Determinants of congressional minimum wage support: the role of economic education (Abstract, Intro, and Conclusion)
Abstract Much has been made about the lack of economic education among the public at
large, yet little has been said about the limited education of Members of Congress.
This
paper examines the economic education levels of Members of Congress voting on the 2007
increase in the minimum wage.
Controlling for a variety of characteristics of members and
constituents, this study finds that members who majored in economics as undergraduates
were less likely to vote for the minimum wage increase than their colleagues.
No other
major had a consistent influence.
A large number of statistical specifications confirm the
robustness of the finding.
1 Introduction
Caplan’s (2007) evaluation of the “rationally irrational” voter provides some frightening
analysis for those who want to believe that democracy yields beneficial political outcomes.
Even more disturbing, however, is the insight into the divide between economists and thepublic on economic issues.
“The typical voter”, Caplan claims, “to whose opinions politi-cians cater, is probably unable to earn a passing grade in basic economics” (p. 13–14).
Other studies have reached similar conclusions (Caplan 2002; Walstad and Rebeck 2002;Blendon et al. 1997; Gleason and Van Scyoc 1995). The general public’s knowledge of economics is woefully lacking. But, living in a representative democracy, the irrational voter does not really need to know much. In contrast, one would think it would behoove policy makers to understand something about how the economy works. To rephrase Caplan, “would a legislator chosen at random be able to earn a passing grade?” Little attention has been paid to the degree of economic acumen possessed by politicians.
While empirical work has been conducted to examine what influences representatives’ vot- ing records on economic issues, the actual economic background of legislators has been overlooked.
In voting on economic issues, shouldn’t some respect be paid to those with a background on the issue at hand?
The cynic would say that these former economics students are merely politicians, and as such, they will do what is necessary to get re-elected even if it means going against economic logic.
This point has been granted to the cynics in the past, but there has heretofore been no empirical evidence to contradict it.
This paper investigates how members’ backgrounds, and especially their education, may influence their legislative positions on the minimum wage.
On the one hand, for those schooled in economics, it is difficult to argue that increasing the minimum wage is a “free lunch” with no costs to employers, employees or consumers.
The harm done by substan- tial increases in the minimum wage is recognized across a broad spectrum of economists (Fuller and Geide-Stevenson 2003).
Even among those unconvinced about the damage of small minimum wage increases, there is recognition of “massive problems” that would be involved in enforcing an unrealistically high minimum wage (Clement 2006).
On the other hand, it may be relatively easy for those with less economic knowledge to confuse inten-
sions with results and favor a higher minimum wage without inquiring into the unintended consequences of their position.
The Members of Congress with the deepest formal backgrounds in economics are the economics majors.
The economics majors in Congress should therefore be in a better posi- tion to make well-informed decisions on economic topics.
They may not be able to convince their colleagues or constituents of their positions, but their voting records should provide a means for identifying potential influences arising from their greater economic knowledge.
Admittedly, a statistical association between education and minimum wage voting does not prove that greater economic knowledge causes the voting behavior.
That is, majoring in eco- nomics could be associated with an unobserved influence that makes people skeptical about labor market intervention and, simultaneously but not causally, interested in the study of economics.
Still, it is useful to see whether those who majored in economics have systematically different voting patterns when they get to Congress. This study deals with the 2007 minimum wage bill, which won overwhelming support in both houses of Congress and was signed into law. The bill called for an increase in the minimum wage from $5.15 to $7.25 in three stages from 2007 through 2009. Among the universe of economic issues, the minimum wage is especially appropriate for study because it is covered in most basic economic classes and all major textbooks. (See Krueger 2001 for a survey.) All Members of Congress understand the simple appeal of voting for higher wages, but the economics majors among their number are better equipped to sort through the less visible effects on employment, benefits and resource allocation. Therefore, they should be less prone to vote to raise the wage floor. This paper proceeds as follows: Sect. 2 focuses on the congressional voting behavior literature, Sect. 3 presents the model, Sect. 4 provides analysis, and Sect. 5 concludes.
Conclusion
Sobel (1999) shows that congressional action surrounding the minimum wage is not consis-
tent with the stated objective of the 1938 Fair Labor Standards Act.
Rather, the actions of Congress fit an interest group theory model in which changes are made close to elections and those changes fail to lift a family above the poverty line.
Former economics majors do not participate in this political gamesmanship as fully as do their colleagues.
The Members of Congress with the most extensive education in economics—those who were undergrad- uate economics majors—were more likely to vote against the minimum wage increase of 2007.
The statistical findings are impressive, controlling for a large variety of possible in-
fluences other than undergraduate major.
The robustness of the results of this study lends significant support to the importance of economic education, especially in the area of public policy.
Members of Congress with a background in economics appear to carry that knowl- edge over into their decision making on the issue of the minimum wage.
Unfortunately, they are not convincing their colleagues of the problems inherent in raising the wage floor.
The minimum wage debate is a particularly political one, but just as the opinions of doctors on medical issues are deserving of special consideration, we believe that the opinions of the most economically literate on the minimum wage should be carefully considered by policymakers and the public.
As Caplan (2007) suggests, “there is no reason, then, to deny economists a normal level of deference in their field of expertise” (p. 83).
Summary: Policy makers who don't have an understang of economics generally followed their party line when voting on economic issues, which are subject to change to gain votes during elections. Economics majors don't play this game and instead vote based on their education. In this case, against a minimum wage. Artilce also claims most politicians can't pass a basic economics course.
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