Sunday, January 22, 2017

This Economic Phenomenon Is Making Government Sick

From Tyler Cowen.
"Some sectors bring bigger productivity gains than others, and often for sustained periods of time. For instance, computing and communications have made enormous strides over the last few decades, but K-12 education hasn’t improved very much and also costs more, an economic phenomenon that has been labeled the “cost disease.” It turns out the cost disease also shapes politics: To the extent governments manage, run or fund low-productivity-growth sectors, the spending required to sustain those sectors can automatically boost the size of government over time.

This logic may apply most of all to health care and retirement. For all the medical advances we have seen, the costs have gone up a lot as well. The temporary pause in health-care cost inflation now seems to have ended, with U.S. costs rising 5.8 percent in 2015. By the way, health-care cost inflation is a global phenomenon, indicating the near-universal nature of this problem.

Much of the associated burden will continue to fall upon government budgets, at least under the plausible assumption that the demand for health care doesn’t shrink radically. Part of the problem is that fixing people is harder than fixing machines, because it requires the cooperation of what are often recalcitrant patients. That’s why productivity improvements are difficult to achieve in education as well. Online learning can be potent and very cheap, but it is hard to get enough of the students to care.
Arguably, we as fallible humans are the ultimate source of the productivity problem, and also a big part of why governments tend to grow. If patients and students would diet properly, take the right medicines and crack open their textbooks, more drastic cost improvements could result.

These dilemmas in health care and education don’t have easy fixes. For instance, as Medicare and Medicaid become more expensive, many people will suggest that taxes and spending be raised. We’ve done that in the past, but at some margin voters will balk at further spending and tax increases, or maybe governments won’t find it so easy to bring in more revenue. To make matters worse, the very expansion of government, and thus third-party spending, may itself contribute to waste and thus lower rates of productivity growth, creating a vicious circle.

The first problem will be that other areas of government spending (“discretionary spending”) will tend to suffer, as money is soaked up by the low-productivity sectors. Voters will feel that governments are neglecting some of their most important interests, such as infrastructure.

At a further margin, government’s contribution to the health care, retirement and education sectors will also seem inadequate, because at such high prices a government really cannot pay for everything. A heated political debate will ensue. Progressives will argue that significant human needs are being neglected, and they will be able to point to numerous supportive anecdotes. Conservatives will argue that the fiscal path behind such policies is unsustainable, and they will be right, too. Because it will feel to voters that government isn’t doing a good job in these high-cost areas, the conservative view will get further traction. Libertarians may promote radical spending cuts, hoping for much higher productivity growth, but the government interventions are built in so thickly that that strategy could take a long time to pay off, and in the meantime it won’t look like a political winner.

All of the various sides may be correct in their major claims, but none will have a workable solution. This actually isn’t so far from where the health-care debate stands now, and where the retirement and nursing home debate is headed as America ages.

The hardest thing, politically speaking, is for a politician to stand up and suggest that we need to set clear limits on how much we will spend on health care. Keep in mind that at some margin, investing money in, say, job creation and higher wages may end up helping human health and well-being more than boosting health-care spending. That doesn’t make it much easier to yank dollars away from people’s coverage.

As it stands, we’re set to re-create these debates at higher and higher levels of government spending in the low-productivity sectors. And I don’t view such dramatically tense, life-or-death issues as conducive either to rational decision-making or to a broadly liberal, consensus-based politics. How well have the debates over Obamacare gone, in terms of being a model for reasonable discourse?
If you care about politics, I suggest spending less time on the candidates and more time studying productivity growth. I also suggest spending more time thinking about how to make working with human beings as easy and as fruitful as manipulating physical capital. Often the real political problem is not the people who disagree with you, but rather the empirical regularities of economies and the humans who inhabit them."

