I looked at this extensively at the end of last week in light of NY's decision to raise the MW to $15 for fast-food workers and the inevitable conservative blowback that it garners.
http://lastmenandovermen.blogspot.com/2015/07/sumner-celebrates-scott-sumner-day.html
For conservative critics of the MW in general-and of sharp raises of it more specifically-the basic argument is pretty clear. They start from the simple model of supply and demand. Wages like any other prices in the economy are set via the price system where demand for labor supply-the labor supply is held to be no different than the apple market or oil market or any other market even if this market is comprised of human beings-where there is a going wage rate based on the interplay of S and D.
To raise the price of labor above it's demand will lead to a fall in prices just as if you raised the price of ice cream cones above it's going or equilibrium rate.
It seems to me that even if you want to stick to simple S&D, it's not quite so simple. Labor could well be more or less inelastic than other goods. It could depend on the market and the industry.
To say that raising the MW simply will reduce employment assumes that the labor market is perfectly elastic and that there are no other effects that might offset it.
However, in addition there are new developments not welcome to conservative economists
http://www.nytimes.com/2015/07/24/opinion/david-brooks-the-minimum-wage-muddle.html?mabReward=CTM&moduleDetail=recommendations-1&action=click&contentCollection=Business%20Day®ion=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&src=recg&pgtype=Blogs&_r=0
that maybe a simple S&D model is not the right way to analyze effects of the MW.
http://robertvienneau.blogspot.com/2006/12/wages-and-employment-not-determined-by.html
There is the recent development of the idea of monospony-that a lot of firms are not passive price takers when it comes to wages as Veinneau discusses in the above link. Then there is the phenomenon of efficiency wages-it may be worth it to pay workers more than you could get away with if these leads them to higher productivity.
Krugman:
"There isn’t a sharply defined “going wage”, either because the firm has monopsony power — it can, in effect, choose the going wage in its local labor market — or because efficiency wage considerations lead it to pay more than the minimum, so that there are normally more applicants than places. And as I’ve drawn it, the top of the hill relating the wage rate to profits is fairly flat. In particular, the firm shouldn’t mind very much paying a somewhat higher wage, because this will produce offsetting benefits — a larger supply of labor if it has monoposony power, lower turnover or higher productivity if efficiency wages are an issue, maybe all of the above."
"The point is that under these circumstances it needn’t be all that hard to push up wages: the threat of union organizing or a consumer boycott, even moral suasion from the government might be enough. So the standard view that it’s very hard to change the distribution of market income, that policy must involve after-market taxes and transfers, may be quite wrong."
http://krugman.blogs.nytimes.com/2015/06/11/the-mutability-of-wages/
When discussing the recent raising of company's internal minimum wages by companies like Wallmart, it is clear that Obama's simple moral suasion from the government the last few years is a part of that.
"In a very helpful blog post, Paul Krugman tries to make sense of Wal-Mart’s recent statementthat it is already reaping some gains from raising wages via reduced turnover costs. Krugman’s main point is as follows. If worker productivity is a function of the wage (through improved morale, lower turnover, etc.), and Wal-Mart was initially maximizing profits, then a small change in wages will leave profits largely unchanged."
"As Krugman points out, this is logic of the “envelope theorem.” What I want to clarify in this post is that the logic behind this argument is more general than the particular efficiency wage model Krugman works through. Any time firms are choosing wages to balance various concerns—as opposed to simply accepting a “market wage” as a constraint—the logic of the envelope theorem applies. What’s more, two types of empirically relevant models of the labor market—monopsonistic competition and efficiency wages—look pretty similar in this regard, and can be thought of as special cases of a more general model."
"Krugman discusses the efficiency wage case, where worker productivity
is a function of the wage, 
. Krugman mentions monopsony in passing, but doesn’t analyze it explicitly: this is the idea that higher wages allows firms to employ more workers. In presence of search frictions, a higher wage allows a firm to more easily recruit and retain its workers. Such frictions, therefore, give employers some wage setting power. In the textbook monopsony model, the quantity of labor employed 
becomes a function of the offered wage."
http://arindube.com/2015/06/10/the-envelope-theorem-please-profits-efficiency-wages-and-monopsony/
"Part of the reason conservatives are so upset is that there was consensus on this until about 20 years ago. Now as David Brooks bemoans there is this 'minimum wage muddle.'
"Once upon a time there was a near consensus among economists that raising the minimum wage was a bad idea. The market is really good at setting prices on things, whether it is apples or labor. If you raise the price on a worker, employers will hire fewer and you’ll end up hurting the people you meant to help."
"Then in 1993 the economists David Card and Alan Krueger looked at fast-food restaurants in New Jersey and Pennsylvania and found that raising the minimum wage gave people more income without hurting employment. A series of studies in Britain buttressed these findings."
"Today, raising the minimum wage is the central piece of the progressive economic agenda. President Obama and Hillary Clinton champion it. Cities and states across the country have been moving to raise minimum wages to as high as $15 an hour — including New York State just this week."
http://lastmenandovermen.blogspot.com/2015/07/sumner-celebrates-scott-sumner-day.html
For conservative critics of the MW in general-and of sharp raises of it more specifically-the basic argument is pretty clear. They start from the simple model of supply and demand. Wages like any other prices in the economy are set via the price system where demand for labor supply-the labor supply is held to be no different than the apple market or oil market or any other market even if this market is comprised of human beings-where there is a going wage rate based on the interplay of S and D.
To raise the price of labor above it's demand will lead to a fall in prices just as if you raised the price of ice cream cones above it's going or equilibrium rate.
