Jacobin magazine’s Seth Ackerman picks up his favorite chew toy, Matthew Yglesias of Vox, doing the economics of the minimum wage. To be clear at the outset, I think it’s perfectly fine for Yggy to take on diverse topics in which he is non-expert. He’s smart, prolific, writes well, and provokes worthwhile discussion. His economic commentary is usually worth reading, though susceptible to the ‘never in doubt’ syndrome.
The basic target of the Vox piece is whether the U.S. minimum wage could go up to $20 an hour without causing mass job losses. Yglesias is reacting to a New York Times story about the blissful status of minimum wage workers in Denmark, another Nordic social-democracy where everything is better except maybe the food and music.
I think Brother Ackerman overthinks and overworks this question, as far as criticism of Vox goes. Yglesias’ basic argument is an exceedingly brief blog post; it’s not a monograph. Said argument, really not more than an assertion, is that Denmark manages to keep employment high not because of a high minimum wage but thanks to their system of “education, training, active labor market policy, and regulation.” The finger-wagging implication is that the high Danish minimum wage depresses their fast-food employment and could do so much more in the U.S., given our medieval social welfare system.
The Times article notes a number of differences between the U.S. and Denmark that purportedly cloud any comparison of minimum wage effects, but on closer reading, all of them are true differences but at best irrelevant to any such comparison. For instance, it is noted that the fast food industry is more profitable in the U.S., so that means we can’t manage a higher minimum wage? In fact it strengthens the argument for a higher U.S. wage.
The only relevant factoid in the Vox article, via the Times story, is that there are more McDonalds establishments in the U.S. than in Denmark. This means nothing. A minimally relevant comparison would be to the fast food industry as a whole in Denmark, or better, the low-wage sector as a whole. And who says we need a bigger low-wage sector, anyway? The proof in the Danish pudding is their good overall labor market conditions.
So Ackerman is using a sledgehammer to liquidate a flea. He shows there is no correlation between the number of McD franchises and the McWage, which proves more than is necessary.
How high should our minimum wage be? Without doubt it could be higher than the $10.10/hr level proposed by our socialist-Islamist president. I’d assign the wage-setting authority to a triumvirate consisting of John Schmitt, Dean Baker, and Larry Mishel. A special pen surrounded by barbed-wire fencing would be available to dissenting economists who wanted to lodge a protest, in keeping with the current state of civil liberties in the U.S.