Ahh, it seems Steve Landsburg is no longer cuddly. Instead of worrying about the unskilled inframarginal workers, he is now concerned about upper middle class college kids working at Wendy’s on their summer breaks.
There’s nothing wrong with Steve’s post as far as it goes, but it would be like Obama proposing to increase the sentencing on drug dealers by 6 months, and then economists have a big debate about whether this particular policy move will increase gun violence. Then Steve Landsburg chimes in and argues that it is wrong to worry about whether this particular marginal change will affect gun violence. Period.
In case I’m being too coy: Even if it were true that raising the federal minimum wage from $7.25 to $9 will have negligible effects on total employment (which I highly doubt), and even if it were true that every single person working right now for minimum wage would be willing to take the gamble (Steve’s point), it is odd that free-market economists wouldn’t still go ahead and make the broader point that there are hundreds of thousands (millions?) of people in the US right now with low skills who want to work, but are prevented by law. They aren’t the ones facing the “gamble” right now that Steve describes, because maybe they only have productivity justifying a wage rate of $5/hour.
Anyway, I wasted yet another hour of my life in an empirical exercise that will not make anyone change his or her mind. I used this Department of Labor website to get every change in the federal minimum wage since 1978, and then I got the CPI-adjusted minimum wage for the 6th month before and the 6th month after each change. Then I got the national unemployment rate and the 16-19 year-old unemployment rates, to calculate the “excess teen unemployment rate.” Below are my findings:
(As always with Free Advice, this is stuff I’m whipping off instead of doing work for paying clients, so I’m not double-checking any of these numbers….Read at your own risk.)
Generally speaking the pattern holds up. I put in red the only two entries that surprised me, because they involved such a big move in the minimum wage and yet the excess teen UR rate went the “wrong” way. Of course we can come up with all kinds of stories to explain them away, but I wouldn’t have done so if they had shown what I wanted. So, I’ll just post the table and let you guys argue about it.