There are better options than increasing the minimum wage

Recently Jen Doleac (a leading economist in the study of crime and a wonderful person*) came under fire on twitter for saying that if the minimum wage were increased to $15/hr where she lives in Texas, she would hire fewer undergraduate RAs (currently $10/hr) and more pre-docs (people who have graduated college and plan to go to graduate school in the future) at $22/hr, resulting in fewer hires overall.  (Note to people who live in Blue Coastal cities– remember that cost of living in the South is a lot lower than where you live.  $15/hr seems pretty high to me given how low rents are where I live– $500/mo for a studio, much less if you’re willing to share a multiple bedroom place with others, and you still get your own room.)

What bothers me about this, other than Jen being a stand-up person who cares a LOT about people and genuinely wants to do things that help rather than hurt people**, is that the attacks on her are a knee-jerk reaction to a policy option that we still don’t know for sure will help or hurt people overall, and the mitigation of potential hurts is not being taken seriously because somehow raising the minimum wage is supposed to solve problems and not create new ones.  Ignoring potential problems not only doesn’t make them go away, but it prevents us from having comprehensive policy solutions.

The problem with most conservatives is that they want money and power and don’t care who gets hurt (also they have stronger levels of disgust and really hate moral hazard).  The problem with many knee-jerk ultra-liberals is that even though they care a lot, they often advocate for things that sound good but actually hurt the populations they’re trying to help.  (This is why Public Finance is such an important class for everyone!)

We don’t know if raising the minimum wage helps or hurts, because if minimum wage gets too high, employment will drop.  Yes, in our current environment it is probably too low now.  Yes, $100/hr is probably too much and will result in more robots and fewer jobs.  (Or in the undergraduate RA case– fewer paid RA positions and more unpaid class credit positions.)  Is $15/hr the right number?  $25?  $10?  It is really hard to say.  There are well over 500 papers examining the effects of the minimum wage.***  We do know that when firms have monopsony power****, employment goes up when the minimum wage is raised a little or in environments that can bear the increase.  It seems likely that a minimum wage increase may have short term benefits to employment outcomes, but then decreases employment over the long term (that is, firms don’t fire people, but they don’t hire as much when people leave when the wages are higher).  There’s a lot of newer evidence showing heterogeneous effects of minimum wage increases and it helps white dudes most and in some cases hurts black men and sometimes women.  So even if it helps on average, there’s a good possibility that large increases in the minimum wage will hurt our most vulnerable.

What does work?  Well, the evidence for the EITC is extremely strong.  Even researchers and policy makers who were EITC deniers back in the 1990s have come around because the evidence is so strong.  (What is EITC?  it’s basically a tax program that subsidizes wages for low income people.  Sometimes knee-jerk folks think, this is the government subsidizing big companies, and they are not wrong.  But are you trying to punish companies or are you trying to help people?  What is the end goal?  In theory, the EITC could be combined with a stronger corporate tax, but in reality…)  So Jen Doleac says, we need to expand the EITC.

But the problem with the EITC (as with increased minimum wages) is that you have to work to get it.  There are a lot of people who, for whatever reason, cannot produce enough to make even $7.50/hr.  You’ve probably worked with people who actively decrease other people’s productivity (possibly even had a boss like that).  Then there are people who are just not capable of regular work.  Now, we do have a disability program and TANF and WIC and etc. but this is not a comprehensive social safety net.  I fully believe that in a country as rich as the US even people who are not capable of being productive enough for a firm to hire them at minimum wage should be fed and sheltered and clothed and provided healthcare.

So what is better than increasing the minimum wage?

Basic Income.  Give everybody enough income that they can live a minimal subsistence lifestyle without working.  Yes, there will be moral hazard– lots of people will work less under this system.  Even potentially productive people.  I don’t care.  Some people shouldn’t be working (though because discrimination is real, under our current system that doesn’t necessarily map to the people who aren’t working) and I am ok with this (not ok with discrimination though).  As long as the basic income isn’t too high, most people will still want to work at least somewhat because most of us don’t want minimal subsistence lifestyles.  Then you can combine basic income with EITC, single payer health insurance, and stronger corporate taxes and there’s no longer even a need for minimum wage or disability or TANF or a whole lot of other expensive red-tape programs.   Of course it’s easier to change one program than to change a number at the same time.  And it’s likely corporate taxes would be dropped later without changes to basic income or EITC, which could be problematic.  We don’t know that much about the effects of basic income because it’s never really been tried on a large scale, but in theory the effects aren’t ambiguous like they are for minimum wage.  Productivity will drop but average well-being will improve and children will benefit from the stability.  (There’s details… how much should geography be taken into account etc. Subsistence income in Manhattan is very different than say, rural Montana.)

