There’s something about Nobel laurels that gives an economist instant credibility, which is why organizations for and against the higher minimum wage have worked so hard to court them. In January, seven Nobelists signed a letter favoring a $10.10 federal wage floor. Today three other Nobel prize-winning economists’ names appeared on a letter warning that such an increase would hurt employment and saying “we need a mix of solutions that encourage employment, business creation, and boost earnings rather than across-the-board mandates that raise the cost of labor.”
The Nobelists on the “anti” letter are Eugene Fama of the University of Chicago Booth School of Business; Edward Prescott of Arizona State University; and Vernon Smith of Chapman University’s Argyros School of Business and Economics and Fowler School of Law. Other luminaries among the 500-plus signatories are Gregory Mankiw of Harvard University and Glenn Hubbard, dean of Columbia Business School, both former economic advisers to President George W. Bush; and George Shultz, a former secretary of Treasury, State, and Labor.
Whatever its economic merits, the anti-$10.10 letter may suffer politically from its failure to propose a clear alternative. It simply says, “we encourage federal policymakers to examine creative, comprehensive policy solutions that truly help address poverty, boost incomes from work, and increase upward mobility by fostering growth in our nation’s economy.” Unobjectionable, but hardly a rallying cry.