Obama administration spent billions to fix failing schools, and it didn’t work

By Emma Brown of The Washington Post. Excerpts:
"One of the Obama administration’s signature efforts in education, which pumped billions of federal dollars into overhauling the nation’s worst schools, failed to produce meaningful results, according to a federal analysis.

Test scores, graduation rates and college enrollment were no different in schools that received money through the School Improvement Grants program — the largest federal investment ever targeted to failing schools — than in schools that did not."

"“We’re talking about millions of kids who are assigned to these failing schools, and we just spent several billion dollars promising them things were going to get better,” said Andy Smarick, a resident fellow at the American Enterprise Institute who has long been skeptical that the Obama administration’s strategy would work. “Think of what all that money could have been spent on instead.”"

"The money went to states to distribute to their poorest-performing schools — those with exceedingly low graduation rates, or poor math and reading test scores, or both. Individual schools could receive up to $2 million per year for three years, on the condition that they adopt one of the Obama administration’s four preferred measures: replacing the principal and at least half the teachers, converting into a charter school, closing altogether, or undergoing a “transformation,” including hiring a new principal and adopting new instructional strategies, new teacher evaluations and a longer school day.

The Education Department did not track how the money was spent, other than to note which of the four strategies schools chose."

"the new study released this week shows that, as a large-scale effort, School Improvement Grants failed.

Just a tiny fraction of schools chose the most dramatic measures, according to the new study. Three percent became charter schools, and 1 percent closed. Half the schools chose transformation, arguably the least intrusive option available to them.

“This outcome reminds us that turning around our lowest-performing schools is some of the hardest, most complex work in education and that we don’t yet have solid evidence on effective, replicable, comprehensive school improvement strategies,” said Dorie Nolt, an Education Department spokeswoman.

Nolt emphasized that the study focused on schools that received School Improvement Grants money between 2010 and 2013. The administration awarded a total of $3.5 billion to those schools, most of it stimulus funds from the American Recovery and Reinvestment Act of 2009. “Since then,” she said, “the program has evolved toward greater flexibility in the selection of school improvement models and the use of evidence-based interventions.”"

"The latest interim evaluation, released in 2015, found mixed results, with students at one-third of the schools showing no improvement or even sliding backward."

"Smarick said he had never seen such a huge investment produce zero results."
"Results from the School Improvement Grants have shored up previous research showing that pouring money into dysfunctional schools and systems does not work,."

Saturday, January 21, 2017

The False Promise of “Buy American”

By Daniel J. Ikenson of Cato.
"If patriotism is the last refuge of scoundrels, where will President Trump turn when his “America First” policies lay waste to the very people he professes to be helping?

The ideas conjured by “Buy American” may appeal to many of President Trump’s supporters, but the phrase is merely a euphemism for doling political spoils, featherbedding, and protectionism. The president may score points with union bosses, import-competing producers, and some workers, but at great expense to taxpayers, workers and businesses more broadly.

Cordoning off the estimated $1.7 trillion U.S. government procurement market to U.S. suppliers would mean higher price tags, fewer projects funded, and fewer people hired. In today’s globalized economy, where supply chains are transnational and direct investment crosses borders, finding products that meet the U.S.-made definition is no easy task, as many consist of components made in multiple countries. And by precluding foreign suppliers from bidding, any short-term increases in U.S. economic activity and jobs likely would be offset by lost export sales – and the jobs that go with them – on account of copycat protectionism abroad.

Buy American laws have been used to limit competition for government procurement to domestic firms and workers since 1933. General Buy American restrictions already apply to all government procurement of supplies and materials for use within the United States. Those provisions require that all “unmanufactured” products (essentially, raw materials) procured be mined or produced in the United States and that all “manufactured” articles procured fit the definition of a “domestic end product,” which is an article manufactured in the United States from components, which are at least 50 percent (by value) U.S.-produced.

