The Economic Models Always Predict that a Minimum Wage Hike Will Cost Jobs, and the Models Are Always Wrong

Hey thanks, New York Post, for printing this how-to guide to classic trickle-down bullshit: “A $15 wage could cost half a million NY jobs.”

Enacting a statewide, all-industry $15 minimum would cost New York at least 200,000 jobs — including 95,600 in New York City, with proportionately larger employment decreases in upstate regions. That’s the key finding of a research paper to be released today by my organization, the Empire Center for Public Policy, and the Washington, DC-based American Action Forum.

Co-authors Douglas Holtz-Eakin and Ben Gitis drew from three different research models to estimate the impact of Cuomo’s proposal. The projected 200,000-job loss is actually their lowball estimate, based on the methodology used in a recent study by the Congressional Budget Office (CBO), of which Holtz-Eakin is a former director. The two other minimum-wage impact models cited in the research paper say the employment impact could be even larger — resulting in somewhere between 432,200 and 588,000 fewer jobs.

Okay, sure. I don’t doubt that your “research models” predict that a $15 minimum wage would cost as many as 588,000 jobs. That sounds about right. Because that’s what the models always predict. Except the thing is, it never happens! Because the models are always wrong.

According to a letter signed by more than 600 economists, including 7 Nobel Prize winners, the weight of the evidence now shows that “increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.” In fact, the economists concur, studies of the effect of actual minimum wage increases (rather than models of theoretical ones) suggest that minimum wage hikes have a “stimulative effect.”

So line up all the economists you want to insist that your economic models are right, but 75 years of minimum wage hikes tells us otherwise.