“Contrary To Popular Belief”: In Real Life, Higher Minimum Wage Doesn’t Kill Jobs
Economists and government officials endlessly speculate on the impact of raising the $7.25 federal minimum wage.
Most recently, a report by the nonpartisan Congressional Budget Office said that raising the federal minimum wage to $10.10 an hour might cut employment by 500,000 workers. That is balanced by the projection that higher pay could also boost about 900,000 people out of poverty.
But some places in the U.S. already have real-life experience with raising their minimum wage.
Washington state, for example, has the nation’s highest rate, $9.32 an hour. Despite dire predictions that increases would cripple job growth and boost unemployment, this isn’t what happened.
At 6.6 percent, the unemployment rate in December was a click below the U.S. average, 6.7 percent, and the state’s job creation is sturdy, 16th in the nation, according to a report by Stateline, the news service of the Pew Charitable Trusts.
In Seattle, where metropolitan-area unemployment is 5.3 percent, that $9.32 sounds so yesterday. The mayor and city council are practically in a race to see who can move faster and with more gusto to increase the minimum wage to $15 an hour.
Safe bet: They will make a move by summer. Seattle could then surpass San Francisco, another city that fancies its role as a laboratory. The City by the Bay’s minimum wage is the highest (not counting airport workers), at $10.74 an hour, and officials are discussing a new rate of about $15.
While Seattle and San Francisco are unrepresentative of the nation, they have helped pressure their states to raise their minimum wages. Fifteen years ago, Washington voters approved an initiative giving the lowest-paid workers a raise almost every year, with increases now tied to inflation. Those increases produced the highest U.S. rate, although California could lap that in 2016 when it hits $10 an hour. Washington governor Jay Inslee and Democratic legislators have been pushing to raise the statewide amount to almost $11 or $12 an hour, but that now seems unlikely this year.
Critics of the voter-approved increase in Washington said it would harm the economy and cause businesses to flee to lower-wage states, such as neighboring Idaho, where the minimum wage is $7.25 an hour. That didn’t happen, as the experience of Washington counties bordering Idaho show.
At the Olive Garden in Coeur D’Alene, Idaho, the spaghetti and meatballs are about $1.70 cheaper than at the Olive Garden about a half-hour away in Spokane, Washington. That may be explained by Idaho’s lower minimum wage, taxes, land costs or something else. A restaurant spokeswoman would only cite vague costs of products and of doing business in various locations. Whatever it is hasn’t stopped Olive Garden from operating two restaurants in the Spokane area.
Bruce Beckett, government affairs director of the Washington Restaurant Association, said he wasn’t aware of any restaurants bailing out of Spokane for Idaho. He said he had heard anecdotes about local restaurateurs buying cheaper supplies in Idaho — fairly small potatoes.
Two bakeries moved across the border a few years ago, said Robin Toth of Greater Spokane Incorporated, a Chamber of Commerce and economic-development organization, but she said those businesses cited Washington’s taxes, not its higher minimum wage, as the reason for doing so.
Yes, but what about businesses that can be based anywhere?
The Spokane chamber group had heard of one telemarketing company that had considered an operation in Spokane, then chose El Paso, Texas, instead. The company mentioned the higher minimum wage.
To be fair, it is difficult to measure what didn’t happen: the businesses that didn’t locate in the state, the job growth that vanished, the young people who missed opportunities. There is fear that adults are taking some jobs from teenagers. The state teenage unemployment rate is about 30.6 percent, compared with a national figure of 22.9 percent.
But over the years, states have raised the minimum wage above the federal level without major harm.
A study at the University of California at Berkeley compared hundreds of pairs of adjacent counties in states with differing minimum-wage rates and concluded that a higher minimum wage didn’t significantly affect employment.
“We found in these cross-border comparisons that employment did not decline on the higher wage side of the border,’’ said Michael Reich, one of three authors.
The research found that employers in places in the U.S. where the minimum wage was higher, as in eastern Washington, had an easier time recruiting and retaining workers, said Reich, who directs Berkeley’s Institute for Research on Labor and Employment.
