Krueger isn’t just a pretty face, say his economic peers

Neil Munro White House Correspondent
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Academic economists say President Barak Obama made a good choice for his next chief economic adviser, but their praise includes a few barbs.

Alan Krueger is “mainstream, Brookings Institution, and democratic,” Cornell University’s Rich Burkhauser told The Daily Caller, adding that Krueger is “competent.”

Obama announced yesterday that Krueger is his pick to chair the White House’s Council of Economic Advisers. The job requires Senate approval.

“He’s extremely articulate — in [the field of] economics, that’s a scarcity — and he writes beautifully,” adds Daniel Hamermesh of the University of Texas at Austin. Krueger will be able to deliver the administration’s message on television, he said, because he’s regarded as one of the more handsome U.S. economists. Krueger’s good looks are  “well above the mean” among economists, quipped Hamermesh, who recently co-authoured a book titled “Beauty and the Labor Markets.”

During the course of his two-decade career, Krueger has tackled some controversial subjects and produced conclusions that might alienate Democratic-aligned advocates. For example, he has argued that extra education spending doesn’t necessarily improve education, and that the formal removal of affirmative-action rules in California and Texas did not significantly disrupt the education of highly qualified non-white students.

But Krueger has also sidestepped some other hot-button issues.

In a series of studies examining the impact of minimum wage laws on employment, he ignored the impact of immigration, which tends to increase the supply of low-wage unskilled workers. “I don’t think that’s anything unusual,” said David Neumark, an economics professor at the University of California, Irvine. Economists have little reliable data on the size and scale of underground economies, Neumark reasoned.

Krueger’s most notable research was done in the mid-1990s, when he concluded that increases in the federal minimum wage did not increase unemployment. Then-President Bill Clinton cited that work as he pushed to raise the minimum wage, but it has not persuaded professional economists, several of them told TheDC.

“After all the additional research that work stimulated, I don’t think our views have changed very much,” Hamermesh explained. “Most economists still believe, based on other studies, that higher minimum wages will cause a small — and I underline small — decline in employment.”

“Modest increases in minimum-wage … have a detectable impact on employment” among low-skilled workers, said Neumark. “You do get winners and losers,” he said. For every 10 percent increase in the minimum wage, Neumark told TheDC, related employment drops by roughly one percent.

Neumark insisted that Krueger’s different perspective was not driven by any particular political ideology. “He and I probably agree on most things in politics,” he said.

On Monday, the Republican National Committee highlighted a series of Krueger’s academic papers that match Democratic priorities. “In 2009, Krueger advocated for a value-added tax that would raise taxes by $500 billion,” the RNC said, adding that “Krueger advocated tax increases on energy production,” that “Krueger suggested raising taxes on employers,” and that “Krueger said the country should take ‘dramatic steps’ towards a green economy through, in part, a cap and trade system.”

Krueger “tends to advise Democrats, but that doesn’t mean he always offers what is popular among Democrats,” said Burkhauser.

Burkhauser offered an example: Kruger has argued that Social Security’s shortfall could be addressed by raising the payroll tax by two percent. “Now if you look at that, it looks like [he is] not toeing the party line,” given the recent calls by Democrats to reduce payroll taxes, he said.

In a 1996 paper examining education policies in North and South Carolina, Krueger declared that spending levels did not have a large impact on educational outcomes. “Does the [economic] literature on school resources, earnings and educational attainment prove beyond a reasonable doubt that resources matter? We do not believe that the evidence justifies so strong a conclusion,” the paper concluded.

“Everyone realizes the [education] problems are much more complicated” than the level of funding, said Neumark.

A 2005 Krueger article argued that ending affirmative action in Texas and California had little impact on the educational progress of well-prepared non-white students. The study found “no change in the … behavior of highly qualified black or Hispanic students,” a controversial conclusion because many Democratic advocacy groups decry affirmative-action opponents as racists, and because many top-level universities compete for those “highly qualified” minorities.

“Most long-time policy analysts tend not to sway with the political breeze,” said Burkhauser. Alan Krueger “has a set of core values,” he said, but “tends to be on the Democratic side.”

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