Wednesday, January 13, 2016

Getting Better Understanding Of Minimum Wage Changes

I stumbled upon this AEI chart on Mark J. Perry's Twitter feed (@Mark_J_Perry):

It took some digging, but the full story is available as a blog post at their Carpe Diem site. One of the big issues I see with a lot of research in this area is how it tends to push an agenda one way or another by purposefully changing the goalposts. One example is this tendentious piece from Occupy Democrats, heralding minimum wage job losses as a nothingburger, or Erik Sherman's piece claiming the then-current $11 minimum wage resulted in restaurant employment "soaring". Perry's post goes a fair distance to improving the heat vs. light ratio minimum wage discussions tend to elicit. It's not perfect, but it is a better guide than most. A few observations:
  1. As Perry asks, "soaring compared to what?" Restaurant employment in the Seattle metropolitan area is outpacing Seattle proper, whose first derivative appears to approach zero, i.e. growth has stopped.
  2. This is the kind of thing we really need, i.e. looking more closely at broad effects on employment among people likely to be in minimum wage jobs rather than among the entire labor pool.
  3. Restaurant employment is a good but not wholly satisfying proxy for minimum wage employment, because it also encompasses fine dining restaurants that do pay some employees substantially more (if only on tips).

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