September 27, 2013 Print
    

SeaTac’s Prop. 1: Boosting the Local Economy?

Introduction

Puget Sound Sage (Sage), a labor union-funded advocacy group, recently released a report arguing that passage of SeaTac’s Proposition 1 initiative would generate a host of economic benefits for workers, businesses and the local economy.[1]

In brief, Sage estimates the number of workers covered by Prop. 1. They then analyze the current pay levels of these workers and estimate how much their pay would increase under Prop. 1. Sage concludes that gross wages of employees would increase by about $40 million under Prop. 1. Next, Sage applies a multiplier effect to conclude that the $40 million increase in wages will create a total of $54 million in local economic activity, creating 412 new jobs.[2]

Unfortunately, the report vastly overstates the benefits of Prop. 1 while minimizing or ignoring its negative consequences. The result is an overly utopian vision of what SeaTac would look like post-Prop 1. 

On the contrary, the City of SeaTac and the surrounding economy would undoubtedly be worse off under Prop. 1.

The following analysis addresses the assertions of the Sage report in chronological order.  

Sage Understates the Earnings of Some SeaTac Employees

Sage’s analysis of current wages paid to employees who would be covered by Prop. 1 fails to take into account tips paid to some employees. For example, skycaps, an occupation Sage focused on in previous publications, receive tips in addition to their base pay.[3] Sage correctly points out that tips have decreased in recent years. Even still, while precise data is scarce, low total daily tips for a skycap are around $70,[4] or another $18,200 per year. Combined with $9.19 per hour (minimum wage) base pay, a skycap could earn over $37,000 yearly. While not a large salary, it is well above minimum wage and is sufficient to support a family of up to two adults and five children above the federal poverty line.[5]

SeaTac Workers Earn More than Initially Estimated

In their initial report on “poverty class jobs” at SeaTac, Sage estimated that average pay for low-wage SeaTac workers was $9.70 per hour, still above the state minimum.[6] However, in its recent report, Sage estimates that the average pay of workers covered by Prop. 1 is currently $11.03 per hour. On its own, the average wage is higher than many local living wage ordinances. San Jose has a $10 minimum wage, Santa Fe has a $10.51 minimum wage, and in San Francisco the minimum wage is $10.55.[7]

Spending Response of Low-Income Workers

Sage’s report theorizes that “one effect of raising paychecks for earners at the bottom of the wage scale is that these earners are likely to spend most of their income to meet basic needs.”

This is a key, but unproven, assumption underlying Sage’s arguments. Studies indicate that household spending does rise following a minimum wage hike, but generally not on “basic needs.” A 2011 study by the Chicago Federal Reserve found that household spending on non-durable goods “barely increases” following a $1 increase in the minimum wage.[8] This is a curious result if minimum wage workers generally lack basic necessities like food and clothing. Instead, the researchers found that most of the additional spending came in the form of debt-financed purchases of new automobiles, suggesting that many local SeaTac businesses would benefit little from any additional consumer spending, were it to occur.

While the researchers determined that individual households benefitting from the higher minimum wage did increase spending, they cautioned against concluding that the economy overall is better off. Indeed, the same researchers have concluded in separate studies that minimum wages decrease employment[9] and raise prices.[10] At the federal level, they conclude that, while a higher wage may provide some stimulus “for a year or so,” it “serves as a drag on the economy beyond that.”[11]

Price Increases

Sage recognizes that Prop. 1 will drive up costs for employers. They contend, however, that these costs will be minimal and will primarily fall on out-of-area “visitors.”

Sage contends that, “with payroll tax included, airport employers will see a combined increase of $29.6 million in yearly labor costs.” They contend further that, “if employers pass on all costs through price increases, the roughly 16 million passengers traveling though [sic] SeaTac Airport every year will only see an average increase of $1.78 in combined ticket, food and retail prices.”

Even assuming Sage’s arms-length assumptions about the internal workings of dozens of airport businesses are correct, a $1.78 increase in air travel prices adds up quickly.

Sage estimates that 68 percent of SeaTac’s 16 million yearly passengers are visitors from outside the five-county-zone around the airport. Conversely, 32 percent (5,120,000) of those SeaTac passengers must be locals. If 5.1 million local passengers each pay an increased $1.78 per trip, over $9 million is taken out of the local economy each year through air travel prices alone. The same effect occurs for each of the other sectors affected by Prop. 1.