Now, from a political standpoint, you may say that increasing the minimum wage is an easier sell than completely restructuring our welfare system to basic income, and you would be right.  Basic income is probably less feasible.  Expanding EITC may be more feasible, and may be a better option, but, of course, it does have the problem that it’s the government subsidizing firms that provide low wages.

I hate the way that well-meaning people often label people as terrible because they don’t think about the potential negative consequences of the programs they’re advocating for.  When I was living in paradise, I was constantly bombarded with requests to sign petitions in favor of rent control.  To help the poor people, they would say.  But what happens with rent control?  You end up with more condos, fewer rental units, and what rental units there are the landlords become abusive and stop keeping up the residences.  (And you end up with current tenants making a mint subletting…)  In the end, some people benefit enormously, but generally not the poor people who are likely to need to move from time to time for work.  What is a better policy?  To remove the rules that buildings can’t be more than 2 or 3 stories and allow high rise apartments to be built.  But nobody wants that!  It’s really a policy to protect people with safe jobs already living there and to keep outsiders out.  There’s simple economic theory behind it, just as there is for minimum wages (same graph, actually, taught in the same section of Micro 101), but there’s also robust empirical evidence that rent control never helps the people it claims to help.  Rent control hurts poor people.  Allowing more units to be built helps poor people.  But “people who care” listen to the NIMBYs with their specious arguments and want rent control, not high-rises.

Some economists are bad people.  I cannot disagree that there are some people who choose this field because they really identified with the simplistic assumptions of Econ 101 and then they never took a public finance course because they don’t believe there’s a role for government or that that could be a useful course.

But there are legitimate reasons that economists who do care about things will disagree on the minimum wage and the cut point for the minimum wage.  (And a lot of this is going to depend on geography!  Housing costs alone vary enormously.)  Bringing these potential problems up does not make an economist a bad person.  Good economists who are good people want to do things that genuinely help and they do not want to accidentally hurt the people they are trying to help.  Good economists care about unintended consequences and they advocate for policies that help the most vulnerable.  (Bad economists just care about reducing moral hazard at the expense of total social welfare.)

Don’t just knee-jerk say someone is a bad person because a tweet on a complex issue doesn’t agree with Bernie Sanders.  One of my colleagues from Vermont says that nobody ever goes to Bernie for help because even though he talks a good game, he doesn’t actually do anything.  Complex issues are complex.  There are trade-offs.  And you can’t demonize someone for bringing up the trade-offs.  Because when you do that, you end up hurting the people you want to help.  Republicans have blinders on.  Democrats don’t need them too.  Evidence-based policy for all!

*I don’t know her very well, but I have seen her present several times.  She’s an extrovert and very good with faces and names, so she knows everyone and everyone knows her.  I am basing her wonderful personness on the body of her work and her interpretations of said work.  She asks important policy questions that show she cares about people and doesn’t start with bigoted assumptions like some economists do.  As a caveat, I didn’t much care for her naloxone paper when it came out but I can’t remember why not.  I think there were competing papers and I found the other one more convincing, but I’m not sure.

**She has a wonderful Ban the Box paper that shows that it decreases hiring among young black men but increases it among women and older black men… and of course white men.  IIRC, she has another paper on how algorithms and machine learning predicting recidivism will be racist if their inputs are racist.

***Many of the people who study minimum wage are jerks to each other.  There’s two big camps that have nasty arguments because results are extremely sensitive to specification choices and I recently told my managing editor I did not want any more minimum wage papers as co-editor.  People working on minimum wage are mostly white dudes because nobody else wants to get into the fray.  But there are a lot of them.  Note that because there are over 500 papers, you can find a paper that supports whatever your agenda is!  And the top economists disagree with which ones are better quality (and yes, there’s a correlation between their political ideology and whether or not they believe they should include state specific time trends, for example).

