Should We Raise or Fold the Minimum Wage?

I broke my own rule after taking a beat with JJ against A8o all in preflop for half my stack, and spent a few orbits reading the random twitter thoughts of my fellow poker pros. Rule #1. Always pay attention at the table. That’s when I came across this tweet from poker superstar Jason Mercier.

Mercier, whose average tournament buy-in is higher than what the average American has in their savings account, tweeted this to his 111k followers.

I have a ton of respect for Jason’s game. For the past few WSOP summers, Mercier has been one of those players that I keep running into at the tables. I’ve knocked him out of a couples events, he’s knocked me out of a couple more. Overall, I’d have to admit I think he’s gotten the better of me when we’ve faced off. But reading his tweet was a bit disappointing, being a stark contrast to my own ideas about what a minimum wage hike would do.

Now I’ll admit I’m quite biased here. I’m a closet socialist. My favorite author is Kurt Vonnegut. I donated to Bernie Sanders this year, and when Bernie said at the debate that he would raise the minimum wage to $15/hr, I felt like that could be a positive change for our county.

When someone like Mercier, who is one of those rare gifted individuals in the game, comes so strongly against a side that I find myself on, it makes me question my own assumptions. The first thing I had to wonder was whether it actually was “common sense” that a $15/hr minimum wage increase would instantly crash the economy.

Common sense is a basic ability to perceive, understand, and judge things, which is shared by (“common to”) nearly all people and can reasonably be expected of nearly all people without any need for debate. – Wikipedia

I thought that most Americans support an increase in minimum wage. Turns out, this is true. An overwhelming majority of Americans favor increasing the minimum wage. The higher you go, the less support it gets… and it’s a partisan issue for sure. Some 93% of Democrats favor a minimum wage increase and only 53% of Republicans favor it. So the danger of a $15 minimum wage is hardly understood by the people.

It shouldn’t surprise anybody that the majority of people support a minimum wage increase. The majority of Americans are relatively poor and they want to make more money. I count myself in this category. I grew up on and off of welfare, with a single mom who spent a lot of time trading units of life for minimum wage. Now I play a game for a living. I don’t really have to work the same way most people do. Poker lets me survive, but throughout my whole career I’ve always been closer to the felt than in that millionaire player’s club that ESPN and the rest of the poker media would have you believe winning a WSOP bracelet or WPT championship gives us entry into.

So what would happen if we raised the federal minimum wage? Would my life be better? Would yours? If it would improve… then why stop at $15? Why not raise it to $100/hr, or a $1,000/hr? If it would “instantly crash the U.S. economy” if we raised it to $15… then maybe it’s better we just remove it altogether. I decided I’m going to do my best to drop my biases and try to wrap my head around the main question:

What Does the Minimum Wage Do?

You’d think getting hard data leading to an obvious conclusion would be easy. Surely there would be a consensus among economists that is based on research and data – science and not a political agenda. But it doesn’t look like that is how the economy works. It turns out that there is research supporting whatever you want to believe, and there are PhDs who will back up each position.

In my search for an unbiased conclusion, I stumbled upon a book by two academics that was released last year. It’s a “meta-analysis of more than 200 scholarly publications published since 1991 (most after 2000)”. What does that mean? It means these guys tried to approach the problem with a completely open-mind, gathered every single academic publication they could find, and analyzed them to figure out what exactly happens when you raise the minimum wage.

I’m surprised that with minimum wage being such a hot topic right now, that these guys haven’t been making the political talk-show rounds. They both seem to be incredibly media shy. I only found one video for each of them talking about their book and the conclusions they came to. What they said was illuminating.

Right off the bat, one of the biggest conclusions that I have to draw is that Jason Mercier is not even close to an expert when it comes to the US economy. Neither am I. This is what an expert on minimum wage sounds like:

“It’s safe to say that the methodology will have a big effect on the results.” — Paul Wolfson, co-author of What Does the Minimum Wage Do?”

Sitting through that five minute video brings flashbacks of when I would be sitting in a college classroom, willing the clock to move fast because I was so bored of what was being said. I had to rewind it a few times. There is valuable information in this video. This guy knows some shit about what we’re talking about here. And as I write this, it has 23 views (I make up 3 of them because I watched it a few times on different devices).

Maybe his co-author would have more video on YouTube. Maybe it would actually be listened to. Lo and behold, I found a single video where Prof. Dale Belman presents his research about minimum wage. It was an hour and twenty minutes long, a presentation given to what appears to be a small classroom of economics teachers as well as grad students working on their PhDs. This one was published last week as part University of Utah Department of Economics Visiting Speaker Series Fall 2015. As I write this, it has 5 views… of which I account for 2.

“Our data is really about very moderate increases to the minimum wage for federal and state… What happens if we walk in and say ‘well, we’re going to raise the minimum wage by 50% or 100%? We’re going to take federal minimum wage to $15/hr?’ I think from the point of view of the statistical work, I would say that is so far out of the range of experience… that we can’t really say much about that.” — Dale Belman, co-author of What Does the Minimum Wage Do?

Should we raise or fold the minimum wage?

In regards to whether raising the minimum wage to $15/hr would instantly crash the US economy, we have the expert here who spent several years of his life researching the issue saying he doesn’t know and that there isn’t any data to really draw a reasonable belief about what would happen. And I believe Dale over Jason Mercier, or actually anybody else for that matter who would suggest that the answer is obvious. It’s not obvious. At all.

As far as whether moderate minimum wage increases help the economy in general, it seems like it does… with very little effect on employment rates, and very little negative effects on most people in general. Indeed, minimum wage increases seems to have a significant positive effect on racial and gender inequality in pay. This could be big for poker.

As players and industry stakeholders, we often wonder why poker has a disproportionate number of white males in the game. We’ve been telling the same handful of narratives in the poker headlines for years. A college dropout, white and male, succeeds at online poker and makes the switch to live. A white male amateur makes a big score at a live tournament and quits his day job. Of course there’s exceptions… but for the most part, if someone says they are a professional poker player then they fall into a stereotype. Why do women only account for 5% of the WSOP fields? Why are minorities underrepresented in a game that is supposed to be a meritocracy? Could it be as simple as basic income inequality? Maybe drastically raising the minimum wage would create a surge of disposable income at the very bottom of our American workforce, which would lead to a surge of new poker players with compelling and new backstories that could lead to the next big poker boom.

Is a $15/hr minimum wage hike a good idea? It’s such a drastic increase that we don’t know what would happen… and for that reason, it’s a safer bet to stay away from such a huge hike at the federal level. Let the states play around with it some more and get some hard data to assure the Jason Merciers of the world that a drastic minimum wage increase of 100% or more isn’t going to instantly crush the US economy. It’s not common sense at all that a $15/hr hike would be a negative thing. It would probably be positive, but we don’t know.

What we do know is that the research is pretty strong on the side of moderate increases in minimum wage having a positive effect on the national economy and the majority of people in it. Unless your last name is Walton, or you have managed to grind your way to an eight-figure liferoll, a minimum wage increase would probably help you and the people you care about.

Maybe a minimum wage increase is exactly the adrenaline shot that the poker world could use right now.

(Featured Image of Jason Mercier playing the WPT Alpha 8 – Used under a creative commons, no-commercial, attribution license courtesy of the World Poker Tour).