“As a result, they saved on hiring and turnover costs, as well as the costs of not being able to fill all their vacancies,” he said. “Increased labor supply, together with small price increases in restaurants, could explain why we did not find employment moving to lower wage areas, such as in western Idaho.’’
Minimum-wage workers are younger, often single, perhaps working two jobs in leisure, hospitality, food preparation and serving. A single individual working full time and being paid Washington’s minimum wage earns more than the federal poverty level.
That changes if the earner is supporting a family. Maybe Seattle’s ascent into $15 territory — along with a few other cities — will eventually give Washington and other states the political will to follow this path. There is little real-life evidence to discourage them.
By: Joni Balter, The National Memo, February 24, 2014
“Obamacare Won’t Cause Society To Collapse”: Americans Choosing To Work Less Doesn’t Mean They’re Losing Their Jobs
A small war has erupted over the recent Congressional Budget Office report on the employment effects of the Affordable Care Act. Last week, the CBO itself felt compelled to offer a lengthy and detailed rebuttal to the spin that millions of Americans will “lose their jobs” as a result of Obamacare.
So let’s first be clear about what the CBO report concluded: As a result of the ACA, millions of Americans will choose to work less, if at all. That doesn’t mean that they will “lose their jobs.” Rather, it means that many will choose to give up working double-shifts just so they can make enough to afford health insurance or leave jobs they hate but have kept simply because they can’t maintain their coverage otherwise. In virtually all cases, these are decisions people are making for themselves and presumably welcome. As the CBO points out, as opposed to “losing their jobs,” in which case we’d all feel sad for them, friends and neighbors will invariably feel happy for these individuals.
But, of course, not everyone. To conservatives, the CBO report demonstrates what they have said about Obamacare – and about the government dole generally – all along: It creates “perverse incentives” encouraging people not to work.
The conservative argument is based on several underlying assumptions, like a DirecTV ad: When you give things to people, they work less. When they work less, they’re worse off. When they’re worse off, they demand more. When they demand more, liberals give them more. And when liberals give them more, society collapses. Don’t have society collapse: Stop the Affordable Care Act.
Of course, the CBO report did in fact find that providing this health coverage will induce millions of people to work less or not at all. So let’s look a little more closely at this syllogism.
It’s undoubtedly true that if you give things to some people, they’ll work less. But it’s not true in all cases. Unfortunately, this sort of assertion is a staple of anti-government rhetoric: For any government expenditure, it can be shown to have enriched some deadbeat or rip-off artist. But so has the derivatives market. Meanwhile, plenty of people work more when you give them more.
In fact, most conservative policies these days are based on the idea that certain people need to be given more to induce them to work harder and to produce more. Of course, those highly-sensitive individuals are the rich and corporate executives, who, without more money (including from the government) simply wouldn’t keep working and creating. By the same logic, though, we should extend even more benefits to more working people – perhaps even raise wages at the low end – to encourage them to work. But for some reason low-income Americans, unlike the wealthy, are presumed to work best if we take incentives and benefits away from them.
Moreover, as the CBO pointed out, there is indeed a “perverse” work disincentive in Obamacare – but it’s the opposite of what conservatives have taken the report to say. Rather, it’s that, as people’s incomes rise, they get less support – a “tax,” in effect, on work. And, of course, taxes are bad. So we actually should be less stingy about giving even better health care benefits to even more people.
Of course, we’d need to pay for those expanded benefits, which appears to be the real point of the “collapse of our culture” argument – not so much that people won’t work as that people who do work will wind up having to support them. But there’s then an obvious way to pay for these benefits if you want to encourage work: tax unearned income (which accrues, by definition, to nonworkers) at a higher rate than we tax earned income. And if giving people money or benefits for which they didn’t have to work encourages sloth, then we’d best start taxing away all inheritance post-haste, as well.
We don’t, of course, because that would tax primarily the rich. But most parents want to leave something behind for their children, because we know that getting a leg up is usually the way to climb even higher. Few people throw their kids out of the house with no means of support, on the grounds that that will make them more successful. Nevertheless, many argue that helping other people’s children only cripples them as opposed to, well, helping them.
