$15

WHYY Duped by Fake Research Director at Fake Think Tank Citing Fake Poll

No one takes the Employment Policies Institute seriously

I grew up in Philadelphia, so I’ve got a ton of respect for WHYY, the local NPR and PBS affiliate (perhaps best known nationally as home to Terry Gross’ award-winning Fresh Air). Which is why I was so sorely disappointed to see WHYY’s “Newsworks” website give op-ed space to fake-think-tank anti-minimum wage shill Michael Saltsman: “Op-ed: Raising minimium wage won’t flip the Senate.”

I mean, for chrissakes, why not just print a goddamn press release?

Saltsman claims to be the research director at the mendaciously-named Employment Policies Institute, which likes to describe itself as a “non-profit think tank” while in fact being neither. Indeed, Saltsman’s faux-think-tank is actually just one of several profitable front groups run out of the DC-offices of lobbying and PR firm Berman and Company. And if the editors at WHYY think I’m exaggerating, they might want to listen to this 2014 interview with Terry Gross, in which the New York Times‘ Eric Lipton explains how this scam works:

LIPTON: Yeah, I was – you know, set up an interview with the research director. I got the address of his office. I went to the eighth floor of the building on Vermont Avenue, like four blocks from the White House. The elevator opens, and it’s Berman and Company. And I go in and, you know, there’s a bunch of awards on the wall, advertising awards, public relations awards that Berman and Company has won for its work, you know, doing ad campaigns on behalf of various industry groups.

And so I didn’t see any evidence at all that there was an Employment Policies Institute office. And in fact when I started to interview the people there, they explained that there are no employees at the Employment Policies Institute and that all the staff there works for Berman and Company, and then they sometimes are just detailed to the various think-tanks and various consumer groups that he operates out of his office.

And he bills them, sort of like a law firm would bill various clients.

Wow. What a great scam. And it has been from the Employment Policies Institute’s start. (Note: I refuse to refer to the organization by its three-letter abbreviation, EPI, because it was obviously named to sow confusion with the real EPI, the pre-existing and pro-minimum wage Economic Policy Institute. Hell, not-EPI even apes EPI’s favicon, causing me to repeatedly click on the wrong browser tab.)

A Tale of Two EPIs

What a bunch of shameless trolls.

Legally, not-EPI is registered as a tax-exempt 501c3 (or, illegally one might reasonably argue), so it doesn’t have to report the names of its funders—though it’s safe to assume its money mostly comes from the restaurant, accommodations, and retail industries. As for how it spends its money: “more than half” of its multi-million dollar budget is paid to for-profit Berman and Company for staffing and operations, an “atypical” arrangement that prompted Charity Navigator to issue a “Donor Advisory.”

For WHYY to allow Saltsman to misrepresent himself as a “research director” at an “institute” is just out-and-out irresponsible. He’s a PR flack, period. And as for the content of Saltsman’s op-ed, well, that’s just as bullshitty as its author.

Saltsman argues that Republicans shouldn’t run away from their longstanding opposition to the minimum wage, based on the thesis that opposing the minimum wage didn’t hurt them 2014. Oh please. First, even without Trump tearing apart the fragile Republican coalition, 2016 was always going to be an entirely different electorate than 2014; Democrats simply turn out in far greater numbers during presidential elections than they do during the midterms. Second, there has been an undeniable and dramatic shift in public opinion over the past couple years in favor of substantially raising the minimum wage.

Those are just facts. There’s no disputing them. Which perhaps explains why Saltsman felt forced to resort to inventing a poll:

This matters. My organization used Google’s consumer survey tool to survey 500 Pennsylvanians who plan to vote this fall. Over 40 percent of respondents said they were no more or less likely to vote for a candidate based on their opposition to minimum wage.

Well, if his PR firm conducted an online poll, I guess we should just take his word for it. It’s almost as ridiculous as his anecdotal citation of a single business closure in booming Brooklyn as evidence that a higher minimum wage is wreaking havoc on the New York economy.

I can sum up Saltsman’s “research” in six words: No data. No methodology. No credibility.

Saltsman is nothing more than a fake “research director” at a fake “institute” citing a fake “poll.” WHYY and other media outlets should be ashamed for allowing him to present himself as anything other than what he really is: a paid spokesperson for the hospitality and retail industries.

 

Damn You, $15 an Hour Minimum Wage!