****Monopsony power is like monopoly power except the firm is the only purchaser of inputs, for example, it’s the only employer in town.

Disclaimer:  I am currently paying undergrads $14/hr which is higher than the university average, new grad students $15/hr (I have to get special permission for this!), and experienced grad students $18/hr (for some reason the top salary allowed for experienced student workers is higher than for starting student workers).  I don’t have pre-docs or post-docs.

I imagine this post might spark some discussion, but my Monday only has an hour free between in-person class and zoom meetings, so I might not be able to moderate/respond until late or even Tuesday depending on how exhausted I am and how much attention I have to pay at the meetings.

35 Responses to “There are better options than increasing the minimum wage”

  1. revanche @ a gai shan life Says:

    I saw that go down and wondered why, if this is such a nuanced issue, she seemed to approach it with such a flippant set of tweets. I assumed it was more nuanced than I knew, at least, not being up on all the literature about it or the policies and politics behind the arguments on either side and I’m too used to y’all discussing these things at blog length, not in sound bites.

    • nicoleandmaggie Says:

      She was making two very simple points: 1. minimum wage increases can decrease employment and change who is employed (shifting from less educated to more) and 2. this will vary by geography. These things are both true and there was no reason for the “woke” “liberal” mob to come after her.

      • Steph Says:

        Geography does clearly have to be involved in any conversation about minimum wage or UBI, although I don’t see where she covers that in her thread. $15/hour would still be less than what I made as a graduate student in NYC (~$16-17/hour, assuming a 40 hour work-week and 2 weeks vacation/year), and that was barely live-able as a single person with no dependents.

    • Steph Says:

      This was my interpretation of the situation as well. Her initial tweet especially came off as callous. Even if there are legitimate arguments against increasing the minimum wage, the conversation about student support goes wider than that – training undergrads (and post-bacs) feeds the talent pool for your field. You also don’t have to pay the same fringe costs for undergrads through the NSF, at least (it’s “participant support”, not wages).

      Also also, most of the folks I saw responding to Doleac’s tweet already call out problems of privilege in who gets undergrad RAships, where underprivileged students aren’t offered paid positions or need to work elsewhere to make ends meet.

      • nicoleandmaggie Says:

        I dunno, most of the tweets I saw retweeted were attacking her directly for making too much money and for not wholeheartedly supporting the minimum wage without caveats. And then the naloxone paper proving what a terrible person she is (which, if the results were robust would suggest the need for additional policy interventions when naloxone was introduced to an area, or, depending on the cost of naloxone would suggest spending the money on other policy options if they were more effective at saving lives/decreasing ODs).

        I think NSF has us pay different fringe costs for undergrads depending on whether they’re in the UROP program which is coded as scholarship or just hourly workers.

        Completely randomly, all of my RAs right now are (paid) minority students (except the grad student from Eastern Europe who is a religious minority).

        Several of the guys at TAMU are very active in pipeline initiatives for minority students, especially Hispanic students. A couple of my friends at unis in TX give a talk every year at their Hispanic pipeline conference. I don’t know how much Jen Doleac is involved though.

    • nicoleandmaggie Says:

      Also, I have to add if her university is like mine (and it seems like all big public unis in the South follow the same trends), the process for hiring an undergrad just became a ton more complicated in terms of paperwork and I’m STILL waiting on one of my TAs who I put in the first part of the paperwork for back in December to be approved even though it’s the third week of classes (I also had to post a sham job ad which is super irritating). For some reason grad students don’t have that kind of paperwork hassle. A pre-doc would though, and we’re not currently allowed to hire them unless we can pay them off a grant, which is really annoying because I have a former student who is coauthor on two papers and I can’t pay her from my bursary and my grant money for those two projects has run out. (So… I have been sending her checks from my own personal money but I can’t get too high or there will be tax implications!)

      So I sympathize about the paperwork– I assume she’s gotten the increased undergraduate hiring paperwork without the hiring freeze. Or maybe she’s using NBER grant money for the pre-doc.

