You'd think President Obama could come up with better 2013 priorities than mandating higher labor costs, what with a nearly 8 percent national unemployment rate and a 23 percent teen unemployment rate. But there it was in his State of the Union address — a proposal to mandate a $9 minimum wage and link it to inflation.
In its minimum wage “fact sheet,” the White House pointed to several recent studies from an organized labor-aligned research center at the University of California-Berkeley that claim that increasing the minimum wage does not harm entry-level job opportunities.
There's just one small problem: These studies are wrong — and it's been proven.
The trump card in this discussion is a new study from UC-Irvine minimum wage expert David Neumark, co-authored with UC Irvine doctoral student J.M. Ian Salas. Their study systematically evaluates — and disproves — the methods used by the authors of the Berkeley reports.
Not that this is a surprise. The pub-lished research on minimum wages points overwhelmingly in one direction.
Federal Reserve Board economist William Wascher recently joined with Neumark to examine exactly what the academic consensus said. They found that 85 percent of the most credible studies from the last two decades show job loss associated with a wage hike.
Disproving this academic consensus is a tall order — even for a president.
Economists have historically detected job losses related to the minimum wage by comparing employment in states that raised the wage against employment in ones that didn't. The authors of the Berkeley reports, however, argue that these past studies wrongly blamed the minimum wage for employment declines that were actually related to other — and unrelated — changes in state economies.