Thursday, February 21, 2013

Buy a bit of economic justice

Raise the minimum wage

So, I've written the Washington Post, again. And, reliably, it does not appear that they will print my letter.

No matter. I almost prefer the opportunity to elaborate my point in a forum (this one) that I know will always make space for me and, from time to time, will be read by others.

In any case, here's what I wrote:


I applaud Charles Lane's effort to broadly consider the merits of an increase in the minimum wage ("Better than minimum wage," Feb. 19). One quibble, though.

Lane reviews four of the possible effects of an increase that may minimize an employer's interest in cutting jobs when an increase in the minimum wage is mandated. But in concluding that an expansion of the earned income tax credit (EITC) is superior to an increase in the minimum wage, Lane appears to discount two of the potential benefits connected to an increase--lower turnover and higher organizational efficiency.

Why not capture those positives, too?. Get better at calibrating and regularizing increases in the minimum wage and spread the benefits of a broader EITC.

Jeff Epton

But the truth is that I have more than one nit to pick with Lane's piece, and one happy observation to add, as well. I held back on the quibbles because the Post doesn't seem very receptive to extended critiques and I figured the one point--that Lane was posing an either/or choice when both would work--was substantial enough.

In any case, Lane's column kicks off with his characterization of Paul Krugman as a "liberal firebrand [who] is still economist enough..." to note that quickly raising the minimum wage by a substantial amount would create problems. This description ignores the fact that Krugman is also a Nobel Prize winner in economics and signals to the casual reader that Krugman is a partisan and Lane is not.

This is not good journalism. We are all partisans. Krugman is the one with the Nobel. With his characterization of Krugman the firebrand, Lane is also signaling from the beginning that he is going to come down in favor of some alternative to raising the minimum wage.

Applauding Lane for actually appearing to be carefully considering a minimum wage increase was a bit of sychophancy in the interest of getting the letter published. Say it didn't work, if you will. Say that sychophants will burn in hell, if you like, but I tried.

The issue my letter raises is that despite Lane's apparent willingness to consider all the pros and cons of raising the minimum wage, he actually dismisses two potential benefits pointed out in a study by John Schmitt of the Center for Economic and Policy Research (CEPR). Workforces that are compensated better at the low end may end up working with more enthusiasm and improved efficiency. In the long run, such improvements allow employers to recover costs. But Lane sees that potential benefit as less certain than the potential downsides, like the possibility of reduced employment overall, and fewer job opportunities for youth.

Indeed, Lane cites studies that show reduced unemployment for "young, low-skilled people" when the minimum wage goes up. That ought to be a genuine concern and should be addressed, even if the problem is not quite the one Lane defines. The fact is that many young people have been pushed out of the job market with increasing frequency as more older people, including those collecting Social Security, take part-time jobs just to make ends meet. Holding down the minimum wage doesn't serve either group.

There is a silver lining in Lane's column. He actually uses CEPR as a substantial source for his column. That's a big deal, and a credit to CEPR and to co-founders Dean Baker and Mark Weisbrot who have been a relentless voice for progressive economic policy. Lane has always been a centrist, at best, and has never seemed very willing to consider progressive policy options. But he does here, even if he ends up rejecting the idea of a minimum wage increase.

As George Lakoff tells us (a bit on Lakoff here), sometimes speech is action. Baker, Weisbrot and CEPR keep researching, writing and talking and have helped move the political discussion to the left.

A better column on the minimum wage by Harold Meyerson ran in the Post on Feb. 20. In "A jump-start for wages," Meyerson points out that the lion's share of the benefits from productivity gains have been going to employers, not workers, since 1973. "The decoupling of wages from the fortunes of big business has been going on for the past 40 years," he writes.

Meyerson cites another study that may not have crossed Lane's desk. "As a January report by Cal-Berkeley economist Emmanuel Saez documents, while the income of the wealthiest 1 percent of Americans rose by 11.2 percent during the recovery years of 2009-11, the incomes of the bottom 99 percent declined by 0.4 percent. That's some recovery," he observes. Read the rest of Meyerson's column here.

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