Seattle Food Service Employment

Courtesy of friend of the blog, Invictus.

Anybody who actually lives, works, or eats in Seattle knows firsthand that our local restaurant industry is booming. But for those of you on a raw data diet, the Federal Reserve of St. Louis serves up the above bland-if-nourishing graph that confirms the intuition of our eyes and tastebuds: Seattle’s restaurant industry is booming. In fact, despite the doom and gloom predictions of minimum wage opponents, food service industry employment in the greater Seattle metropolitan area has actually accelerated since adopting our phased in $15 ordinance.

Damn you, $15 an hour minimum wage!

Of course, the graph above represents all of King, Snohomish, and Pierce counties, so what about Seattle proper? That’s not as easily discernible from the Fed data, but as Paul pointed out last week, a new report from the University of Washington finds wages, jobs, and hours up for Seattle’s low-wage workers over the first year of phase-in, without any observable negative impact on businesses:

The data are coming in, and they prove that contrary to the empty threats we’ve been hearing from conservatives, the sky has not fallen. Our job market is strong. Our workers are working more hours and making more money, which they are then spending locally, which allows employers to hire more people to meet with increased demand. Seattle’s march to the $15 minimum wage is right on track.

Yeah, I know, it’ll take years to tease out the full impact of the $15 ordinance, and even the analysis will be somewhat speculative and subjective. But so far, predictions of job losses remain theoretical while workers’ wage gains are very, very real.

Study: Raising the Minimum Wage Is Good For Babies

minimum wage infant mortality

We already know that increasing the minimum wage would help working familiesreduce childhood poverty (and thus, make kids healthier), and generally make life better for parents and kids. But a new public health survey released in May found that the impact of raising the minimum wage isn’t just positive for families as a unit—according to the study, a raise of just $1 could actually reduce infant mortality.

The study, published in the American Journal of Public Health, sought to “investigate the effects of state minimum wage laws on low birth weight and infant mortality in the United States,” according to the authors, Kelli A. Komro, PhD, MPH, Melvin D. Livingston, PhD, Sara Markowitz, PhD, and Alexander C. Wagenaar, PhD. 

Their findings?

“If all states in 2014 had increased their minimum wages by 1 dollar, there would likely have been 2790 fewer low birth weight births and 518 fewer postneonatal deaths for the year.”

All things told, the researchers found, that same dollar increase would decrease infant mortality by as much as 4%.

This is hardly the first study that’s linked higher wages to improved public health. A 2015 report published in The Nation’s Health, Minnesota State Health Commissioner Edward Ehlinger called the state’s minimum-wage increase a greater benefit to public health than a tobacco tax increase enacted that same year. From that report:

“If you look at the conditions that impact health, income is right at the top of the list,” Ehlinger said. “Anything we can do to help enhance economic stability will have a huge public health benefit. This is a major public health issue.”

It’s not a huge surprise; wealth and public health are linked in a variety of ways.

People living in poverty are more susceptible to obesity, heart disease, and lower life expectancy. And while these links are due to myriad factors, almost all of them can be solved or at least ameliorated just by putting a little extra money into peoples’ pockets. From greater access to basic necessities, like housing that isn’t infested with mold or pests or food that’s high in nutritional value and low in fats, sugars, and preservatives, to more nuanced lifestyle changes, like regular exercise or cleaner air, the ability to spend more of your income to better your environment has a huge impact on the lives of working individuals and families.

Additionally, the direct link between poverty and infant mortality is well established, particularly in urban areas. One 2015 report found that children born to poor families in Washington, D.C., are 10 times more likely to die in infancy than babies born to the area’s most wealthy.

Ten. Times.

It would be willfully ignorant, then, to assume that allowing workers to put in full 40-hour workweeks (or more) while paying poverty wages wouldn’t, in some way, impact the health and wellness of infants and children—and even moreso to assume that fighting minimum wage increases would somehow help, rather than continue to harm, poor families and their children.

Conservative lawmakers may love to tout the ways their poverty platforms are “good for families,” but until they propose literally just paying people more money for the work they’re already doing, those plans not only ignore the lived experience of the working poor, they ignore the science, as well.

 

With a Tipped Wage, Customers Are Stuck Picking Up the Tab

tipped wage unfair

I have written before about tip crediting and how I wish more politicians—specifically, those who are running for, you know, President—would come out against it. At the time, I noted that it’s a policy which fosters the race and gender income gap by disproportionately impacting women, which remains true.

