OPINION:
“Raising the minimum wage by a substantial amount would price working poor people out of the job market.”
Which major newspaper’s editorial board wrote this logic? The Washington Times? The Wall Street Journal? Investor’s Business Daily? The Onion? None of the above. The correct answer is The New York Times, which wrote this in a January 1987 editorial titled: “The Right Minimum Wage: $0.00.” (The Times also wrote two other editorials in the same period opposing the minimum wage: “Don’t Raise the Minimum Wage” in April, 1987, and “The Minimum Wage Illusion” in February, 1988).
The editorials give thoughtful and robust descriptions of the unintended consequences of minimum wage increases and the economic consensus opposing them. From the January 1987 piece: “[T]here is a virtual consensus among economists that the minimum wage is an idea whose time has passed . Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired .”
Contrast that to present day, when an editorial in last week’s New York Times calls out Hillary Clinton for her support of a 66 percent federal minimum wage increase to $12 because it is too low. Rather, the piece argues, she should be “championing a stronger federal minimum wage of $15 an hour.”
The more things change, the more they stay the same. The New York Times’ about-face on the minimum wage is contrasted by the established economic consensus that it’s a bad idea. Recent summaries of the best academic research on the minimum wage, including one published by the Federal Reserve Bank of San Francisco, demonstrate that the vast majority of studies conclude that government-dictated wage hikes reduce job opportunities.
The logic of last week’s New York Times editorial is a house of mirrors compared with their three earlier ones. It argues there is no proof to back up Mrs. Clinton’s contention that a $15 minimum wage may be too high. Yet even left-wing economists, including Obama administration alum Katherine Abraham and Clinton administration alum Harry Holzer, have expressed concerns about the consequences of a broad $15 mandate.
The editorial board could simply take a quick trip down 8th Ave. to see the proof of minimum wage consequences firsthand. Pizzetteria Brunetti in the West Village has been forced to end overtime and cut employee hours to compensate for the costs associated with the local New York law. Or they could pop over to the burger joint PJ Clarke’s, which has eliminated table-busing positions at one of its locations because of the mandatory wage hikes.
Countless other businesses across the country have been forced to close their doors, lay off employees, cut shift hours, cut kitchen labor by cutting menu options, and slash store operating hours as a direct consequence of dramatic local minimum wage increases. (You can read specific stories at Facesof15.com.)
“One reason a third of Americans today live in or near poverty,” claims last week’s editorial “is that many jobs in the United States do not pay enough to live on.” What it fails to mention is that the biggest reason why people are in poverty is because they hold no job at all. More than 60 percent of Americans in poverty are out of work entirely, so they (of course) wouldn’t be affected by a minimum wage increase. And raising the cost of employment won’t make it any easier to get hired.
In any event, the poverty argument is a red herring. The vast majority of those who would be affected by a dramatic minimum wage increase do not live in poverty. Most minimum and near-minimum wage employees are the second or third earners in a family. The national average household income of those affected by a $12 minimum wage is $55,800.
The bad targeting of minimum wages is a major reason (along with reduced job opportunities) why minimum wage increases have no record of reducing poverty. Economists at Cornell University and American University examined the 28 states that raised their minimum wages between 2003 and 2007 and found no associated reductions in poverty.
The Times used to acknowledge this fact: “The idea of using a minimum wage to overcome poverty is fundamentally flawed . A far better way to help [the working poor] would be to subsidize their wages or — better yet — help them acquire the skills needed to earn more on their own.”
Its January 1987 editorial concludes: “It’s time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little.” That advice is even truer today, but lost on a newspaper that has sacrificed its honestly held principles for convenient politics.
• Richard Berman is president of Berman and Co., a Washington public affairs firm.
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