"Top U.S. Chamber Official: The Minimum Wage Is ‘Counterproductive’ And ‘Doesn’t Help’"
David Chavern, the executive vice president and chief operating officer of the right-wing U.S. Chamber of Commerce, appeared on C-Span’s Washington Journal this morning to discuss his organization and the state of the economy. At one point, a caller with a “pet peeve” against the minimum wage dialed in on the Republican line and laid out a typical far right stance about how the minimum wage hurts employment. Asked to respond to the caller, Chavern said the Chamber would “agree with you.” Chavern explained that the minimum wage is “counterproductive” to employment, but acknowledged that its political popularity made it something that “we are going to have to get used to living with it”:
CALLER: One main thing that I have a pet peeve with is the minimum wage. … So, I think eliminating the minimum wage and letting the business owners use their own discretion would be one step in the right direction of solving the employment problem we have in this country.
HOST: David Chavern, the minimum wage?
CHAVERN: Yeah, you know, I think as a matter of economic theory, we would probably agree with you. It doesn’t help to have the government setting wage rates. It is ultimately counterproductive. It may make people feel good politically, but it does not help job growth. On the other side of the coin, you have to understand practical politics. Which is, you know, some level of minimum wage is very popular and is something that we are going to have to get used to living with on an on going basis, because it’s a part of our system.
While Chavern correctly notes the minimum wage is popular, he fails to mention that almost all of the economic research on the subject shows that the minimum wage is not “counterproductive,” but rather has little to no effect on employment. The most well-known researchers on the subject — David Card and Alan Krueger — examined a minimum wage increase in New Jersey, and found that “employment actually expanded in New Jersey relative to Pennsylvania, where the minimum wage was constant.”
Chavern need only look back to 2009, when the federal minimum was increased to its current level in the face of heated conservative fear-mongering about increased unemployment. Despite their fears, the higher wage actually provided “a cushion to the economy when it is most needed,” by quickly boosting consumer spending by $4.9 billion, the Economic Policy Institute found.
But setting aside the employment question, the current minimum wage doesn’t even lift a family of three out of poverty. The current federal minimum is $7.25 per hour, but it would have to be hiked to $9.92 per hour just to match the buying power of the minimum in 1968.
Indeed, as 650 economists wrote in 2007 while Congress was considering raising the minimum wage, increasing the minimum will have “very little or no effect on employment,” but “would improve the well-being of low-wage workers.”