What I did not mention—because, I don’t know, it didn’t seem to bear repeating—was that it’s also actually just kind of mind-boggling that anyone would argue in favor of a wage of just shy of three American dollars per hour in a place like Washington, DC, where the tipped wage is $2.77 and the minimum wage is $10.50.

For a full-time worker, that’s a paycheck of a scant $443.20 per month.

$443.20.

Per.

Month.

Of course, the assumption with the tipped wage is that a server is probably making the $7.73 in tips she’d need to to round herself up to $10.50 (if not, her employer is required to float the rest although anyone who’s looked into this in even a cursory manner could tell you that often doesn’t happen).

Again, let’s look closely at that:

  • Base wage: $2.77 per hour
  • Required tipped income to make minimum wage: $7.73 per hour
  • Total base wages required to be paid by employer:  $22.16
  • Total required tips to even make minimum wage per eight-hour shift: $61.84

Which means a) as a patron in Washington DC you’re expected to float restaurant owners to the tune of 73.6% of their employee payroll costs, and b) as a server, your actual base wage is less important than the amount of money you can pull from a customer’s wallet.

If this is surprising to you, you’re not alone; D.C. Mayor Muriel E. Bowser has recently proposed a change to the area’s minimum wage laws, which would raise the base minimum wage to $15 over several years, and gradually increase the tipped wage from $2.77 to $7.50 over the next six years.

DC has been gradually increasing its base wage, but not its tipped wage, since 2013.

In the previous times I’ve written about this subject, I didn’t feel the need to go into too deep of detail on what the sub-minimum wage actually looks like and how truly bonkers it is, because I assumed (wrongly) that most people can see what a clearly ineffective system this is—a system which allows restaurants to charge whatever they like, keep most of the money because they’re not paying it in payroll costs, and expect customers to cover the bulk of the costs not only by paying their tab but by tipping their server.

Forgetting the fact that tipping’s history is racist as hell, this seems antithetical to what we typically think of as the point of tipping. Tipping is meant to be for a job well done, not so that a server isn’t making what is very obviously an unlivable wage.

Whether or not you believe in abolishing tipping, balancing the budget on the backs of tips—essentially relying on the kindness of restaurant patrons—seems like a poor way to do business.

And yet, there are people who will fight tooth and nail to convince you that this is a system that works. Like this guy from a fake think-tank, who recently wrote a piece in the Washington Post going to bat for the tipped wage in DC. Here’s what he had to say:

In reality, those take-home wages for tipped employees are many times larger than the required hourly minimum. In testimony before the D.C. Council, restaurateurs in the District reported that their employees earned anywhere from $20 to $35 an hour when tips were included. (If a server sells $100 in food, he typically gets an 18 percent to 20 percent tip; the restaurant may make 5 percent profit on a $100 meal.)

Of course restauranteurs would testify that their servers are raking it in with their tips. They’re literally financially incentivized to say that.

This particular fellow goes on to note that increasing the tipped wage from $2.77 to $7.50 (because that’s the proposal on the table) “threatens [DC’s] vibrant foodie culture”:

It’s easy to forget during a bustling Friday night, but the average profit margin at a full-service restaurant is in the low single digits. Labor costs make up about one-third of restaurant expenses. Nearly tripling the hourly wage for tipped employees would force dramatic changes in service, food prices and employment levels.

This is uncomfortable, I know, but stick with me:

Restaurant owners are actually not entitled to turn a profit.

There! I said it! Turning a profit as a restaurant owner is not something that is required by law. No one owes you a profitable business—and if paying just a quarter of your servers’ total salaries is what’s holding your business together and expecting patrons to literally pick up the tab on the rest, maybe your business model sucks.

What is required by law is that workers who do work are entitled to be paid for that work, and the current law is only barely requiring employers to do that. If they make 18% off a $100 tab, bully for them. That’s great. However, there are plenty of DC servers who are decidedly not working in restaurants where the tabs are routinely $100.

According to a 2015 report from PayScale, the median income for a server is about $13.80 per hour; over 60% of their income is from tips, which means they actually only earn about $8.50 in tips per hour on average.

The funny thing about averages is that they indicate that a whooooole lot of people are well below that figure.

Additionally, it’s important to note that $13.80 is only barely above the city’s actual minimum wage, and that $8.50 per hour in tips is only a hair over what is required by a server to essentially break even.

