having any effect. What’s your point? [Next page](https://boards.straightdope.com/t/the-evidence-concerning-the-effects-of-minimum-wages/652245.md?page=2)