Berkeley economist Christina Romer on increasing the minimum wage

Christina Romer Berkeley economist

Timothy Noah, for The New Republic:

In a March 3 New York Times op-ed laying out her objections, Romer began by dismissing some of the more familiar conservative arguments against the minimum wage. It isn’t true, she pointed out, that the beneficiaries would mostly be burger-flipping teenagers; half would be families now earning less than $40,000 a year. It also isn’t true that raising the minimum wage is a job-killer; “the overall adverse employment effects are small.” (In the online version, these words link to a recent literature review from the nonprofit Center For Economic Policy Research that states the case more bluntly: “the minimum wage has little or no [italics mine] discernible effect on the employment prospects of low-wage workers.”) One reason a minimum-wage increase doesn’t kill jobs is that the increase in the price of labor is balanced out by reduced turnover and a general increase in productivity.

After dismissing these arguments, Romer goes on to say that she thinks the Earned Income Tax Credit is a better instrument for helping the poor because it would boost overall employment. In response, Noah reminds us that the political climate in Washington doesn’t allow for stimulus at the expense of reducing the deficit:

Say it with me: The minimum wage can be boosted without costing the Treasury a dime. The GOP may not go for this argument, but it’s an easier sell than asking Congress to spend money.

Share Button