Former Obama economist leery of minimum-wage hike
The Kansas City Star
Christina Romer was President Obama’s first chair of the Council of Economic Advisers, so her skepticism toward the president’s proposed minimum-wage increase is news in itself.
In a piece in The New York Times, Romer notes that the issue is complicated and the research largely inconclusive. Does the minimum wage kill jobs for low-income workers? She says “the bulk of the empircal analysis finds that the overall adverse employment effects are small.”
Hmm. So there ARE adverse effects. Nor does she address a key argument — whether the minimum wage kills jobs for young people starting out in the working world. Bottom line, she’s against it and instead suggests an increase in the earned-income tax credit.
Romer: “If a higher minimum wage were the only anti-poverty initiative available, I would support it. It helps some low-income workers, and the costs in terms of employment and inefficiency are likely small.
But we could do so much better if we were willing to spend some money. A more generous earned-income tax credit would provide more support for the working poor and would be pro-business at the same time.”
Me: A policy that would increase costs for many small businesses is hardly the right medicine with the economy still shaky, and as far as the EITC goes, the priority right now should be finding ways to cut spending and reduce the cost of tax credits. But it’s highly significant that a former Obama economist is decidedly lukewarm to the president’s idea.