The Card-Krueger study that claimed increasing minimum wages won't hurt employment has been cited thousands of times in other studies, but almost nobody has ever looked at it and seen what a complete disgrace it is. Had a study like this been submitted to a journal in any real science it would have been tossed in the trash, yet Card won an economics Nobel for it.
In my book with the same name as my Substack, I wrote an appendix exposing its flaws. I don't think I can attach the appendix to this comment but I'll be glad to send it to anyone who wants to write me at rick [at] rickteller dot com. To give you an idea of a few of its flaws:
1. The law raising the minimum wage in New Jersey was passed over two years before it went into effect, giving restaurant owners a long time to change their ways to reflect the coming jump in wages. Yet the "before" in the study was only a few weeks before it went into effect, ignoring everything owners had done for two years to reduce labor expense before then.
2. In the early 1990s fast food restaurants were still growing very fast at the expense of mom-and-pops, yet the study didn't survey the latter. The lack of employee layoffs likely largely reflected fast food restaurants grabbing share as the mom-and-pops went under.
3. In the US, the owners of one or a few fast food outlets must typically personally guarantee the lease payments. The study looked at employment less than a year after the increase went into effect. But even if an outlet was losing money, it doesn't make sense for it to shut down until the lease ends, because the owner is on the hook either way. The study never bothered to check if leases ended after the study's "after."
There were just some of the flaws I covered. As I summarized it, more politely than I would have said in person, "Economists can advance very far in their profession despite being unaware of how businesspeople think and operate."
No, minimum wage workers don't *EARN* more, they are *PAID* more. The *ENTIRE* *POINT* of a minimum wage is a floor below which regardless of the value of the work, the *PAY* cannot drop.
The Card-Krueger study that claimed increasing minimum wages won't hurt employment has been cited thousands of times in other studies, but almost nobody has ever looked at it and seen what a complete disgrace it is. Had a study like this been submitted to a journal in any real science it would have been tossed in the trash, yet Card won an economics Nobel for it.
In my book with the same name as my Substack, I wrote an appendix exposing its flaws. I don't think I can attach the appendix to this comment but I'll be glad to send it to anyone who wants to write me at rick [at] rickteller dot com. To give you an idea of a few of its flaws:
1. The law raising the minimum wage in New Jersey was passed over two years before it went into effect, giving restaurant owners a long time to change their ways to reflect the coming jump in wages. Yet the "before" in the study was only a few weeks before it went into effect, ignoring everything owners had done for two years to reduce labor expense before then.
2. In the early 1990s fast food restaurants were still growing very fast at the expense of mom-and-pops, yet the study didn't survey the latter. The lack of employee layoffs likely largely reflected fast food restaurants grabbing share as the mom-and-pops went under.
3. In the US, the owners of one or a few fast food outlets must typically personally guarantee the lease payments. The study looked at employment less than a year after the increase went into effect. But even if an outlet was losing money, it doesn't make sense for it to shut down until the lease ends, because the owner is on the hook either way. The study never bothered to check if leases ended after the study's "after."
There were just some of the flaws I covered. As I summarized it, more politely than I would have said in person, "Economists can advance very far in their profession despite being unaware of how businesspeople think and operate."
No, minimum wage workers don't *EARN* more, they are *PAID* more. The *ENTIRE* *POINT* of a minimum wage is a floor below which regardless of the value of the work, the *PAY* cannot drop.
Mounjaro