Republican Charlie Baker Misses Mark on Minimum Wage Opposition

Baker channels his Mitt Romney. - promoted by Bob_Neer

[Cross-posted from the ProgressMass blog.  Like ProgressMass on Facebook and follow us on Twitter.]

This morning, Republican candidate for Governor Charlie Baker appeared on the Boston Herald Radio program “Morning Meeting.”  Among the issues discussed, Baker highlighted his apparent opposition to raising the minimum wage (beginning at the 1:17:02 mark):

Interviewer: I’d like to talk to you a little bit about the minimum wage in Massachusetts.  Would you be in favor of increasing the minimum wage?

Charlie Baker: I’m a much bigger fan- the answer is, I would love to see work pay.  OK, I think we should all be supportive of that.  But I worry about two things on the minimum wage.  The first is I really do worry about people losing job opportunities because of the increase in the minimum wage.  And I also worry about the impact it has on Main Street businesses and small businesses which, for the most part, are the ones that are most likely to be negatively affected.

Republican Charlie Baker’s misguided fears over raising the minimum wage suggest that he is either unaware of or actively ignoring the extensive research establishing that increasing the minimum wage does not hurt employment.

An analysis by the Center for Economic and Policy Research from February of this year resulted in very clear findings:

A new paper from the Center for Economic and Policy Research finds that modest increases in the minimum wage – such as the one proposed by President Obama in his State of the Union address – have little impact on employment, due to adjustments by employers and workers. The paper, “Why Does the Minimum Wage Have No Discernible Effect on Employment?” by economist John Schmitt reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. It finds that the strongest evidence suggests the most important adjustments are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners (“wage compression”); and small price increases.

“This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don’t have much impact on employment,” Schmitt said. “An increase to $9.00 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence.”

This finding echoes the results of numerous other studies by economists in recent years, evidencing that increasing the minimum wage simply does not harm employment.

The first study, published in November 2010 in the Review of Economics and Statistics by Arindrajit Dube of the University of Massachusetts, Amherst; T. William Lester of the University of North Carolina, Chapel Hill; and Michael Reich of the University of California, Berkeley, compared all of the adjacent counties that touch a state border where there is a difference in the mandated minimum wage in each state. Overall, the authors found that minimum wage increases raise wages for low-wage workers but do not reduce employment. […]

The second recent study, published in April [of 2011] in Industrial Relations by Sylvia A. Allegretto of the University of California, Berkeley; Arindrajit Dube; and Michael Reich, focused on state-level data. The authors replicated the models of researchers whose studies of teen employment found that increases in the minimum wage create job losses and are often cited by minimum wage opponents. (Teen employment is often viewed by minimum wage scholars as an indicator of the impact on the lowest-skilled workers.)

Again, however, when the authors added appropriate variables to control for regional differences—variables that previous researchers had omitted—they found that minimum wage increases do not reduce teen employment levels. Allegretto, Dube, and Reich specifically included an analysis of the effect of the minimum wage during the recessions of 1990–1991, 2001, and 2007–2009 and again found no impact on hours worked or employment levels.

Further, this isn’t just new conventional wisdom from the last few years.  Analysis of actual minimum wage increases back in the 1990’s had similar findings:

But research in the 1990s, specifically a study authored by economists David Carr and Alan Kreuger, seemed to prove otherwise, or at least to poke holes in this theory. Carr and Kreuger studied the effect of an increase in the minimum wage in New Jersey from $4.25 to $5.05 per hour in 1992. They surveyed 410 fast food restaurants in New Jersey and nearby counties in neighboring Pennsylvania, which saw no increase in the minimum wage. Their study found that New Jersey’s minimum wage hike didn’t negatively affect employment — in fact, they found, employment increased.

Since this 1992 paper, several other studies using similar methodologies have come to similar conclusions.

In short, numerous studies across the country spanning multiple decades find that increasing the minimum wage simply does not harm employment.

If Republican Charlie Baker wants to oppose an increase in the minimum wage, he ought to find a more defensible excuse than the one he offered to Boston Herald Radio this morning because his misguided fears of a minimum wage increase hurting employment just doesn’t square with economic reality.


20 Comments . Leave a comment below.
  1. Quite honestly, I haven't

    talked to anyone who is opposed to this.

    Here’s my story again: my daughter is a freshman at community college. She’s been working for a large, donut establishment for 3 years. She’s a great employee. She worked voluntarily worked 43 hours this weekend, starting at 5:00 a.m. on Friday. She started out at $8 an hour and still makes, yep, $8 an hour. They just don’t give raises. Three years, no raise. Unfreakingbelievable. I’d support the minimum wage increase anyway, but I watch my very responsible daughter work very hard and the corporate owners of her places of employment and get less every year.

    • Mark- let me ask you a few questions.

      Does the donut shop offer your daugher a flexible schedule, since she attends college? If so, that does have value. Does the donut shop pay workman’s comp and social security tax on the employer side? Does the donut shop owner pay any health bennies to full-timers? Has the property taxes increased on his building or rent gone up?

      I’m sure your kid is a great worker and being dedicated for staying 3 years, one would think she would be making $12 hour or more by now, that I would agree with you. But I have no idea of the guys profit margin in this type of business, his expenses, is he barely surviving with all the fees, taxes, and regulations the government puts him thru. Although, I do recall a donut shop owner driving a new Corvette back in the early 80′s, so perhaps we are in the wrong line of business.