It is incumbent upon liberals to assert not just that children “deserve” health care or that people “shouldn’t have to” work grueling hours and still not make ends meet. Such assertions are, after all, merely subjective. But if investments in human capital actually improve total productivity, then the only argument against is that “the poor you always have with you” actually is a commandment, not a condemnation. And various studies (such as this and this) have shown – not surprisingly – that health care is one of the better bets for boosting productivity and workforce engagement.
And productivity, after all, is really the issue. No one longs for the days when people had to toil every waking moment to scrape out subsistence livings, instead of a modern world where a 40-hour work week can enable one to produce more economic value than the greatest medieval monarchs could even dream of. So do we really think it’s good if more and more Americans feel compelled to work 80 hours a week just to make ends meet? Would it mean our economy, or our morals, were headed downhill if more Americans decided they didn’t need to work two shifts every day but could get by, having all they want, on only one?
In short, it isn’t clear that more work is self-evidently good. Or that society will collapse if people work a little less – let alone if it makes them more productive overall – because they have health care. Just as it didn’t collapse when we moved to a 40-hour workweek and ended child labor. But it’s possible. After all, when I can’t get cable, I do get angry.
By: Eric B. Schnurer, U. S. News and World Report, February 22, 2014
“Phony Experts On Retainer”: Fight Over Minimum Wage Illustrates Web Of Industry Ties
Just four blocks from the White House is the headquarters of the Employment Policies Institute, a widely quoted economic research center whose academic reports have repeatedly warned that increasing the minimum wage could be harmful, increasing poverty and unemployment.
But something fundamental goes unsaid in the institute’s reports: The nonprofit group is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that the White House and Democrats in Congress have pushed for.
“The vast majority of economic research shows there are serious consequences,” Michael Saltsman, the institute’s research director, said in an interview, before he declined to list the restaurant chains that were among its contributors.
The campaign illustrates how groups — conservative and liberal — are again working in opaque ways to shape hot-button political debates, like the one surrounding minimum wage, through organizations with benign-sounding names that can mask the intentions of their deep-pocketed patrons.
They do it with the gloss of research, and play a critical and often underappreciated role in multilevel lobbying campaigns, backed by corporate lobbyists and labor unions, with a potential payoff that can be in the millions of dollars for the interests they represent.
“It is the way of Washington now — and that is unfortunate,” said John Weaver, a Republican political consultant who has helped run several presidential campaigns. “Because if it’s not dishonest, it’s at least disingenuous.”
In this case, the policy dispute is over whether increasing the minimum wage by nearly 40 percent to $10.10 an hour within two and a half years would reduce poverty or further it.
Even if the legislation never passes — and it is unlikely to, given the political divide in Congress — millions of dollars will be spent this year on lobbying firms, nonprofit research organizations and advertising campaigns, as industry groups like the National Restaurant Association and the National Retail Federation try to bury it. Liberal groups, in turn, will be spending lots of money as they try to make the debate a political issue for the midterm elections.
The left has its own prominent groups, like the Center for American Progress and the Economic Policy Institute, whose donors include nearly 20 labor unions, and whose reports, with their own aura of objectivity, consistently conclude that raising the minimum wage makes good economic sense. But none has played such a prominent and multifaceted role in recent months as the conservative Employment Policies Institute.
The Employment Policies Institute, founded two decades ago, is led by the advertising and public relations executive Richard B. Berman, who has made millions of dollars in Washington by taking up the causes of corporate America. He has repeatedly created official-sounding nonprofit groups like the Center for Consumer Freedom that have challenged limits like the ban on indoor smoking and the push to restrict calorie counts in fast foods.
In recent months, Mr. Berman’s firm has taken out full-page advertisements in The New York Times and The Wall Street Journal and plastered a Metro station near the Capitol with advertisements, including one featuring a giant photograph of Representative Nancy Pelosi, the California Democrat who is a proponent of the minimum wage increase, that read, “Teens Who Can’t Find a Job Should Blame Her.”