It seems to me that even if you want to stick to simple S&D, it's not quite so simple. Labor could well be more or less inelastic than other goods. It could depend on the market and the industry.
To say that raising the MW simply will reduce employment assumes that the labor market is perfectly elastic and that there are no other effects that might offset it.
However, in addition there are new developments not welcome to conservative economists
http://www.nytimes.com/2015/07/24/opinion/david-brooks-the-minimum-wage-muddle.html?mabReward=CTM&moduleDetail=recommendations-1&action=click&contentCollection=Business%20Day®ion=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&src=recg&pgtype=Blogs&_r=0
that maybe a simple S&D model is not the right way to analyze effects of the MW.
http://robertvienneau.blogspot.com/2006/12/wages-and-employment-not-determined-by.html
There is the recent development of the idea of monospony-that a lot of firms are not passive price takers when it comes to wages as Veinneau discusses in the above link. Then there is the phenomenon of efficiency wages-it may be worth it to pay workers more than you could get away with if these leads them to higher productivity.
Krugman:
"There isn’t a sharply defined “going wage”, either because the firm has monopsony power — it can, in effect, choose the going wage in its local labor market — or because efficiency wage considerations lead it to pay more than the minimum, so that there are normally more applicants than places. And as I’ve drawn it, the top of the hill relating the wage rate to profits is fairly flat. In particular, the firm shouldn’t mind very much paying a somewhat higher wage, because this will produce offsetting benefits — a larger supply of labor if it has monoposony power, lower turnover or higher productivity if efficiency wages are an issue, maybe all of the above."
"The point is that under these circumstances it needn’t be all that hard to push up wages: the threat of union organizing or a consumer boycott, even moral suasion from the government might be enough. So the standard view that it’s very hard to change the distribution of market income, that policy must involve after-market taxes and transfers, may be quite wrong."
http://krugman.blogs.nytimes.com/2015/06/11/the-mutability-of-wages/
When discussing the recent raising of company's internal minimum wages by companies like Wallmart, it is clear that Obama's simple moral suasion from the government the last few years is a part of that.
"In a very helpful blog post, Paul Krugman tries to make sense of Wal-Mart’s recent statementthat it is already reaping some gains from raising wages via reduced turnover costs. Krugman’s main point is as follows. If worker productivity is a function of the wage (through improved morale, lower turnover, etc.), and Wal-Mart was initially maximizing profits, then a small change in wages will leave profits largely unchanged."
"As Krugman points out, this is logic of the “envelope theorem.” What I want to clarify in this post is that the logic behind this argument is more general than the particular efficiency wage model Krugman works through. Any time firms are choosing wages to balance various concerns—as opposed to simply accepting a “market wage” as a constraint—the logic of the envelope theorem applies. What’s more, two types of empirically relevant models of the labor market—monopsonistic competition and efficiency wages—look pretty similar in this regard, and can be thought of as special cases of a more general model."
"Krugman discusses the efficiency wage case, where worker productivity
is a function of the wage, . Krugman mentions monopsony in passing, but doesn’t analyze it explicitly: this is the idea that higher wages allows firms to employ more workers. In presence of search frictions, a higher wage allows a firm to more easily recruit and retain its workers. Such frictions, therefore, give employers some wage setting power. In the textbook monopsony model, the quantity of labor employed becomes a function of the offered wage."http://arindube.com/2015/06/10/the-envelope-theorem-please-profits-efficiency-wages-and-monopsony/
"Part of the reason conservatives are so upset is that there was consensus on this until about 20 years ago. Now as David Brooks bemoans there is this 'minimum wage muddle.'
"Once upon a time there was a near consensus among economists that raising the minimum wage was a bad idea. The market is really good at setting prices on things, whether it is apples or labor. If you raise the price on a worker, employers will hire fewer and you’ll end up hurting the people you meant to help."
"Then in 1993 the economists David Card and Alan Krueger looked at fast-food restaurants in New Jersey and Pennsylvania and found that raising the minimum wage gave people more income without hurting employment. A series of studies in Britain buttressed these findings."
"Today, raising the minimum wage is the central piece of the progressive economic agenda. President Obama and Hillary Clinton champion it. Cities and states across the country have been moving to raise minimum wages to as high as $15 an hour — including New York State just this week."
http://www.nytimes.com/2015/07/24/opinion/david-brooks-the-minimum-wage-muddle.html?mabReward=CTM&moduleDetail=recommendations-1&action=click&contentCollection=Business%20Day®ion=Footer&module=WhatsNext&version=WhatsNext&contentID=WhatsNext&src=recg&pgtype=Blogs&_r=0
Sumner's helpful suggestion is because there is disagreement we should accept the theory that rests on the more 'conventional' basis-read traditional; ie, if there's a tie between conservatives and progressives give it to conservatives.
"There are conflicting empirical studies of the effect of minimum wages. When that occurs, it's probably safest to go back to the basic theory. That doesn't necessarily mean that minimum wages are bad policies, perhaps the gains in income outweigh the cost in unemployment. But it's disingenuous to claim that we can raise minimum wages without any disemployment effects."
http://econlog.econlib.org/archives/2015/07/paul_krugman_on_2.html
You can see how conservatives might find that reasonable.
It actually gets worse for conservative economists however-the standing of macroeconomists with layman policymakers has decreased which makes it even less likely that policymakers will simply follow tradition in making economic policy.
http://www.philosophyofmoney.net/share/was-milton-friedman-the-last-economist/
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