Overall, combining Sage’s estimate of the aggregate annual wage increase for all covered employees ($39,905,900), with the associated taxes ($3,926,700), means that SeaTac employers would see their direct payroll costs rise by $43,832,600 in response to Prop. 1. If all of the increase is passed on in prices, as Sage suggests, and 32 percent of the price increase is borne by local residents, as Sage suggests, then price increases will extract $14,026,400 from the local economy each year.

By their own estimates, the best intellectually honest claim Sage can make is that Prop. 1 will inject $25.9 million in the local economy, not $39.9 million ($39.9 million added to local economy in higher wages - $14 million removed from local economy in higher prices).

As a side note, Sage contends airport businesses can get away with charging more because customers have few alternatives. Airport concessionaries facing Prop. 1 are in an interesting situation, however. The Port of Seattle, which administers the airport, has a “street pricing” policy which prevents concessionaires inside the airport from charging more than business locations outside the airport.[12] Consequently, while concessionaries will see their costs rise due to Prop. 1, they will be unable to increase prices to compensate. It is likely that at least some would not be able to absorb the higher costs and would be forced to shut down.[13]

Sage contends, without documentation, that concessionaires at San Francisco’s airport (SFO), who were under similar street pricing requirements, passed increased costs on to the airport instead of customers. Port of Seattle staff, however, informed me that there is no such mechanism for passing costs from concessionaires onto the airport. Furthermore, concessionaires at SFO are actually permitted to charge more than on-street locations, though how much more is limited. Lastly, San Francisco’s law exempted existing contracts, while Prop. 1 applies to existing contracts as well.  

Employment

Sage acknowledges that “fewer jobs or hours worked will directly reduce the overall wage boost, and, hence, the multiplier effect.” They contend, however, that Prop. 1’s $15 minimum wage requirement will not decrease employment.

Sage relies heavily a recent paper by John Schmitt of the Center for Economic Policy Research. While Sage claims his paper concludes that “minimum and living wage laws have had no discernible impact on employment levels,” this is generous to say the least. A more accurate characterization of Schmitt’s report is that recent studies generally find “modest increases in the minimum wage” result in “little to no” reduction in employment.[14]                                                                                    

Schmitt’s position is not much different from minimum wage opponents; it’s simply phrased differently. In a review of modern minimum wage studies, economists David Neumark and William Wascher concluded that “a sizable majority” of studies “give a relatively consistent,” if not large, “indication of negative employment effects of minimum wages.”[15]

The reason for the relatively small impact of most recent hikes in the minimum wage can be attributed to two factors. First, increases in the minimum wage are generally fairly small. Second, they are generally not indexed to inflation, meaning that the real value of the minimum wage begins to decline almost immediately, easing its impact.

On average, increases in the federal minimum wage have been $0.32 (17.5 percent). Since Washington State began setting its own minimum wage rates in 1961, the average increase has been $0.29 (eight percent).[16]

Increases of this magnitude typically affect only a very small number of workers. As Schmitt correctly points out, employers can usually compensate for the higher wage without resorting to lay-offs. Instead, businesses may reduce employee hours, benefits or training. They may also employ more-skilled workers, try to increase employee productivity, increase prices to consumers or, where possible, accept a smaller profit margin.

Increasing the minimum wage to $15 from $9.19 in SeaTac, however, would constitute an increase of $5.81 (63 percent) over the current wage, far above the typical minimum wage increase. Furthermore, since Prop. 1 requires the $15 wage to be increased annually to keep pace with inflation, any decrease in employment would be permanently locked in.

The chart below indicates what an increase in the minimum wage to $15 an hour would look like compared to historic minimum wage levels in Washington. All dollars amounts are in 2013 dollars.

 

Even advocates of a higher minimum wage oppose increasing it by so much, so fast. Schmitt himself believes that a sudden, steep increase in the minimum wage would “do more harm than good.”[17] Economist Dr. Sylvia Allegretto of U.C. Berkeley, a staunch supporter of a higher federal minimum wage, admits that a $15 minimum wage is “absurd.”[18]

Furthermore, while Sage cites a study by Arindrajit Dube of the University of Massachusetts-Amherst, Dube admits that a $15 minimum wage would be uncharted territory.[19]

But what about local minimum wage hikes? Are they as damaging as state or federal increases? Sage contends that living wage ordinances in San Francisco and Santa Fe had “no discernible effects on employment.”

