07 Jul 2018

Revisiting Piketty’s Summary of the U.S. Minimum Wage

Piketty 16 Comments

The good news is that one person responded to my labor of love (i.e. my long comment) on Scott Alexander’s post on Piketty. The bad news is that the guy’s response contained stuff like this:

If that’s the worst, most partisan error in Piketty, then I’m not too concerned. If anything I’m more concerned about you, Bob Murphy. You’ve dismissed a 696 page book on a single, minor historical detail that was corrected in the second edition (contrary to your assertion).

The only out-and-out error in Piketty’s above statement is the attribution of multiple minimum wage increases to Obama when he signed none*, and this was duly corrected in his 2nd edition. 

and

tl;dr Piketty got it essentially right. You characterize the question as “not hard”, but it is only easy if you simplify minimum wage history down to which presidents signed off on increases. When you consider length of delay between increases, party control of congress during increases and between increases, and inflation effects it becomes clear that Democrats are pro-labor legislation. Which shouldn’t be surprising really. Everyone knows Democrats are pro-labor and Republicans are pro-capital.

I wrote a response to him in turn (and thanks to David R. Henderson for reviewing a draft of it for clarity and calmness in tone). So of course feel free to go read the whole exchange at Scott Alexander’s site for the gory details.

However, what I want to do here is revisit Piketty’s narrative. When I first read it, it was so totally bonkers that I couldn’t make heads or tails of it. (But again, as Phil and I stress throughout our paper, the “typos” we kept identifying all seemed coincidentally to favor Piketty’s narrative. It wasn’t like his cat jumped on the keyboard occasionally when Piketty wasn’t looking–unless it was a progressive feline.)

But now that this guy on Scott Alexander’s blog reviewed my particular claims and tells me there was a slight thing that may have been a bit off, which Piketty duly corrected in the 2nd edition, I read the whole thing again with fresh eyes. And now I think I see why Piketty believes he ironed out any difficulties with the 1st edition, even though (to my eyes) he didn’t even address the 4 most glaring problems.

The real kicker here is that if I’m right, I think it makes Piketty’s treatment FAR WORSE and should make us not touch anything in his book with a ten-foot pole.

So I’m curious to hear your thoughts on whether I’m right in my analysis, and in my related judgment.

*    *    *

For convenience let me reproduce Piketty’s 1st edition summary, and then give the actual history of the U.S. minimum wage:

PIKETTY 1st edition: “From 1980 to 1990, under the presidents Ronald Reagan and George H. W. Bush, the federal minimum wage remained stuck at $3.35, 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” (2014b, p. 309).

ACTUAL MINIMUM WAGE HISTORY:

Date……………..Minimum Wage………..President in Office
January 1, 1980…..$3.10…………………Jimmy Carter
January 1, 1981…..$3.35…………………Jimmy Carter
April 1, 1990……….$3.80…………………George H. W. Bush
April 1, 1991……….$4.25…………………George H. W. Bush
October 1, 1996……$4.75…………………Bill Clinton
September 1, 1997..$5.15………………..Bill Clinton
July 24, 2007……….$5.85…………………George W. Bush
July 24, 2008……….$6.55…………………George W. Bush
July 24, 2009……….$7.25…………………Barack Obama

Now in his 2nd edition, the only change I saw Piketty make is acknowledged to have fixed all genuine mistakes by my hostile critic. Here’s how that guy put it at Scott Alexander’s blog:

The only out-and-out error in Piketty’s above statement is the attribution of multiple minimum wage increases to Obama when he signed none*, and this was duly corrected in his 2nd edition. Changing “frozen at that level under George W. Bush before being increased several times by Barack Obama after 2008” to “frozen at that level until legislation passed under George W. Bush led to an increase under Obama” is arguably a typo if you squint your eyes, though I would prefer to call it a minor detail.

