How Roosevelt Transformed the National Industrial Recovery Act

Abstract

This paper examines the evolution of the National Industrial Recovery Act (NIRA) from its intellectual origins in the writings of Tugwell and Moulton, to the passage of the Act itself on June 17, 1933. What began as an attempt to address a structural problem, namely the widening gap between productivity and wages in manufacturing and mining, was transformed by President Franklin Roosevelt and Hugh Johnson into an economy-wide, multi-purpose policy instrument in the form of the NIRA and the subsequent President’s Reemployment Agreement (PRA). The multiple objectives and comprehensive breadth of the NIRA ultimately contributed to its demise. A simultaneous review of structural, cyclical and moral objectives, shows that the NIRA failed on all accounts. Specifically, firm and industry heterogeneity conspired to defeat all three objectives. Wages were increased in industries that had not been touched by electrification, contributing to lower aggregate employment and higher prices, thus providing an example of what not to do in the current debate over raising the minimum wage to $15.

Introduction

The National Industrial Recovery Act (NIRA) and companion President’s Reemployment Agreement (PRA) remain enigmatic pieces of legislation, whether in terms of the underlying motives or the effects on output and employment (Cole and Ohanian 1999, 2004; DeLong 2009; Friedman 2007; Rauchway 2008; Shlaes 2007). This, I maintain, owes in large measure to their largely heuristic, impressionistic and synthetic character. The Roosevelt Administration in 1932 found itself in uncharted waters, armed with little more than a set of good intentions. Drawing from various intellectual traditions, it crafted a piece of legislation that continues to be the subject of debate some 80 years later (Taylor and Klein 2008; Taylor 2011). On the one hand, the NIRA set out to correct what many authors felt was a structural problem, namely the widening gap between rising productivity in manufacturing and, to a lesser degree, mining and wages. This will be referred to as the structural problem. The main proponents were Columbia University economics professor Rexford Tugwell, and Harold Moulton of the Brookings Institution. They maintained that The Great Depression was the result of this disequilibrium. Second, given that wages and prices had fallen drastically from 1929 to 1932, the NIRA sought to stimulate consumer spending by restoring wages to their 1929 level, the idea being that greater purchasing power would kick start the economy. Third, there was President Franklin Delano Roosevelt’s interest in his uncle’s (Theodore Roosevelt) progressive movement, notably the notion of a minimum wage. Combine these to get the multi-faceted, highly controversial pieces of legislation that were the NIRA and PRA whose objectives, as well as their means were and continue to be the subject of much debate (Stabile 2016). For example, Friedman and Schwartz (1963), Weinstein (1980), Vedder and Gallaway (1993) and Cole and Ohanian (2004) found that the NIRA, by increasing nominal, hence real wage rates throughout the economy, did more harm than good, delaying recovery by months, if not years.

This paper maintains that the failure of the NIRA to raise employment and income can be attributed to its multi-faceted nature. According to the Tinbergen Rule (Tinbergen 1952; Klein 2004), policy requires as many instruments as there are objectives. In the case of the NIRA, three distinct and oftentimes conflicting objectives, notably closing the gap between productivity and wages in sectors that had experienced extensive technological change (e.g. electrification), increasing overall purchasing power, and addressing the problem of income or wage inequality, were pursued using one single instrument. These three objectives shall be referred to as the structural, cyclical and moral problems, respectively. Each had its own challenges. In the case of the structural problem, wages were to rise only in the affected firms and sectors and in keeping with productivity growth. Clearly, this was a tall order as detailed knowledge of productivity and wages at the firm and sector levels were required. The cyclical problem was just as daunting, if not more so, requiring detailed information on wages and prices by product, industry and sector. In essence, this amounted to restoring the 1929 price level by fiat (Eggertsson 2008; Sumner 2015).

Policy Issues Addressed by the NIRA

Structural Problem

The NIRA was primarily a response to a structural problem in the form of a widening wage-productivity gap in sectors that benefitted from electrification and mass production techniques (Beaudreau 1996, 2005; Beaudreau and Taylor 2018). Specifically, it was based largely on the work of two scholars, Tugwell and Moulton. In earlier work (i.e. 1927), Tugwell examined in detail the electrification of U.S. industry in the 1910s and 1920s. America, he argued, was in the throes of a new industrial revolution. ln Industry’s Coming of Age (1927), he described the revolution underway in U.S. industry. Foremost among the technical causes of increased productivity was “the bringing into use of new and better power resources more suited to our technique, more flexible and less wasteful; and continued progress in the technique of generating and applying power” (Tugwell 1927, p.180); in short, the electrification of U.S. industry.

