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Bernstein on the Minimum Wage

April 16, 2013 at 9:00 PM
BY
CBPP

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In a live, Oxford-style debate by Intelligence Squared, CBPP Senior Fellow Jared Bernstein argued against a motion to abolish the minimum wage.  Along with his teammate Karen Kornbluh, former U.S. Ambassador to the Organization for Economic Cooperation and Development, Bernstein made the case that abolishing “a simple policy that, for 75 years, has been doing what it's designed to do with little fanfare and minimal, if any, negative side effects… makes absolutely no sense at all.”

During the debate earlier this month, Bernstein presented a common sense thought experiment:

The American minimum wage, as you've heard, has been in place since 1938, 75 years ago. It has been raised 22 times. Nineteen states now have their own minimum wages above the federal level. If this policy was so damaging, as damaging as [the opposing team] claims, that it needs to be abolished, how could it be that citizens and legislatures in 19 states decided not to abolish it, but to raise it above the federal level? If it was anywhere near as damaging as our opponents claim, how could the minimum wage not only have survived this long, but have flourished and expanded? The answer, once again, is because it's widely understood and accepted by mainstream economics, policymakers, and perhaps most importantly, low-wage workers themselves, who overwhelmingly support the policy … as doing what it's supposed to do, steering a bit more of the economic growth their way.

And he explained some of the harmful unintended consequences of abolishing the minimum wage:

If you abolish the minimum wage, and it falls a lot, you will collect fewer payroll taxes. You will have to pay more in food stamps…. You have to pay more in welfare benefits. And it is very much a transfer of the burden of poverty to the taxpayer in ways that minimum wages and living wages help to mitigate.

By the end of the debate, more of the live audience agreed with Bernstein and Kornbluh, with 67 percent voting against the motion to abolish the minimum wage (see chart).

See the full transcript here and listen to the podcast here.

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