Larry Elder

CNN's Candy Crowley seems absolutely, positively astonished that Republicans could oppose raising the minimum wage and extending unemployment benefits.

To her Republican guest, Crowley asked this "question": "If I am an unemployed American ... or if I am a minimum wage worker and I see Republicans who say, 'You know what? It's artificial, it messes with the marketplace, it might mean some teens can't get into the job market,' why would I become a Republican?"

Crowley's "question" implies that raising minimum wages and extending unemployment benefits for the out-of-work are clearly positive no-brainers. After all, a recent Gallup poll found 76 percent of Americans support an increase, as do 58 percent of Republicans.

First, the minimum wage. Economist and Princeton professor Alan Krueger served as the chair of President Obama's Council of Economic Advisers. His famous Card-Krueger study is by far the most widely cited study in the last 20 years on the effect of minimum wage increases. Krueger and colleague David Card concluded that -- surprise, surprise -- an increase in minimum wage in New Jersey resulted in an (SET ITAL) increase (END ITAL) in employment, not a decline as anti-minimum wage foes predicted. Excited minimum wage advocates channeled Dr. Frankenstein: "It's alive! It's alive!"

But while the Card-Krueger study is the most widely cited; it is also one of the most widely restudied. Upon examination by peers, the study fails to hold up. In fact, it has been so broadly and credibly attacked, one wonders why so many still cite it.

The conservative think tank Heritage Foundation wrote "Liberals Laud Alan Krueger's Fatally Flawed Minimum Wage Study." Heritage said: "Subsequent reviews of the study showed fatal flaws that undermined its findings. In 1996, a review of the study by the Employment Policies Institute found that the data sets Krueger and Card used were so badly flawed that 'no credible conclusions can be drawn from the report.' Specifically, the study found, 'the data set used in the New Jersey study bears no relation to numbers drawn from payroll records of the restaurants the New Jersey study claims to cover. ...

"When David Neumark and William Wascher re-evaluated the study, they found that data collected using (actual payroll) records lead to the opposite conclusion. ...: 'Estimates based on the payroll data ... suggest that the New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania control group.' In other words, the New Jersey/Pennsylvania case study supports the basic economic notion that increasing the cost of hiring a worker will generally lead to fewer workers hired."


Larry Elder

Larry Elder is a best-selling author and radio talk-show host. To find out more about Larry Elder, or become an "Elderado," visit www.LarryElder.com.