Says the letter: “At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers.”
Addressing the concern that employers would lay off their least-productive workers rather than raise their pay, the letter says, “the weight of evidence now show[s] that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market.” It goes on to say that “a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”
This isn’t the final word, of course. Those opposed to raising the minimum wage will argue that many of the signatories to the new letter are more liberal than the average of the profession. The Nobel economists who signed are Kenneth Arrow, Peter Diamond, Eric Maskin, Thomas Schelling, Robert Solow, A. Michael Spence, and Joseph Stiglitz.