Those Buy American restrictions can be waived if any one of three conditions applies: (1) a waiver would be in the public interest; (2) the products are not available from domestic sources in sufficient quantity or of satisfactory quality, or; (3) the cost of using US-made products is deemed “unreasonable.” Under the Federal Acquisition Regulations, “unreasonable cost” is defined as a situation where foreign supplies and materials are offered at a price that is six percent or more below the price of domestic supplies and materials.

But there are even more restrictive Buy American provisions governing Transportation Department procurement rules for highway and related projects. These rules require that all of the iron, steel, and manufactured products used in these projects be produced in the United States. The definition of U.S.-manufactured products is the same here as under the general Buy American provision, and the same thresholds for public interest and short supply waivers also apply. However, the unreasonable cost waiver is considerably different. Under this provision waiving the restriction on the basis of unreasonable cost requires that the total project cost (not the input cost) be at least 25 percent higher. That is an enormous cushion for domestic suppliers, which accords them license to tender their bids at exorbitant prices.

There is another set of waivers that are supposed to ensure some competition in the U.S. government procurement market. Under the Trade Agreements Act of 1979, the president is authorized to invoke the public interest waiver of the Buy American rules and exempt countries which reciprocally waive their own buy-local restrictions for U.S. firms. Those countries include signatories to the World Trade Organization’s Government Procurement Agreement or parties to U.S. free trade agreements (like the North American Free Trade Agreement) that contain full government procurement chapters.

Whether these waivers would be invoked by President Trump seems highly unlikely – it would at least contradict his inaugural rhetoric.  Moreover, Senator Sherrod Brown (D-OH) plans to introduce new legislation next week to broaden the scope (and limit the potential for exemptions) of government spending that is subject to Buy American rules, to effectively ensure that the $1 trillion or more of infrastructure spending likely to be authorized by Congress is off limits to foreign companies and workers.

With low-cost suppliers of crucial materials and some of the world’s most experienced and efficient civil engineering firms (think dredging America’s too shallow harbors to accommodate the large Post-Panamax container ships) effectively excluded from the infrastructure spending bonanza, U.S. suppliers will be less restrained in their cost proposals, which means fewer, more expensive public projects.

As individuals spending their own money, most Americans seek to maximize value. That often means shopping for groceries at a big supermarket chain instead of the gourmet market or patronizing Home Depot instead of the hardware store on Main Street. Shouldn’t we expect Washington to spend our tax dollars with a similar eye toward prudence and value?

The instinct to want to insulate “our” markets, protect “our” businesses, and prevent “our” resources from leaking into other jurisdictions at “our” expense is easy to grasp.  But the idea that restricting government procurement spending to American goods, services, and workers will produce that outcome is misguided, nonetheless.

When we artificially reduce the pool of qualified suppliers or the variety of eligible supplies that can satisfy procurement requirements, projects cost more, take longer to complete, and suffer from lower quality. Only a basic understanding of supply and demand is required to see that limiting competition for procurement projects ensures one outcome: taxpayers get a smaller bang for their buck.

Sure, some U.S. companies will win bids, hire new workers, and generate local economic activity. What will be less visible — but every bit as real — are the contracts denied numerous other U.S. businesses and workers because the resources have been stretched and depleted to satisfy restrictive procurement rules. Some U.S. companies and some U.S. workers may benefit, but the real value of public spending  — the actual products and services procured — will decline.

While President Trump seems to be prioritizing U.S. companies and workers, he must know that well over 6 million Americans work for foreign-headquartered companies here in the United States.  He must know that over $1.2 trillion of foreign direct investment is parked in the U.S. manufacturing, undergirding valued added activity, and supporting jobs and the tax base.  Tightening Buy American rules will hurt these firms and possibly chase them and their investments offshore.

It is the responsibility of elected officials who tax, borrow, and spend to be prudent stewards of the public’s finances. Yet the temptation to breach that implicit contract to advance self-serving ends often proves irresistible – especially when the action finds refuge in patriotism."

