What did you think being the party of the working class meant? Vibes, papers, essays?…

Sen. Josh Hawley just introduced his "Higher Wages for American Workers Act" which would raise the Federal minimum wage to $15/hour. The question of the minimum wage is a good fault line between traditional Republicans and the New Right.

The politics are famously brutal, since most Americans are not in fact economists. Polls have consistently shown not only about two-thirds support among the broader population, but even majority support among Republicans, for a $15/hour Federal minimum wage. Every race, gender, and age group shows majority support. It is just a very, very popular idea.

What about the policy?

Well, the economics 101 argument is pretty well-known. Prices adjust in the marketplace in response to supply and demand, which means that workers are paid the marginal value of their work output. If you increase the minimum wage, what happens is not that lower wage workers get paid more, what happens is that low productivity workers get shut out of the labor market, which is bad for them.

A more sophisticated view (and one fully consonant with New Right ideas) would say that increasing wages, particularly at the bottom of the scale, is a very valuable and important goal of public policy, but that the best way to do this is to work with, not against, supply and demand. In other words: policymakers should strive to make labor markets tighter, causing wages to rise naturally. There are many policy tools to do this, such as (for example) tariffs and immigration restrictions. In this light, an increase in the minimum wage is not to be preferred not so much as a violation of economics 101 but as in some way irrelevant to the broader picture. This is the view of this writer.

Now, what about the real world? In an interesting parallel to the tariff debate, minimum wage increase proponents argue that employers will simply choose to eat the higher costs rather than lay off workers. During the Obama Administration, especially, there was a huge push by left-of-center wonks to trumpet study after study purporting to show this, going even as far as to say that "science" had "proven" that increasing the minimum wage works. After 2010, we suddenly got a rash of new studies showing different results from what the literature previously said. More recently, a 2024 meta-analysis of 88 studies by Arindrajit Dube and Ben Zipperer published in NBER finds a moderate impact: "only around 13 percent of the potential earnings gains from minimum wage increases are offset due to associated job losses," or, to put it differently, a 10% increase in the minimum wage is associated with a 1.3% decrease in employment, on average. Their finding is that increasing the minimum wage boosts wages and has a negligible impact on employment.

CBO, meanwhile, has created a very neat interactive tool that allows you to play around and see how much wages would rise, as well as unemployment fall, depending on which wage increase you pick. CBO finds only a job loss of around 500 000 jobs for a $15/hour Federal minimum wage, meanwhile around 250 000 would be lifted out of poverty.

All of this is very interesting, but all of these projections and econometric studies, on top of their intrinsic flaws as imperfect estimations of reality, are all premised on one world which may not at all be the world we are heading into. We are, of course, referring to AI and robotization. The studies looking most specifically at the link between minimum wage increases and automatization are much less sanguine.

For example, it's been pretty well established that California's $20/hour fast food minimum wage drove a shift to automation, namely kiosks and drive-thru voice bots. A study from the University of Zurich found, using both theory and data from minimum wage increases in Germany, that increases to minimum wage drive automation adoption.

Even if increasing the minimum wage drove an increase in wages with negligibly few job losses in, say, 2018, or even 2024, there's still every reason to think it will not be true in 2026, much less 2027 or 2028.

Still, it's good politics…

Policy News You Need To Know

#Healthcare — ATR has a good item on a little-noticed, but very good, provision of the Big Beautiful Bill: a large HSA expansion.

#SchoolChoice — With the signing of SB 295, New Hampshire has become the 17th state to adopt universal school choice.

#Antitrust — Speaking of fault-lines between the traditional and the new right, David B. McGarry at The Daily Economy makes the case against conservative antitrust.

#Reg — This week's update on regulatory activity across the Federal government: "Across all rulemakings, agencies published $61.2 million in total costs but cut 14,290 paperwork burden hours." That's a very stark change for those who remember the Biden Administration.

#Vax — RFK, Jr fired all of the members of a HHS advisory panel on vaccines. Quoth panic. At the Cato blog, Jeffrey A. Singer tries to be balanced: "As a medical doctor, I share my professional colleagues’ concerns, although my reaction is more nuanced." He adds: "As a physician, I worry about the erosion of scientific integrity. But I also see this as an opportunity for the CDC and ACIP to refocus on protecting the public from genuine external threats while respecting individuals’ autonomy to manage their personal health."

#JonesAct — You probably know someone (or are someone) who's the kind of nerd who cares very very deeply about the Jones Act. Of course, unlike policy wonks, President Trump likes the Jones Act and has even made lots of noises about using similar types of measures to encourage more shipbuilding in the US. But thus far, it hasn't worked. "Freight rates for the Jones Act fleet of US-built and crewed vessels that transport oil and other liquids between US ports have responded little to US government shakeups in 2025," reports Argus, an industry publication.

#FinReg — Very interesting. You've heard of Fannie Mae and Freddie Mac, which President Trump plans to "privatize" while retaining their guarantee from the Federal government. However, as R Street's Nicholas Thielman points out, they're just the tip of the iceberg. "Since at least 1916, one of the primary drivers of the federal government’s interference in financial markets has been a gradually expanding network of quasi-governmental enterprises that, through the privileges allotted to them by their congressional charters, exert a strong influence over the direction and kinds of credit available to American consumers." More here.

#Medicare — In its drive to balance its books, the Senate is apparently thinking about cutting Medicare Advantage. Douglas Holtz-Eakin of the American Action Forum is not pleased. He notes that MA is "the value-based alternative to the costly, volume-oriented traditional fee-for-service (FFS) program. This would occur even as, for the first time, more beneficiaries are enrolled in MA than FFS. The popular MA program is expected to continue to grow and become the backbone of the Medicare program. It is perverse timing, indeed."