Strong US support for increasing unemployment
A USA Today poll reports that 71% of Americans back the president’s plan to raise the minimum wage: 87% of Democrats, 68% of independents and even a 50-47% plurality of Republicans. Only the tea party supporters oppose the move (64-32%)
The only problem with the plan is that — based on more than 100 academic studies — it will raise unemployment, particularly among the least employable workers (e.g., minority teens).
A 2006 NBER study by David Neumark of UCI (go Anteaters!) and William Wascher of the Federal Reserve — later published in Foundations and Trends in Microeconomics — reviewed nearly two decades of research on the impact of increasing minimum wages. Here’s the abstract:
A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries.While individual studies have reached varying conclusions, such comprehensive literature reviews are the way that science reaches a consensus on an unsettled question of causality (whether innovation policy or global warming). The administration wants to be guided by science when it supports its policies, but ignores inconvenient truths.
Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.
When our educational system turns out high school graduates that are illiterate or innumerate, they pay the price. When it turns out economic illiterates — leading to bad policies — others pay the price for those policies.



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