And yet, restaurant owners and anti-wage lobbyists insist that this is a fine system, that this works, and that it’s perfectly acceptable to require servers, bussers, bartenders, and other tipped workers to not only sing for their supper, but sing exceptionally, lest they barely be paid at all.

When you leave a tip, you expect that it’s an extra bonus for your server because they delivered a service well. With the tipped wage, though, you’re actually just paying their salary on behalf of their boss, who get to collect the money from the tab and from the cost-savings of not paying their employees.

And they expect you, as a customer, to be happy about it.

The $15 Minimum Wage Is Apparently a Time Traveler

Raising the minimum wage is powerful. Powerful enough to lift millions out of poverty. Powerful enough to reduce dependence on social services, such as food stamps. And, apparently, powerful enough to go back in time and change unemployment numbers for teens and also spur lawmakers to create policies to address those numbers.

At least, that’s what the conservative bloggers over at ShiftWA seem to think—which would certainly explain their apparent fear of a minimum wage increase. I mean, if it’s so completely able to change the arc of time, what can’t it do?

teen unemployment minimum wage

Their most recent example of the minimum wage’s might is Seattle Mayor Ed Murray’s youth employment initiative which, they say, is a direct response to the massive decline in youth employment as a direct result of the gradual ascent to $15. First pointed out by right-wing think tank the Washington Policy Center, the initiative is designed to help encourage businesses to hire more youths, and to train young people to make them more job-ready. Because, according to WPC and Shift, it’s the minimum wage that has made it so hard for them to get hired.

Nevermind the fact that Washington’s schools are literally criminally underfunded, which could contribute to a dearth of teens with necessary skills the join the workforce (according to the Mayor’s office, “nearly 70% of employers report graduates are deficient in critical thinking and problem solving skills essential to successful job performance”)—no, the reason teens and other young folks can’t get hired is because of a law that went into effect just about 400 days ago.

That makes perfect sense, assuming that the minimum wage increase was somehow impacting employment long before it actually became a law, let alone went into effect.

Washington state has had high numbers of teen unemployment for years; a 2011 report found that “Washington teens are only slightly better off than teens in Georgia when it comes to unemployment rates” (for reference, the 2011 minimum wage in both of those states was and $8.65 and $5.15, respectively, so it’s safe to assume that was not wage-based, either). A few years later, in 2014, Washington’s minimum wage had gone up, while its teen unemployment rate had gone down to about 25%.

Today—post minimum wage increase—it’s 13%, according to the city.

Part of the reason for the decrease? Youth employment initiatives like the Mayor’s, which have existed for years and are kind of a staple in city, county, state, and federal politics. Programs like Youth at Work and the (partially) privately-funded Summer Youth Employment Program have been actively trying to place kids in jobs because it’s good for the economy, not because the minimum wage has made them impossible to hire.

Murray’s youth employment initiative is likely not intended to cover up the blunder that is the minimum wage ordinance, but rather, to fulfill a promise he made in his State of the City address this year, wherein he addressed the racial achievement gap that has plagued Seattle since long before anyone uttered the words “$15.” From his speech (wherein he announced the doubling of the youth employment initiative among other investments in racial equity programs that have nothing to do with the minimum wage):

I believe that when our young black men are at their best, Seattle is at its best. My vision is that in 10 years, all of Seattle’s young people will have the opportunity to enjoy the benefits that come with a growing city and a growing economy.

Yes, that definitely sounds like an elaborate coverup of a failed policy and not, you know, a politician addressing a systemic issue that is failing thousands of King County residents.

Unless, of course, you believe that the minimum wage is so vastly powerful that it has managed to reach back through decades to change the course of history specifically to ensure that at this very moment, the Mayor is forced to (horror of horrors) take affirmative action to help vulnerable community members find jobs because some other community members are now pulling down what’s close to a wage they can live on. Yes, that explanation makes sense.

minimum wage facts

The minimum wage: It’s magical AF

$15 Then! (Yet Another Reason Why a $15 Minimum Wage Isn’t as “Insane” as You Think)

15Now.org

Last night during the Democratic debate, when asked if she would sign a $15 an hour federal minimum wage should the bill come across her desk, Hillary Clinton snapped back, “Of course I would … if we have a Democratic Congress, we will go to $15.” Clinton has previously backed state and city efforts to raise the minimum wage to $15, but this is the first time she’s on the record supporting that number at the federal level.

