Everybody Hates Poor People 

A Narrative Analysis of the Minimum Wage

On Friday, the Senate rejected Senator Bernie Sanders’ amendment to the COVID-19 relief bill that would gradually increase the minimum wage to $15 per hour over four years. This has prompted discussions about the minimum wage, and it looks like we have a rare consensus in the narratives.

Both sides agree that the other side hates the poor.

To the right-leaning public, Democrats are trying to kill jobs—they must hate the poor! It’s common knowledge that minimum wage increases decrease the number of jobs. Fewer jobs available means fewer people in or entering the workforce. Do they not want to help people enter the job market and have at least some income? 

To the left-leaning public, this increase in the minimum wage is a long time coming. And Republicans refusing this humanitarian move must truly hate the poor. Why would you not want to help people escape poverty?

This is a frustrating type of policy fight. It becomes immediately apparent that either side has difficulty seeing evidence that disagrees with them—instead only acknowledging those facts that support their preferred narrative.

Narratives are compressed, easy to understand distillations of complex and nuanced realities. And so part of the miscommunication here is that the public is often understanding information they’ve heard from experts in a much more simplified way. But the economy is ridiculously complicated, and not even experts know the exact impact a $15 minimum wage would have.

To the economists on the left, there’s plenty of new evidence that minimum wage increases do not lead to a notable decrease in jobs. Arindrajit Dube, one of the leaders of the new minimum wage discourse, put together a compilation of studies demonstrating minimum wage increases will have a much smaller (if not negligible) impact on jobs, especially in places where there are a limited number of employers. While there is some evidence from states and cities raising their minimum wages and having some jobs lost, there is equal evidence that job Armageddon won’t happen, especially given that the raise is phased in very slowly. 

(If you want to know more, Bloomberg economist Noah Smith wrote this explainer on why some economists changed their mind on the minimum wage.)

Economists on the right are either dubious of this new evidence or find that the prior evidence carries more weight. Classic economic models, which succeed in providing useful but limited predictions of what various policies will do most of the time, state that jobs will be lost when you set a wage floor. And before the pandemic, we saw wages growing to well above minimum wage purely due to market pressure. Economists on the right therefore reject a national $15 minimum wage on the grounds that it might exceed that threshold where jobs will be lost. Why risk eliminating jobs during a recovery if the market can raise wages for us, and in a way that takes into account a varied cost of living across the country?

Experts disagree on key issues in every field. 

Each step in economic research offers a new opportunity to inject bias. Two different economists bringing different assumptions to the table could come to two very different conclusions. This is not a sign of failure, but the nature of a dynamic academic field. 

In economics, these disagreements are often more public than in other fields because their conclusions directly affect the material well-being of everyone. So it’s very easy for non-economists to reduce the issue to a simple good-versus-bad paradigm, focusing only on the findings that fit their broader narrative. This approach is the best we can do given that we cannot (and should not) all become economists just to better comment on politics.

There is no consensus in economics on what a minimum wage increase will end up doing to the job market. And so the other side probably doesn’t hate the poor, but just thinks about the issue a little differently. In fact, both sides are advocating for what they see as the best option to aid the poor. 

This is not a battle of good versus evil, but rather of good versus good.

Lessons learned

Economic policy is complicated. But it also touches every one of us in a highly personal way. When policy is this critical, it’s that much more important to be mindful about the limitations of our collective knowledge and be willing to consider new information that might not fit our existing framework. 

This is a case where the facts are decidedly unknown, no matter how decided one person or another may be about them.

But we can be fairly certain about this: neither side really hates the poor.

Share