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Why don't progressives say California will lose jobs to Texas because Texas has a lower minimum wage?
See
How to tell if you are a modern progressive by Scott Sumner.
"Have you ever wondered if you are a progressive? I've come up with a
two-part test. If you believe in both of the following propositions,
then you qualify as a American progressive, circa 2016:
Proposition #1: Free trade with low wage countries like Mexico
steals lots of jobs from American workers. There is no way a
Mexican-American worker paid $7.25/hour in El Paso can compete with an
actual Mexican worker making $3.50/hour in Cuidad Juarez. NAFTA led to a
giant sucking sound of jobs flowing south across the Rio Grande.
Proposition #2: Free trade between Texas and California does
not cost jobs. A Mexican-American worker making $15 hour in Fresno can
easily compete with a Mexican-American worker making $7.25/hour in El
Paso, because there are studies "proving" that lower minimum wages in
one state do not steal jobs from neighboring states.
In other words, trade steals jobs when it occurs across international
boundaries, but not when it occurs across domestic boundaries.
My own view is that trade never steals jobs. Instead, laws that push
wages above equilibrium steal jobs (although the effect may be tiny for
small increases.) Wages are lower in Mexico because productivity is
lower. And that's partly because institutions in Mexico are worse than
in the US. In contrast, institutions in El Paso are at least as good as
in Fresno. Thus forcing wages in Fresno up to twice the level of El
Paso, almost certainly will cost jobs. I believe in both Ricardian
trade theory and neoclassical labor economics, with downward sloping
demand for labor. But then I'm not a progressive.
PS. Astute readers will notice that my sarcastic comment about
studies "proving" no impact from minimum wages did not accurately
characterize those studies. That is correct. I am not describing those
studies, I am describing how those studies have been interpreted by
many American progressives (not all), circa 2016.
PPS. I predict that the very same progressives that rely on the Card and Krueger study
finding no employment effects from minimum wage differentials in
neighboring states, will eventually demand a higher national minimum
wage to prevent an "unfair competition" in state minimum wage
differentials."
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