  2. CG Says:

    Ugh, the arguments about rent control. Those bug me almost as much as the pro-affordable housing people who fight against new market-rate housing because they don’t understand how filtering works in real estate and think that limiting housing supply will somehow make the city more affordable. SMH. However, that is a dispute among lay people, not academic urban planners. As far as I know, academic urban planners get it. We do have debates about if/how local governments should incentivize/require affordable housing, with some arguing that if you make affordable housing requirements too burdensome, you will get fewer units overall, which is bad for affordability. I’ve mostly come down on the side of just relaxing zoning restrictions to allow supply to better meet demand than spending a lot of effort to create dedicated affordable units because they are expensive and only help a small percentage of people. But there are certainly things I don’t talk too loudly about (and I am not on twitter) because they are more nuanced or I don’t think the most left position is the best idea or will work politically/pragmatically. For example, loud calls for eliminating all single family zoning districts scare the crap out of homeowners, even otherwise sympathetic ones, and as such I think they will cause a backlash against the good work affordable housing advocates are trying to do. Is single family zoning based on racism and classism? Yes! Is it doing ongoing harm? Yes! Should we just blow it all up right now? Probably not! I’m glad there are people who are out there who think in a more radical way because we need them and I appreciate that they challenge me and push my thinking. But temperamentally I am not one of them and I don’t want to get in their way.

    • nicoleandmaggie Says:

      Yeah, pretty much all academics know that rent control is bad. I wonder if most academics know that the science isn’t completely in on minimum wage increases…

      • CG Says:

        I didn’t, but I’m not an economist. :) I appreciated your discussion–I’m always interested to learn more about econ. My econ education was pretty minimal.

  3. Jenny F. Scientist Says:

    Minimum wage aside (I too would change my hiring based on wage considerations!) I read the naloxone paper and it was not great; there was a set of assumptions about opioid users which are not reflective of reality, and also, letting people just die does not, in fact, reduce opioid use.

    Anyhow, a living wage situation of some sort seems highly desirable to me. I don’t pretend to your level of expertise, but surely we can change something!

    • nicoleandmaggie Says:

      I’m thinking maybe the better paper was by Ellen meara? This is something I could look up but likely won’t. But theoretically there could be more overdoses (not more use, more ODs) if people think they will be saved. Sniff test probably not. But it’s theoretically possible. I would want much more evidence than one study before changing policy.

      • Jenny F. Scientist Says:

        Yeah, I meant more that we do have data that the availability of naloxone does not increase overdoses, just… fatalities. Not least because overdoses in the last decade are largely from carfentanyl and fentanyl, so it’s not that people were using more, it’s that QA on street drugs is not good. (Surprise!) The Doleac paper is from 2018, so the data were already there. And it assumes that naloxone availability is the only driver of opioid-related hospital visits and/or mortality, which is clearly fallacious.

        I am also too lazy to find the much-better paper on the topic I recently read…

      • nicoleandmaggie Says:

        Economists are always overturning results where it looks like X–> Y but it’s just that X and Y are correlated, not causal. So it’s not crazy to have someone write a paper on something we already “know.” Often these papers end up just getting more precise results (the “credibility revolution”) but sometimes they overturn the results. Presumably she is using data for the paper! Also I’m not sure that any paper would be assuming that naloxone availability is the only driver of opioid-related hospital visits, just that naloxone is the only driver of opioid related hospital visits that is affected by whatever source of exogenous variation the paper uses, which is a weaker assumption.

        Again, it’s been a long time since I saw this paper (earlier than 2018– I presumably saw a working paper), and it’s not the only econ paper I’ve seen on the topic.

  4. First Gen American Says:

    I have one good datapoint. I have a friend that has severe mental health diagnosis, and although brilliant and very capable, she can’t work 9-5 consistently. She spent years going on and off disability. She finally just decided to stay on permanent disability and tries to keep her income below the threshold of losing it. That was a sustainable solution for her as you could imagine how stressful it is to be dealing with a mental health episode and losing your income at the same time. I don’t begrudge her having it and I don’t feel like she is taking advantage. She lives a very Spartan lifestyle to enable it all to work.

    It’s all so hard. I had a big long response on all the pitfalls but at the end of the day, I prefer having an imperfect safety net for the people who need it most than nothing.