Where Have All the Startups Gone? New Research from eBay and EIG

By Richard Morrison of CEI.
"Recently eBay’s public policy team here in Washington, D.C. presented a fascinating program on economic growth and new business startups. The presentations and panel discussion focused on two studies relating to the long-term decline in new business ventures and the geographic distribution of the business growth that we’ve seen over the last few post-recession economic recoveries.

The first study, The New Map of Growth and Recovery, published late last year by the Economic Innovation Group, highlighted the dramatic decline in new firms during the Great Recession and the unprecedentedly anemic recovery since. Moreover, most of the new firm growth we have seen has been geographically narrower than in the past – confined to a smaller number of counties representing a smaller share of the total U.S. population. From 2010 to 2014, only one-quarter of all counties added new businesses at the same rate as the national economy and a mere 20 counties accounted for half of all new business establishments.

Business growth during the recovery from EIG

The second study, piggybacking on the first, was published this month by eBay’s Public Policy Lab. When the eBay team looked at their own proprietary data on the company’s users with more than $10,000 in annual sales, they found “a significantly more geographically inclusive spread of new enterprise formation on eBay compared to the brick and mortar economy as reported by EIG.”

According to Platform-Enabled Small Businesses and the Geography of Recovery, there seems to be something about an online business platform like eBay that makes it easier for small businesspeople to start and maintain a business, particularly outside of the most prosperous American counties.

According to John Lettieri of EIG, the prosperous areas that are dominating the recovery generally have high levels of immigration, up to date infrastructure, easy access to capital, and are part of one or more large university communities. It’s difficult, and probably impossible in the short term, for an economically depressed community to try to replicate those conditions. An online business that allows entrepreneurs to have easy access to millions of potential customers, ship and receive internationally, and scale easily, however, helps balance the disadvantages of less-vibrant locales.

When it comes to leveraging these findings, EIG’s Lettieri and eBay’s Brian Bieron had several policy recommendations, both for individuals who are confronting the geographically asymmetrical recovery in general, as well as those looking to build a business on an online platform.
  • Reform occupational licensing laws that keep people with valuable skills from moving between jurisdictions. The Institute for Justice and the Charles Koch Institute have been leaders in the fight for licensing reform.  
  • Reduce regulatory and tax complexity for small businesspeople. New legislation in the 115th Congress, like the Regulatory Accountability Act, would go a long way toward achieving this goal. Reforming the tax code’s treatment of so-called “pass-through” small businesses is also a promising option.
  • Increase access to capital for small businesspeople. My colleague John Berlau has written extensively on recent legislation aimed at that goal, like the Jumpstart Our Business Startups (JOBS) Act and the Fix Crowdfunding Act.
  • Oppose expanding state tax authority over online transactions, especially as envisioned by legislation like the (misnamed) Marketplace Fairness Act. My colleague Jessica Melugin has been making the case for years that an MFA-style approach is terrible policy, though its proponents still seem to be hoping for a miracle in Congress.
Beyond the immediate conclusions of their current study, the huge volume of user data that eBay is sitting on has the potential to produce all kinds of interesting findings in the future. Watch their Main Street site for updates on future research."

Friday, January 20, 2017

Is life expectancy really falling for groups of low socio-economic status? Lagged selection bias and artefactual trends in mortality

From the International Journal of Epidemiology. By Jennifer B Dowd and Amar Hamoudi. Excerpts:
"We suggest that it is long past time to admit an alternative—and arguably more plausible—interpretation of these patterns. The fact that a measure was computed at two different time points does not, by itself, make the difference between them a trend. Imagine if researchers measured the average temperature for the whole of the USA a decade ago, and then for only Alaska this year, and found the former number to be lower than the latter. Would it be appropriate to say that average temperatures had ‘declined’ over the decade? We argue that it would not, and that it is likewise not appropriate to be describing many of the observed differences in subgroup life expectancy or mortality as ‘trends’."

