Here’s the abstract of Washington University economist Ian Fillmore’s new paper on the minimum wage:
How informative is historical experience with the minimum wage about the consequences of raising the federal minimum to $15? This paper compares a hypothetical $15 federal minimum to the most recent federal minimum wage increase, in 2007, from $5.15 to $7.25. I describe a straightforward method for using publicly available data from the Occupational Employment and Wage Statistics (OEWS) program to assess whether a proposed minimum wage increase is within historical experience. I illustrate the method by comparing the occupations and industries most directly affected by the 2007 increase with those that would be affected by a $15 minimum wage. By any measure, a $15 minimum wage is far outside historical experience—in both its size and the breadth of occupations and industries it would affect—and the frontier of historical experience is a minimum wage between $9 and $11 per hour. I recommend that future minimum wage proposals, both federal and local, include a similar analysis to assess whether the proposal is within historical experience. Finally, I argue for future research to take advantage of several scheduled state-level minimum wage hikes to estimate heterogeneous employment effects by occupation and industry.
The new child-care program and various additions to major safety-net programs such as Medicaid and “affordable housing” also discourage work. As one’s income from working increases, the amount offered by these benefit programs decreases. The marginal tax rate on working an extra hour, day or week, or improving your skills, can be extremely high.
The revised bill also allows even America’s highest-income households to receive subsidized ObamaCare insurance as long as they can’t get coverage at work. Some Americans will retire earlier or spend more time between jobs. Much of the lost wages will be replaced by more-generous ObamaCare subsidies at taxpayer expense.
I estimate that the several implicit employment and income taxes in the revised bill would increase marginal tax rates on work by about five percentage points. I expect that such a change, over five years, would reduce full-time equivalent employment by about 4%, or about five million jobs.
Gary Galles reminds us of the greatness of Booker T. Washington.
Here’s Alberto Mingardi on Jim Dorn and the late, great Peter Bauer.
Richard Epstein decries the “flood of superficial climate reports.” Two slices:
Sadly, instead of asking any hard questions, these reports just take the worst-case scenario for granted and move on. The financial risk report summarizes this basic orientation by wrongly claiming that the report of the United Nations Intergovernmental Panel on Climate Change “concluded with high confidence that the climate crisis is ‘code red for humanity.’” The quoted words were not, however, from the IPCC report but rather from a florid press release by the secretary-general of the United Nations, António Guterres, which unwisely went well beyond the IPCC report.
One possible response is that a little exaggeration is just what is needed to spur a lethargic nation into action on multiple fronts. That temptation should be stoutly resisted because it can all too easily lead to unsound recommendations by minimizing or ignoring alternative hazards that could easily present greater perils. These errors abound in all these reports, with their constant emphasis on a “climate resilient” economy that is in a position to deal with the anticipated calamities if nothing is done to eliminate them.
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In sum, this set of Biden administration reports punts on all serious issues, rallying its troops to the wrong cause. In all cases, the generic problem is that any form of instability has the potential to reduce available resources that will in turn increase the level of conflict around the world. But climate change plays a role at most in a small subset of the world’s earthquakes, tsunamis, volcanic eruptions, and floods, most of which are unrelated to climate change. The analytical deficits of these one-sided screeds are too glaring to ignore. The Biden administration should rip them up and start over.
David Henderson sets Heather Cox Richardson straight about Herbert Hoover.
