02 Feb 2015

Solving the Great Piketty Minimum Wage History Mystery

My latest at Mises CA. For the quick version, Phil Magness showed me a data table from Piketty that makes it clearer what the heck happened with Piketty’s erroneous “history” of the U.S. minimum wage. Specifically, Piketty came up with annual values by looking at the minimum wage as it stood on January 1 of a given year. So in the graphic below, on the left I have the actual legislative history, on the right I have the table Piketty constructed to represent the values over time:

This solves *some* of the problems (a little), but it makes the remaining ones even worse. Look again at how Piketty described things, assuming he had the right table in front of him as he did so:

“From 1980 to 1990, under the presidents Ronald Reagan and George H.W. Bush, the federal minimum wage remained stuck at \$3.25, which led to a significant decrease in purchasing power when inflation is factored in. It then rose to \$5.25 under Bill Clinton in the 1990s and was frozen at that level under George W. Bush before being increased several times by Barack Obama after 2008” (p. 309).

It’s more understandable now how Piketty could’ve (incorrectly) said that George W. Bush never saw an increase, since in Piketty’s table the hikes don’t happen until 2008. (Even here it’s wrong, since George W. Bush was the president for every second of the calendar year 2008. But still.)

However, look at how Piketty handled George H.W. Bush. He made true statements (disregarding being off by a dime) about the wage being stuck through 1990, and how this included Reagan and H.W. Bush, and then that it went up again under Clinton.

So in light of this new quirk, I personally am more confident that this was deliberate funny business rather than just Piketty looking at the wrong data table and inventing a random history out of simple error.

3 Responses to “Solving the Great Piketty Minimum Wage History Mystery”

1. Harold says:

Your quote says \$5.25 under Bill Clinton. It was never at that figure – it should be \$5.25. Is that you or Picketty?

It seems to me that these errors may have significance to Americans because they portray certain presidents incorrectly according to stereotype, but do they affect the argument about the minimum wage?

• Harold says:

Of course, that should say \$5.15. Darn it!

2. Harold says:

Sorry – just seen the explanation in the Mises post. It was Picketty.