"Our concern is that stable differences between noncomparable subgroups are being mistaken for time trends in a broader group—a phenomenon we term lagged selection bias (LSB). We use the term ‘selection bias’ in a spirit that is common in the population sciences,8 although in epidemiology the phenomenon might also be understood by some as a form of collider bias and by others as a form of confounding.9 Regardless of how it is labelled, LSB generally occurs when: (i) there is a temporal lag between when individuals are selected into their exposure group and when the outcome manifests; and (ii) the dynamics of selection into the exposure group were changing over the period spanned by the lag. Due to this temporal lag, the implications of changing selection dynamics only become manifest long after the changes have happened. When these conditions apply, it is impossible to tell from the data alone whether contemporary differences in the outcome indicate contemporary trends (like increasing social exclusion of high school non-completers), or changes from a long time ago in the exposure selection process, or some complicated combination of these two. A proper interpretation, therefore, must be explicitly based on the history of the selection process itself."

"These ‘trend’ interpretations gloss over important differences between demographic constructs like period age-standardized mortality rates or life expectancy and real-world outcomes like the risk of death or expected length of life. They also give short shrift to two critical facts of the social history of the USA: 
  1. Lag between exposures and outcome. High school completion in the USA has historically been determined by the time a person is in his or her early 20s,14 long before the ages when most mortality is observed.
  2. Secular change in the dynamics of selection into the exposure group. Access to high school increased dramatically over the 20th century in the USA (Figure 1 ). The average White girl born at the end of World War I stood about a 50% chance of finishing high school by her 20th birthday; born at the end of the Lyndon Johnson administration, she had a 90% chance. Much of this expansion in access was driven by changes in the opportunity costs facing working class families who wanted to send their children to high school;15–17 as access expanded, it likely became more equitable."
When one computes mortality rates or life expectancy for the year 1990 for White female high school non-completers, one ascribes to those reaching age 70 the risk of dying that was faced by a woman who was excluded from high school around the end of the Great Depression—a normative experience for her time. By contrast, the same exercise for the year 2010 ascribes mortality risk at age 70 based on the experience of a woman excluded from high school in the late 1950s/early 1960s—which means she was left behind during a period of unprecedented expansion in access to secondary education. 

The high school completion status of those dying in a given year is like light from a distant star—it reflects social conditions that prevailed decades before. In terms of mortality risk, those excluded from high school in the early part of the 20th century are not comparable with those excluded from high school a generation later, because those left behind by the high school expansions in mid century likely had childhoods that were more disadvantaged along many dimensions, and so were at higher mortality risk all along. Life expectancy among high school non-completers for the year 1990 will largely be determined by the mortality experience of the relatively lower-risk subgroup; for the year 2010, it will be determined by the mortality experience of the higher-risk subgroup. Describing differences between these two subgroups as a ‘decline’ in the life expectancy of high school non-completers simply because they were born at different times almost certainly reflects LSB."

"To illustrate the dynamics more clearly, we have used US population data and forecasts to recreate the mortality experience of 141 birth cohorts of women from 1880 to 2020. The overall risk of dying at each age for women in each cohort is based on actual and forecasted data from the US Social Security Administration.19 We also capture the social gradients around these average risks by randomly assigning each simulated person to one of 1001 early life socioeconomic status (EL-SES) categories and assigning those who are more (less) disadvantaged in terms of EL-SES to a higher (lower) than average risk of dying at any age. These disparities are based on patterns observed in the USA.20,21 We also incorporate an EL-SES gradient in access to high school reflecting historical patterns.16 In cohorts for whom high school completion is rare, it is only the most advantaged young adults who achieve it; as access expands, it also becomes more equitable. Our example rules out an increase in actual mortality risk for anyone—every individual stands a lower chance of dying at every age if they are born later, than they would have stood if they had been born earlier but had exactly the same characteristics. For example, in our simulation the average person in the most disadvantaged quintile in 1990 dies at age 69.5 years and in 2010 at age 72.2 years"