My, how far the $15 movement has come. And yet, not quite so far as it first appears.

Back in 2012, when New York City fast food workers first walked off the job demanding a $15 minimum wage and the right to organize, the political and media establishment collectively rolled its eyes at such an “insane” demand. But that was back when $15 was still worth, well, $15 — at least in 2012 money. Four years later, adjusted even for our current anemic rate of inflation, those same three five-spots are only worth about $14.46. And not even Bernie Sanders is talking about jumping to $15 now. He proposes a gradual phase-in through 2022 (a full decade after that first fast food strike!), when $15 will only be worth about $12.80 in 2012 dollars.

That’s not nothing. But in today’s money, it’s about $4,600 a year less than what those fast food workers were striking for. Because inflation!

So yeah, the rapid progression of $15 from fringe idea to the most loudly shouted about point of agreement in the Democratic debate is nothing short of amazing. Still, whatever your first impression of the proposal, it’s important to remember that $15 now isn’t the same thing as $15 then.

Free Marketeers Are Losing the Debate (and Their Minds) Over the Minimum Wage

Milton Friedman

If Milton Friedman were alive today, he’d be…

Writing in The Week, Shikha Dalmia, a senior analyst at the libertarian Reason Foundation (motto: “free minds and free markets”), adds absolutely nothing to the minimum wage debate beyond the same old 1980s-era trickle-down bullshit:

Progressives have gone crazy over the minimum wage.

As opposed to conservative Republicans, who I guess are sanely campaigning on promises to deport 10 million immigrants, build a giant border wall, carpet bomb Syria/Iran/whoever, return us to the gold standard, and punish women who have abortions.

President Obama got the ball rolling when he called for hiking the federal minimum wage from $7.25 to $10.10 per hour. Now, both Democratic presidential candidates are trying to one-up him, with Bernie Sanders demanding a $15 federal wage and Hillary Clinton $12. Meanwhile, California and New York have already passed laws mandating the Bernie rate, and scores of cities across the country are clamoring to follow suit.

Actually, President Obama first got the ball rolling back in 2008, when he campaigned on raising the minimum wage to $9.50 an hour — equivalent to about $10.50 today (about 40 cents below the 1968 inflation-adjusted peak of $10.90). So, yeah, Obama’s been pretty damn consistent on this issue, like, forever.

As for Hillary Clinton’s proposed $12 an hour minimum wage, phased in over five years, by the time it would be fully implemented in 2022, it would stand about 30 cents below the 1968 inflation-adjusted peak. So again, no historical outlier here.

And while Bernie Sanders’ $15 minimum wage would represent an inflation-adjusted high, he too proposes phasing it in over five years, so it’s not quite the jump it first appears: about a 22 percent premium over 1968 (but about half what it would have been had the minimum wage kept pace with productivity gains as it had done over its first 30 years).

minwage-productivity

So I’m failing to see what’s so “crazy” about all this.

And all the while, minimum wage advocates are making increasingly fanciful claims on behalf of their beloved laws.

The left’s minimum wage obsession dovetails with a shifting academic consensus that until the 1990s considered such hikes a recipe for killing jobs, especially for low-skilled workers.

If by “fanciful claims” Dalmia means  touting the latest “academic consensus,” then yes, guilty as charged.

For a long time, the generally accepted rule of thumb was that, all else remaining equal, every 10 percent increase in the minimum wage would decrease low-skilled employment by 1 to 2 percent, since the more employers had to pay these employees, the fewer jobs they could afford to provide.

This consensus began to fray with a 1992 study by economists David Card and Alan Kreuger, who found that New Jersey’s minimum wage hike — from $4.25 to $5.05 — did not lead to expected job losses in the state’s fast food restaurants.

In other words, the “generally accepted rule of thumb” was refuted by, you know, actual data.

This finding has been hotly contested,

… by free market ideologues like Shikha Dalmia…

… but even if it were true, it doesn’t mean there are no other downsides to minimum wage laws. For example, sometimes employers don’t respond to minimum wage hikes by laying off workers, but instead by raising prices for consumers.

Actually, if she bothered to read the latest academic literature instead of just reflexively dismissing it, Dalmia would learn that rising prices (along with increased worker productivity, reduced turnover costs, and rising consumer demand from higher paid workers) is prominently part of the mechanism that explains why rising wages do not result in net job losses.