His work should be seen as part of what was then a growing literature (professional and non-professional) one electrification and the ensuing problems, notably the relationship between wages and productivity growth, and the subsequent underincome and underexpenditure. Among the other notable contributions were the writings of Moulton, as well as the populist writings of Henry Ford and Edward Filene. Like the latter who advocated higher wages, Tugwell felt that wages had not kept pace with productivity, depressing consumption and output in general.¹ Moulton was of a similar view, arguing that the failure of wage income to rise commensurately with productivity acted as a brake on economic growth (Moulton 1935).

Tugwell’s solution: government-imposed wage increases. Tugwell (1933) advocated government control of wages and prices. In his view, wages and purchasing power had failed to keep pace with productivity, a result he attributed to the changing face of the labor input as well as to the nature of the labor market, namely of being competitive. In short, technological change had lessened labor’s bargaining power.

Throughout this important but neglected work, Tugwell referred repeatedly to the gap between what he referred to as our possibilities and our performances. For example, in Chapter VIII entitled Government and Industry, he remarked:

“Evidently, what we have done is not enough. There has never been a more conspicuous disparity between our possibilities and our performances. The question whether we do not need something more than an enforcement of competition and a defining of its standards is being insistently raised. Do we need some kind of compulsion to efficiency, to adhere to common purpose” (Tugwell 1933, p.200).

Interestingly, businessmen Ford and Filene shared this view/premise, but differed as to the appropriate course of action. While they too felt that wages had to rise, they implored their fellow businessmen to raise wages spontaneously (i.e. without third-party intervention), arguing that:

“... business success based on mass production will be impossible except as it makes for both high wages and low prices. Low wages and high prices manifestly cut down the widespread and sustained buying power of the masses without which mass production sooner or later defeats itself. In other words, the business of the future must produce prosperous customers as well as saleable goods” (Filene 1924, p.201).

Analytically, this argument can be recast in terms of basic growth theory (e.g. the Solow-Swan growth model), namely as the presence of a paradigm technology shock (e.g. electrification), but the inability of a private, for-profit economy to move to the new higher equilibrium growth path owing to the failure of wages to keep pace with productivity. By 1932, this view had entered popular culture with the writings of Veblen, Scott, Chasen, Ford, Filene and numerous others.² It can be reduced to a series of principles, summarized in Table 1. These were the structural issues, long-term in nature, that underlie both the NIRA and the National Recovery Administration (NRA) as well as the Wagner Act of 1935 (National Labor Relations Act). The Brains Trust, however, had to deal with another set of issues, brought about in large measure by the downturn, namely the extensive wage and price deflation and massive unemployment of the early 1930s.

Table 1 Structural Problem: Underlying Principles

Cyclical Problem

With the stock market crash and the ensuing downturn came lower wages and prices in virtually all industries, confounding the issues. Whereas according to the structural problem, low wages were problematic in sectors that had experienced high productivity growth, now generalized low wages and prices would be a problem for the economy as a whole, especially in nominal contract markets, where prices were fixed (debt-deflation theories). Furthermore, lower wages combined with lower employment would reduce overall purchasing power. To others, lower product prices were synonymous with unfair, ruinous competition as the smaller, competitive firms within any given industry were forced out by the larger, vertically-integrated firms. Smaller, higher-cost firms were effectively eliminated. While most economists viewed lower wages and prices (i.e. deflation) as exerting a salutary effect on the economy, many laymen felt that lower prices were one of the causes of the Depression, leading many to advocate higher prices as a necessary precondition to the recovery (Sumner 2015).

Hence, the Brains Trust was confronted with three sets of issues, structural, cyclical and logistical. The stated goal of increasing purchasing power in line with productivity was set against a background of falling wages and prices, and firm and industry heterogeneity, not to mention incomplete information, a problem Tugwell was well aware of. In Chapter VIII of Tugwell, he referred to the “dearth of knowledge to anticipate just what would need to be done and, for this reason, we cannot say which of them would be constitutionally permissible, if Congress should undertake the passage of enabling legislation (1933, p.201)”. The stakes were high and time was of the essence. President Roosevelt had been elected on a platform of change, action, and decisiveness. The Brains Trust had to come up with a plan.

