Minimum Wage Debate Motivated by Evidence or Ideology?

Dan Paley

Does the minimum wage destroy jobs? The debate among academics is far from settled and should continue until an academic consensus is reached. But according to an op-ed by ESSPRI director David Neumark in today’s Wall Street Journal, the “debate suffers when researchers use their influence to attack results they don’t like.”

Central to his argument is a recent dust up over this summer’s research on Seattle’s minimum wage experiment, in which the city raised its minimum wage from $9.50 an hour to $13 (on its way to $15). The study, conducted by the University of Washington, estimates that the increase “reduced hours worked in low-wage jobs by around 9 percent” which translates to a reduction in earnings “by an average of $125 per month.”

In the study, researchers used “close comparison” groups (comparing geographically close areas that did not see a wage hike.) Close comparison is a method favored by researchers who find little or no negative effect of minimum wage hikes, and who have, based on this evidence, suggested that high minimum wages impose few if any costs. It was used in the 1994 David Card and Alan Krueger study, among others, often referenced by advocates of increasing the minimum wage.

Yet this hasn’t stopped researchers from attacking the University of Washington study on methodological grounds. Michael Reich, a professor at Berkeley who has found higher minimum wage does not cause job losses, wrote to city officials in June to say the Seattle study could not be trusted because of the close comparison control group used. If that’s true, his assessment undermines the very method favored by researchers whose work, including his own, supports raising the minimum wage. According to Neumark, “Criticizing the method only when it delivers evidence against minimum wages suggests the motivations here may be ideological rather than empirical.”

Policymakers and the public rely on the research community to explain the effects of public policy. But according to Neumark, such reliance presumes, and requires, a debate motivated by empirical evidence rather than ideology.

Visit the Wall Street Journal to read the full article.