Skip to content

Should We Raise the Minimum Wage?

2014-02-04 · explainer · John · 3:46 · watch on YouTube

Topic: US politics & society (also: Economics) · mode: Explainer

John argues that evidence since Card and Krueger's New Jersey study shows minimum-wage rises cost few jobs and reduce poverty, making them 'the cheapest lunch available', and that as an employer he favours paying a living wage.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Greeting; Hank's businesses pay above the $7.25 federal minimum; hypothetical fast-food restaurant 'Corndogs and Sodium'; the question

  • ★ John lists the businesses Hank has started: Crash Course, SciShow, DFTBA Records, VidCon and, jokingly, 'the ceaseless juggernaut' 2D Glasses. (playful) — 00:00:02 · Crash Course, SciShow, DFTBA Records, VidCon
  • ★★ John says Hank's companies employ dozens of people, none of whom are paid the federally mandated minimum wage of $7.25 per hour. — 00:00:07
  • ★★ John imagines Hank opening a fast-food restaurant, 'Corndogs and Sodium', to ask what raising the federal minimum wage would do to him and his employees. (hypothetical) — 00:00:14

00:00:29 — The 'Econ 101' argument against a minimum wage: markets set wages, price controls slow growth, unemployment rises

  • ★★ John sets out the 'Econ 101' argument: markets set wages, price controls slow growth, and a minimum wage raises unemployment, so it ends up increasing poverty. — 00:00:29

00:01:11 — Real labour markets: Card and Krueger's New Jersey/Pennsylvania study, later studies, reasons for mild effects, higher prices

  • ★★ John says actual labour markets are far more complex than the models of them built by college freshmen. — 00:01:11
  • ★★★ John reports Card and Krueger's study: New Jersey raised its minimum wage in 1992 while neighbouring Pennsylvania did not, and restaurant employment in New Jersey actually increased. — 00:01:19
  • ★★ John says many later studies confirmed Card and Krueger's findings, while some found negative employment effects that are surprisingly and consistently mild. — 00:01:43
  • ★★ John gives reasons: the minimum wage is probably near the market rate, low-wage workers spend raises (creating jobs), and higher wages cut turnover costs. (hedged) — 00:01:54
  • ★★ John says the downside is that higher wages go with higher prices for goods relying on low-wage labour, so Hank's corndogs would probably cost a bit more. (hedged) — 00:02:09

00:02:18 — Poverty: a 10% rise cuts poverty about 2.5%; limits; neither 'job-killer' nor inequality fix; the cheapest lunch

  • ★★★ John says there is growing consensus that raising the minimum wage reduces poverty in the medium run: big recent studies find a 10% rise cuts the number in poverty by about 2.5%. — 00:02:18
  • ★★ John adds that even many opponents accept this, but it won't always work: at some point raises bring inflation and slower job creation, and no one knows where that point is. — 00:02:34
  • ★★★ John says it is as disingenuous to call the minimum wage a 'job-killer' as to claim it will fix economic inequality. — 00:02:45 · economic inequality

  • ★★★ John concludes that there is no free lunch, but for reducing poverty without hurting employment, higher minimum wages seem the cheapest lunch available. (hedged) — 00:02:51 · There ain't no such thing as a free lunch

    “higher minimum wages seem at least to be the cheapest lunch available”

00:03:01 — John as employer: living wages at VidCon and DFTBA Records, Costco; his academic decathlon bronze medal

  • ★★★ As an employer, John is more persuaded by the personal argument: paying a living wage, which they would do even at 'Corndogs and Sodium', makes employees happier and more productive. — 00:03:01
  • ★★ John says that, though hard to quantify, paying a living wage has let VidCon and DFTBA Records keep employees for years and grow sustainably. — 00:03:12 · VidCon, DFTBA Records
  • ★ John jokes that he is not an economist, though he won a bronze medal in economics at the Alabama State Academic Decathlon in 1993. (playful) — 00:03:19 · also in: Understanding the Tax Plans of Donald Trump and Ted Cruz
  • ★★ John says the strategy of paying a living wage has worked well for them so far and is also working at much larger companies like Costco. — 00:03:24

00:03:31 — The US does not benefit from poor workers; hope for a nuanced conversation; sign-off

  • ★★★ John says the United States is a rich country and that growing evidence suggests the US does not benefit from having poor workers. (hedged) — 00:03:31 · United States
  • ★★ John says raising the minimum wage won't fix that problem, but hopes it can at least start a nuanced conversation about it. (hedged) — 00:03:38

Threads in this video

Mentioned

Central: Alan Krueger · David Card · living wage · minimum wage

Also: Projects: Crash Course · DFTBA Records · SciShow · VidCon

Works: 2D Glasses

Organizations: Costco

Concepts: economic inequality · free market · inflation · Unemployment

Places: New Jersey · Pennsylvania · United States

Events: United States Academic Decathlon

Memes: There ain't no such thing as a free lunch

Only in the description or credits: Rosianna Halse Rojas

← Previous: In Depth Viewing of the TFiOS Trailer · Next → Kill All The Humans