That would have been my headline. David Neumark, an economist who has devoted much of his career to research that is intended to show why the minimum wage is bad, was quoted in an NYT article as saying that the proposed minimum wage hike would reduce employment among the least skilled workers by 4 percent. Okay, it's fun with numbers time. The minimum wage hike to $7.25 an hour will increase the wage for the those at the very bottom by 40.8 percent. Mr. Neumark believes that it will result in a 4 percent decline in employment, according to the article. That means that these least skilled workers will on average end up with 35.1 percent higher wages after the minimum wage hike than they do now (0.96*140.8 percent). That sounds like a pretty good deal for those at the bottom. Taking the average is appropriate for those at the bottom, since most minimum wage jobs have high turnover. That means that we are not generally talking about 4 percent of the least skilled workers being thrown out of work if we raise the minimum wage. Rather, we are saying that it will take these workers a bit longer to find a new job when they change jobs. So, the deal is 4 percent fewer hours of work, but hourly wages that are 40.8 percent higher when you do work. I suspect that most of the least skilled would consider this an improvement.
--Dean Baker
