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Data Analysis · Economic Theory · Employment · Minimum Wage
Economists, notably Nobel laureate David Card and the late Alan Krueger, have used empirical data and "natural experiments" since 1994 to challenge the long-held economic theory that raising the minimum wage inevitably causes job losses, shifting the debate from abstraction to evidence.
California's new fast-food law expects a minimum wage increase to $22 in 2023, up from $15 in September 2022, sparking renewed debate over its potential $3 billion cost increase and job impacts. Conventional economic wisdom, based on supply and demand, posits higher wages lead to fewer jobs; however, Card and Krueger's 1994 study comparing New Jersey (increased minimum wage) and Pennsylvania (no change) found little employment impact.
The article highlights that traditional models assume perfectly competitive labor markets, which rarely exist, often overlooking monopsonies where a few companies dominate. This empirical approach, despite technical flaws, has made the minimum wage discussion more data-driven, emphasizing real-world human behavior over pure theory.
