Sumner Celebrates Scott Sumner Day the Right Way: With John Cochrane

     The bad news for him is that it is Scott Sumner day-NY state will now raise the minimum wage to $15 for all fast food workers.

     http://lastmenandovermen.blogspot.com/2015/07/just-call-it-scott-sumner-day-in-ny.html

     He definitely took note with not one but two anti minimum wage pieces-one at Money Illusion and one at Econolog.

     At least he celebrated it the right way:

   "My posting will be relatively infrequent for the next couple of weeks. I just returned from DC, where I finally got a chance to meet John Cochrane. He’s taken a position at the Hoover Institute. Although we disagree on sticky wages, we have uncannily similar views on a wide range of other issues, such as immigration, health care reform and financial system reform. I also got a chance to meet quite a few of the Mercatus scholars, and came away very impressed with the organization."

   http://www.themoneyillusion.com/?p=29985

   I already looked at the work of his minimum wage soul-mate, Carolone Baum.

   http://lastmenandovermen.blogspot.com/2015/07/on-minimum-wage-sumner-finds-his-soul.html

   http://lastmenandovermen.blogspot.com/2015/07/caroline-baum-stands-behind-neumark.html

   He takes a crack at Krugman himself at Econolog:

  "Paul Krugman recently had this to say on the minimum wage:

  "Until the Card-Krueger study, most economists, myself included, assumed that raising the minimum wage would have a clear negative effect on employment. But they found, if anything, a positive effect. Their result has since been confirmed using data from many episodes. There's just no evidence that raising the minimum wage costs jobs, at least when the starting point is as low as it is in modern America."

  "This struck me as very odd. I've done work that suggests that minimum wages probably cost jobs (although admittedly my research was on the Great Depression, and hence may not be applicable to today.) But it's widely known that there is lots of other research suggesting that minimum wages cost jobs. In addition, economic theory suggests that when you make something more expensive, people will buy less of it. Perhaps strangest of all, Krugman's claim is contradicted on the very first page of the study he links to as having "confirmed" his claim:

  "On balance, case studies have tended to find small or no disemployment effects. Traditional national level studies, however, have produced a more mixed verdict, with a greater propensity to find negative results.

  "Paul Krugman has said that he doesn't read conservative blogs, so obviously he may not be familiar with the literature on how the minimum wage costs jobs. But that's no excuse for not even reading the first page of the study he links to in support of his claim."

   http://econlog.econlib.org/archives/2015/07/paul_krugman_on_2.html

   Krugman hasn't actually contradicted himself here. The traditional national level studies are not good for this kind of study. Sumner says there is lots of other reasearch that shows it. Who does he have in mind. Hopefully not the Neumark-Wascher study that claimed to disprove Card-Krueger. 

   Sumner could just as soon to be said to be contradicting himself by ignoring case studies that show there is small effect. 

   Finally, Sumner gives the game away: this is about the $15 minimum wage for fast-food workers NY has just passed. AKA: Scott Sumner Day. 

  http://lastmenandovermen.blogspot.com/2015/07/just-call-it-scott-sumner-day-in-ny.html

  "Krugman doesn't come right out as say that the Card-Krueger study provides support for the Democratic Party's recent attempt to raise the minimum wage, but that's surely the implication that most readers will draw from his post. And yet even the Card-Krueger study doesn't necessarily support the Obama administration's proposal for a $10.10 minimum wage, or the Congressional Democrats attempt to raise the minimum wage to $12/hour. The studies he cites look at the effects of small increases in the minimum wage."

 "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."

  When studies conflict use the ones that you agree with. Apparently there is no such thing as inelastic demand. And natural experiments are not as reliable as derivative national data. 

  As a commentator this morning pointed out-who happens to be an economist:

 "PS surveys are used for loads of data in economics, including telephone interviews. Applied research relies a lot on survey data. GDP is calculated using survey data. If you want to start dismissing that kind of data so curtly then get ready to dismiss a whole lot of economics."