"Life expectancies at age 25 for the bottom quintile of the EL-SES distribution as well as for high school non-completers are shown in Figure 3. When we identify disadvantage based on the stable EL-SES characteristic, period life expectancies at age 25 are 43.8 years in 1980, 44.2 years in 1990, 44.4 in 2000 and 44.7 in 2010. When we rely on people’s access to high school to identify their exposure, the corresponding values are 48 years, 47.3 years, 45.3 years, and 43.4 years. Age-standardized mortality rates, shown in Figure 4, move in parallel with period life expectancies; this reflects the fact that the two demographic constructs are computed in very similar ways."

"This difference arises because of a policy success—namely, improvements in equity of access to education over the 20th century. As a result of that policy success, people who were already vulnerable to shorter lifespan because of conditions in their early lives nonetheless had access to high school, whereas those exposed to similar conditions from an earlier birth cohort had no such access. As a result, averages for high school non-completers in earlier years include the less vulnerable, as well as the very vulnerable; in the later years, the less vulnerable were simply reclassified to the high-school completer group, leaving behind only the very vulnerable. It is that reclassification that drives the artefactual ‘decline’ in life expectancy a half-century later, not any change in anyone’s actual risk of dying. 

More than simply illustrating the important distinction between real-world health outcomes like longevity and demographic constructs like period life expectancy, the exercise underlying Figures 2–4 helps pin down the timing when we would expect to start seeing artefactual ‘trends’ in the demographic constructs, given the history of educational expansion in the USA over the 20th century. The exercise suggests that, if health disparities have been large and stable over the past century, and given trends in overall mortality risk and educational expansion over the past century, one would expect to see an artefactual ‘rise’ in period age-standardized mortality rates among the least educated, starting in the 1990s and continuing for about a generation. This matches the patterns that have been reported."

Keeping Cool About Hot Temperatures: Last year was warmer by 0.04 Celsius, but it was also an El Niño year

WSJ editorial.
"The National Oceanic and Atmospheric Administration (NOAA) announced this week that last year was the warmest in the agency’s 137-year series, and that 2016 broke the previous record for the third consecutive year. This sounds alarming, until you read that 2016 edged out 2015 by a mere 0.04 degrees Celsius. That’s a fraction of the margin of error. Atmospheric data from satellites detected similarly small warming over previous years. In other words, no one really knows if last year was a record.

Here’s what we do know: 2015 and 2016 were major years for El Niño, a Pacific trade winds phenomenon known to produce temperature spikes. The Cato Institute’s Patrick Michaels has detailed in these pages how in 1998, another big El Niño year, average surface temperatures increased about a quarter-degree Fahrenheit and then dropped in the following years. That is similar to the increase in 2015—and by the end of 2016 temperatures were falling back toward 2014 levels. Even NOAA admits El Niño’s role.

The underreported news here is that the warming is not nearly as great as the climate-change computer models have predicted. As climatologist Judith Curry testified to Congress in 2014, U.N. Intergovernmental Panel on Climate Change simulations forecast surface temperatures to increase on average 0.2 degrees Celsius per decade in the early 21st century. The warming over the first 15 years was closer to 0.05 degrees Celsius. The models also can’t explain why more than 40% of the temperature increase since 1900 happened between 1910 and 1945, which accounts for only 10% of the increase in carbon emissions."

Thursday, January 19, 2017

James Kwak Sure Doesn't Understand The Economics Of The Minimum Wage

By Tim Worstall.
"The law professor, James Kwak, has treated us to his thoughts on the minimum wage. The essence of which is that there's just too much economics 101 going on here, people just aren't grasping the complexity of the subject. There being a couple of problems with this assertion. The first is that Kwak has missed that all economists, without fail, agree that the economics 101 explanation is true at some level of a minimum wage. Make a minimum wage "too high" and it will produce significant unemployment effects. The only debate actually happening within economics is what is that definition of too high? The second is that Kwak doesn't actually understand that what he thinks he knows about it is not what is actually known about it.

