Over a year ago, tired of waiting for Congress to act on a national increase in the minimum wage, Seattle raised its minimum wage to $15.00/hour, to be implemented in stages and in accordance with certain other parameters. The usual characters predictably made the usual complaints, that this would be a job killer and that businesses would flee Seattle for the greener pastures of cheap labor.
Many of us remember in 2013 when John Boehner said this about raising the minimum wage:
"When you raise the price of employment, guess what happens? You get less of it. At a time when Americans are still asking the question, 'where are the jobs?' why would we want to make it harder for small employers to hire people?"
GOP leaders, Fox and other right-wing media have a long history of attacking minimum wage laws, and have been misleading the public about the supposed downsides of Seattle's incremental increase to $15 by 2017.
But now some quantifiable data has been published--you know, facts--and they don't support the trickle down mythology espoused by Republicans. The Seattle Times reported last week that, according to the Washington State Employment Security Department, instead of losing jobs, Seattle's jobless rate since stage one kicked in to $10-11/hour in April, has dropped by about 1% to 3.6%, an eight year low.
Joblessness in the Seattle area, which includes Bellevue and Everett, dropped to 3.6 percent in August — a level not seen since September 2007.
Washington state’s unemployment rate, meanwhile, stayed at 5.3 percent for the third month in a row, according to preliminary seasonally adjusted figures released Wednesday by the state Employment Security Department. That rate is down from 6.2 percent in August 2014.
Source:
Seattle Times
So in the same three month period that Seattle's jobless rate dropped about 1%, the rest of the state stayed the same.
Evidence Surfaces
Just last July Fox ran this headline: "Seattle sees fallout from $15 minimum wage . . . " and claimed that in the first three months of stage one--which they neglect to report was at the time only $10-11/hour--the new law has failed to lift the working poor out of poverty, by getting them off of public assistance.
Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.
Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less. Source: Fox News.com
"Evidence is surfacing" that "several workers want to work less". Really? That's the evidence? No statistics, no quotes from the "several" workers? Now that is good journalism. But wait, they do follow up with a quote, just not from anyone associated with the nursing non-profit they cite.
“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.
So says Jason--his real name isn't Rantz--Antebi, right-wing talk host, radio producer, and current Asst. Programming Director at KTTH and KIROFM. Not only does Fox not have any real facts but notice that they use the Rantz quote to hold up the existing wage increase at $10-11/hour to the standard of the yet to be implemented $15/hour, which won't go into effect until 2017/18.
And the vacuous journalism continues as Fox expands on the notion that workers are intentionally requesting to work fewer hours to preserve their welfare benefits.
While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.
Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.
The bolding is mine.
Good grief! There are so many things wrong with those four sentences, it is hard to know where to start. While admitting these claims are difficult to track, they use the statewide drop of 475 enrolled in the "Basic Food program", implying the caseload reflects the entire time from April to present (July 22 is the date of the article), but actually they cite only the single month of April, as proof that the new wage law is not delivering as promised in Seattle-Bellevue-Everette.
And it gets worse! Next they go on to claim that "prices appear to be going up on just about everything". Dang, that sounds terrible! Tell us more.
Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.
Some long-time Seattle restaurants have closed altogether, though none of the owners publicly blamed the minimum wage law.
What was that about prices going up on "just about everything"? Oh, well I guess "some restaurants" adding a 15% surcharge is what they're going with. And some managers are encouraging no tipping which is leading to "redistribution of income"?--wait, what? Finally, those unnamed "long-time Seattle restaurants" that had to close? Well none of them blamed the minimum wage hike, so why is this in the article? This would be outright hilarious if it weren't for the fact that there are many people stupid enough to take this as serious journalism instead of so much word vapor.
The Biggest Cherry
What Fox is stumbling to highlight is the disproportionate effect the wage increase may or may not be having on restaurants in the area, which is probably the biggest cherry on the tree. In fairness, the new law will apply some negative pressure on the industry and to his credit Tim Worstall, writing for Forbes, no friend of the minimum wage, at least does a much better job articulating the trickle down point of view than Fox.
Recall, we’re not insisting that a rise in the minimum wage will reduce the number of jobs in the economy, nor even in a sector of it. We’re saying that once we isolate out only the effect of the minimum wage rise then we will see that there are fewer jobs as a result of it than there would have been without it. We entirely agree that the effects of the general economy can overcome this minimum wage effect.