    • nicoleandmaggie Says:

      It is very hard! I used to think that if it were easy we’d be doing the right thing, but then Trump reminded me that there are a lot of people out there who want to do the wrong thing because they’re actual villains, not well-meaning wrong-headed people.

  5. Becca Says:

    I’m sure Doleac caught flak for any number of reasons, including but not limited to: Twitter being a poor medium for nuance; pre-existing angst about minimum wage debate within the field causing everyone to dig in their heels (indeed, I appreciate the background you provided which may partly explain the tone of her tweets); she’s a woman in economics; the twitter drama algorithm screwed her. I’m glad you like her and I think there are some very important questions in her body of work. I believe she does actually care about people and how policy impacts them.

    Also, to be very blunt, if I were a women in economics anytime I saw a mob come for a fellow woman in economics, I’d be tempted to take her side. Much of the twitter pile-on was unfair.

    BUT (you knew there’d be a but here)… I’ve been following her on Twitter for a while. I think she got a whole heap of criticism on this exact issue in part because of how she chose to describe her undergraduate RAs. To be very blunt, when an economist says “unskilled labor” I hear “skilled labor that is not respected”.
    (I realize within economics “unskilled labor” is not *intended* as a loaded, insulting term. Within medicine, referring to a 39 year old woman as “elderly primigravida” is simply the standard technical jargon, but you bet your buttons my Mother did not take kindly to such a phrase as a patient, and I don’t blame her one bit. The term “unskilled labor” is garbage and should just be avoided entirely).

    It costs $725/month to rent a studio in College Station, Texas. It costs $3,308 for the average student to take a 4 credit hour class with Professor Doleac, not counting debt and opportunity cost. The university is the largest employer by a factor of about 10X. One of the other local employers is Sanderson Farms (https://www.kbtx.com/content/news/KBTX-Investigates-More-than-two-dozen-COVID-19-cases-at-local-poultry-plant-570559221.html).
    She should pay her RAs $15.

    Good economists recognize when their own financial / professional interests may influence their views of policy. Good economists know when monopsony power is working *for* them. Good economists also recognize how the significant market demand for “economist to go on teevee and tell partisan politician types exactly what they want to hear” might also influence the debate on minimum wag.

    Given a specific set of values, there is an optimal policy. There is also a powerful Restaurant Association of America lobby. This is not necessarily a situation where I believe “if it were easy we’d be doing the right thing”. Because the right thing for workers, and policy makers, and society, is not necessarily the best thing for owners of businesses.
    Now. That does not necessarily mean we should have a $15 minimum wage everywhere. However, we’ve been arguing about #FightFor15 since at least 2012 (longer, if you count clamor for it arising from Occupy not just the fast food strikes). There is a lot more data from places that have tried it, and also inflation has eroded what that $15 represents. I think it is time.

    It will cost some jobs. It will also be hard on small businesses. Which is precisely why we should do it right now- with the PPP /Covid related mechanisms to help small businesses, we can absolutely help them make the transition if they are committed to doing right by their workers.
    But available evidence points to it also lifting many people out of poverty. Available evidence does not point to a huge loss of jobs. Available evidence does not suggest that the significant regional differences in housing cost will be increased by the combination of increased buying power and more mobile higher wage earners.

    I also agree 100% on dramatically expanding the EITC. And also the Pell grant should be doubled, and quadrupled for students with caretaking responsibilities. And the government should fund short term disability as well as long term disability, and it shouldn’t take years and lawyers to qualify. And while we’re at it, I’m not opposed to baby bonds or a UBI either. We can do more than one thing. But I think we are well overdue for the minimum wage increase.

    • nicoleandmaggie Says:

      It is true that I do not follow her (or any economists!) on twitter. (Though I do check in with nomadj who is wikipedia brown’s husband(!) from time to time, but that’s about it. Everything else I just see in retweets.)

