The Clunky Past of Alan Kreuger, Obama's Economic Adviser Nominee


One research paper in 1993, which he co-authored with labor economics professor at the University of California, Berkeley, David Card, suggests that raising the minimum wage does not have a negative impact on employment, an assertion that many labor economists have challenged. Krueger's paper examined the impact of a minimum wage hike in New Jersey on employment in the fast food industry, compared with employment in nearby Pennsylvania.

Stephen Bronars, senior economist with Welch Consulting in Washington D.C., said there may be evidence in the current economic downturn which also casts doubt on the paper's conclusion. The 40 percent increase in the minimum wage between 2007 to 2009 may have contributed to the low employment rates of teenage workers in the current economic downturn, Bronars said.

The Heritage Foundation, a think-tank in Washington, D.C., said the "fatally flawed" study was later disputed by other economists who found the wage increase in New Jersey led to a 4.6 percent decrease in employment there relative to the control group in Pennsylvania.

But Bronars said he believes Krueger is flexible enough to help craft solutions that can be guided through a deeply divided Congress, where the Democrats control the Senate and the House is Republican-led.

"[Krueger] is savvy enough to know that the most relevant policy initiatives are ones where a compromise can be reached, regardless of what his opinions are or what he has learned from his research," Bronars said.

Another paper Krueger co-authored, published in 1991, may spark some debate related to the White House's mandated healthcare laws. The research, co-written with MIT economics professor Jonathan Gruber, found workers paid for roughly 85 percent of employer mandates for benefits such as health insurance or workers compensation. According to Gruber and Krueger the remaining 15 percent of the cost is paid by the employer.

The authors state that "although the nominal burden of mandated employment-based health insurance will be borne by firms, if the experience of health insurance is similar to that of workers' compensation insurance, our estimates suggest that employees will ultimately bear a large fraction of the burden of financing mandated health insurance through lower wages."

Robert Reich, former labor secretary under President Clinton and professor at the University of California, Berkeley, called Krueger "one of the preeminent labor economists in America."

"While economists and policy experts working in high public office occasionally have to pull their punches in public, I have no doubt Alan will tell the president the unvarnished truth," Reich said. "That's what the CEA chair is supposed to do."

Williams of the Tax Policy Center said every CEA chairperson brings with him an "economic toolbox and a view of the world," used in conjunction with the president and his policy focus.

But mostly Williams said the CEA chair's role is to "stop bad ideas."

"That's something someone in the council can do," Williams said. "They speak in an economic voice, promoting plans and keeping bad things from happening."

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