Lessons from the National Restaurant Association Astroturf Letter: Tuesday Focus: March 18, 2014

Jared Bernstein learns three four lessons from the National Restaurant Association’s right-wing sock puppets economists letter.

Lesson 1: the NRA would rather not have its role in the debate public:

Jared Bernstein: The Paradoxical Position of the National Restaurant Association in the Minimum Wage Debate: “We learn in today’s paper that unknown to its signers, the opponents’ letter was organized and even partially drafted by the National Restaurant Association (NRA)…. OK, clearly smarmy but biz as usual in DC.  Clearly, the (other) NRA thought they’d lose signatories if they revealed their role, a fear the Economic Policy Institute, a research organization (where I used to work), did not share.

Lesson 2: the NRA would rather not have people focus on the reasons that it opposes a minimum age increase:

What bothers me is the lobby’s phony concerns about the impact of the increase.  What they actually, and legitimately, worry about is the impact of higher labor costs of their members’ bottom lines.  But what they say they worry about in both the letter and other public statements is how the policy will hurt low-wage workers and not reach the enough of the poor. The letter emphasizes how the minimum wage will cost jobs and is poorly targeted, arguments that are not even well supported by the CBO report that they cite (CBO finds that while 500,000 jobs are lost, 24.5 million workers benefit from the increase; and two-thirds of the direct beneficiaries of the proposed increase are in the bottom half of the income scale)…. But the NRA does not exist to raise the living standards of low-wage workers.  If they did, presumably they’d listen to those workers who loudly and persistently advocate a position on the minimum wage which is diametrically opposed to that of the NRA.

Lesson 3: The NRA believes that a substantial portion of the losses from a higher minimum wage fall not on workers that lose their jobs but on restaurant owners who lose (some of) their ability to exploit their local monopsony power:

Here’s what the NRA says it actually does: “We advocate for pro-restaurant regulation and operational freedom. And we empower all restaurant owners to achieve even more success than they thought possible.” Got that?  The clients here are of course restaurant owners, who through their membership will achieve unimaginable success.  Not minimum wage workers; not poor people.  The fact that the NRA is protecting its members’ profits is not exactly news, and in fact their letter notes that profit margins are tight among low-wage employers. But their very presence in this debate… tells you something important about how minimum wage increases are absorbed in real life, and why we don’t see anything like the job loss effects opponents decry…. The NRA’s very presence in this debate, the very fact that they planted this letter, is… evidence against the argument that the higher minimum wage comes exclusively out of workers’ jobs and higher prices…

Lesson 4: There are some right-wing economists who don’t think that their job is to read empirical work and mark their beliefs to market:

Update: Both Noah Berger and Larry Mishel point out the following quote in the NYT from Robert Lucas, Nobel-winning economist who signed the opponents’ letter. “I was convinced that the minimum wage was not a good idea in Milton Friedman’s class in 1960,” he said, referring to the University of Chicago economist, whose classes he took as a graduate student. In other words: I learned how this works 50 years ago so don’t bother me with the path-breaking empirical work [by Card and Krueger; Dube, Lester, and Reich; and others] on the issue since then that’s changed the way many, probably most, economists think about this.

I have always been relatively skeptical of Card and Krueger et al.: I find it easy to believe that, at current levels, the disemployment effect of raising the minimum wage is small relative to its distributional effects. And I see no way that an honest utilitarian benefit-cost calculation that starts from a presumption that the baseline is equality of opportunity can come out rejecting this minimum wage increase. But I do find it very striking how nobody on the other side of this dares?… bothers?… cares?… to engage with Card and Krueger at all, and how nobody on the other side of this dares?… bothers?… cares?… to actually do any sort of benefit-cost calculation