Krugman Takes Down Key GOP Talking Point

Krugman Takes Down Key GOP Talking Point

Posted in the Minneapolis Forum

Awful Truth

Saint Paul, MN

#1 Feb 18, 2013
Increasing the minimum wage is "actually good policy," New York Times columnist Paul Krugman wrote in a blog post on Saturday.

President Obama proposed raising the federal minimum wage from $7.25 to $9 an hour during his State of the Union address last week. While many on the right say that raising the minimum wage could make it more difficult for employers to hire people and therefore cause higher unemployment, Krugman argued in his post that this simply is not the case.

"There just isnít any evidence that raising the minimum wage near current levels would reduce employment," Krugman wrote, citing a report by John Schmitt from the Center for Economic Policy and Research.

This opinion is a hotly contested one. A 2011 study from the London School of Economics found that higher minimum wages do correlate with an increase in unemployment.

That said, there are a number of ways the labor market could respond to an increase in the minimum wage that do not involve cutting jobs. The Washington Post's Wonkblog has a great summary of these effects, which you can check out here.

The federal minimum wage hasn't increased since 2009. According to a 2012 study from the Center for Economic and Policy Research, the minimum wage would actually be $21.72 an hour if it kept pace with increases in worker productivity.

The same CEPR study found that if the minimum wage kept up with inflation since it peaked in real value in 1968, it would now be $10.52 per hour.

Even if the U.S. raised the federal minimum wage to $9 an hour, the nation would still have a lower minimum wage than many countries around the world. Check out this list of 9 countries with a higher minimum wage than the U.S. below:

http://www.huffingtonpost.com/2013/02/17/paul...

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