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AEI Economist Mark Perry Proves Low Minimum Wage Kills Jobs!

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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.

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:

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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.

 

Seattle Restaurants Post Largest Month-to-Month Jobs Gain Ever!

Statistical noise, or absolute proof that higher wages produce more jobs?

Statistical noise, or absolute proof that higher wages produce more jobs?

I love to taunt the trickle-downers with tweets of “Damn you, $15 minimum wage!” every time another impressive monthly jobs report is released for booming Seattle. But of course, I’m only joking.

One month’s jobs data on its own is little more than statistical noise when it comes to proving the positive or negative impacts of Seattle’s high-minimum wage experiment, while what useful jobs data we have is incredibly coarse—the entire Seattle-Bellevue-Tacoma metropolitan area rather than just Seattle proper. And who’s to say at this point that Seattle’s booming jobs market wouldn’t be booming even more if not for our higher minimum wage?

It will take years to gather and analyze the relevant economic data, and even then there will be room for reasonable disagreements. So out of respect for, you know, facts, I generally limit my short term analysis to an occasional mocking tweet.

But conservative commentators have proven far less cautious honest.

First there was the Washington Policy Center’s effort to intentionally misrepresent a handful of Seattle restaurant closings into a case study of a minimum wage hike gone awry, despite the protest from restaurateurs that the minimum wage had nothing to do with their decisions. Then there was the hullabaloo over the minimum-wage-linked closing of a single pizzeria, a lone data point the conservative propaganda machine attempted to inflate into a trend. (Ironically, the closed pizza place is being replaced by a better pizza place.)

Then Mark Perry from the conservative American Enterprise Institute (allegedly a “think tank”) attempted to spin a one-month downturn in the preliminary seasonally-adjusted food service employment data for the larger Seattle-Bellevue-Tacoma metropolitan area into “evidence” that Seattle’s minimum wage ordinance may already have “started having a negative impact on restaurant jobs in the Seattle area.” Really.

Which is why we should all enjoy a little fun mocking Perry with the chart above—courtesy of our good friend Invictus—showing the largest month-over-month gain in restaurant employment ever recorded over the life of the data set!

Sigh.

Look, when I snarkily retweet a single data point—or Forbes’ libertarian propagandist Tim Worstall tortures one in one of his typically torturous posts—well, that’s almost okay, because we’re just dumb bloggers. But Professor Perry is an actual economist, for Chrissakes! So when Perry claims that “the loss of 1,000 restaurant jobs in May” (and that’s seasonally adjusted data—the real number of restaurant jobs actually increased by 1,000 in May) is indicative of anything more than a fluctuation in one month’s data, he knows better.

He’s just hoping you don’t.

Now Conservatives Want to Wait and See on the $15 Minimum Wage

yeswereopenOver at the Big Picture Blog, our friend Invictus highlights the problem with conservatives on Seattle’s minimum wage hike: now that the sky has not fallen, now that business license applications for restaurants in Seattle continue to climb, critics of the increase are kicking the can down the road.

One such critic told Invictus on Twitter that everyone should “reserve judgement on the health of the industry when it hits 15” and that “at 11 [dollars an hour] places haven’t closed ..let’s see what another 4 dollars will do ..that’s all I’m saying …” The same people who wrote celebratory posts praising a (debunked) story about Seattle-area restaurant closures are now claiming to defer judgment until 2021, when every employer in Seattle will be required to pay $15 an hour. It’s a disingenuous ploy, in part because these same critics were eager to praise and spread a (debunked) story citing instantaneous closures.

If the question you’re asking is something along the lines of “has this minimum-wage increase helped a large number of low-wage workers make more money with a minimum impact on small business owners?,” then the answer is yes. It’s impossible to point to a rash of business closures because those closures don’t exist. New businesses are on the rise. Seattle’s unemployment is way down. It’s impossible to argue that the minimum wage increase has hurt Seattle’s economy, so critics are now trying to table the issue. Looks like a success story to me.