Alan Krueger Explains his Thinking Behind the Minimum Wage Hike

4798 President Obama is pushing a controversial hike in the minimum wage. It is surely no coincidence that his chief economic advisor is Alan Krueger, an economist who became famous in the 1990s for research supporting minimum wage hikes. But don't higher wages mean fewer jobs? Krueger explains at length why they don't.

Alan Krueger shakes hands with President Barack Obama after announcing his nomination in August 2011 as chairman of White House Council of Economic Advisers. Krueger was confirmed by the Senate on Nov. 3, 2011. Photo by Andrew Harrer/Bloomberg via Getty Images.
Paul Solman: During his State of the Union address Tuesday evening, President Obama challenged Congress to do what it could to help the middle class. Of the many economic issues in his address, raising the minimum wage to $9 an hour and tying it to the cost of living is nothing short of controversial. It is surely no coincidence that the chairman of the president's Council of Economic Advisors is Alan Krueger, an economist who became famous in the 1990s for research supporting minimum wage hikes.

Back in 1996, not long after "Myth and Measurement," his then ground-breaking and controversial book with David Card on the minimum wage first came out, I interviewed Alan Krueger at length about the minimum wage, which so many economists at the time opposed because, as critics argued after the State of the Union address, raising wages supposedly reduces the incentive to hire workers. By contrast, Krueger and Card found, a study of workers in New Jersey and neighboring Pennsylvania showed no decrease in fast food employment when the minimum wage was raised.

Krueger is now the chair of the President's Council of Economic Advisors. He is a key - if not the key - presidential economic advisor. So if you want to understand the President's economic reasoning in pushing for a minimum wage hike, there may be no better place to start than with Krueger's original reasoning.

In the years since, he has become one of the country's most respected economists. But his support for hiking the minimum wage has remained consistent, as has his reasoning for "indexing" the minimum wage to inflation, something he makes quite clear near the end of the interview I did with him in, excerpted at length for the first time below.

Source: PBS | Paul Solman
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