(Minimum wage opponents haven’t helped their case by hitching it almost exclusively to job losses while ignoring the other, equally pernicious, adjustment responses by businesses.)

No, they most certainly haven’t helped their case. But that’s mostly because their equilibrium theory is so clearly contradicted by economic reality.

There is only one scenario, according to Naval Postgraduate School economist David Henderson, under which a modest legally mandated minimum wage might do more good than harm: when employers enjoy monopsony power (a monopoly on the buying side) in the labor market, either because there are very few of them or because workers can’t leave for some reason. Employers then have a relatively free hand to hold wages down. A mandated minimum wage under those circumstances merely diverts the firm’s “excess profits” to the worker, something that would have happened automatically in a more competitive market. But it doesn’t diminish a company’s productivity or its incentive for additional hiring — thereby actually boosting job growth. But genuine monopsony isn’t common and would require a very finely calibrated and skillfully crafted minimum wage, which is not how blanket policies work in the real world.

The founder of economics, libertarian heartthrob Adam Smith, would disagree.

America’s federal minimum wage of $7.25 per hour works out to about 42 percent of its $17.40 hourly median wage. Even the most gung-ho academics only advocate raising it to 50 percent of the median — which means a little over $8.70. This in itself is a crude benchmark that lumps together high-wage service occupations with low-wage construction and other non-service ones whose market realities are completely different. Be that as it may, it is inconceivable that a $15 minimum wage — equal to 86 percent of America’s median wage, and the highest in the Western world — wouldn’t kill jobs, especially in small towns and cities where wages tend to be lower. Witness the chronic double-digit unemployment rate that a far less insane minimum wage has generated in France, Spain, Belgium, and other European countries.

Oh, this again. Please. There’s a reason why Dalmia (and every other $15 opponent) neglects to explain the empirical rationale behind the 50 percent minimum-to-median ratio; it’s because there isn’t any. (Also, her “86 percent” number? That’s bullshit. By 2022, when it’s fully phased in, Sanders’ $15 minimum would equal about 69 percent of median, while Clinton’s $12 figure would equal the 55 percent ratio we enjoyed back in 1968).

And yet, minimum wage enthusiasts are abandoning all caution and making increasingly extravagant claims. Here are four of their sillier arguments:

Or rather, four of her sillier arguments.

False: Minimum wage hikes will lead to productivity-boosting automation

The standard rap against minimum wage laws is that by raising the cost of hiring workers, they prompt companies to invest in labor-saving technologies, throwing people out of work. But Matthew Yglesias claims that this would by no means be a “bad thing.” Why? Because productivity is the engine of economic progress. And if machines are more productive than people, then policies that prod employers to replace people with machines would mean more wealth without toil for everyone. This is the reverse of the Luddite fallacy that seeks to boost jobs by eschewing labor-saving technologies. Nobel laureate Milton Friedman once heard a Third World bureaucrat, suffering from this fallacy, defend his decision to have poor workers dig a massive canal with shovels rather than earth movers because that meant more jobs. Friedman asked: Why don’t you replace their shovels with spoons?

Increasing productivity is not simply a matter of increasing output, but doing so in the most cost-effective way. You do not encourage that with policies that force investments in capital equipment when labor is plentiful. Indeed, this raises the overall opportunity cost, rendering an economy less efficient. If Friedman were alive, he may well have asked Yglesias why, by his logic, he doesn’t just advocate a ban on all manual labor.

If Friedman were alive, he’d be scratching at the lid of his coffin. Which if you think is an unserious rebuttal, well, yes, but no more unserious than Dalmia’s lazy “why not ban all manual labor” reductio ad absurdum.

The fact is that the “academic consensus” is that a higher minimum wage does indeed lead to higher worker productivity. Which in the aggregate is a good a thing, regardless of whether it comes from the substitution of labor-saving technology, or, as researchers at the prestigious Cornell University School of Hotel Administration conclude: because “better compensated employees tend to be happier, more productive, and less likely to quit their jobs.

False: Minimum wage hikes helps firms make more money

This claim strains credulity. How would a $15 mandate that almost doubles a company’s labor costs actually boost profits? The argument that former Labor Secretary Robert Reich offers is that higher wages means happier employees and lower turnover, something that saves a company money. If so, the million-dollar question is why aren’t greedy companies doing this already? Are they too stupid or sadistic or both to pass up on a win-win deal for both themselves and their workers?