These messages, also promoted on websites operated by Mr. Berman’s firm, including minimumwage.com, instruct anyone skeptical about the arguments to consult the reports prepared by the Employment Policies Institute, most often described only as a “nonprofit research organization.”
But the dividing line between the institute and Mr. Berman’s firm was difficult to discern during two visits last week to the eighth-floor office at 1090 Vermont Avenue, a building near the White House that is the headquarters for both.
The sign at the entrance is for Berman and Company, as the Employment Policies Institute has no employees of its own. Mr. Berman’s for-profit advertising firm, instead, “bills” the nonprofit institute for the services his employees provide to the institute. This arrangement effectively means that the nonprofit is a moneymaking venture for Mr. Berman, whose advertising firm was paid $1.1 million by the institute in 2012, according to its tax returns, or 44 percent of its total budget, with most of the rest of the money used to buy advertisements.
Disclosure reports filed by individual foundations show that its donors in recent years have included the Lynde and Harry Bradley Foundation, a longtime supporter of conservative causes. Mr. Berman and Mr. Saltsman would not identify other donors, but did say they included the restaurant industry. But its tax return shows that the $2.4 million in listed donations received in 2012 came from only 11 contributors, who wrote checks for as much as $500,000 apiece.
Mr. Saltsman, 30, who has an undergraduate degree in economics from the University of Michigan and previously worked for the federal Bureau of Labor Statistics, drafts dozens of letters to the editor and opinion articles for newspapers, arguing that increasing the minimum wage would hurt more than help. Other special institute projects included a recent survey of lawmakers who support the minimum wage increase asking if they pay their interns — a report The Daily Caller, a conservative online publication, then released, calling out the lawmakers with unpaid interns as hypocrites.
The major reports released by the institute are prepared by outside academics, like Joseph J. Sabia, an associate professor of economics at San Diego State University, who has collected at least $180,000 in grant money from Mr. Berman’s group over the last eight years to deliver seven separate reports, each one concluding that increasing the minimum wage has caused more harm than good — or at least no significant benefit for the poor.
“There is never a good time to raise the minimum wage,” Mr. Sabia said at a briefing in the Longworth House Office Building late last month that was co-sponsored by the institute, as he laid out the findings of his newest report to Capitol Hill staff members and reporters. “You are not reaching the poor workers you want to help.”
Mr. Sabia said in an interview late last month that his research conclusions were developed independently. “I don’t write advocacy policy briefs,” he said. His papers are also submitted to academic journals, which publish them after a peer-review process — a standard, he noted, that publications put out by left-leaning groups like the Economic Policy Institute often do not meet.
What is clear is that the reports by the Employment Policies Institute are a critical element in the lobbying campaign against the increase in the minimum wage, as restaurant industry groups, in their own statements and news releases, often cite the institute’s reports, creating the Washington echo chamber effect that is so coveted by industry lobbyists.
“Once you have the study, you can point to it to prove your case — even if you paid to get it written,” said one lobbyist, who asked not to be named because his clients rely on him to use this technique.
But some questions have been raised about the institute-funded work. Saul D. Hoffman, a professor of economics at University of Delaware, examined the employment data Mr. Sabia used for a 2012 paper funded in part by the institute. Mr. Hoffman concluded that the narrow cut of data Mr. Sabia picked was perhaps unintentionally skewed, and once corrected, it would have showed that the 2004 increase in New York State’s minimum wage had no negative impact on employment — the opposite of the conclusion the institute had proclaimed in its news releases.
Mr. Berman, 71, a onetime auto mechanic turned labor lawyer and restaurant industry executive, rejected any suggestion that his reports were based on bias or faulty data.
“I get very upset when people say we are putting out junk science and twisted economics, because that happens to be our criticism of other people,” Mr. Berman said in an interview at his office. Yet internal company documents show that members of Mr. Berman’s team — at least when they have been involved in some of the other corporate-backed projects — have discussed ways to massage academic data to change outcomes.
