Paul Krugman argues that:
- Hiking the minimum wage has little or no adverse effect on employment
- A minimum-wage increase would help low-paid workers, with few adverse side effects
In other words, Krugman, not for the first time, is peddling the sort of claptrap that few of us would accept from a college freshman.
The first point — that hiking the minimum wage has little effect on employment — is an empirical one. Not all smart observers agree with Krugman’s reading of the data, but many do — so for the sake of argument, let’s assume he’s right about that.
The question now is: How the hell do you get from point 1 to point 2? Answer: Only by forgetting the most basic principle of economics, which is that things have to add up. If the minimum wage has no effect on employment, then it’s basically a pure transfer of resources. Which means that the costs and the benefits are equal. The only way there can be “few adverse side effects” —- i.e. few costs — is if there are few benefits. Our job as economists is to make sure people understand such things.