Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences
Buy the Books
  • Macro Roundup
  • About Roundup
  • About Ed Conard
  • Highlights
  • Topics
  • Subscribe
Edward Conard
  • twitter
  • facebook
  • linkedin
  • youtube

Part II: CBO Report Shows Increasing the Minimum Wage Hurts Marginal Workers

The most damning aspect of Tuesday’s CBO report on the minimum wage may not be its acknowledgment that raising the minimum wage is a highly inefficient way to help families in poverty relative to subsidizing work with the Earned Income Tax Credit (EITC). The most damning aspect is the report’s implicit acknowledgment that raising the minimum wage hurts marginal workers by reducing their chances for employment.

The report estimates that raising the minimum wage will imposed three times as many job losses on marginal workers as adults generally. Nevertheless, the report concludes that overall job losses suffered by marginal workers are likely to be low because few marginal workers currently have jobs. Twenty-three percent of African-American workers between the ages of 20 and 24 years old, for example, are unemployed. For the least skilled among those workers, the unemployment rate is even higher. Those workers are unable to produce $7.25 of value in an hour of work—the amount of the minimum wage—that customers are willing to buy, and so remain unemployed. Raising the minimum wage to $10.10 per hour will make it that much harder for those workers to find economically viable work. So in addition to the 500,000 workers who can produce $7.25 of value in an hour but not $10.10—individuals who the CBO expects will lose their jobs outright—there are many currently unemployed workers who will find it even harder to find work, especially low-skilled entry-level work that serves as a gateway to a lifetime of employment.

Liberals, such as the editorial page of the New York Times, downplay this concern and argue that an increase in the minimum wage rather than the EITC is needed to prevent employers from pocketing the benefits of lower wages subsidized by the EITC. To a large extent, competition makes it difficult for employers to pocket subsidies rather than passing the savings to their customers through lower prices—especially in industries where competition demands minimum wages. Lower prices increase the demand for products made with minimum wage labor, which increases minimum wage employment. If some companies hire more low-skilled marginal workers eligible for the EITC, namely single mothers, because they can pocket the subsidies, it would be a nice problem to have.

In short, increasing the EITC is a lot cheaper way for taxpayers to help families in poverty and a lot less destructive to marginal workers than raising the minimum wage.

Share this:

  • Share on X (Opens in new window) X
  • Share on Facebook (Opens in new window) Facebook
  • Share on LinkedIn (Opens in new window) LinkedIn
  • Print (Opens in new window) Print
  • Email a link to a friend (Opens in new window) Email
© Copyright 2026 Coherent Research Institute · All Rights Reserved · Privacy · Terms