“New Minimum Wage” Economists Prioritize Politics Over Evidence of Consequences

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While the immediate fight to raise the minimum wage to $15 under reconciliation has subsided, activists are beginning to look toward a future standalone $15 federal wage bill. Proponents, including politicians, consistently claim that raising the minimum wage will have no costs, only benefits. President Biden repeatedly claimed a $15 wage wouldn’t cause job loss, saying instead it would make “the whole economy rise”.

Other economists have refuted these claims, and a recent study published by the National Bureau of Economic Research finds that the majority of studies in the last 3 decades show that raising minimum wages results in significant job loss. The nonpartisan Congressional Budget Office also concluded that Sen. Bernie Sanders’ $15 wage proposal would cost up to 2.7 million jobs.

So what’s the real story behind the “no consequences” literature?

One key player in the pro-wage hike camp is economist Arin Dube, whose research served as a foundation for multiple minimum wage increase proposals. He has long been a proponent of the unsupported claim that minimum wage hikes do not cause significant job losses.

Dube has frequently collaborated with pro-hike economists from the UC Berkeley Institute for Research on Labor and Employment (IRLE), who have also argued minimum wages have no unemployment effects. But the Berkeley group also has deep ties to union interests and politicians seeking pass minimum wage increases:

  • Compromised research results: Emails obtained through public records requests show the Berkeley economists have coordinated their study results with government officials, unions, and special interest groups to support minimum wage increases.
    • In 2014, a staffer for Los Angeles mayor Eric Garcetti asked the economists to conduct a study showing a minimum wage hike would “help labor and the economy.” A year later, the mayor’s office asked the UC Berkeley team to respond to the city’s request for studies on impacts of a proposed city-wide minimum wage hike. The economists submitted a study finding that L.A. would not experience job losses due to the mayor’s proposed wage hike.
    • In 2014, New York $15 wage advocates provided specific talking points to Ken Jacobs, which he agreed to use, to testify before the state Senate Labor Committee. After working with the National Employment Law Project to round up NY union support for a minimum wage hike, Jacobs then published a study that a $15 minimum wage in New York would not cause job losses.
    • In 2017, the Seattle mayor’s office asked the Berkeley team to counter a newly released study from the University of Washington – which found the city’s minimum wage hikes had cost jobs and wages for employees – and had a PR executive representing the Fight for $15 organization write the press release.
  • Labor union affiliation: Economists associated with the IRLE and its affiliated centers have ties to unions which have fought to push a $15 in cities, states, and at the national level.
    • Ken Jacobs, who chairs the IRLE’s Center for Labor Research and Education, has ties to the AFL-CIO’s United Association for Labor Education, and has received research grants from unions.
    • IRLE’s Center on Wage and Employment Dynamics co-chairs Michael Reich and Sylvia Allegretto have both been affiliated with the union-funded Economic Policy Institute. Reich also founded the Union for Radical Political Economics, a group focused on “construct[ing] a progressive social policy” and critiquing capitalism as a form of “exploitation and oppression.” Allegretto has also received research grants from the union-funded, pro-$15 National Employment Law Project (NELP).
    • The Center on Wage and Employment Dynamics’s Annette Bernhardt serves on the AFL-CIO’s Worker Center Advisory Council as well as boards of other union-funded groups.
    • Advisory board member and Director of the Food Labor Research Center Saru Jayaraman founded the Restaurant Opportunities Center (ROC), operates as a union-like entity to organize workers to demand raising the minimum wage and end tipping for restaurant employees.

As the push to raise the federal minimum wage continues toward a new standalone bill, lawmakers should beware of the entrenched union interests trying to raise wages for their own benefit, while ignoring the real consequences for America’s workforce.