AEI Economist Mark Perry Proves Low Minimum Wage Kills Jobs!
Normally I wouldn’t take a random snapshot of an unrevised, overly-broad, and notoriously noisy data set as conclusive evidence of anything, but the American Enterprise Institute’s Mark J. Perry does have a PhD in Economics, so I’ll just have to presume that he knows what he’s doing and follow his lead.
Perry helpfully offers the chart above that shows food service jobs in Washington state outside the Seattle-Tacoma-Bellevue Metropolitan Statistical Area (MSA) increasing by 5,600 since January 2015 while food service jobs within the MSA have fallen by 100. What happened in January to make that a meaningful starting point? Hell if I know. But I’m confident a PhD in Economics wouldn’t disingenuously cherrypick a date range and data set just to make a partisan point, so I’ve no choice but to place my faith in Professor Perry’s scholarly judgment.
So what does this say about the impact of Seattle’s $15 minimum wage ordinance, which took an initial step to $11 an hour in April? Professor Perry doesn’t explicitly say, but I think the implications of his research are crystal clear: Seattle’s higher minimum wage is depressing food service employment in the lower-wage areas surrounding the city.
To understand Professor Perry’s startling conclusion, you have to understand the data set with which he is working. The Seattle-Tacoma-Bellevue MSA covers all of King, Pierce, and Snohomish counties, an area with a total population 3.61 million—more than half of the state’s estimated 7.06 million inhabitants. The city of Seattle proper however, with a population of 668K, only accounts for 18.5 percent of the Seattle-Tacoma-Bellevue MSA.
Clearly, Professor Perry must understand that an MSA more than five times the size of the city proper can’t tell us much on its own about the employment effects of the minimum wage within Seattle—I mean, he has a PhD in Economics, for chrissakes. So given the rigors of his profession, any conclusion he might draw can only be made within the context of additional data.
— Invictus (@TBPInvictus) September 17, 2015
Fortunately, we’ve got plenty of other data to work with. For example, friend of the blog Invictus has been providing us with weekly updates on Seattle food service permits showing a roughly 3.2 percent increase in the number of establishments in-city since the start of the year. But what do the number of food service establishments tell us about the number of food service employees? Actually, quite a lot.
The US Census Bureau provides detailed employment data at the city, county, and MSA level every five years, and Seattle’s ratio of food service employees per food service establishment has stood near 14.5 in 2002, 2007, and 2012. And since there’s no reason to suspect a substantial shift in this ratio in the three years since the last city-level report, we must logically conclude that Seattle’s 3.2 percent increase in the number of food service establishments since the start of the year roughly correlates to a 3.2 percent increase in Seattle’s number of food service employees.
Meanwhile, the state provides monthly county-level data jobs data, which, seasonally-adjusted, shows a 2 percent increase in food service jobs since the start of the year in King County. Since we know Seattle’s food service job growth is roughly 3.2 percent year-to-date, and historical Census data tells us that Seattle accounts for about half of King County’s food service employment, we can extrapolate the data to conclude that the number of food service jobs in non-Seattle areas of King County have only grown by about 0.8 percent year-to-date.
In other words, food service jobs are growing four times faster in Seattle than in lower-wage surrounding King County. Wow!
What about the rest of the MSA? Seasonally adjusted, state data shows Snohomish County food service jobs growing at only 1.3 percent year-to-date, while food service jobs in Pierce County have actually declined by 0.5 percent. Thus, if there has been a loss of bar and restaurant jobs in the Seattle-Tacoma-Bellevue MSA, the loss has come entirely from Pierce County—where the Tacoma city council recently failed to raise the minimum wage. Food service jobs in the rest of the three-county MSA—especially in higher-wage Seattle—continue to grow.
So thank you, Professor Perry, for proving the job-killing impact of Pierce County’s lower minimum wage.
Yes, I know, that’s a lot of math based on a lot of assumptions drawn from a lot of random, unrevised, overly-broad, and noisy data. But Professor Perry has a PhD in Economics, and I’m only following his scholarly lead.
Or, if you don’t trust my math, you could just look at the Federal Reserve data for the Tacoma-Lakewood Metropolitan District (which includes all of Pierce County) and double check my conclusions for yourself:
Presumably, Professor Perry must know that these finer (though still overly-broad) metropolitan district data sets exist. And he must also know that the Seattle-Bellevue-Everett MD (just King and Snohomish counties) shows a year-to-date food service job gain, not a job loss. And since I can’t believe a PhD in Economics would really mean to imply that Seattle’s minimum wage ordinance was costing the city jobs—when all the data clearly points to the opposite—I can only assume that Professor Perry has drawn the same conclusions as I.