For example, an academic study published by researchers at the University of Southern California concluded that soda had higher concentrations of high-fructose corn syrup than advertised. Mr. Berman’s team, hired by the corn refining industry to defend its sweeteners, mobilized staff at his Center for Consumer Freedom to challenge the results.
“If the results contradict U.S.C., we can publish them,” said an email sent to Mr. Berman and other staff in October 2010 from a Berman employee at the time, referring to the University of Southern California report. The exchange became public recently as a result of a lawsuit between the sugar and corn refining industries. “If for any reason the results confirm U.S.C., we can just bury the data.” Mr. Berman said that the employee who wrote that email left more than a year ago and that such practices were not allowed at the institute.
Left-leaning groups like the Citizens for Responsibility and Ethics in Washington have filed legal complaints, arguing that the large payments to Mr. Berman’s for-profit firm may violate the law, an accusation that Berman and Company strongly disputes.
What is most important, said Lisa Graves, the executive director of an organization responsible for the online publication PR Watch, is that newspapers detail Employment Policies Institute’s corporate ties when they cite research it publishes. Such disclosure happened in less than 20 percent of the cases over a three-year period, an analysis by PR Watch found.
“They are trying to peddle an industry wish list, but mask it as if they are independent experts,” she said. “They are little more than phony experts on retainer.”
By: Eric Lipton, The New York Times, February 9, 2014
“A Deliberate Coyness”: The Farce Of Paul Ryan, Serious Man
Like a phoenix risen from the ashes of Mitt Romney’s failed presidential campaign, Rep. Paul Ryan (R-Wis.) is back.
The conservative budget guru is once again being hailed as the Ideas Man who will lead the GOP to electoral salvation. But this time, he’s supposedly toning down his idealism a bit and, as is his party in general, putting on a softer, gentler face.
From Politico’s Jake Sherman, we hear that Ryan “is sifting through the lessons of his political past to shape a new persona” and, after trying to radically redraw the federal budget toward his conservative vision in the past, now “betting that incrementalism — legislative half-steps toward conservative solutions is the best look for Republicans.”
“The brand Ryan is cultivating is deliberate, serious, and aims to be inclusive of other political parties and voters who haven’t considered Republicans,” he adds.
Ah, there it is, the “S” word: Serious.
Ryan is often portrayed as the lone adult in the room, the man with serious ideas when the rest of Washington is embroiled in partisan sniping. Whether or not he’s truly offering sound policy — and there have been many questions on the front — he’s incessantly framed as being above-the-fray, concerned only with making Washington work right. In a word: Serious.
The trouble is that the mystique is largely media-crafted. A quick Lexis-Nexis search of U.S. newspapers for “Paul Ryan” and “serious” returned more than 3,000 results from the past year alone.
To be sure, Ryan does offer up a lot of policy proposals, an anomaly in D.C., and especially for a party that has voted to repeal ObamaCare more than 40 times without offering, until now, any semblance of an alternative. Yet his policy ideas don’t always hold water. Sometimes, they’re deeply flawed.
His previous budget plans were widely criticized for relying on highly suspect data, and for following a formula along the lines of: Cut spending + pixie dust = economic growth.
“If Obama tried to claim that his policies would achieve anything like this,” the liberal Paul Krugman wrote of Ryan’s 2011 budget plan, “he’d be laughed out of office.”
As for Ryan’s big new anti-poverty crusade, the details there, too, are suspect. His ideas — placing work requirements on safety-net programs, tax breaks, and so on — are “supply-side policies that don’t change the overall level of poverty” says Ryan Cooper in The Washington Post, making them no more than “vague rhetoric and window dressing.”
Other thorough assessments of his anti-poverty campaign have been similarly harsh. Meaning, it’s not so much that Ryan has changed, but rather that he’s tucked his old ideas into new packaging and — voila! — become the serious man once again.
Consider it the Republican rebrand writ small.