Theoretically, real wages can rise either by an increase in nominal wages with fixed prices, a decrease in prices with constant nominal wages, or a combination of either rising nominal wages and falling prices, or falling nominal wages and falling prices, with the rate of the latter being greater than that of the former. Referring to Table 2, nominal wages fell from 1929 to 1932, from an average of 56 cents per hour to 44 cents per hour. As prices fell from 50.6 to 40.2, real wages increased slightly in 1930 and 1931, before falling in 1932.

Table 2 U.S. Manufacturing Wage and Price Data 1923–1945

Moral Problem

The 1929 Depression was particularly unique coming on the heels of what many consider to be the heyday of U.S. economic growth, namely the 1920s which saw growth rates soar. Known as the Roaring Twenties, output, employment, income and expenditure increased at above-average rates. Throughout this period, exceptionalism was at its zenith as per-capita income increased. However, the rising tide had not lifted all ships (Stabile 2016). Many sectors of the U.S. economy were unaffected. Modernity’s tentacles had not reached into all sectors or industries. Agriculture was hit particularly hard.

The Depression served to accentuate these differences and inequalities.³ As many observers remarked, there was a preponderance of scarcity amidst plenty, of poverty in the face of riches. Finding inspiration in the structural debate, where greater purchasing power was in order, President Roosevelt pledged to eradicate poverty. He achieved this via the labor market, specifically via the imposition of a minimum wage. He proverbially killed two birds with one stone, alleviating poverty and increasing purchasing power.

NIRA Wages and Prices: One Instrument, Three Targets

According to the Tinbergen Rule, efficient policy design requires at least as many policy instruments as there are targets (Tinbergen 1952; Klein 2004). This implies that single-target policy instruments should be preferred to broader instruments. In the case of the NIRA, the wage and price provisions can be seen as a multi-target instrument (U.S. Senate Congressional Record 1933). Specifically, higher wages and prices would address the Structural Problem target, the Cyclical Problem Target, as well as the Moral Problem target. However, this led to non-negligible internal inconsistencies. For example, instituting a minimum wage would do little to address the structural problem. In fact, if anything, a minimum wage would be counterproductive as unemployment would increase. The structural problem was sectoral in nature. Not all industries and sectors were affected by the new technology. Similarly, simultaneously raising all wage and prices (i.e. addressing the cyclical problem) would do little to address both the structural and moral problems.

This raises an important question, namely why did the Roosevelt Administration decide to act on all three fronts? The reason is twofold. First, there was the free-wheeling and heuristic spirit of the New Deal, taking action, doing something, anything regardless of whether the policy had been tried and/or tested. Second, the Roosevelt Administration, given the uncertainty, was hedging its bets. By pursuing multiple targets with a single instrument, the chances of success would be greater. As is argued in this paper, this backfired, contributing to the overall failure of the NIRA and PRA. Put differently, by attempting to do everything, they ended up doing nothing. By raising wages indiscriminately across all industries, they contributed ultimately to reducing, not increasing employment.

Two-Sector Non-Market Clearing Model of NIRA Wage Policy

In this section, the NIRA is analyzed using a New Keyneisan model in the presence of a technology shock and product market constraints (Christoffel et al. 2006). Specifically, the choices facing four firm prototypes—hereafter types—are examined. Type I firms had not adopted/benefitted from the new technology. Type II adopted the new technology and responded by raising wages (e.g. the Ford Motor Company) in line with productivity. Type III also adopted the new technology but instead of raising wages, responded by lowering prices. Type I-III firms were on their labor demand curve (market clearing). Type IV adopted the new technology but neither raised wages nor lowered prices, and as such, found itself off of its labor demand curve (i.e. in disequilibrium). Type IV firms were more productive, but their wage and price (real wage) remain unchanged. The model was then calibrated using U.S. Department of Commerce (1970) historical data on output, electrical power consumption and employment at the sectoral level. Electrical power consumption per worker was used to proxy the new technology.

Firm and Industry Heterogeneity

As the new technology (i.e. electrification and resulting mass production, high-throughput continuous flow production) dated back to the 1910s, it stands to reason that by 1929, there would be much heterogeneity among firms both within industries and across industries (David 1990). Some would have adopted it, others would not.⁴ Of those that did adopt it, some would have raised wages in response to higher labor productivity (i.e. Ford Motor Co.), while others may have reduced their price, passing on the cost savings to the consumer. This could, at least on the surface, be perceived of as price-chiseling, or cut-throat competition.⁵

The breakdown of 1929 U.S. GDP by sector is shown in Table 3, with manufacturing dominating, followed by Trade, Finance, Agriculture and Services. Output per worker in each sector is reported for 1909 and 1929. For example, GDP per worker (GDPEMPL) in 1909 stood at $730.19, which had more than doubled by 1929 to $1,584.92 (current dollars). The increase in constant 1909 dollars was 22.68 percent. By sector, output per worker growth varied from a low of -35 percent in Trade, to 52 percent in Mining, and 48 percent in Manufacturing. Labor productivity in agriculture remained relatively constant. In short, electrification was not universal in scope. Referring to Table 4 which reports the use of electric energy per sector, of the sectors listed in Table 3, only the manufacturing and mining sectors were affected. This implies that based on the employment data (Table 3), at least 75 percent of the labor force would have been unaffected by electrification. Moreover, this implies that at least 75 percent of firms would have been Type I-III (i.e. in labor market equilibrium).

Table 3 U.S. Output and Employment by Sector 1909–1929

Table 4 U.S. Output and Employment by Sector 1909–1929 29 (million kwhs)

Model

This section presents a two-sector, non-market-clearing model of the U.S. economy in 1929. Prices and wages were assumed to be fixed unless otherwise specified, creating a situation in which quantities (output and employment) adjust to price and wage shocks—in this case, government-induced wage shocks. The two sectors consist of (i) the manufacturing and mining sector and (ii) the rest of the economy, including agriculture, construction, transportation, trade, finance, services and government. The level of employment in the two sectors is given by Eqs. 1 and 2, the corresponding linear labor demand functions. Employment is shown as a decreasing function of the wage and an increasing function of the overall wage bill, defined as the sum of the wage bill in the two sectors. In keeping with the non-market clearing nature of the model, employment is determined by the demand side of the market.

$$ e_{1}=\alpha_{0}+\alpha_{1}w_{1}+\alpha_{2} w_{1} e_{1} +\alpha_{3} w_{2} e_{2}; \{\alpha_{0}, \alpha_{2}, \alpha_{3}\geq 0 \alpha_{1} \leq 0\} $$

(1)

$$ e_{2}=\beta_{0}+\beta_{2}w_{2}+\beta_{2} w_{1} e_{1} +\beta_{3} w_{2} e_{2}; \{\beta_{0}, \beta_{2}, \beta_{3} \geq 0 \beta_{1} \leq 0\} $$

(2)

These two equations can be solved for e₁ and e₂, the equilibrium levels of employment in the two sectors.⁶ The corresponding reduced-form equations are given by Eqs. 3 and 4. As presented, the effect of an increase in wages is ambiguous and depends on a number of factors, notably the own-sector labor demand elasticity. In the inelastic case, an increase in the wage will, in general, increase employment via the income effect. That is, the higher wage will increase the overall wage bill (i.e. α₂w₁e₁ + α₃w₂e₂), increasing the demand for labor in both sectors via a cross-sector multiplier effect. Higher wage income in Sector 1 will increase the demand for labor in Sector 2, and higher wage income in Sector 2 will increase the demand for labor in Sector 1. The reverse will hold in the elastic case, as an increase in the wage will decrease the overall wage bill, decreasing employment in both sectors, via a similar process.

$$ e_{1}=\frac{-w_{2}\alpha{3} (\beta_{0}+w_{2}\beta_{1}+\alpha_{0}(-1+w_{2}\beta_{3})+w_{1}\alpha_{1}(-1+w_{2}\beta_{3})}{-1+w_{2}\beta_{3}+w_{1}(\alpha_{2}+w_{2}\alpha_{3}\beta_{2}-w_{2}\alpha_{2}\beta_{3})} $$

(3)

$$ e_{2}=\frac{-(-1+w_{1}\alpha_{2})(\beta_{0}+w_{2}\beta_{1})+w_{1}(\alpha_{0}+w_{1}\alpha_{1})\beta_{2}}{1-w_{1}(\alpha_{2}+w_{2}\alpha_{3}\beta_{2})+w_{2}(-1+w_{1}\alpha_{2})\beta_{3}} $$

(4)

Calibration and Analysis

The model was calibrated to U.S. 1929 income and productivity data (Table 3). Sector 1 consisted of the manufacturing and mining sectors, while Sector 2 consisted of all other sectors (agriculture, construction, transportation, trade, finance, services and government). The corresponding employment and wage levels are listed in Table 5, where employment in manufacturing and mining was 11,617,084 employees, and 35,993,916 employees in the rest of the economy. The average annual wage (w₁,w₂) per sector was defined in terms of gross domestic product per worker by sector. Specifically, the annual wage in manufacturing and mining in 1929 was $1,636.89, and $1,568.15 in the rest of the economy. Values for α₁ and α₂, the labor demand elasticity parameters, were then chosen to generate output and employment levels for various Sector 2 labor demand elasticities.

Table 5 1929 U.S Sectoral Data/Calibration Parameters

To capture heterogeneity (i.e. technological change in the manufacturing and mining sector in a non-market clearing environment), α₁ was set to zero, the idea being that Sector 1 firms were operating off of their labor demand curve—specifically below and to the left of the curve.⁷ Consequently, in these industries, higher wages will not affect the firm’s choice of e₁ directly. However they will affect it indirectly via the aggregate, purchasing power effect.

Employment, the PRA and Codes of Fair Competition

The model was used to simulate the effects of the high wage provisions of the NIRA, focusing specifically on the PRA, on employment in the U.S. economy.⁸ In July 1933, the Roosevelt Administration, finding that the process of code writing and approving was too slow, introduced a blanket agreement which established a minimum wage of $0.40 per hour and a 40-hour work week. To simulate the effects of an across-the-board increase in wages (in both sectors) on aggregate employment and output, various values for Sector 2 labor demand elasticity were employed, namely 7.72, 2.63, -1,16, and -0.66. Sector 2 labor demand elasticities go from highly elastic (7.72) to inelastic (0.66). This is intended to capture the role of the own-price elasticity of labor demand in those sectors of the economy not affected by the new technology.⁹

The results are presented in Table 6, where in the first case (highly elastic Sector 2 labor demand), a ten percent increase in wages in both sectors results in a decrease in employment in both sectors, especially in Sector 2 where employment falls from 35.993 million to 10.732 million. Output is more than halved from $75.459 billion to $31.262 billion. This occurs because the substitution effect of a higher wage is greater than the income effect in both sectors (i.e., an increase in the wage and wage income in Sector 1 and the higher wage in Sector 2).¹⁰ It is worth noting that this was not the anticipated outcome of the Roosevelt Administration.

Table 6 PRA Simulation Results

As the Sector 2 labor demand elasticity decreases, the results, employment- and output-wise, improve markedly. Specifically, when the elasticity falls to -2.63, the decrease in Sector 2 employment is smaller (i.e. 25.216 million), as is the drop in output ($61.910 billion). Ultimately, as it becomes inelastic (i.e. Case 4), employment in Sector 1 increases, employment in Sector 2 decreases only slightly, while aggregate output increases to $83.364 billion. Comparing Cases 1 and 4, the greater is the Sector 2 labor demand elasticity, the greater the risk that an across-the-board increase in wages (e.g. in this case, a 10 percent increase) will have the opposite effect of decreasing (not increasing) employment in both sectors. This result is consistent with the findings of previous results on the wage provisions of the New Deal (Vedder and Gallaway 1993; Cole and Ohanian 2004).

Empirically, Case 4 describes the actual effects of the PRA and the subsequent Codes of Fair Competition on employment from the summer of 1933 to December 1933. Table 7 presents actual employment data by industry for 1932 and 1933. By the end of December 1933, employment had increased in manufacturing and mining/forestry, but had decreased in virtually all other sectors. Employment in agriculture, construction, transportation, public utilities, and trade decreased by 41,000, 198,000, 63,000, 74,000, 51,000, 137,000, respectively. By indiscriminately applying wage hikes across what were heterogeneous sectors (technology adoption-wise), they decreased overall employment, via direct and indirect effects. Referring to the last two rows, manufacturing and mining employment (Man+Min) increased by eight percent, while employment in all other sectors (Non-Man) decreased by two percent. This result is illustrated in Case 4, where manufacturing and mining employment increased by seven percent, while employment in all other sectors decreased by two percent. In other words, firms in sectors whose productivity was not affected by electrification but were forced to raise wages, responded by reducing employment, which snowballed into a generalized decrease in employment and output in the sector. Higher wages in affected sectors (Sector 1), increased employment but only slightly.

Table 7 U.S Sectoral Employment Data-1932 and 1933

In short, the across-the-board wage increases implemented by President Roosevelt and the Brains Trust, while justifiable in certain sectors (i.e. those affected by electrification), were detrimental to the overall recovery. Cyclical and moral concerns, in this case, hampered the efficacy of a policy measure that was designed originally to address a structural problem, namely the technology-induced wage-productivity gap. The wage income effects from higher wages in Sector 1, while employment was increasing in both sectors, were dwarfed by the lower wage income effects from higher wages in Sector 2, a result not anticipated by President Roosevelt and the Brains Trust. Among other factors, this can be attributed to the view that the technology shock was generalized throughout the economy when this was not the case. As shown in the next section, this very point was raised by the Committee of Industrial Analysis in its 1937 report.

Findings of the Committee of Industrial Analysis

The 1937 U.S. Committee of Industrial Analysis, appointed by President Roosevelt, came to a similar conclusion. Its report noted that industries differed widely in terms of their experience with the NIRA and PRA.¹¹ Specifically, the authors pointed to the existence of two distinct groups of industries. The first consisted of industries where codes of fair competition were successfully administered. These were industries where firms were relatively few, large and heavily equipped (i.e. Sector 1). The second group consisted of industries with many firms, most of which were small (i.e. Sector 2). More important however, was the presence of considerable differences in methods of operation and in size. The results reported earlier corroborate the role of technique, notably the adoption and use of electric power, as a statistically-significant factor influencing firm behavior, specifically employment and output. In fact, one could argue that the compliance crisis (Taylor and Klein 2008) was, at least in part, the result of this firm and industry heterogeneity (Alexander 1997).¹² Unaffected firms (i.e. those whose productivity had not increased) refused to collaborate. Interestingly, it was a small kosher poultry company in New York City, the Schecter Poultry Corporation, that ultimately killed the NIRA and the NRA. In recommendations for future policy measures aimed at controlling wages and prices (The Problem of Standards to Guide Policy), the authors stated that: “Such standards must consider not only the money cost of an adequate standard of living, but the ability of industry to pay the wage without the necessity of raising prices or of raising them unduly” (U.S. Committee of Industrial Analysis 1937, p.236.). This analysis bears this out. Wage increases in industries and sectors not touched by electrification were counterproductive as they resulted in lower employment.

Conclusions and Implications

According to the Tinbergen Rule, efficient policy design requires at least as many policy instruments as there are targets. The upshot is to favor single-target policy instruments over multiple-target policy instruments. In the case of the NIRA, the wage and price provisions (U.S. Senate 1933) had become a multi-target instrument. Specifically, higher wages and prices would address the targets of the structural, cyclical and moral problems, as well as the moral problem target. This, however, led to non-negligible internal inconsistencies. For example, instituting an across-the-board minimum wage would do little to address the structural problem, but instead would be counterproductive by reducing overall employment. The structural problem was sectoral in nature. Not all industries and sectors were affected by the new technology. Raising wages in unaffected sectors would be counter-productive for obvious reasons. Similarly, raising all wage and prices (i.e. addressing the cyclical problem) would do little to address both the structural and moral problems.

Thus, in conclusion, President Roosevelt’s synthetic, unstructured and undirected approach to policy contained the seeds of its own demise. Moreover, there is every reason to believe that if the Brains Trust and the NRA had restricted the breadth of the NIRA to the underlying structural concerns, the outcome would have been fundamentally different. When Henry Ford threw his support behind the NIRA, he noted that “I think that if industrial leaders had been willing to push wages up and up during the last years, the present economic ills would at least not be as great as they are. If the government can help in these matters, well and good, but the government has not a rosy record in running itself this far.” (New York Times, 1933, p. 11). Clearly, his indictment was as accurate as it was prophetic.

Last, these findings have important implications for the current debate over a $15.00 minimum wage. Specifically, while increasing the minimum wage will have little effect on sectors and industries which experienced technological change-based productivity increases, doing so will lower employment in those that did not. As the case of the NIRA demonstrated, the overall effect on employment and income will depend on the labor demand elasticities of the various sectors and industries. Again, bear in mind that not all sectors and industries experienced an increase in productivity over the course of the past three decades. These findings also serve to cast the current debate into proper context, namely of either correcting a structural problem (i.e. that of the wage-productivity gap), increasing overall purchasing power, or reducing poverty (or eliminating worker poverty).