Update #2 for October 16, 1996

Tim McGraw Tickets

Hoover Institute Study Fails Truth Test; "Consider the Source"

SAN FRANCISCO, CA -- Yes on Prop. 210, the campaign to raise California's minimum wage to $5.75, said today that a Hoover Institute study on Prop. 210 "fails the truth test", and urged voters to "consider the source" of the report. "The principals of the Hoover Institute oppose any minimum wage, so it's not surprising that they've gone to great lengths to invent a way to make Prop. 210 look unattractive. They have tossed all economic expertise and honesty aside by calling a wage increase a 'tax'," said Yes on 210 Campaign Manager Richard Holober. "A wage increase is not a tax, and for the Hoover Institute to call it one displays how desperate the anti-living wage campaign is."

Dr. Martin Anderson, Senior Fellow at the Hoover Institute, has been on record for more than a decade calling for a "constitutionally mandated elimination of the minimum wage".

"These extreme right-wing economists believe that the working poor should have no protection against being paid poverty wages," said Holober. "They oppose Prop. 210 because they oppose any economic ground rules being set. They would have the working poor make $.50 an hour or less.

"I don't believe any credence should be given to a study that focuses only Prop. 210's benefits to 'minimum wage' workers, and not include the benefits to low-wage workers above the minimum but below $5.75 an hour. The Hoover Institute's own Fellow calls it a place where 'right hand doesn't know what the extreme right hand is doing'."

"The current issue of Fortune magazine carries a ringing defense of using child labor in Third World sweatshops, and uses the same arguments anti-living wage folks are trying to use against Prop. 210," said Holober. "How can we take these people seriously? They are so extreme as to defend child sweatshop labor!

"These are the very same group of economists who predicted huge job loss after California's last minimum wage increase, in 1988," said Holober. "There was a gain of 400,000 jobs after we raised the minimum wage in 1988. The Hoover Institute is as far off base in 1996 as they were in 1988."

Yes on 210 economists pointed out the following flaws in the Hoover study:

• The authors of the study chose to ignore studies that do not support their conclusions, such as those by Princeton University economists Card and Krueger.
• The study ignores most of those who will benefit from Prop. 210, those who make more than the minimum wage, but less than $5.75 an hour. Their conclusions would all change dramatically if they included these working poor families. But then Prop. 210 would look too attractive.
• Most economists estimate the benefits much larger and the costs much smaller. A study using moderate assumptions, as opposed to the extreme ones used by the Hoover Institute, would find zero negative result. Extremely conservative economists who oppose any minimum wage cannot be expected to treat the subject fairly.

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