So in this light, let me make two observations:

  1. There is still the (presumably genuine typo) of saying Clinton raised it to $5.25 when in fact it was $5.15. Again, that mistake helps Clinton, but let’s assume it is a genuine typo. This one just shows Piketty is sloppy. (The mistake survives into the 2nd edition.)
  2. Apparently both Piketty and my hostile critic are fine with looking at the above table of dates and describing it like this: “From 1980 to 1990, under the presidents Ronald Reagan and George H. W. Bush, the federal minimum wage remained stuck at $3.35, which led to a significant decrease in purchasing power when inflation is factored in. It then rose to $5.[1]5 under Bill Clinton in the 1990s…”

Just look at the table and look at that quoted sentence (where I’ve patched the erroneous $5.25 with the correct $5.15) to see now, why Piketty/my critic think it’s fine. If we are really sloppy on the front end and start with the minimum wage in 1981 and say it held in 1980, then it is indeed a true statement that the minimum wage remained stuck at $3.35 from 1980 [sic] to 1990 (specifically up to March 31, 1990) and it is indeed true that during this period (if we start counting inside 1980 after the November election and consider that he was president-elect) Ronald Reagan and George H.W. Bush were in office.

Next, one could see how a person might say it is indeed a true statement to say that the minimum wage then rose to $5.15 under Bill Clinton in the 1990s.

I realize some of you may not care about this stuff, but I want you to really SEE what these guys are doing with the facts vs. the narrative. If Piketty really is doing what he apparently is doing (and which, for sure, my hostile critic agrees with), then the above treatment is, I think, the most misleading, dishonest historical summary I’ve ever seen that one could claim is not technically lying. His technique of ending in 1990 in order to avoid mentioning the two increases under George H. W. Bush exhibits the precision of a surgeon.

(To be clear, I’m not myself admitting it isn’t false. As I said at Scott Alexander’s blog in response: “The only way you can say Piketty’s summary is correct here, is if you also endorse the following statement, “Reagan remained fixed in the White House, until it was then occupied by Bill Clinton.””

So in conclusion, this whole revisitation makes me adjust my previous weight on the possibilities that Piketty was merely sloppy to “he is intentionally deceptive.” But I grant I’m biased, so I’m curious to hear your thoughts.

16 Responses to “Revisiting Piketty’s Summary of the U.S. Minimum Wage”

  1. Khodge says:

    Another homework assignment from Bob.

    The last (only?) time I tried to read Piketty I made it far enough to find out that everything I earn/save over half a million dollars belongs to the state. That was in the second chapter or so and I just couldn’t keep going.

  2. Keshav Srinivasan says:

    Bob, I highly doubt that Piketty is intentionally trying to hide George H.W. Bush’s minimum wage increases. Piketty may have just assumed that Bill Clinton was “the President of the 90’s”, and then based on that looked at Bill Clinton’s minimum wage increase history to determine the minimum wage increases of the 90’s. So Piketty may have been sloppy rather than dishonest.

    • Keshav Srinivasan says:

      By the way Bob, when you said “The real kicker here is that if I’m right, I think it makes Piketty’s treatment FAR WORSE and should make us not touch anything in his book with a ten-foot pole.” I stopped and thought to myself “I cannot imagine any sequence of words that would be written after the three asterisks that would cause me to conclude that Piketty’s book should not be touched with a ten-foot pole.” And I was right; this does not give me any reason to stop recommending the book to people, though I might warn them that there are some errors regarding the minimum wage.

    • Bob Murphy says:

      Keshav wrote: Bob, I highly doubt that Piketty is intentionally trying to hide George H.W. Bush’s minimum wage increases. Piketty may have just assumed that Bill Clinton was “the President of the 90’s”, and then based on that looked at Bill Clinton’s minimum wage increase history to determine the minimum wage increases of the 90’s.

      OK I have to be brief Keshav:

      (1) Please explain to me how Piketty wrote what he wrote, if his purpose were not to protect his readers from knowing that the minimum wage increased twice under George W. Bush.

      (2) You think what Piketty did could simply be that he erroneously thought Bill Clinton was the president for all of the 1990s, right? All right, it’s weird to me that you are so flippant with an economic historian just winging it, rather than looking stuff up. But this error survived even after people wrote a paper pointing out the problem, and Fox News called him up about it. But still, no big deal in your mind?

      (3) You say this just means you don’t trust him on the minimum wage. But how can you trust what he wrote about, say, the Gilded Age? Maybe something happened in 1940 and Piketty mistakenly thought that’s when the Gilded Age was? (He could have thought, “Oh yeah, the Gilded Age came after the Civil War,” and after all, 1940 came after the Civil War.) I mean, he’s not actually looking up dates and dollar figures, he’s just putting stuff in his book off the top of his head, according to you.

