IE 11 is not supported. For an optimal experience visit our site on another browser.

A 'thumb on the scale' in minimum-wage fight

The CBO shook up the debate over the minimum wage yesterday, in a way that opponents welcomed, but the details are worth considering.
Low wage workers take part in a protest organized by the Coalition for a Real Minimum Wage outside the offices of New York Governor Andrew Cuomo, May 30, 2013. (REUTERS/Mike Segar)
Low wage workers take part in a protest organized by the Coalition for a Real Minimum Wage outside the offices of New York Governor Andrew Cuomo, May 30, 2013.
When the CBO says the Affordable Care Act will lower unemployment, reduce the deficit, increase wages; and bring coverage to tens of millions, the right says it doesn't matter. When the CBO says comprehensive immigration reform will boost the economy and lower the deficit, the right says it doesn't matter. When the CBO says extended unemployment benefits will create hundreds of thousands of jobs, the right says it doesn't matter. When the CBO says the Recovery Act rescued the economy and ended the Great Recession, the right says it doesn't matter.
But when the CBO says raising the minimum wage might cost jobs, congressional Republicans proudly proclaim, "This is definite proof that we're right and Democrats must abandon their efforts immediately."
How convenient.
When the CBO delivers good news to Democrats, Republicans don't budge an inch. When the CBO delivers bad news to Democrats, Republicans don't budge an inch. Heads I win, tails you lose -- the data only matters when it reinforces an agreed upon narrative and preconceived assumptions that aren't dependent on evidence anyway.
Put another way, imagine if the CBO had concluded yesterday that raising the minimum wage to $15 would cause a hiring surge. It didn't, but just for the sake of conversation, imagine it had. Would conservatives respond, "Well, in that case, we're prepared to reconsider our assumptions and take a second look at the idea"? Of course not; they would say what they always say when the CBO tells the right what it doesn't want to hear: CBO reports are only relevant when Republicans find the conclusions ideologically satisfying.
Given this, perhaps it's best to take Republican commentary in response to yesterday's report with a grain of salt. There's no discernable intellectual integrity to the talking points.
The CBO nevertheless generated quite a bit of discussion yesterday about the minimum wage, and it's worth keeping the findings in mind as the policy debate, such as it is, continues. The headlines folks have seen -- "Minimum wage hike would cost jobs" -- don't tell the whole story.
Soon after the CBO report started making the rounds, the White House issued an analysis from Jason Furman, chairman of President Obama's Council of Economic Advisers, and Betsey Stevenson, a member of the Council of Economic Advisers, that highlighted what Democrats saw as the good news in the findings. And to be sure, there's quite a bit to like:
* A minimum-wage increase to $10.10 would lift the incomes of 16.5 million Americans.
* It would lift 900,000 Americans out of poverty.
* It would give the economy a quick boost.
But that's obviously not what the political world is focused on. Rather, the key takeaway from the CBO's findings is that a wage hike would mean 500,000 fewer jobs. Is this true?
Note at the outset that the CBO actually used that number as a mid-point within a range of possible outcomes -- the office said the result could be 1 million fewer jobs or practically zero.
As for the estimate itself, Mike Konczal's analysis rings true.

As it turned out, what [CBO researchers] thought was appropriate involved a lot of adjustments in the direction for a higher impact. In the report, the authors themselves clarify that they are taking a more conservative line. All predictions, of course, amount to speculation of things that could happen in the economy, but in this one the speculating goes in a direction that is, to a surprising extent, in tune with Republican ideology. The report speculates that a minimum wage indexed to inflation would reduce jobs. It speculates that the speed of the minimum wage increase, or its level using various inflation measures, would reduce jobs. It argues job losses will be higher because of very new research centered on growth levels, even though that research is highly controversial. It speculates that technological change is coming faster than expected, and this will have an impact. And it also, crucially, speculates that these would bite much harder at $10 minimum wage instead of a $9 one. These are all interesting ideas, but they are definitely putting a thumb on the scale towards an estimate of job losses that is, as Harvard University's Lawrence Katz told me, "higher than the consensus." The CBO, in effect, is trying to referee a debate among economists, but the report doesn't quite convey the level of debate and the ambiguity when it comes to these numbers. Instead, it gives a narrow, and headline grabbing, result.

And so the political debate continues.