      Google is telling me that “studio apartments in College Station TX range from $469 to $2,052,” although of course this is not the time of year to be looking for them! A more accurate view would be gotten right before school starts when everyone is moving in. I also do not know how much dorms cost. And Texas A&M sounds pretty cheap for a college degree! (Side-eye to Harvey Mudd/Vanderbilt/all the places we’ve been getting college mail from…)

      It’s hard to use a different jargon term because “educated” labor ignores all the skilled labor that does not require education, just experience which economists, contrary to reputation, absolutely do not ignore (I have been guilty of using the term education when I mean to include apprenticeships). Unskilled labor is generally the kind that could be/is being replaced by robots and doesn’t require experience or education. Economists don’t think poorly of unskilled labor– it is just in the current environment of skills-biased-technical-change (another jargon term) there’s too much labor available for the jobs available for labor-that-does-not-have-generalized-or-specialized-skills and there’s not enough skilled labor, given that we have a minimum wage (otherwise wages would adjust downward because of the oversupply of uneducated/untrained(?) labor). This is why ALL economists (even the evil ones who don’t believe income inequality is a problem) want to get more people educated/trained. It will make the economy more productive. Everybody should have access to I dunno, free college or free training of their choice except from predatory for-profit institutions that take money but produce worse outcomes than community colleges.

      “Available evidence does not point to a huge loss of jobs.” Except– half the evidence says it might. This is NOT a settled question. YES it helps some people, those who keep their jobs, and those who are hired by monoposonies. BUT in the long term it may hurt people (I am a huge fan of the Meer and West paper on this topic that does a good job reconciling Card and Kruger with Neumark by looking at short-run vs. long-run outcomes, AND explains where the differences in Dube vs Neumark come from in terms of specifications– that’s also out of Texas A&M, and Jeff Clemens and separately Martha Bailey also have some pretty clean evidence showing that raising the minimum wage may HURT black men on average even as it helps white men because employers are discriminatory and are only willing to hire black men if they can pay less than their productivity.) Like I said, you can find papers on the minimum wage, and seemingly well done papers, that completely disagree with each other because of what they decide to include in their regressions or what time periods they’re looking at or who they’re looking at or what changes their looking at. Clemens has some beautiful work that shows raising the minimum wage in a boom is less problematic than during a recession. There is a LOT of stuff and people keep writing papers. It isn’t settled and we’re only very recently starting to have people come in having nuanced conversations rather than arguing Dube/Card and Kruger vs Neumark ad infinitum. Note that Paul Krugman doesn’t report on Neumark and similar folks, only Card and Kruger and similar folks so it seems like the argument is decided, but it really isn’t.

      Is $15 the right number, I don’t know. I would predict it won’t make any difference in much of the country because it’s not binding.

      I think you’re thinking too small re: Pell grants. And our disability system is ridiculous (I have a LOT of friends working on that topic since SS decided to fund research on it not too many years ago).

      But seriously, I’m most worried about the people who don’t/can’t work steadily. Even the folks with the three part-time jobs– part of the problem is that those jobs aren’t stable so they bounce on and off of programs (jargon term: churning). I want a minimum sustenance baseline without (and this is the important part) any work requirements. Because too much of our welfare system is now tied to work.

      • becca Says:

        I agree completely that economists “want” people to be specialized in their roles and that high quality education and vocational training are incredibly important pieces of that puzzle. To the degree “unskilled labor” is a term used in the literature of people advocating for those specific things it does not imply evil intent! But it will always rub me the wrong way on twitter, and I’m not alone in that. I long ago abandoned the pedantic hill to die on of “Covid19 isn’t airborne” just because it’s transmission patterns to date are most consistent with predominantly droplet based spread- ordinary people need to think of it as airborne if we’re going to have a hope of finishing stronger than we’ve been doing (even if, in the virology technical literature, that is not the correct jargon).

        As an aside- the thing I am actually most excited about robots doing is the interventional radiology medical specialty. So I’m not terribly inclined to equate “robots will change this job” as a proxy for “this job is low skill”. But I digress- there certainly will be robots in many types of tasks and vulnerable workers upset by changes in how things are done.

        But for the actual minimum wage question- where does it end? If we lowered the minimum wage and more black men were hired, is that the only outcome that matters? Because I am sure there are plenty of Southern people willing to hire plenty of black men for the low price of “free”. We’ve been there before. Workers are not paid based on their productivity. Workers are paid the least that employers can get away with, that’s why minimum wage exists. They can get away with paying less for workers more exploited by society. https://www.salon.com/2017/10/15/they-thought-they-were-going-to-rehab-they-ended-up-in-chicken-plants_partner/

        Wages should support workers. I’m inclined to say 1.5 minimum wage jobs should support about two adults and two kids. $15/hour is a justifiable number in those terms, for far more people in the US than $7.25. It is not necessarily a perfect number. There may be more optimal numbers, but wages should relate in some way to the material reality families experience, and what we have historically defined “jobs” to be. Or we need to build the infrastructure to support people who do not work in the formal economy FIRST. Which, frankly, is my preference. But we aren’t currently paying SAHM $40k minimum salaries.