      • Dan says:

        “But this error survived even after people wrote a paper pointing out the problem, and Fox News called him up about it. But still, no big deal in your mind?”

        Maybe Piketty just assumed he hallucinated that. You can’t expect him to go back and check his facts based on what he assumed were hallucinations.

    • trent steele says:

      The idea that you could write a treatise and not know who the president of the United States was in a particular year is laughable.

      Is that how closely you expect people to read the Hindu scripture? My god, what kind of world do you want, Keshav, where people are required to live by some obscure text, but you’re ok with people making errors that big in their reading of said text.

      Tragic.

  3. Kevin Erdmann says:

    Off topic slightly. But it also speaks of a sort of sloppiness about the idea that minimum wage hikes are always good that the 2009 hike is listed as a positive development. In utilitarian terms, that hike happened inn the middle of an employment crisis. The fact that it wasn’t at least postponed is indefensible.

  4. Tel says:

    Everyone knows Democrats are pro-labor and Republicans are pro-capital.

    Crank yanking for sure.

  5. Rory says:

    The commenter complains that you dismiss Piketty’s 696 page book based on a triviality. Personally, I think it’s at least quizzical that he chose not to risk 697 and explain minimum wage history as clearly as even his defenders on blog comment sections.

    I was glad to see your reply, Bob.

    • Rory says:

      Oh and not to nitpick (I think your reply was excellent in content and tone) but your parallel here:

      “The only way you can say Piketty’s summary is correct here, is if you also endorse the following statement, ‘Reagan remained fixed in the White House, until it was then occupied by Bill Clinton.'”

      would I think it would be more close to say “The White House was controlled by Presidents Ronald Reagan or George Bush from 1980-1990, then it was occupied by Bill Clinton.” That’s still disingenuous, but your inclusion of “until” hits on a different meaning for me than the one in Piketty’s statement.

  6. Yancey Ward says:

    It was deliberately deceptive. That this has to be argued is exasperating, but not surprising to me. The evidence is right there in front of everyone– the phrase “from 1980 until 1990”. Had that phrase been “from 1980 until 1997”, then one might suppose that Piketty simply didn’t see that the minimum had been raised twice under H.W. Bush before it was raised twice more under Clinton to $5.15. However, the actual phase used does tell us that Piketty was aware all along that the minimum was raised at least once in 1990, and we then have to believe that he thought Clinton was president in 1990. For a “well researched” book, this is simply unbelievable. That he made this exact mistake twice with 2 different pairs of presidents is the clincher, and the motive is quite clear- he wanted his readers to think that Republican Presidents never sign minimum increases- that all such increases have to have Democratic Presidents to get approved.

    There is practically no way Piketty could have the values he did use be correct, but not know the steps by which it reached those values. He had to have known of every single discrete increase and the dates- those data literally go together whereever I looked to determine what they were at any point in time- be it 1990, 1991, 1996, 1997, 2007, 2008, or 2009. Piketty shows he did know what it was in 1990, 1997, and 2009. To argue it was all just an honest mistake, Piketty or his defenders would have to show us a source that makes exactly the mistake Piketty himself made in not showing all the discrete steps. For me, the vague description of of the entire section under question is evidence Piketty was deliberately trying to hide the fact that 5 of the increases occurred under the Bushes and that none of those described were signed by Obama.

  7. Andrew says:

    SJWs always project:

    You’ve dismissed a 696 page book on a single, minor historical detail

    Actually, this is what he was attempting to do to your comment. He tried to dismiss the entire thing with an apologia for a single relatively minor criticism among many criticisms of various sizes of Piketty’s book.

  8. Andrew says:

    I think you are right that Piketty was being deliberately deceptive. I think his purpose was intended to say that Republicans allowed us to go an entire decade (even though it was actually less than 9 years) without an increase to the minimum wage, which is an awfully long time in his mind.

    For some reason, he neglected to mention that Clinton waited almost 4 years to get his first minimum wage increase and then didn’t have any during the final 3 years of his administration.

    And then there was an even longer minimum wage increase drought from ’97 to ’07 (almost an actual full decade!) but that one wasn’t as useful for Piketty’s purposes because it was 30% owned by Bill Clinton.

  9. J Mann says:

    I’d love to see a wiki someplace summarizing what Piketty got wrong and right. On SSC, David Friedman had what looked to me as a new catch, that Piketty’s summary of Ricardo looks unsupportable.

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