BUSINESS
02/19/2013 05:03 pm ET

Freakonomics' Steven Levitt: The Minimum Wage Doesn't Matter 'All That Much'

A University of Chicago economist well-known for tearing down the conventional wisdom on a host of controversial topics is wading into the renewed debate over the minimum wage.

In response to a question in a Reddit Ask Me Anything forum on Tuesday, Steven Levitt, one of the co-authors of bestseller "Freakonomics," wrote: "Honestly, I don't think the minimum wage matters all that much to the economy."

In his State of the Union address last week, President Barack Obama proposed raising the minimum wage to $9 an hour, up from $7.25. "We know our economy is stronger when we reward an honest day’s work with honest wages," he said in the address.

Explaining that a very small percentage of American workers actually are paid the minimum wage, Levitt wrote: "People can always cheat to get around it."

In 2011, 1.7 million workers earned the federal minimum wage of $7.25 per hour, according to the Bureau of Labor Statistics. During that year, workers making the minimum wage or below represented about 5.2 percent of hourly workers overall.

Some studies have reinforced President Barack Obama's argument that raising the minimum wage would boost the economy. Raising the minimum wage by $1 would give households comprised of minimum wage workers $2,800 per year more to spend, according to a 2011 study from the Federal Reserve Bank of Chicago cited by CNN.

Levitt and his co-author Stephen Dubner are known for a number of counterintuitive economic theories. In their book "Freakonomics" they argued among other things that legalized abortion reduced the crime rate, and that the wage structure of illegal drug dealing is just as skewed as in corporate America. In Tueday's AMA, Levitt also raised the controversial idea that changing the laws around gun buying will do little to stem gun violence.

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