      • Typical, you only care about someone else's job when that person looks like...

        • And, of course...

        • Geez Mike, you make me me laugh. Them my brothers! Oh by the way,

          I just had delivered 3 tons of anthracite coal, harvested from American workers in PA, like those above. And the best thing, no MA sakes tax on my coal, since it’s considered energy. Few more weeks, and I go live 24/7 burning the best energy in America.

        • What an unfair comment

          You might not like Dan’s viewpoint in his comment, but he’s not making his argument based on the various points you seem to suggest with your pictures …

          • The distraction that is DFW

            These are pictures mike_cote has pulled from other posts of DFW’s if I’m not mistaken.

            But then, we come to BMG to read DFW and commentary on DFW, right?

            • KBusch is correct.

              On the first set of pictures, they are directly from a DFW post where he was crying about how if we care about the environment, we would drive these coal workers out of a job.

              The Tebow picture was more just baiting DFW about his MAN-CRUSH.

              • Attend to the capitalization

                It should be KBUsch

                • First time I've seen the capitalization

                  Sadly, because nicknames here are all lower-case, “camel case” aspects of nicknames get lost. I’ve always thought of the handle as “k-busch”. Thus, seeing it as “KBUsch” opens new vistas of possibility.

                • I Apologize

                  There is a British singer named Kate Bush and I assumed (wrongly) that your name was similar, but with an extra Germanic C. Again, I apologize.

                • OK, now I'm curious

                  Can you enlighten us, without revealing more of your identity than you wish, as to what your handle means? I too always thought of it as K. Busch and some have called you Kate, which I just assumed was another example of my ignorance of someone’s identity that others don’t share.

      • Those things aren't part of the equation.

        Even if everything in your first paragraph were true she still needs enough cash to live on, plus $8 is probably before payroll tax is deducted.

        • Christopher, If we had a robust economy, nobody would worry about the minimum wage. Case in point

          I do recall back in the 80′s, the minimum wage was what, $3.35 hour? There were starter jobs paying high school students $7.00 hour. Why? Because the economy was roaring. Nobody talked about minimum wage b/c nobody earned it (for the most part). And back then, you could buy a decent used car for $500 and gas was cheap. Today, McDonald’s in North Dakota starting salary is $17.00 hour, with $500 signing bonuses, due to the oil and gas boom.

          So I understand why Baker is hesitant to pander, and just favor raising the minimum wage. Perhaps he is more confident in his economic program, which will grow our economy organically, allowing wages to increase on their own, rather than artificially by a new law, which tells me the current economic policies are a failure.

          • As I've said before...

            …when you write a diary about the stimulus and other proposals to grow jobs and stimulate the economy didn’t go far enough you’ll be credible. Until then provide some links that nobody was making minimum wage in the 80s, which I do recall being an issue even as young as I was. Put more cash in the pockets of those likely to spend it and the economy will grow.

      • The guy's actually a corporation

        that owns several individual franchises that “America runs on.” This isn’t a mom-and-pop operation where she would probably get paid more.

        Workman’s comp and social security? Of course. I don’t give a flying fuck about their taxes. My daughter pays sales and excise tax and social security. She actually owed income taxes last year too. Everybody pays taxes. Rent? Mortgage? Everybody has those too.

        Full-timers, what’s that? There are probably 2 or 3 per store. manager and assistant manager. Everyone is discouraged or prevented from working -full-time. My daughter says she may get reprimanded for working more than 40 hours this week, even though she did so with her manager’s approval.

        Flexible scheduling? Somewhat. They hire more people in the summer so you get fewer shifts. If they schedule you for too many hours during the school year, sucks for you. You work 30 hours around your classes, unless someone can take your shift.

        Twelve bucks an hour? I don’t know about that, but 25 or 50 cents certainly isn’t beyond the pale.

      • Irrelevant

        Every employer pays worker’s comp and employer’s FICA/Medicare. A entity that can’t pay those is a hobby, not a business. Whatever flex time is made available to this worker was worth just as much three years ago as it is now. Three years without a raise is a long time.

        The minimum wage is too low. A large and growing majority of Massachusetts residents (and voters) agree. Mr. Baker is again demonstrating why the Massachusetts GOP is dead — just as the events unfolding in Washington are demonstrating why, at a national level, the GOP is dying.

        The old, stale, and delusional “ideas” of the GOP appeal only to a shrinking group of equally delusional right-wingers.

        In the real world, the minimum wage in Massachusetts is obscenely low, and the arguments against raising it are without merit or substance.

    • Mark

      Have you seen people collecting signatures to put minimum wage on the ballot out by you? We’re wondering here if we should have travel teams to get to parts of the state that aren’t being covered.

  2. Baker is working hard

    to change the grumpy Charlie rep he earned in his last attempt at governor. The only problem is even though he is being a good time Charlie on the stump, he still has the same positions on the issues. I didn’t want him then, and I don’t want him now. I don’t want a governor I would enjoy having a beer with. I want a governor who shares my political views and my concerns. That isn’t Baker.

  3. Right wing populist or smartest guy in the room?

    Perhaps Mr Baker should make up his mind.

    If he wants to be the smartest guy in the room, the one who due to his immense brain is best qualified for the governor’s job, then he shouldn’t mouth long-refuted crap. He should know his economics.

    If he wants to play right-wing economic populist — and right-wing populists care not a fig what academics prove, then his style is all wrong.

    Thus the incoherence that is Mr Baker’s campaign for governor.

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