Krugman's minimum wage law support is an attack on American workers
There are recalls for automobiles. There ought to be one for economists. If there were, Paul Krugman, the New York Times columnist, would have to be re-educated in Economics 101 in order to retain his Ph.D. degree. I doubt he would pass. As for his Nobel Prize in the dismal science, well, the less said about that, the better.
Why am I frothing at the mouth at "Dr." Paul Krugman? It is because of his nasty, vicious, evil, indecent support for the minimum wage law, and I use these words advisedly.
In his recent column, Paul Krugman extols the virtues of the minimum wage law. However, he offers no reasons why it will be helpful to struggling unskilled workers. If this law is such a great idea, why limit it to $15 per hour? Why not boost it to $15,000 per hour? Then we'd all be rich. We could stop foreign aid cold and just tell poor countries to raise their minimum wage to astronomical levels. The technical reason for moderation (according to our author, it might not be a good idea to raise it "all the way to $15") is monopsony. But single buyer status does not apply to workers earning low wages; it has relevance only for narrow technical specialists, who can be hired by only one or very few firms (in which case it is called oligopsony).
Mr. Krugman utilizes the argumentum ad populum logical fallacy; this law is a great idea since it is popular. "[L]ook at what happened in Florida back in November: even as Trump carried the state, a referendum on raising the minimum wage to $15 won in a landslide." Who gives a rat's rear end about what a bunch of non-economists think about an economic law? That is no way to establish truth.
Seemingly more powerfully, Mr. Krugman then engages in another logical fallacy, the argumentum ad verecundiam, the reliance on authority. Well, at least the surveys here are based on the views of economists (mostly pinkos, but that is an entirely different and minor matter). In this view, yes, in bygone days, when we all lived in caves or trees and dragged our knuckles on the floor, "there was a near-consensus among economists that minimum wages substantially reduced employment." But we live and we learn — nowadays, Krugman tells us, thanks to "'natural experiments' that take place when an individual state raises its minimum wage while neighboring states don't. The lesson from this evidence is that unless minimum wages are raised to levels higher than anything currently being proposed, hiking the minimum won't have major negative effects on employment."
Krugman points to the Chicago Booth survey, which asked whether, "[i]f the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage US workers will be substantially lower than it would be under the status quo."
I am probably one of the most bitter opponents of the minimum wage law on the planet. Yet even I would be sorely tempted to answer "no" to this question. Heck, I would do just that. The point is, most "low-wage U.S. workers" are already unemployed due to this law (I'm talking pre-COVID). There are only a limited number remaining who will lose their jobs given an increase.
According to David Card, one of the chief instigators of this fallacious doctrine, "[r]aising the minimum wage modestly is likely to have a negligible impact on employment levels,"
Yes, true. But that's the wrong question to ask. The right question is: "Compare a minimum wage of $15 with no minimum wage at all. Will this have serious or negligible effects on the unemployment of unskilled workers?"
The real issue is not whether the level stipulated by law ought to be raised, slightly, or not. That is all the vaunted "natural experiments" can be relevant to. The important question is, should we have a minimum wage in the first place, at any level, or not? If we do, it will remain devastating for all those whose productivity lies below whatever the level mandated by law. The minimum wage is not a rising floor, boosting compensation. It is a high jump bar, over which workers have to jump in order to obtain work and keep it.
Mr. Krugman, look me in the eye and tell me, in the name of all that is holy in economics, what you think of the employment prospects of a person with a discounted marginal revenue productivity of $2, $4, $6, $8, $10, $12, or $14 per hour, given a minimum wage of $15. If you're honest, your answer will not be "slim to none." Rather, it will be none, and just none.
Let me try an argument from analogy. A man smokes six packs of cigarettes per day. He is thinking of increasing to seven packs. He goes to his doctor, physician Krugman, and asks: "If I engage in this raise, will it substantially increase my chances of contracting cancer?" Doc Krugman says no. That is not totally unreasonable. However, logical howler coming up — you had better be sitting down for this one — cancer specialist Krugman concludes from this that smoking a half-dozen packs per day "is likely to have a negligible impact on contracting cancer."
But is this not a poor analogy? The minimum wage increase economist Krugman is supporting is from $7.25 to $15 per hour. Not exactly. That raise refers to the federal level. But many states are already far higher than the former figure, and numerous others have already reached the latter.
No analogy is perfect — otherwise, it would not be an analogy — but this one is thus pretty accurate.