What Fresh Hell Is This?

March 24, 2013

When Studies Collide (Said George Pal To His Bride)

In today's Tribune-Review, Scaife's Braintrust has effectively endorsed this Texas A&M study on the minimum-wage.  They write:
A new Texas A&M study concludes that raising the minimum wage retards job creation. Additionally, the study says raising the government-dictated wage floor would not stimulate the economy. It's so simple and fundamental that even a “progressive” should be able to understand it. [Bolding in original.]
I realize there's a lot of competing economic theories on the effects that the raising minimum wage on our nation's employment.  For example in this discussion via Minnesota Public Radio, the "pro" side says it would  pump more money into the economy since those working minimum wage jobs pay for things immediately.  On the other hand, there's the argument that minimum wage jobs are rarely the primary income for a household and raising the rate too high would make jobs "disappear" and hurt the families you're looking to help.

I'm not here to settle that discussion - oh no.

I'm here to look at some of the details from the study endorsed by the Braintrust.  In the paper's abstract we read:
The voluminous literature on minimum wages offers little consensus on the extent to which a wage floor impacts employment. For both theoretical and econometric reasons, we argue that the effect of the minimum wage should be more apparent in employment dynamics than in levels. Using administrative data in a state-year panel, we evaluate each employment margin directly. We find that the minimum wage reduces gross hiring of new employees, but that there is no effect on gross separations. Moreover, despite having an insignificant discrete effect on the employment level, increases in the legal wage floor directly reduce job growth. Neither labor force turnover nor the entry or exit rate of establishments are affected. [Emphasis added.]
So what they're saying, as I understand it, is that raising the minimum wage, while it would reduce the rate at which new jobs are created, won't effect, on the whole, the current level of employment ("no effect on gross separations" and "Neither...entry or exit rate of establishments are affected").  So raising it won't kill any existing jobs.

Again, I am not here to discuss whether that's true, only to point out how much that idea conflicts with other things we've found at the Trib.

For instance this from last July:
Jake Haulk, a former Mellon Bank economist and president of the Allegheny Institute for Public Policy, a conservative think tank in Castle Shannon, said the minimum wage is bad policy.

"They're fighting reality," said Haulk. "If you force a minimum wage (increase), you're just going to cost people their jobs."
So I guess the study the Trib just quoted is in direct disagreement with the President of the local think-tank that the Trib's owner supports.  And for those who aren't following the numbers, according to the Bridgeproject, Scaife's various foundations account for about 89% of the support given to the Allegheny Institute for Public Policy.  They've given $5,331,000 to the institute since 1955 1995 (sorry for the typo).  Adjusted for inflation that's about $6,629,320 in today's dollars.

I wonder if they'll be correcting themselves anytime soon.  And I wonder how long it'll be before we see the Trib declare that raising the minimum wage will result in people losing their jobs.

No comments: