◼ ECONOMICS Bloomberg Businessweek February 8, 2021
31● Arindrajit Dube’s research
cemented a new understanding
Wage Authority on the effects of minimum wages
audience as Democrats in Congress attempt to
make good on President Biden’s pledge to raise the
federal wage floor to $15 an hour by 2025.
To cut to the chase, Dube (doo-BAY’) thinks
it’s a good idea. “My reading of the evidence is
that those risks are probably not very high,” he
says, alluding to the argument that high wage
floors destroy jobs by causing employers to make
dowithfewerworkers or, in extreme cases,to
closetheirdoors.“There’s also a lot of rewards—
lowering poverty.”THEBOTTOMLINE Biden’sgoalofputtingmiddle-classinterests
atthecenterofAmericanforeignpolicysoundsgoodonpaperbut
maybetrickytodeliveron.Macron,forone,faces 2022 electionsandneeds
a moredurablewaytorespondtotheeconomic
anxietiesarticulatedbytheYellowVestprotesters.
Someprogressivesseekinga broaderremakeof
U.S.policyandinstitutionssuchastheWorldTrade
OrganizationworryBidenwillfocustoomuchon
wooingalliesalienatedbyTrump.“Ihopeit won’tjustbethat—fouryearsofsoothingpeople’sruffled
feathers,” says Thea Lee, head of the progressive
Economic Policy Institute. Then again, Lee adds,
the crises Biden inherited from Trump offer an
opportunity. “It certainly creates the space for
building something new.” �Shawn Donnanfueled by China’s rise, the growth of the internet,
and the rapid decline in transportation costs would
have been a congressionally mandated flood of
public investment in education, infrastructure, and
R&D, says task force member Christopher Smart,
an alumnus of the Obama National Security Council
who’s now chief global strategist at investment
bank Barings. “Is that a realistic scenario of what
could have happened? Probably not,” he says. “But
it’s probably what should have happened.” So why
not make it happen now, as Biden has proposed?
A preview of Biden’s approach could be found
in the documents accompanying a “Buy American”
executive order the president signed on Jan. 25. The
decree itself did little more than close loopholes
that allow exemptions from rules requiring fed-
eral departments to buy U.S.-made products. But
the press release also noted the administration was
“committed to working with partners and allies to
modernize international trade rules—including
those related to government procurement—to make
sure all countries can use their taxpayer dollars to
spur investment.”
That was an acknowledgment that U.S. trad-
ing partners have long argued “Buy American”
provisions violate international trade rules. It
also could be read as a preamble to a broader dis-
cussion about subsidies, an issue that’s sure to
come to the fore as governments search for ways
to boost domestic production of medical equip-
ment and pharmaceuticals.
A Biden administration looking to change the
rules of engagement may be able to find common
ground with European allies with their own mid-
dle classes to appease. French President Emanuel
Asa 16-year-oldkidflipping burgers at a Seattle
McDonald’s in 1989, Arindrajit Dube was earn-
ing the state minimum wage of $3.85 an hour. “I
remember feeling privileged that I was going to go
on to college, while there were many older work-
ers working at that wage,” he recalls.
He still thinks about the minimum wage,
only now it’s from his perch at the University of
Massachusetts at Amherst, where he’s possibly the
world’s leading authority on its economic effects.
Dube’s research is guaranteed to get a bigger