January 13, 2007

Raising the minimum wage has no negative effect on employment

For the past year and a half, a group of students at ND has been fighting a campaign to raise the minimum wage paid to university staff (especially janitors and plant maintenance folks) to a living wage of $10-12/hr. The group makes some interesting -- and, I think, undeniably logically valid -- appeals to Catholic notions of social justice, but the university's policy has basically been to completely ignore the issue. Naturally, this is a fight that shows up in the letters to the editor to the Observer, the main student daily paper, with opponents of a living wage tossing out standard arguments (non-sequiturs in this case) about how raising the minimum wage increases unemployment.

Amp has found pretty solid evidence that this is simply false. I want to hang on to this reference so I can cite it when the issue inevitably bubbles up again.

By comparing changes in employment in the two states (a procedure they referred to as “differences-indifferences”), Card and Krueger were able to estimate the employment effects of the New Jersey increase. Using this approach, they found that the differences in employment growth between the two states were not statistically significant. They concluded, therefore, that the minimum-wage increase did not lower employment in New Jersey.

The link has more general interest to us bloggy folks because Amp narrates a failed conservative effort to refute the study.