Yes, many employers are too stupid or sadistic or both.

But rhetorical questions aside, I just re-watched that Robert Reich video Dalmia links to, and nowhere in it does he imply that raising the minimum wage would boost companies’ profits. What he’s saying (and again, what the “academic consensus” says) is that lower turnover “helps employers save money,” thus offsetting part of the cost of higher wages:

In fact, I don’t know anybody on our side who is pushing the “boosts profits” argument. If anything, one of the things that is ailing our economy is the six percent of GDP or so — about a trillion dollars a year — that used to go to wages but now goes to profits. Shifting some of that back into pockets of workers would be a good thing.

False: Minimum wage hikes will stimulate the economy

Michael Reich, an economist at the University of California, Berkeley, claims not only that a $15 minimum wage wouldn’t produce job losses in the short run, but would actually stimulate the economy, resulting in job gains in the long run. “They’d (employees) have more money to spend, the overall level of demand for goods and services would be higher, and so would the level of employment,” he claims.

But shifting wealth around doesn’t generate real economic growth. Boosting productivity does. Indeed, ordering employers to give artificial raises means that they would have less money to spend or invest, cancelling out any extra spending by workers.

Oy. Again, raising the minimum wage increases productivity. That’s the “academic consensus,” not just Michael Reich’s.

As to Dalmia’s larger point about “shifting wealth around” not generating real economic growth, well she’s absolutely right — if we’re shifting wealth into the pockets of the super-wealthy. A 2014 working paper from the OECD found that widening income inequality knocked a cumulative 6 to 9 percent off US GDP growth over the previous two decades due to the drag of stagnant wages on the 70 percent of the economy that is driven by consumer spending.

Wow. Just imagine how many more jobs there would be today if our economy was 9 percent larger!

False: Minimum wage hikes will diminish the strain on welfare programs

Advocates of the minimum wage claim that without a suitably high minimum, low-income workers are forced to rely on food stamps and health care programs to make ends meet. In essence, they argue, welfare programs end up subsidizing McDonald’s low-wage workforce, which is hardly fair to taxpayers. Forcing companies to pay something resembling “living” wages would diminish low-wage workers’ dependence on government programs.

This assumes that boosting the minimum wage would hand more workers a raise than it would throw people out of work, of course — which is hardly a reasonable assumption, as pointed out earlier. Indeed, notes University of California, Irvine’s David Neumark, the probability that a family will escape poverty due to higher wages will be offset by the probability that another will enter poverty because it has been priced out of the labor market.

So, here’s the thing: We’ve been raising the minimum wage for 78 years, and there is simply no evidence of any correlation between minimum wage hikes and net job losses! Nada. Bupkes. Zilch. Dalmia’s got the gall to accuse minimum wage advocates of making “extravagant claims,” and yet Dalmia is unable to support her core argument by, you know, facts.

The core fallacy in this line of reasoning is that employers can set wages based on employee needs rather than market forces. Hence, they can simply be forced to hand over more money to their workers. That, however, is not how things work, especially in a globalized world where forcing employers to cough up wages higher than the market can bear would undermine their competitiveness — not something that helps anyone in the long run.

First of all, most of these minimum wage jobs are in the service sector, and since you can’t offshore the work of a barista or a retail clerk or hotel housekeeper, there isn’t much threat from cheap-labor global competition. But Dalmia’s core fallacy is that the market for labor operates like the market for bananas. It doesn’t.

The problem for Dalmia and her ilk is that this is about much more than just the minimum wage; this is about the entire free market philosophy to which she has dedicated her life. For if we do raise the minimum wage and the job losses don’t come — if we shove the labor market into “disequilibrium,” yet disaster never strikes — then the question must be asked: What else have the neoliberals gotten wrong?

The answer, Dalmia must fear, is everything.

Employment Policies Institute Is a PR Firm Masquerading as a Think Tank. And They SUCK at It.

No one takes the Employment Policies Institute seriously

 

As research director at the mendaciously named Employment Policies Institute, Michael Saltsman has one job, and one job only: Defend his restaurant and retail industry patrons from proposals to raise the minimum wage. And yet it is on Saltsman’s watch that the $15 minimum wage has quickly transformed from a “near insane idea” to codified law in Seattle, California, and New York.

To borrow a phrase from the Republican frontrunner: Sad!

No wonder Saltsman has taken to the pages of the Orange County Register to blindly lash out at the upstart minimum wage advocates who are, let’s be honest, totally kicking his supply-side ass:

Advocates for the policy at a far-left Seattle think tank made the contrarian case that California’s rising minimum wage is entirely consistent with our past experience.

Hey, that’s us! And yet in criticizing our post, Saltsman not only fails to extend the common courtesy of throwing us a link, he refuses to even mention our name. What a dick.

Here at 100% plutocrat-funded Civic Ventures, we chuckle at the notion that our shop is “far-left” (Nick Hanauer’s mission is to save capitalism, not overthrow it), though since such ideological nomenclature is inherently subjective, whatever. But to be clear: We are not, nor have we ever claimed to be a “think tank.” (I only chose the title “senior fellow” because I think it’s funny.)

Compare that to Saltsman’s Employment Policies Institute, which disingenuously claims to be a “non-profit think tank,” while actually being neither. In fact, it is actually just one of several profitable front groups run out of the offices of DC-based lobbying and PR firm Berman and Company. In a 2014 interview with NPR’s Terry Gross, the New York Times‘ Eric Lipton explains how it works:

LIPTON: Yeah, I was – you know, set up an interview with the research director. I got the address of his office. I went to the eighth floor of the building on Vermont Avenue, like four blocks from the White House. The elevator opens, and it’s Berman and Company. And I go in and, you know, there’s a bunch of awards on the wall, advertising awards, public relations awards that Berman and Company has won for its work, you know, doing ad campaigns on behalf of various industry groups.

And so I didn’t see any evidence at all that there was an Employment Policies Institute office. And in fact when I started to interview the people there, they explained that there are no employees at the Employment Policies Institute and that all the staff there works for Berman and Company, and then they sometimes are just detailed to the various think-tanks and various consumer groups that he operates out of his office.

And he bills them, sort of like a law firm would bill various clients.

Wow. What a great scam. And it has been from the Employment Policies Institute’s start. Note: I refuse to refer to the organization by its three-letter abbreviation, EPI, because it was obviously named to sow confusion with the real EPI, the pre-existing and pro-minimum wage Economic Policy Institute. Hell, not-EPI even apes EPI’s favicon, causing me to repeatedly click on the wrong browser tab:

A Tale of Two EPIs

What a bunch of shameless trolls.

Legally, not-EPI is registered as a tax-exempt 501c3 (or, illegally one might reasonably argue; something the IRS should look into before President Cruz eliminates the agency), so it doesn’t have to report the names of its funders—though it’s safe to assume its money mostly comes from the restaurant, accommodations, and retail industries. As for how it spends its money: “more than half” of its multi-million dollar budget is paid to for-profit Berman and Company for staffing and operations, an “atypical” arrangement that prompted Charity Navigator to issue a “Donor Advisory.”

And what sort of return are not-EPI’s donors getting on their investment? Not much these days. Minimum wage hikes have been passed all over the place in recent years, even in blood-red states like Alaska, Arkansas, South Dakota and Nebraska. Ouch. Oh, and the Orange County Register? For all that donor money, you’d think not-EPI could place its op-ed in a more prestigious (and less infamously libertarian) outlet. I mean, according to Saltsman, Civic Ventures isn’t even worthy of mentioning by name, and yet we routinely get our stuff placed in the likes of Politico, the Atlantic, the Hill, PBS NewshourDemocracy Journal, and the New York Times.

Hey, where’s Rick Berman’s TED Talk, Michael? My boss has two of ‘em! Geez, for a high-priced PR firm you guys sure do a shitty job of garnering press.

Sure, I suppose I could spend some time actually refuting Saltsman’s op-ed instead of just shoving his face in it. But really, why bother? Saltsman is a huckster and a hack—a paid propagandist masquerading as a “research director” at an “institute” that doesn’t exist. With this, I’ve now linked to his op-ed four times, showing him more respect than he showed me and infinitely more than he deserves.

But if he thinks I’m going conflate his solemn tone with serious discourse, he’s got another think coming. Civic Ventures is not a “think tank” or an “institute,” nor do we pretend to be. We’ve got no funders to appease, no conventions to uphold, no fiction to maintain. So there’s nothing to constrain me from calling bullshit on Berman and Company’s fake think tank game.

We’re kicking your ass in the minimum wage debate, Michael, because we’re right and you’re wrong. And because frankly, we’re simply better at this PR stuff than you.