Greenspan on the Minimum Wage

Larry Mishel, President of the Economic Policy Institute, sent me an email today, asking me to sign a letter of economists endorsing an increase in the minimum wage. Apparently, he already has some high-profile signers, including my undergraduate thesis adviser Alan Blinder and my current Harvard colleague Larry Katz. Despite my fondness and respect for Alan and Larry, I declined.

Alan Greenspan will, I predict, decline as well--a forecast I make based on this old article from the files.

Greenspan warns higher minimum wage could raise unemployment
The Associated Press, February 24, 1999

Raising the minimum wage could deny some teenagers their chance at entry-level jobs, Federal Reserve Chairman Alan Greenspan said Wednesday.

Responding to questions from House Banking Committee members while delivering the Fed's semiannual report to Congress, Greenspan said increasing the wage probably would push inflation higher. But he said his main concern was "individuals who become unemployed because of the minimum wage."

"Being unemployed when you're a teenager... is very detrimental to... learning by training and becoming a productive member of the work force," he said.

Greenspan's view is consistent with recent research by David Neumark. Obviously, not all economists are convinced.

I wonder if Ben Bernanke will be as forthright on this topic as Greenspan was. My guess is that Ben's views on the minimum wage are not very different from Greenspan's, but that Ben will decide that he hasn't accumulated enough political capital to stick his neck out on such a politically charged issue.