While the headline is worse than what follows, Peter Coy’s latest piece in Bloomberg Businessweek — “The $15 Minimum Wage Will Kill Jobs. Should You Care?” — is an object lesson in the power of sheer repetition to overwhelm the actual facts. Oy:
Start with an unpopular but irrefutable fact: Raising the minimum wage to $15 an hour, as some states are doing, will create both winners and losers. The winners will be workers who get paid more, of course. The losers will be low-skilled workers who don’t get paid at all, because employers couldn’t afford to keep them on.
In the short term, no doubt, yes. Some businesses will struggle to adapt, and fail. Some workers will lose their current jobs. But then, that’s true of every economic innovation, from new technologies to new regulatory policies. The more pertinent question is not whether $15 will cause some workers to lose their jobs, but whether it will cause net job loss in the aggregate over time.* And on this, there is simply no historical evidence to suggest that it will.
Coy repeats former Bureau of Labor Statistics Commissioner Katherine Abraham’s claim that we “have no experience with an increase in the national minimum of that size,” but a quick glance at past hikes shows that this simply isn’t true. We have plenty of experience with 50 percent, 60 percent, even 94 percent minimum wage increases phased in over several years, with no evidence of any discernible correlation between rising wages and rising unemployment.
Might $15 result in a substantial net loss of jobs? I suppose. As they say in the footnote to all those investment brochures, “past performance is not necessarily indicative of future results.” But while Coy’s job losses remain theoretical, I can absolutely guarantee you that the wage gains are real.
So yeah, despite how frequently and faithfully it is repeated, the assertion that “the $15 minimum wage will kill jobs” — that $15 is “a job-killer” — is totally unsupported by the facts. A more honest (if admittedly less click-baity) headline would have been: “If the $15 Minimum Wage Kills Jobs, Should You Care?” You’re welcome, Peter.
Which finally brings me to Coy’s larger thesis: that when it comes to the minimum wage and free trade, those bemoaning job losses from one often ignore the job losses from the other. An interesting point. Too bad I’m so exhausted from reading Coy’s credulous headline to give it the serious discussion it deserves.
* Actually, I don’t really believe net job loss is the appropriate metric at all. But that’s a subject for another conversation.