trickle-down economics

It’s Too Soon to Tell if a Higher Minimum Wage is Eliminating Restaurant Jobs

Allow me to save you a click: The answer to the Atlantic’s recent question, “Are Higher Minimum Wages Eliminating Restaurant Jobs?” is “it’s too soon to tell.”

That’s the gist of the article and that’s the answer to the question. It’s also the truth, because it is, in fact, too soon to tell.

Atlantic writer Russell Berman, too, could have saved you a click by simply titling the article truthfully—”It’s Too Soon to Tell if Higher Minimum Wage is Eliminating Restaurant Jobs” would be accurate, as would “It’s Too Soon to Tell if Higher Minimum Wage is Boosting Restaurant Jobs”—but then, of course, the Berman and the Atlantic wouldn’t be able to stir up the frothy sea of ire that floods Facebook feeds and drowns out Twitter discussions when otherwise-respectable reporters opt to trot out dubious studies and play to the fears of those who believe the old adages of trickle-down economics.

Let’s evaluate this piece by piece.

The article is, from the beginning, set up to confirm every expectation of a person who wants to hear that raising the minimum wage has cost restaurant jobs, without ever actually succeeding in doing so. Even focusing on the restaurant industry as a yardstick of the efficacy of raising the minimum wage (the industry is the largest employer of those making under $10.10, but only 18% of near-minimum wage workers are employed by restaurants) is something of a red herring, but that’s a separate issue.

Under a hero image of a woman in a McDonald’s uniform—doubling down on the idea of “burger-flipper”—within the first few lines, Berman goes ahead and answers his own question.

“One early report suggests hiring has slowed in the cities that changed their policies this year, but it’s probably too early to tell, economists say,” reads the subheader.

So the answer to Berman’s lead (and leading) question is: it’s too soon to tell. But of course, he keeps going.

Explaining that “the race is on to assess” the impact of higher minimum wages, the article begins by describing the higher minimum wage as controversial, opting not to note numerous studies showing that public support (including among small businesses) is growing rapidly.

Then, again, Berman answers his own question:

While many Republicans and business groups have opposed raising the wage floor on the grounds that employers will slow hiring or lay people off, major economic studies have found little negative impact on jobs.

Oh. Case closed, then, right?

No! Of course not. Because in spite of both research and anecdotal evidence—some of it coming from Seattle and Seattle restauranteurs themselves—Berman is determined to show both sides, or at least, the thin veil of “both sides.”

Several economists said it’s too soon to get good data to evaluate the changes that went into effect earlier this year, but one conservative group is putting out a report on Friday that takes an early look at trends in the restaurant industry over the last several months.

Once more for the cheap seats in the back: “It’s too soon to tell.” That hasn’t deterred conservative think tanks from, as Berman describes, racing to declare the minimum wage a disaster.

The paper by researchers at the American Action Forum found that growth in restaurant employment in cities that raised their minimum wage in 2015 was slower than in their respective states as a whole. Restaurant jobs since the spring in Seattle’s metropolitan area, for example, have grown just 0.6 percent since , while they have grown by 6 percent across Washington state.

What Berman leaves out: AAF’s study uses the same faulty data as a factually-problematic, widely debunked report by conservative economist Mark J. Perry of the American Enterprise Institute (AEI).

The report, Media Matters pointed out at the time of its release, is based on faulty data, and even admits that—what’s that? Just that “it’s too soon to tell for sure.”

Even conservatives in the Seattle area who don’t support a $15 minimum wage were quick to fact-check the aforementioned report, finding one very sticky element that discredits the figures: The “Seattle metropolitan area” didn’t raise the minimum wage, the City of Seattle did, and the City of Seattle makes up just one-fifth of the population of the “Seattle metropolitan area,” and occupies one-seventieth of the space.

That essentially rules out the data, entirely—which doesn’t stop Berman from treating both the AAF study and Perry’s work as viable.

Berman then quotes AAF’s director of labor policy, Ben Gitis, who stated that “the verdict is still out on how these policies will impact local employment.”

In the parlance of the kids today: TooSoonToTell.

Finally, though, Berman shifts away from the porous data of the AEI and the AAF, turning toward left-facing economists. Their verdict?

“Everything that they’re documenting could be statistical noise,” says Economic Policy Institute’s David Cooper.

“It is simply not possible to reliably assess employment trends following minimum wage increases in cities like Seattle and San Francisco yet…Given data availability and reliability, I would essentially ignore any reports claiming to estimate employment effects from these policies,” added University of Massachusetts at Amherst economist Arindrajit Dube.

Essentially ignore, you say? Done and done, Mr. Dube.

Despite the extremely misleading title of this article, the point is this: It is just too early to determine whether raising the minimum wage has an impact on the sheer volume of jobs in the restaurant sector.

It’s too early to say if it’s eliminating jobs, and it’s too early to say if it’s creating more. It’s too early to mourn the death of the Washington restaurant, and it’s too early to celebrate huge wins of economic growth. We simply do not have the data yet to draw these conclusions.

What we can determine is that Seattle-area workers are currently ending the workweek with more money in their pocket, that Seattle is on track to post high numbers of new restaurant openings, and that restaurant owners are actually extremely optimistic about the increases.

Tom Douglas, owner of dozens of Seattle-area restaurants, initially predicted that the city would see “maybe a quarter of the restaurants in town” shutter; he has since opened several new eateries, and told the Puget Sound Business Journal that he “has now changed his mind about the law.”

Are higher wages eliminating restaurant jobs? To quote Russell Berman’s own reporting, “it’s too soon” to tell.