Taking their lumps of coal

The minimum wage law tribe of increasers had a couple of disappointments this Xmas. Second (most recent) to deliver to the stockings were Michael Wither and Jeffrey Clemens--thanks to Russ Roberts--in November;

The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers

By exploiting the fact that several states had their own minimum wages laws already above the 30% increase in the federal minimum of 2007-09 (from $5.15 to $7.25), and thus were immune to its effects, the two economists found;

...that [these federal] minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point between December 2006 and December 2012. ...this accounts for 14 percent of the national decline in the employment-to population ratio over this period.

The severity of the recession accounting for the balance. Even more ominous;

We also present evidence of the minimum wage’s effects on low-skilled workers’ economic mobility. We find that binding minimum wage increases significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings. This curtailment of transitions into lower middle class earnings began to emerge roughly one year following initial declines in low wage employment. Reductions in upward mobility thus appear to follow reductions in access to opportunities for accumulating work experience.

I.e., if low skilled people can't get their first foot on the economic ladder...

Then there was, from February, Thomas MaCurdy of Stanford. He ceded, for the sake of argument, what we can call the Card-Krueger point that large disemployment effects aren't found in the wake of increases in minimum wage laws. We find that to be highly dubious, but, even if it were true, MaCurdy then asks, So, who pays the bills for the increase?

Almost everyone agrees that it isn't the owners of the businesses (through lower profits). Which leaves consumers, through higher prices. He looked at the redistributional, from rich to poor, effects from a 1996 increase. Concluding that that increase acted like a sales tax in its effects on consumer prices, a tax that is even more regressive than a typical state sales tax.

If advocates of raising the minimum wage are doing it to help the poor, they're tragically mistaken. Because about as many high income families--through having a minimum wage earner in the family--get the benefit of higher income, but low income families find that a larger share of their consumption is affected by the necessary higher prices that pay for those higher incomes.

MaCurdy finds that three in four low income families were net losers from the 1996 law.