I got an email yesterday from Nobel Laureate, Vernon Smith, on behalf of an organization called EconomistLetter.com. They want me to join 150 other economists in signing a letter to stop the proposed minimum wage hike. EconomistLetter.com points out that the US economy has not been working for most Americans. Whereas elite Americans’ incomes started rising back in 2009 and now have never been higher, most Americans are still in an economic recession because, they say, “median income has fallen …unemployment remains elevated, and… poverty is a serious, complex issue that demands a comprehensive and thoughtful solution.” EconomistLetter.com says that the minimum wage is “a poorly targeted anti-poverty measure” that would give little help to the poor. As evidence, EconomistLetter.com cites the CBO study which estimated that under 20% of workers who would benefit are in households below the poverty line.
I agree with all of the above and these are the reasons why I support the minimum wage hike. It helps most Americans including millions of people in households below the poverty line. It isn’t the best anti-poverty measure, but it is the most politically feasible because it is popular with a majority of people in both parties. EconomistLetter.com is a good example of the lack of feasible alternatives. Their letter doesn’t have any suggestions whatsoever. Instead, they end the letter saying that they want “creative, comprehensive policy solutions that truly help address poverty, boost incomes from work, and increase upward mobility”, but they don’t have any suggestions at all. None.
I don’t know who is funding EconomistLetter.com, but until somebody like them is ready to start spending some serious money to promote laws that will work better than the minimum wage, I’ll still support the minimum wage. It isn’t perfect, but it does some good. There are better policies for helping the poor and the median American, but better policies are not feasible and only a misguided utopian would make people suffer while perpetually waiting for a chance at perfection. Don’t be the kind of utopian who lets the better become the enemy of the good when the good is the only feasible option.
Update 3/14: Peter Coy at Businessweek contacted Swirski and discovered that the letter is funded by the National Restaurant Association.
Update 3/18: I haven’t had time to write recently, but Michael Hiltzik at the LA Times digs even deeper into the influence peddling in the above situation.