New NBER Study on Minimum Wage

On the heels of Nathaniel’s latest minimum wage post, I thought I’d point to a brand new NBER working paper titled “More Recent Evidence on the Effects of Minimum Wages in the United States.” As one summary explains,

For years, [David] Neumark has battled claims by other economists, such as University of Massachusetts professor Arindrajit Dube, that minimum wage hikes have no effect on employment. This latest paper offers more evidence that employment prospects for teenagers are diminished most by the minimum wage. 

Even though teenagers are generally not relying on minimum wage income for living expenses, jobs give teenagers their first opportunity for work experience that is crucial for becoming a productive worker later in life. For disadvantaged teenagers, a minimum wage job can develop skills that provide an opportunity to move out of the lower-class.

While state and local minimum wage increases deprive some of jobs, even more young people would be out of work if the federal government increased the minimum wage nationwide. Income levels and cost of living vary widely between states. The hourly median wage varies from a high of $37.59 in Los Alamos County, New Mexico, to a low of $10.81 in Brownsville-Harlingen, Texas. The federal minimum wage is an attempt to impose an oversimplified, cure-all prescription to the complex and diverse causes of poverty.

…Neumark’s new paper shows once again that flashy sound bites such as “Raise the Wage” make for quick political slogans, but raising the minimum wage will continue to price teens out of jobs.

The minimum wage, like other price controls, has unintended consequences.