Mark Perry is a free market economist. He has a blog on the site of the American Enterprise Institute.
Recently, he cited a pair of editorials in the New York Times. They were on minimum wage laws. One was published in 1987. It called for a minimum wage law of 0. The other is recent. It calls for a law at $10 an hour.
He used this as an example of an increase in economic ignorance at the New York Times. I concur. But that is not a surprise. The following is a surprise.
I went to Wikipedia's article on the minimum wage. Here is what I found.
According to a 1978 article in the American Economic Review, 90% of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers. By 1992 the survey found 79% of economists in agreement with that statement and by 2000 the percentage was 45.6 in full agreement with the statement and 27.9% agreeing with provisos (73.5% total).The authors of the 2000 study also reweighted data from a 1990 sample to show that at that time 62.4% of academic economists agreed with the statement above, while 19.5% agreed with provisos and 17.5% disagreed. They state that the reduction on consensus on this question is "likely" due to the Card and Krueger research and subsequent debate.
A similar survey in 2006 by Robert Whaples polled PhD members of the American Economic Association. Whaples found that 46.8% respondents wanted the minimum wage eliminated, 37.7% supported an increase, 14.3% wanted it kept at the current level, and 1.3% wanted it decreased. . . .
In 2013, a diverse group of economics experts was surveyed on their view of the minimum wage's impact on employment. 34% of respondents agreed with the statement, "Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment." 32% disagreed and the remaining respondents were uncertain or had no opinion on the question. 49% agreed with the statement, "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy", while 11% disagree.
Two decades ago, there was close to unanimity among American economists: minimum wage laws reduce employment. Today, there is no agreement. It's about half and half.
I can think of no better evidence of the failure of the defenders of economic reasoning to persuade the public. They have not persuaded the economics profession.
The reason I select the minimum wage law as a representative example is this: I know of no clearer case of a government law that interferes with prices. I also know of none that has greater statistical evidence than this: the rise in unemployment among black teenage males in the years immediately following an increase in the federal minimum wage law. This has been known for half a century.
As a nation, we have gone backward. Academic economics is in worse shape today than in the year after the collapse of the Soviet Union.
Every once in a while, I come across an article calling for an increase in the minimum wage. Here is one published in the liberal magazine, The Atlantic. It says that some economists argue that an increase in the minimum wage would increase employment, at least temporarily.
If an article is really choice in its denial of economic cause and effect, I send the link to Walter Williams. He has spent his career arguing against minimum wage laws. I sent this one to him. I said this in my letter: "Our work is still cut out for us." He responded: "Thanks. I'm beginning to think it is hopeless."
Four decades ago, he and I went out on the road to lecture to public school high school teachers for a week. This long-defunct program was sponsored by the Intercollegiate Studies Institute: The Role of Business in Society (ROBIS). These teachers were generally agreed that the federal government should interfere with market pricing. It was our job to spend a week trying to persuade them otherwise. The Foundation for Economic Education had been doing this in its summer seminars for a decade by this time. I was director of FEE's program in 1971. We could accommodate about 35 people per week. FEE ran three sessions. A fair number of the attendees were nuns.
Very few high school teachers ever went through either of these programs, despite the fact that their expenses were covered.
Today, we need summer seminars for college professors of economics. But who would teach them? Other economists. I do not think people with Ph.D.'s in economics would attend such a seminar -- not even if their expenses were paid.
So, it is worse today than it was four decades ago.
One thing will stop this: a default of the federal government on its Medicare obligations. That day is coming. Free market economists must do what we can online to prepare a generation of voters for the statistically inevitable day of reckoning. We must show that the federal government's interference with market pricing produces negative outcomes.
This is a tough sell these days. There is too much opposition from academic economists.
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