Karl Smith agrees with Casey Mulligan that reducing the minimum wage would boost the job market:
I understand that there are sophisticated studies showing a limited impact of the minimum wage on employment. My judgment is impacted by those studies. Nonetheless, they are climbing a steep hill against intuition and a supply and demand paradigm that has proved incredibly powerful in the past.
It may not be the case that the minimum wage cut employment by 800K but I have a hard time swallowing that it does not impede recovery and exacerbate long term unemployment.
I can’t imagine that there are no workers at all in America whom it is profitable to hire at $4.75 an hour but unprofitable to hire at $7.25.
This kind of stuff bothers me on a bunch of different levels. Let's count the ways:
There are, obviously, nuances here. Maybe you think we should do away with the minimum wage and instead beef up the EITC or something similar. Or maybe we should directly subsidize higher wages instead of making businesses pay them directly. For a variety of non-economic reasons I don't think that's a good idea, but reasonable people can differ. But what it's hard to differ about is that this is pie in the sky. If we reduce the minimum wage, nothing is going to take its place and we all know it. It would increase corporate profits and dramatically reduce the wages of the poorest workers, and that's about it. Employment would probably be affected only marginally, and nothing would take the place of that lost income. Welcome to America.