JEFF JACOBY goes back to anecdotes from 1938 to attack minimum wages as bad for workers (“Minimum wage laws are costly for the unemployed,” Op-ed, July 11). More recent evidence leads to a different conclusion.
Most research on minimum wage increases in the last two decades finds no important effect on teenage unemployment rates and very small negative effects on overall employment — so small as to justify for many economists the benefits of higher income for minimum wage workers.
Employers seem even less worried than professional economists or Jacoby. In recent surveys by the National Federation of Independent Business, wage costs are not what’s on business owners’ minds. When the recession began in late 2007, about 9 percent of firms identified poor sales as their most serious problem. This number jumped to 34 percent in 2009-10 and settled back down to 21 percent this summer.
From the beginning of the recession to now, only about 4 to 6 percent put labor costs at the top of their worry list. As Eric Hoyt of the Center for Economic and Policy Research notes, “The real problem facing firms is not that their low-wage workers earn too much; it is apparently that their customers earn too little.”