The record is not so clear, however. The methodology of the studies cited by Sage undermines their usefulness. In San Francisco’s case, for instance, the studies examined only the total number of individuals employed, which would not account for decreases in hours worked or changes in the composition of the workforce, such as a shift from low-skilled workers to more-experienced ones.

Correcting for these issues, a recent study by economist Aaron Yelowitz of the University of Kentucky concluded that San Francisco’s minimum wage “caused a substantial reduction in both weeks and hours worked by young adults, as well as a significant increase in unemployment for this vulnerable group.”[20]

Another study found that “Santa Fe’s living wage increase led to significant and negative consequences for employees in the city—particularly the least skilled employees.”[21]

It must also be noted that a $15 minimum wage would be more than 42 percent higher than the current wage levels in Santa Fe ($10.51) and San Francisco ($10.55).

The Washington Research Council estimates that Prop. 1 would eliminate about five percent of covered jobs, and that a further 5-10 percent of low wage workers would lose their jobs to more experienced workers.[22]

Sage takes issue with the Research Council’s estimate, contending that, “in the unlikely event of a 5% reduction of covered jobs, more new jobs would be created from the spending of remaining workers receiving a wage increase.”

Unfortunately, Sage’s argument rests on a basic misunderstanding of minimum wage research. Sage attempts to make a distinction between jobs lost and jobs created by higher minimum wages, contending that more jobs are created than lost. No such distinction exists in the research, however, which focuses on the cumulative effects of minimum wage laws. In other words, any jobs which may be created from the added spending of some workers are more than offset by the decrease in employment resulting from the higher minimum wage, hence the conclusion that minimum wages reduce overall employment.

Not only do minimum wage laws decrease employment, but they prevent new jobs from ever being created, an unseen but important consequence. Even if all covered workers retained their jobs under Prop. 1, studies have found that “the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.”[23]

There is already anecdotal evidence indicating that Prop. 1 would limit future economic development in SeaTac.[24]

Turnover

Sage contends that the higher wages mandated by Prop. 1 could result in lower employee turnover, to the benefits of employers. First, if reducing turnover by hiking wages is worth the tradeoff, it can be safely assumed that a business will do so voluntarily, without a legal requirement.

Second, Sage assumes that turnover is necessarily undesirable. However, as one study points out, there are no clear policy gains from decreasing turnover through regulation.[25] In fact, economists explain that turnover or “churn,” serves as important purpose, and “reductions in churn have costs because they reflect a reduction in labor movement to higher valued uses.”[26]

To the extent artificially higher pay encourages workers to stay put in low-productivity jobs, instead of moving to more productive jobs (which prior to the higher minimum wage would have paid more), it represents an economic inefficiency. Similarly, to the extent that turnover in entry-level jobs decreases, the difficulty for young workers in finding work increases.

Productivity

The traditional view is that workers are compensated based on their productivity instead of the other way around.[27] However, Sage asserts that productivity increases following a minimum wage hike. To the extent that this may occur, it will permit employers to hire fewer workers or reduce the hours of existing workers. At the extreme, employers may increasingly seek to mechanize or automate their processes, reducing their need for laborers.

Labor Substitution

As Sage points out,

One frequently cited effect of minimum and living wage laws is substitution of lower-skilled workers for higher-skilled workers. If true, this could displace lower-skilled workers who currently hold jobs covered by Proposition 1 – in particular, young workers, people of color and women.

Such a response seems entirely reasonable. However, in his paper cited by Sage, Schmitt references several studies which contend that such labor substitution does not occur.[28] A review of other studies, however, concluded that there is “substantial evidence” of labor substitution.[29] A separate study published last year found that young, low-skill workers fared worse after an increase in New York’s minimum wage than older workers with low-skills.[30]

Regardless, Sage contends that even if labor substitution occurs, “presumably the higher-skilled worker leaves one job in the area to take the covered job, creating a vacancy somewhere in the labor market.” There are two flaws with this reasoning.

