Obama Nominee Krueger Accused of ‘Sloppy Research’
Today, in a move to combat Americans’ view that the President is failing on economic policy, Obama will nominate Alan Krueger to head the White House Council of Economic Advisers.
Alan Krueger, if confirmed, will be walking into a group that has faced failure and discontent. Larry Summers, Christina Romer, and the man Krueger will replace, Austan Goolsbee, have all left the council in recent months.
Krueger is a veteran of the Obama administration. Alan served as Asst. Treasury Secretary under Tim Geithner in 2009 and 2010. He returned to his 20 year teaching career at Princeton in 2010.
The confirmation of Alan Krueger is likely to be contentious. The make-up of both the House and Senate have changed and Republicans are likely looking to put a microscope on this nomination considering the lack of review Obama’s collection of Czars have received and their failure to do anything substantive to help the American economy.
Krueger is known as a labor economist. In 1994-95 he served as Chief Economist at the U.S. Department of Labor. In 1993 he was credited for his narrow research that attempted to buck conventional wisdom on minimum wage. Most economist stipulate that by forcing raises to minimum wages instead of letting them happen through market forces will force them to hire fewer people.
Krueger conducted a study during a recession in New Jersey. His report postulated that while the state raised the minimum wage, fast food restaurants actually hired additional staff. Unfortunately, that study has since been proven as flawed .. on House.gov [emphasis mine]:
The best data Card and Krueger could have obtained from these restaurants were hours worked. However, they did not obtain that data. Another set of economists, Dr. David Neumark and Dr. William Wascher, obtained the payroll data from the restaurants Card and Krueger surveyed. When Neumark and Wascher calculated the numbers, using the identical statistical methodology of Card and Krueger, they found the exact opposite of Card and Krueger. Card and Krueger found that restaurant employment in New Jersey rose, while restaurant employment in Pennsylvania fell. Neumark and Wascher found that employment in Pennsylvania rose more rapidly than employment in New Jersey. A Presidential Commission found in 1980 that teenage employment fell one to three percent for every ten percent hike in the minimum wage. The difference between Pennsylvania and New Jersey was exactly within that range.
The Card and Krueger study has collapsed. The foundation of the Administration’s argument for higher wages has fallen apart. Raising the minimum wage destroys jobs. Only by doing sloppy research can economists arrive at another answer. The Card and Krueger fiasco is an example when inadequate research is used to buttress unwise policy.
If being wrong on an entire study weren’t enough, he also missed the mark when gauging the American economy, of which he will now be advising the President. In Charlotte last June Krueger said, “But recoveries also have internal momentum. The income generated from restocking inventories leads consumers to spend more, which in turn leads businesses to sell more goods, invest in more plants and equipment, and hire more workers. Although the recovery will move in fits and spurts and is still fragile, I think the most reasonable forecast is for economic growth to proceed in the 3 percent range this year and to be stronger next year. ”
Obama is now relying on more false facts from academia and base socialism instead of the truth that free-markets and capitalism represent. If Obama can’t abandon his attempt to turn away from a free-market system, the economy may never recover.
Americans have lost all faith in the President’s ability to lead on the economy. Alan Krueger will be yet another toppled domino in the string of poor nominations, decisions and policies that Obama’s made in order to prevent the very double-dip recession he may be causing.