Part of Ryan’s enduring “seriousness” is actually deliberate coyness, which allows pundits to hang the simple narrative on him. He’s deflected questions about his political ambitions with a “Who, me?” shrug, while insisting he’s just trying to do his job. It’s an effective though farcical facade. Ryan has a knack for shrewdly self-promoting his supposed quiet humility and wonkish credentials. As the economist Jared Bernstein wrote, Ryan “is the classic example of the adage that if you’ve got a reputation for being an early riser, you can sleep til noon.”
To be sure, Ryan did help craft the mini budget compromise that passed earlier this year to avoid another government shutdown. But absolutely no one — okay, maybe Ted Cruz — wanted another shutdown, especially the GOP leadership, considering how badly the last one hurt the party. In that sense, Ryan was merely ensuring the GOP didn’t self-immolate once again.
Ryan’s big rebrand doesn’t prove that he’s a “serious” lawmaker. It does, however, prove he’s serious about looking serious.
By: Jon Terbush, The Week, January 30, 2014
“Mission Accomplished”: Rand Paul Says ‘War On Women’ Is Over, Everybody Get Married
Yesterday, Rand Paul (R-Ky) declared an armistice in the “war on women” when he told Candy Crowley that the war is over and besides, “women are winning it.”
“The whole thing with the War on Women, I sort of laughingly say, ‘yeah there might have been,’ but the women are winning it,” he said Sunday on CNN’s ‘State of the Union.’ “I’ve seen the women in my family and how well they’re doing. My niece is in Cornell vet school and about 85% of the people in vet school are women.”
Mazel Tov to your niece, Rand Paul. It’s so great to hear that there are more women in vet school than in Congress.
“I think women are doing very well, and I’m proud of … how far we’ve come,” Paul said. “I think some of the victimology and all this other stuff is trumped up and we don’t get to any good policy by playing some charade that one party doesn’t care about women or one party isn’t in favor of women advancing or other people advancing.”
On the one hand, Paul’s not totally wrong. Here are all the ways women are winning:
- Women outnumber men on college campuses 57% to 43%, and the gap is expected to reach 59% to 41% by 2020.
- The pay gap is shrinking for millennials, with younger women making 93% of what men make
- Women are 48% of medical school graduates, up from around 10% in 1965
- Three words: Hillary Rodham Clinton
But on the other hand, women still have the cards stacked against them, especially poor women:
- 1 in 3 American women live in poverty or on the brink of it
- 2/3 of minimum wage workers are women, and they usually don’t get sick days
- The average woman makes 77 cents on a man’s dollar, and that’s lower for minorities; black women make only 64 cents on the dollar, and Hispanic women make only 55 cents
- Even for the rich and well-educated, there’s still a disparity: men with MBAs make an average of $400,000 per year a decade after grad school, women with MBAs make around $250,000
But what Paul said next about marriage is the real nugget here.
“The number one cause of poverty is having kids before you’re married,” he said. “I tell people over and over again, I can’t make you get married, I can’t do anything about that.”
But, Rand…what if there was some magical way to make sure women didn’t have babies before they were married? What if there were some kind of pill, or even a procedure that would allow women to not have babies when they couldn’t afford them? How bout it, Rand? Maybe science has the answer! Let’s check!
Oh wait, this the same Rand Paul that co-sponsored the Life at Conception act to completely outlaw abortion and opposes the Obamacare birth control insurance coverage mandate. Right, I forgot.
He did seem very, very concerned about the plight of women on CNN. “It would be very difficult to have a government policy… how would you institute a government policy that didn’t create incentives to have more children?”
It’s a real head-scratcher.
The fact that Rand Paul thinks the war on women is over means he had no idea what it was about in the first place. Nobody accused the Republican party of standing in the way of women going to veterinary school– women’s financial and educational advancements are propelled by social changes that aren’t being specifically debated on the Senate floor. The “War on Women” is about abortion rights and access to affordable contraception more than anything, and Paul is fighting against both of them.
It’s giving me deja vu to when Bush stood in front of a “Mission Accomplished” banner in 2003; a false victory, a pat on the back, and nothing really accomplished.
By: Charlotte Alter, Time, January 27, 2014
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