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Minimum Wages Are Great, Except When They're Not

The debate about pay is often too simplistic.
Talking past each other.

Talking past each other.

Photographer: Victor J. Blue/Bloomberg

Debate about the minimum wage is often too simplistic. It’s usually just about whether minimum wages are good or bad -- as if the answer would be the same across all of time and space. In reality, the answer should be a nuanced one. Obviously, if we raised minimum wages to $400 an hour, the economy would collapse. Minimum wages that are fine in one area will cost lots of jobs in places where prices overall are lower. Minimum wages will tend to help certain groups and hurt others. The list of qualifications and caveats goes on and on, but is typically drowned out in the partisan shouting. 

I’d like to add one more caveat to the list. Minimum wages may be perfectly fine when the economy is doing well, but be a drag in times of recession. That could bias us toward thinking that minimum wages are good, if our studies of their effects are limited to prosperous times.