Because HRC wont Answer Questions, does this mean reporters can ignore policy statements? Her economic speech at the beginning of the week had good parts and moments reminiscent of her husband’s sprinkling of crumbs to a leftist base that was suspicious of him since spring ’92. Paul Krugman looks at the canard regarding the hazard of raising the minimum wage:
Until the Card-Krueger study, most economists, myself included, assumed that raising the minimum wage would have a clear negative effect on employment. But they found, if anything, a positive effect. Their result has since been confirmed using data from many episodes. There’s just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America.
How can this be? There are several answers, but the most important is probably that the market for labor isn’t like the market for, say, wheat, because workers are people. And because they’re people, there are important benefits, even to the employer, from paying them more: better morale, lower turnover, increased productivity. These benefits largely offset the direct effect of higher labor costs, so that raising the minimum wage needn’t cost jobs after all.
The direct takeaway from this intellectual revolution is, of course, that we should raise minimum wages. But there are broader implications, too: Once you take what we’ve learned from minimum-wage studies seriously, you realize that they’re not relevant just to the lowest-paid workers.
Yet this canard has totemic power for the Beltway class. Like debt reduction and Simpson-Bowles, it’s a sign of intellectual seriousness if a politician commits to it.