Economists warned California not to raise the minimum wage to $20. They were wrong in almost every way so far, another economist says.
https://www.msn.com/en-us/money/markets/economists-warned-california-not-to-raise-the-minimum-wage-to-20-they-were-wrong-in-almost-every-way-so-far-another-economist-says/ar-AA20WZb5
Posted by paxinfernum
5 Comments
Crazy how overblown the they make minimum wage raises out to be when we’ve already seen it work in countless other countries. The real problem they have with it is people they see as beneath them making a little more money
This keeps getting posted, but the answer is that other strands of research found both employment losses and relatively significant price pass through.
https://www.nber.org/papers/w34990
https://www.nber.org/papers/w34033
https://www.tandfonline.com/doi/abs/10.1080/13504851.2026.2641130
The minimum wage is an incredibly nuanced topic, and articles like this do it a disservice. Because: (1) employment loss does not mean a minimum wage is a failure; and (2) the minimum wage should be judged on all benefits and all costs, not a small fraction of them.
Here is what we know about the minimum wage.
1. Overall estimates find (at most) small job losses from minimum wage increases. There is a substantial amount of 0 estimates, however.
2. There can be positive employment effects, in monopsony models. Empirical evidence of this exists.
3. Even if employment doesn’t fall, there are other mechanisms that exist that can worsen both worker and social welfare: reduced hours of work, reduced non wage benefits, higher prices, reduced training, changes in the composition of the workforce. There’s evidence that these play some role in minimum wage responses.
4. There are secondary positive and negative impacts from minimum wages (externalities) in: crime, education, health, time with children, …
We really need to start differentiating between **capitalists** and **economists**.
Capitalists are the ones who are reinforcing the oligarchic rhetoric that exploitation is the only way to run a business, to make money, who believes that capital should own the means of production. Economists are people who study economic data, who propose theories about what *might* happen. Economists are essentially researchers and ideologists; capitalists are owners, employers.
All capitalists are economists; not all economists are capitalists.
“Economist*s* warn. . . .”
The article literally only names one single economist who believes in the embarrassingly historically ignorant idea that raising wages is harmful.
The types of economists who subscribe to keeping wages stagnated are almost always wrong yet continue to get high paying jobs from lobbying groups to continue to advocate for harmful policies.
$20 should be California’s minimum wage to offset the high cost of living. When workers earn less, taxpayers cover their costs through government public assistance. For employers, healthcare is the biggest expense, as they are legally required to provide insurance and benefits for full-time staff. To reduce costs, employers may cut staff to a minimum or hire only part-time workers.