Commenting on this post, Steve Sisson says:
Lots of talk, but if minimum wage is clearly bad for employment, or the economy, then you should be able to show it with empirical evidence. Where is the data? Increases in minimum wage should be associated with higher UE and lowered GDP. This should be true across our country, other countries and across time. TBH, I find it odd that a professor would not offer such. If the data is [sic] not clear, why would that be the case?
As Yevdokiya Zagumenova correctly points out, in response to Mr. Sisson’s comment, there is no shortage of empirical studies that document the minimum-wage’s detrimental impact on low-wage workers. There are also, of course, other empirical studies that find the opposite effect, and yet others that find no significant effect.
That’s the way it is with social-science (including economic) data: they almost never speak for themselves clearly and without significant exceptions. Someone can always challenge even the most consensus-supported studies as having left out important variables, gotten causality backwards, employed inappropriate aggregation, examined inappropriate time periods, and on and on.
You want to find empirical studies that show free trade to be harmful to free-trading nations? No problem; you can find them. You want to find empirical studies that show government stimulus spending to be a sure-cure for what ails a slumping economy? There are plenty of such data-rich studies out there. You want to find empirical studies that show that violent crimes aren’t deterred by the death penalty? Not a problem. You want to find empirical evidence that increased rates of handgun ownership increase citizens’ likelihood of dying of gunshot wounds? Many such studies are available.
You can also find plenty of empirical studies showing the opposite of what is shown by all of the above studies. And these other studies are, as a group, no less carefully done than are the studies that they contradict. And these other studies, also, are done by scholars no less credentialed and no less objective than are those scholars who produce the contrary findings.
That’s the reality of the social sciences. It’s not an exercise in simple observation of simple and self-defining facts, only one or two of which change at any time.
Therefore, theory is important. Among other roles, theory directs our attention to what patterns to look for, and helps us to better understand what empirical findings warrant our suspicion more than others. Obviously, theory should never be used as dogma to prevent our learning from careful empirical studies. Nor, however, should well-accepted and coherent theories be tossed aside simply because a handful of people produce a few studies that are inconsistent with that theory – especially if other careful empirical studies support the theory.
So while it’s always a good instinct to ask “What do the data say? What does history tell us about this matter?”, it’s just as scientifically naive to ridicule thoughtful discussion of theory (including discussion of pitfalls in interpreting data) by suggesting that the discussion is useless because it presents no data as it is to suggest that theory should never be subjected to empirical tests.
One of the subsidiary points of my post – the post that Mr. Sisson ridicules – is that employers can react to increases in the legislated minimum-wage in ways other than hiring fewer unskilled workers. (This point is hardly original to me.) To the extent that employers, in response to a hike in the minimum-wage, work unskilled workers harder rather than not hire them, empirical studies that look only to the employment effects of the minimum-wage will miss a potentially important negative consequence of the minimum-wage hike. Is there no value in pointing out this fact? I believe that there is value in it, but Mr. Sisson is free to disagree.
I can’t resist pointing out that Mr. Sisson’s comment, if valid, destroys itself: he presents no empirical evidence in that comment to support his thesis that analytical arguments made in the absence of supporting empirical evidence are simply “lots of talk” deserving only ridicule. Now in fact I don’t ridicule Mr. Sisson for not offering empirical evidence in his comment in support of his thesis that empirical evidence is required to give someone’s analytical writing sufficient substance to be taken seriously. His theoretical point is plausible enough, and it can serve, as it stands, as the basis for a discussion that enhances our understanding. But I ask him to recognize that he made, in his comment, a purely theoretical point – one that he expects us to take seriously despite his failure there to offer empirical evidence to back it up.
A final point. There in fact is an empirical fact that runs throughout the post of mine that draws Mr. Sisson’s scientistic ridicule. That’s the empirical fact that no one seriously proposes to raise the minimum-wage to $90 (or $900, or $9,000) per hour. I offered four reasons why the often-heard reductio might, in fact, be an inappropriate criticism of arguments in support of raising the minimum-wage. ’Tis true that I offered no empirical evidence, say, on how many minimum-wage supporters rely upon the first reason that I identify, how many rely upon the second, and so on. But I leave it to the Cafe’s patrons to determine the value of my discussion. Whether or not that discussion is valuable is an empirical question.