Cantankerous archetype Don Boudreaux has apparently abandoned his job and family in order to rail full-time against the minimum wage, writing no fewer than nineteen posts on the subject since the SOTU speech. There is a lot I could say about the subject - about the economics, about the social and political impacts of the policy, and about the patronizing and condescending way Boudreaux concludes that anyone who disagrees with him is an idiot trying to destroy the poor – but instead I’ll just post the below graph, which is the ratio of one hour worked at the minimum wage to NGDP-per-capita (log scale)*:
Firstly – note how awesomely the log trendline fits the data. Secondly, note that the last point, Obama’s proposal (assuming full implementation at $9/hr on Jan 1 2014) does “hop” outside the trendline a little, but still is below the level observed in 1991.
One of my firmest belief is that most differences in kind are really differences in degree, and thus the answer to the question “is raising the minimum wage a good idea?” is another question – namely, “by how much?” I am exceedingly doubtful that Obama’s proposal will have any substantial disemployment effects.
Lastly, note that I only used “new” minimum wages, so I’m really only tracking the politically-decided minimum wage at the moment of impelmenetation, not at every moment in time. Here’s the chart for the latter:
*The future data points for NGDP/POP were projected forward by Excel using…whatever it felt like using, I guess? Kind of magic. Anyway, the numbers didn’t seem absurd so I kept them.