        None of which is to say that the complex and nuanced literature on minimum wage boils down to only one specific possible conclusion, and that I know The Correct Path and others are Intentionally Misleading People. I understand it is complex and we should definitely still study empirically the impact of different options.

        HOWEVER. Studying those options is not a substitute for action. Let’s be real: most politicians who actually make these laws will never personally read an economist’s work (to be 100% explicit, that is a dig on politicians [most of whom will not read either an education or epidemiology paper before deciding on a policy re: Covid19 school closing, for instance], not economists). The political will is there, and I firmly believe it will help more people than it will hurt. Including vulnerable people.

  6. Ali Says:

    It was brave/stupid of her to post that on twitter, but I can understand where she’s coming from. I hire ugrad research assistants with a very limited pool of $. In my field, lots of labs don’t pay research assistants. and there are WAY more interested students than available spots. I always pay, but just $10/hr the first year. If the min wage is $15, I would have to work with fewer students. (or rely more on free labor, which seems more unfair than $10/hr). Definitely tough decisions.

    • nicoleandmaggie Says:

      I know, right now I have a lot of RAs but my NSF grant is ending in May and I’ll be back to being able to have just the one-year grad student that my department pays for (at $18/hr) and whatever I don’t use for travel from my bursary (which generally pays for 2 conferences). I have a colleague who doesn’t pay OR give course credit OR provide coauthorship (I try to do $ and coauthorship if I can!) despite having grants. (She’s also the person I was complaining about in this past week’s link love who is now swimming in departmental money.)

  7. Debbie M Says:

    Oh, yes, I am so sick of people promoting things that sound good but do not work (both those that have already been proven not to work and those that obviously would not have affected whatever incident is inspiring the thing). (Not to mention those people who promote known sickening things for evil reasons and try to make them sound good.)

    On fighting poverty, another issue is how flexible the border is between getting free money/benefits and not getting it. Too often you get punished by working more. There should be better phasing, maybe like (I think) there is with working while collecting social security.

    Thanks for this analysis. I especially like this part: “As long as the basic income isn’t too high, most people will still want to work at least somewhat because most of us don’t want minimal subsistence lifestyles. Then you can combine basic income with EITC, single payer health insurance, and stronger corporate taxes and there’s no longer even a need for minimum wage or disability or TANF or a whole lot of other expensive red-tape programs.”

    • nicoleandmaggie Says:

      Yes, churning (losing benefits because you temporarily are ineligible) is a huge problem with a lot of public programs. I don’t think it really affects minimum wage, EITC, or basic income though! The minimum wage will have effects on churning though… and those effects will vary dramatically by worker protection laws within a state.

      Higher minimum wages I think are a safer policy when we have a pre-1996 version of welfare that isn’t tied to work. Although pre-1996 welfare was mainly for women and kids and didn’t help displaced men all that much. When everything is tied to having employment, anything that lowers employment is going to have bad repercussions for a segment of the population.

      It sounds like I’m talking myself out of an increased minimum wage, but what I am more concerned with is not passing a higher minimum wage without accompanying legislation that takes into account any potential negative effects. A policy can cause harm to a specific group and still be a good policy so long as steps are taken to mitigate that harm. (See: trade agreements, climate change legislation, etc.)

  8. Colleen Says:

    Beyond the issue for non-wage earners (and people under 26, etc.), my understanding is that approximately 20% of eligible EITC recipients fail to claim every year. Does that concern you or economists generally? I worry about administrative burden.

    (Not the point of my comment, but $10/hour did seem low to me. I made $9.25/hour in college about a decade ago in a cheap, rural Midwestern town.)