So, what we want to do is isolate out a sector that we know is disproportionately affected by the minimum wage. That’s obviously the restaurant business. As is not quite accurately but generally true some 50% of minimum or below wage earners work in this sector and some 50% or so of workers in this sector are on minimum wage or below. It’s a good place to go looking for the effects of the minimum wage. Source: Forbes
Although Worstall is better at disguise than Fox, he is still trafficking in propaganda. When he decides to isolate out only the effect of the minimum wage rise on the restaurant industry that is the ultimate in cherry picking. And nowhere does he mention that overall, during this same period, employment actually increased. Worstall chooses to focus instead on the statistically minimally averse effects on the restaurant industry which are actually less than 1%, and purposely ignore all other data.
Fox and Worstall both derive talking points from conservative economist and American Enterprise Institute (AEI) scholar Mark Perry who in an August 9th blog claimed that the minimum wage increase from $9.47 to $11 per hour was to blame for the loss of 1300 restaurant jobs in the "Seattle area" in the first half of 2015.
While any job loss is one too many, they do happen and it is important to keep that 1300 number in context. As
Media Matters explains:
Decline In Restaurant Employment Is Less Than 1 Percent.
According to data from the Bureau of Labor Statistics (BLS) and compiled by the Federal Reserve Bank of St. Louis, total employment in the combined MSA in "food services and drinking places" declined from 135,300 to 134,000 from January through June 2015. This 1,300 reduction, which is still subject to revision, represents a less than 1 percent reduction in the area's restaurant workforce:
Go on.
Total Employment Continues To Climb Despite Wage Increase. Beyond the restaurant industry, total employment in the region increased by nearly 22,000 from January through June 2015, according to data from the BLS. City, state, and federal minimum wage laws in this case would apply to all businesses, not just those in the food service industry:
The Earned Income Tax Credit vs The Minimum Wage
The Wall Street Journal is no fan of raising the minimum wage either, and they have not been shy about expressing their disapproval. Take this article by Michael Saltsman titled The Unappetizing Affect of Minimum Wage Hikes, for example.
The consequences of minimum-wage increases, at the historical levels studied in the U.S., are well known to labor economists. A summary of the research published last year by the Institute for the Study of Labor, and authored by University of California-Irvine economist, David Neumark, found that each 10% hike in the minimum wage on the state and federal level has caused a 1% to 2% drop in youth employment. Similarly, researchers at the Federal Reserve Bank of Chicago found an increase in fast-food prices associated with the same wage change. Source: WSJ
David Neumark, who is cited above by the WSJ argues against the minimum wage by championing the Earned Income Tax Credit as the better way to boost income because it targets children and families with children.
Nonetheless, there are important differences between the earned-income tax credit and the minimum wage. The fundamental difference is that the earned-income tax credit aims benefits at low-income families with children, rather than simply low-wage workers. This is in large part its virtue, and it makes a lot more sense than the minimum wage’s focus on low-wage workers. Do we really care if a low-wage teenager in a middle-class family makes an extra dollar an hour? Economix, Nytimes.com
Well since he posed the question, Yes I care that my teenage daughter makes an extra dollar an hour. But my personal situation aside, let's look a little more deeply at this line of thinking. It is a given that Neumark is correct the Earned Income Tax Credit helps many poor working families, it even has helped my family, but I also believe it is nowhere near that simple as he would have us believe. In 2013, 24% of the federal minimum wage workers were teenagers, which means 76% were not. Source:
Pew Research Center. Surely a percentage of the 76% did not have children, while just as surely some of the teenagers were parents. If a 28 year old man or woman working at Walmart decides not to bring a child into the world, for what ever reason, or a 60 year old single woman whose children are all grown and works at Burger King, an increase in the minimum can help lift them into a better situation, giving them more money which they almost certainly will spend in the local economy, while the EITC does not help them at all. Almost three-quarters of minimum wage workers do not have children. He also flippantly ignores the fact that women are nearly two-thirds of the minimum wage workers and that over half of women earning the minimum wage are 25 or older. Source:
National Women's Law Center
When it comes to the minimum wage and the EITC, Neumark seems to imply it has to be one or the other. Why not both? That way you help a lot more people, even if it includes a few middle class teens and adults without dependents.
When cities are forced to act on their own to address wages, as they have done in Seattle, San Francisco and now in Los Angeles, it is likely that some jobs may be lost, teen unemployment might go up a percent or two, fast food prices as well, and that not every low wage worker will be lifted from poverty. There will always be some up and some down to implementing any new law, and we do nobody any favors by ignoring the bad to emphasize the good and visa versa. Even though the preliminary numbers look good, it may be too soon to draw final conclusions about the Seattle law. But we do know for certain that the states that raised the minimum wage in 2014 actually grew jobs faster than those states that did not, and all of this is not anything like the nightmare scenario predicted and reported as fact by Republicans, Fox News and the trickle down ideologues. To deny working Americans the dignity of a living wage is mean spirited, selfish, economically short sighted and in my opinion immoral.