March 16, 2022
It’s not just prominent Harvard professors who make Excel spreadsheet errors. I managed to do it myself a couple of years ago. I wrote a post that calculated the minimum wage would have been over $24 an hour in 2020 if it had kept pace with productivity growth since its real value peaked in 1968. That error was repeated in a later post in 2020 and contributed to a calculation error of $26 an hour in a 2021 post.
The point made in these posts was that the minimum wage had in fact risen in step with productivity growth from 1938, when the national minimum wage was first established, until 1968. Since 1968, the minimum wage has not even kept pace with inflation. The post argued that it is not unreasonable to imagine a world where the minimum wage had kept pace with productivity over the last 54 years, even if changes in the structure of the economy mean that this would not be possible in the immediate future.
Anyhow, it turns out my calculation was wrong. My friend, Josh Bivens, the research director at the Economic Policy Institute, was doing his own calculation and came up with a considerably lower number. After checking my own calculations, I discovered the spreadsheet error. When I corrected the error, I came up with $21.50 as a year-round average for the productivity adjusted minimum wage in 2020 and $23 in 2021.
I’m not happy that I got the number wrong. CEPR prides itself on getting numbers right, but I’m glad that Josh caught the error and that I can correct it now. At least it did not become the centerpiece in the case for global austerity that cost millions of workers their jobs.