Will McGrew sends us to Allegretto, Godoey, Nadler, and Reich taking a narrow look at food services and drinking places and the minimum wage. Back when David Card and Alan Krueger wrote their Myth and Measurement about how the costs of rising minimum wages had been vastly overstated, many—I might even say most—American economists believed that their claim that the evidence showed that recent minimum wage increases had raised rather than lowered business demand for employees was overstated. Now I believe that is no longer the case: the majority view is that employers have market power, so a minimum wage is much more like good rate regulation of a monopoly utility rather than an anti-competitive "interference" in a well-working competitive market: Will McGrew: The latest research on the efficacy of raising the minimum wage above $10 in six U.S. cities: "Sylvia Allegretto, Anna Godoey, Carl Nadler, and Michael Reich... local labor markets... particularly affected by... local legislative changes... food services and drinking places... six cities... substantial earnings growth and inconsistent employment effects...
...Pooling the data for the six cities... a 10 percent increase in the minimum wage produces an increase of 1.3 percent to 2.5 percent in earnings on... anywhere from 0.3 percent decrease to a 1.1 percent increase in employment as a result of the rise in the minimum wage.... Kate Bahn details one cause of the observed employment effects from the minimum wage increase may be the prevalence of monopsony in contemporary labor markets.... David Howell argues that “no job losses” should not be the standard for evaluating minimum wage increases as such reforms can be implemented in conjunction with other employment programs and work incentives...
#shouldread
#labormarket
