I largely agree with Gary Becker and Richard Posner with reference to the Democrat proposal for raising the minimum wage in the USA. Despite the fact that the proposal is also supported (and to some extent, ignited to start with) by many remarkable economists, I do not think there is any undisputed, clear, evidence that the benefits would outweigh the costs, and moreover there are better alternatives that can be used towards the same (declared) goals (as, for instance, the Earned Income Tax Credit, first championed as the "negative income tax" by the late Milton Friedman; as Posner discusses in his post mentioned above, why not work towards making that more generous, since the EITC is probably a less inefficient tax than the minimum wage). At best, there is more research needed to have clear-cut policy recommendations. The discussions by Becker and Posner on their blog couldn't have been phrased better in such a short space.
Gary Becker is also pointing out that most economists probably do not support this view, albeit one can count, among other top economists, 5 Nobel Laureates in Economics, who do so (although, to my knowledge, none of them worked precisely in this field), fact which served advertising a lot this campaign. Here's an excerpt from his post:
A recent petition by over 600 economists, including 5 Nobel Laureates in Economics, advocated a phased-in rise in the federal minimum wage to amuch higher $7.25 per hour from the present $5.15 per hour. This petition received much attention, and the number of economists signing is impressive (and depressing). Still, the American Economic Association has over 20,000 members, and I suspect that a clear majority of these members would have refused to sign that petition if they had been asked. They believe, as I do, that the negative effects of a higher minimum wage would outweigh any positive effects. That is one reason I would surmise why only a fraction of the 35 living economists who received the Nobel Prize signed on to the petition--I believe all were asked to sign.
Controversy remains in the United States (and elsewhere) over the effects of the minimum wage mainly because past changes in the U.S. minimum wage have usually been too small to have large and easily detectable general effects on employment and unemployment. The effects of an increase to $7.25 per hour in the federal minimum wage that many Democrats in Congress are proposing would be large enough to be easily seen in the data. It would be a nice experiment from a strictly scientific point of view, for it would help resolve the controversy over whether the effects of large increases in the minimum wage would be clearly visible in data on employment, training, and some prices. Presumably, even the economists and others who are proposing this much higher minimum must believe that at some point a still higher minimum would cause too much harm. Otherwise, why not propose $10 or $15 per hour,or an even higher figure? I am confident that for this and other reasons, the actual immediate increase in the federal minimum wage is likely to be significantly lower than $2.10 per hour.
In fact, from and only from a pure scientific point of view, in agreement with Gary Becker's final lines in the fragment above, an increase of such a magnitude would simply be welcome and it would probably help- subsequent to thorough investigation of the effects, over a few years- end a controversy that goes on for quite a while now in the USA. As Becker conjectures however, if at all, the implemented increase would be significantly lower than the amount(s) proposed. And that would not probably serve very well any purpose...
Update: here's what Greg Mankiw thinks about the topic. Very interesting- and very plausible!- explanation for why the minimum wage is much more present in political discussions than the EITC.
Update 2: Greg Mankiw posts again something extremely interesting on the issue. Apparently the only issue on which economists seem indeed to be largely divided is the minimum wage. Hence, one can only agree with one idea in Becker's post mentioned above that, if anything, the increase in the federal minimum wage should be high enough so that its effects can be thoroughly investigated and this controversy cleared up. Given the deep divide among economists, this seems actually the first best scientific scenario...
Update 3: Mankiw with yet more views on pros and cons to raising the minimum wage and how can 600 economists be all wrong.
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