At which point Mark Perry seems to have the measure of the piece:

    Writing in The Atlantic, law professor James Kwak makes a very ill-advised case for ignoring economic theory, logic, laws and reasoning and supporting higher government-mandated minimum wages for unskilled workers in an essay (“The Curse of Econ 101“) that I would characterize as a 3,000-word logorrheic bouillabaisse of misunderstandings, non sequiturs, half-truths, and false presumptions (to channel Don Boudreaux). It ranks right up there along with articles by John Komlos (“Why a $15 minimum wage shouldn’t scare us“) and “America’s Worst Minimum Wage Pundit” Nick Hanauer (“The claim that if wages go up, jobs will go down is not a theory — it’s a scam“) as one of the most misinformed, flawed and misguided articles ever written about the minimum wage.

Don't pull any punches there professor. The specific part of Kwak's misunderstandings that leap out at me are these bits where he tries running through the arguments in favour of a higher minimum wage:

    In the above examples, a higher minimum wage will raise labor costs. But many companies can recoup cost increases in the form of higher prices; because most of their customers are not poor, the net effect is to transfer money from higher-income to lower-income families.

No, this has been studied. The majority of people earning minimum wage are not in poor households. But the majority of people consuming the products of minimum wage labour are themselves in the lower reaches of the income distribution. After all, we're not going around saying that Walmart's target market is the upper middle classes, are we? Changes in wages there, changes in prices there, are going to affect the lower ends of the income distribution therefore. And when we do more detailed empirical studies we find that the majority of a minimum wage rise would not go to the poor but the majority of the costs of higher prices would. The actual effect is the opposite of that assumed by Kwak.

    In addition, companies that pay more often benefit from higher employee productivity, offsetting the growth in labor costs.

Even Paul Krugman has pointed out the error with this one. You only get that higher productivity by paying more than other employers.
A general rise in the wage rate doesn't produce that higher productivity.

    Justin Wolfers and Jan Zilinsky identified several reasons why higher wages boost productivity: They motivate people to work harder, they attract higher-skilled workers, and they reduce employee turnover, lowering hiring and training costs, among other things.

All true but it's from higher than other wages. Krugman:

    They also argue that because there are cases in which companies paying above-market wages reap offsetting gains in the form of lower turnover and greater worker loyalty, raising minimum wages will lead to similar gains. The obvious economist's reply is, if paying higher wages is such a good idea, why aren't companies doing it voluntarily? But in any case there is a fundamental flaw in the argument: Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage "compared with other companies"
-- and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish.

Kwak again:

    A higher minimum wage motivates more people to enter the labor force, raising both employment and output.

That raises unemployment. Sheesh. So, more of those 96 million not currently working think that wages are now high enough to tempt them to go look for work.
That means they've gone from being happily economically inactive to being, presumably, unhappily searching for work. Or, as we use the word, unemployed.

    Finally, higher pay increases workers’ buying power. Because poor people spend a relatively large proportion of their income, a higher minimum wage can boost overall economic activity and stimulate economic growth, creating more jobs.

This effect does indeed exist. But it's also not very large.
It's the marginal propensity to spend, or the inverse to save, here. And it will be in the 10 - 15% range of the change in wages, not the total amount of wages itself. And we do also need to note that the economy does not live by consumer demand alone. Investment, financed from savings, also matters. And the very contention is that we're moving stuff from savings by richer people into consumer demand by poorer people. Thus even though the increase in consumer demand is definitely there it's not entirely obvious that the fall in savings and investment on the other side does not cancel out the effect.
And let's be honest about this shall we? If the best defences of a rise in the minimum wage turn out to be things which aren't true then we might then think that perhaps economics 101 has something going for it, might we not?"