Nick Hanauer on Noah Smith
A billionaire named Nick Hanauer has weighed in on the minimum wage debate. Am I trying to bias you against him by mentioning his net worth? Not really. Instead, I’m following the lead of PBS, which published his piece. In the “Editor’s Note” introducing Hanauer to the audience, the first 5 words are: “Billionaire venture capitalist Nick Hanauer.” I look forward to PBS publishing future pieces by billionaires Charles Koch and David Koch.
So what is Hanauer’s case? His view is that the evidence is in. Here are his second and third paragraphs:
The more I thought about it, the less sense this premise made. [Noah] Smith’s article underscored two big things for me: first, the degree to which people see the evidence they want to see; second, how silly the idea of “economic theory” can be. Smith claims that we don’t know what the result of a $15 minimum wage will be. Will it kill jobs or not? But the truth is there’s abundant and overwhelming evidence that this theory is wrong and that higher minimum wages don’t hurt employment. The evidence is there; you just have to choose to see it.
Let’s just look in my own back yard for an example of that evidence. Washington state has had the highest minimum wage in the nation for several years–at $9.47, it’s a full 30 percent more than the federal minimum of $7.25. Washington’s unemployment rate of 5.5 percent isn’t the best in the country, but it’s not the worst, either. In fact, it perfectly matches the national rate. Seattle was until recently the fastest growing big city in the country. The first part of the $15 minimum wage rollout was successfully implemented in April, and unemployment in our county promptly plummeted to 3.3 percent.
Whatever economists’ views on the minimum wage are, I know no economist who has studied it or written on it who would accept this as sufficient evidence.
Hanauer’s earlier statement “[Noah] Smith’s article underscored two big things for me: first, the degree to which people see the evidence they want to see” shows just how uninformed Hanauer is. As my late friend Murray Rothbard used to say, that statement should get a horse laugh. It’s possible that Noah Smith “sees the evidence he wants to see” on some issues. But on the minimum wage? In the Smith article that Hanauer links to, Smith lays out why he thinks the L.A. “experiment” with the minimum wage is so good: precisely because it will tell us more than we now know about the effects of large increases. Anyone who knows anything about Smith’s views knows that on this one, there’s a greater than 99% probability that Smith is telling the truth.
I don’t normally start my morning by defending Noah Smith, but come on, Hanauer.
Fortunately, Hanauer gives a “tell” at the end of his piece:
The most powerful forces in economics are not numbers or facts. They are prejudices and preferences. No amount of evidence will ever change the degree to which many of the rich and powerful prefer themselves to be richer and more powerful and others poorer and weaker. The $15 minimum wage will work, just like [sic] all the other big historical increases in the minimum wage worked. Workers will be better off, and unemployment rates will be largely unaffected. But the people who prefer the rich to be richer and the poor poorer and the economists who are sympathetic to them will ignore this evidence in the same way they ignore all of the present and past evidence. It’s really just about deciding which side you’re on.
That last sentence says it all.
HT to Don Boudreaux.