Smart. Sharp. Funny. Fearless.
Thursday, December 8, 2016

Debunking Chris Christie’s Minimum-Wage Mythology

Debunking Chris Christie’s Minimum-Wage Mythology

If there is any upside to the constant blabber from a politician like Chris Christie, it is that he blurts out what others like him would never say in public – for instance, his recent remarks at the U.S. Chamber of Commerce.

“I’m tired of hearing about the minimum wage,” said the boorish New Jersey governor, a sentiment no doubt shared by the assembled big-business lobbyists and by most of Christie’s fellow Republican governors. “I really am. I don’t think there’s a mother or a father sitting around the kitchen table tonight in America saying, ‘You know, honey, if our son or daughter could just make a higher minimum wage, my God, all of our dreams would be realized.’ ”

Like him, several Republican governors have vetoed a proposed minimum-wage increase during their terms, and a few have even questioned whether there ought to be any minimum at all. Christie doesn’t go that far, although he campaigns and raises money for those who do, but he evidently believes that paying even a poverty-level wage to the poorest workers is damaging to the economy. And the would-be GOP presidential hopeful also believes, as he suggested to the Chamber of Commerce, that the minimum wage mainly affects teenaged and casual workers.

The notion that minimum-wage increases slow down economic growth and employment is an old Economics 101 myth, bolstered last winter by a Congressional Budget Office study that said increasing the federal minimum to just over $10 an hour might cost up to 500,00 jobs.

According to conservative economists, the minimum wage decreases demand for unskilled labor by raising the price. Simple enough, right? Or maybe that formulation was too simple — because putting extra dollars into the hands of those who spend it immediately, on food, clothing, and other essential goods, boosts the economy.

We have accumulating evidence, from a real, ongoing experiment, that raising the minimum wage is actually beneficial to the economy and not only doesn’t hurt employment, but helps create jobs. The experiment is taking place in 13 states that raised minimum wages above the federal level earlier this year, where results can be compared with all the other states that continued to let wages stagnate. So far, every comparison of employment rates for teenagers and adults with a high-school education or less between the two categories of states has upset the old assumptions about minimum-wage effects.

Six months after wages went up, federal data indicated that jobs were growing more rapidly in those 13 states than in the rest. The most carefully controlled recent study, conducted by two economists at the University of Delaware, with numbers released last August, showed that there was no dropoff in job growth in those states, which continued to have a slight, though statistically insignificant, advantage over states where the minimum wage wasn’t raised.

“There is no evidence of negative employment effects,” wrote the University of Delaware economists, Saul D. Hoffman and Wai-Kit Shum, “due to the increases in state minimum wages.”

Whether those comparisons will remain valid into the future remains to be seen, although there is an increasing set of studies, both national and international, suggesting that the conventional wisdom about the effects of minimum-wage increases is simply wrong.

What we know for certain – and what the CBO report last winter emphasized – is that increasing the minimum wage is good for poor families and low-paid workers. It improves family incomes, reduces dependency on welfare and other income support programs, and chips away at the worst effects of economic inequality. Raising the federal minimum to $10.10 an hour, as the president has proposed, would increase net real income to poor and working families by up to $17 billion and move about a million people up from destitution.

But the minimum wage isn’t a panacea.

After Chris Christie vetoed an increase in the Garden State, Democratic legislators put it on the ballot and the voters approved raising the minimum wage from $7.25 to $8.25 an hour. Yet while 4 of the top 10 states in employment performance this year were among those that raised the wage — specifically Washington, Oregon, Colorado, and Florida — Christie’s New Jersey was not among them.

So bad was his economic management that New Jersey marked the worst performance of any state, period — with a net decline in employment of more than half a percentage point by last summer.

No wonder he’s tired of hearing about higher wages. And no doubt working families are equally tired of hearing about him.

Click here for reuse options!
Copyright 2014 The National Memo