    • nicoleandmaggie Says:

      Absolutely, our jargon term is take-up (and our jargon term for “administrative burden” is “red tape” though we know to talk with polisci and public administration using the term administrative burden) and it is a big area of study in public finance. With EITC it is especially concerning because it is generally the worst off who are not taking up because of their circumstances and generally not needing to file taxes. (Basically anyone who files taxes and is eligible for EITC takes it up– even people who wouldn’t take unemployment don’t see it as a government handout.) Before she had kids, one of my econ friends worked at a women’s shelter every tax season to help battered women get the EITC that they didn’t know they were entitled to.

      Re: college wages. Thinking back to my own experience, it is complicated. The way my fancy college handled work study was that they offered it broadly (and I was semi-required to do it as part of my financial aid package) but forced the wages to be low (even in an expensive city)… but also it didn’t matter because a need-based scholarship provided most of my room and board and my income went entertainment and savings? So wages were low, but the school was extremely progressive in terms of money. If wages were higher, they’d have to offer less work-study (unless federal guidelines on work-study changed) and I don’t know how financial aid would be affected more generally– I’m guessing they would offer less to the lowest income (who would be still eligible for work study at the higher wages) and a little more to the lower income (who would no longer be eligible for work study). But who knows. There are a lot of moving parts.

      • Colleen Says:

        Thanks for answering! That’s helpful information on the EITC.

        The college wage stuff is definitely complicated. Work study was more limited at my college, I think.

  9. Omdg Says:

    I really appreciated this post. Not only did you describe the economics clearly and in a way that a non-economist should be able to understand, I love that you described this piling on phenomenon that you observed online. I’m not sure why it is so important to people for others to agree with absolutely 100% of what they say at all times, and that a conflicting viewpoint or questioning of any aspect of the argument is not tolerated, but that appears to be reality.

  10. solitarydiner016 Says:

    Thank you for an interesting and thoughtful post. I have a question about your comment on basic income that “lots of people will work less under this system”. Is there evidence for this? I have read a bit about the Canadian example of “Mincome” in Dauphin, Manitoba, and my understanding of the experiment was that there wasn’t a significant increase in unemployment, and that the people receiving a basic income who didn’t work in many cases used that income to go to school or to parent their kids. (https://www.bbc.com/worklife/article/20200624-canadas-forgotten-universal-basic-income-experiment) I’d love to hear your thoughts!

  11. ccerebrations Says:

    I think a major point you’re missing out on and what she missed out on in her post is most undergrad RA positions are not full time. So $15/hr isn’t actually that much when you actually take into account the hours. Most undergrad RAs do what? 10-20 hours/week, that’s 600-1200/mo without taxes taken out which makes even a $500/mo studio kind of questionable if the person is also expected to pay for groceries, transportation, phone, etc.

    I did subtweet in response to her but I have a point to not make ad hominem attacks and to only join in discourse politely. “I was offered a UG RA position at $12/hr 10hrs/wk. Turned it down for a non-RA job at $17/hr 40hrs/wk. Not getting the research experience made getting into a PhD program difficult. But would I do it again? Yes bc only one afforded a roof overhead & food on my table… #phdchat” Also mind you that this $12/hr was back in 2010 at a PUI in a low cost area so it was actually pretty decent. Great professor and I appreciated her trying her best for me! But still not enough to make ends meet. But this brings up a point one of your other commenters made about privilege. I think if we’re going to expect graduate students to have research experience when applying we need to take into account paying them liveable wages as undergraduates so they can get that experience otherwise we are just widening the gap.

    Anyway, I definitely like the idea of EITC but I think that also needs to come with a wage increase. And I do wholeheartedly agree that people need to calm down when responding to takes they don’t like on Twitter. But at the same time she could have been more mindful of her audience, maybe flushed out what she was saying a little bit more or asked for a discourse instead. I don’t think anyone can say it’s a shocker that saying what she said would not get a good response.

    • nicoleandmaggie Says:

      I think the point you’re missing out on is that much of the developed world manages to pay students stipends for living expenses through the government without requiring work.

  12. nicoleandmaggie Says:

    My friend who follows econ twitter says that it has moved on from arguing about the minimum wage to arguing about whether the covid package is so big that it will cause inflation.

    I say, these things are connected– if the covid relief package does cause inflation then a $15 min wage nationally won’t be a problem!


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