First, take a hypothetical example of two individuals. The first is an inexperienced worker earning the $9.19/hr. minimum wage; he is covered by Prop. 1. The second worker is more experienced, earning $13/hr.; she is not covered by Prop. 1. When the minimum wage increases to $15, the second worker leaves her $13 job and takes the job of the first worker. The first worker, unfortunately, does not have the skills necessary to take the $13/hr. opening left by the more-experienced second worker; he is left with fewer employment options.  

Second, as Berkeley economics professor and former advisor to President Obama Christina Romer explains, a higher minimum wage could induce not-working individuals to join the labor force. “If these new workers are typically more affluent,” she explains, “perhaps middle-income spouses or retirees — and end up taking some jobs held by poorer workers, a higher minimum could harm the truly disadvantaged.”[31]    

Reduction in Government Subsidies

As an added benefit of Prop. 1, Sage contends that higher incomes for workers will reduce the need for government assistance. Studies consistently show, however, that higher minimum wage levels fail to reduce poverty and sometimes make it worse.[32]

One study summarized it this way:

While an increase in the minimum wage will lift out of poverty the families of some low-skilled workers who remain employed, other low-skilled workers will lose their jobs or have their hours significantly cut, reducing their income and dropping their families into poverty.[33]

Alan Krueger, now an economic advisor to the president, and David Card authored the study perhaps most frequently cited by minimum wage advocates. Yet even they refer to the minimum wage as a “blunt instrument” for increasing the income of the poor, and note that the effect of minimum wages on the overall poverty rate is “statistically undetectable.”[34]

Furthermore, while Sage contends that higher incomes will decrease the need for assistance from local agencies, the Sage report only attempts to estimate what reductions may occur in state and federal assistance programs.

Even if the need for local services declined somewhat, the effect would be quite small. Total spending on Human Services by the City of SeaTac constitutes a mere 1.5% of the city’s general fund budget.[35]

Any minor decrease in public assistance costs would almost certainly be outweighed by the increased costs to the city of enforcing Prop. 1.  

Mandatory Paid Sick Leave

In addition to the $15 minimum wage requirement, Prop. 1 requires targeted employers to provide one hour of paid sick leave for every 40 hours worked. Sage contends that “paid sick days help prevent the spread of disease by encouraging sick workers to stay home.”

While a noble goal, Sage does not demonstrate that workplace sickness is a serious problem or that mandatory paid sick leave would produce the desired results. On the contrary, a recent report by the Seattle City Auditor on Seattle’s mandatory paid sick leave law addressed both of these questions.

First, the auditor found that employees do not generally come to work sick, “regardless of whether paid leave is offered” by their employer. The report noted that, “When employees are absent due to illness, a co-worker typically makes up the work. This suggests that sick workers already stay home, but under the Ordinance they will now be paid for this time.”[36]

Second, the auditor reported that employers offering paid sick leave were noticeably more likely to report employees coming to work sick than employers who did not offer paid sick leave. The auditor admitted this finding “seemingly contradicts the intent of the ordinance,” but did not speculate as to the reason. 

Another recent survey of Seattle businesses found that mandatory paid sick leave is having a noticeable impact on businesses.

Among the survey’s findings:

  • 83 percent of businesses said sickness in the workplace was “not serious at all” before the law took effect. Only one in 10 viewed it as a serious problem.
  • More than 50 percent of employers believe the law will increase their costs, and more than one quarter think it will do so significantly.
  • Two-thirds of businesses did not expect reductions in employee turnover, and one-third expect unscheduled absences to increase.
  • Attempting to offset the costs of the law, 15.7 percent of employers had already raised prices, 18.3 percent reduced hours and staff, and 17.3 percent curbed or increased the price of other employee benefits.[37]

While the report admits it is not the “final verdict” on Seattle’s law, the findings indicate that mandatory sick leave policies have a definite negative impact on prices and employment, the assurances of sick leave advocates notwithstanding.

Promoting Full-Time Employment Over Part-Time

Citing the growth of part-time work in Washington State and around the country, Sage lauds Prop. 1’s requirement that businesses give any additional work to existing part-time employees before hiring additional part-time workers. Unfortunately, the requirement reduces flexibility and options for both employers and workers.

For instance, the implications of the Affordable Care Act could mean Prop. 1’s arbitrary promotion of full-time employment will work against the interests of businesses and employees alike.  

On one hand, the Affordable Care Act requires businesses with over 50 workers to provide health insurance to any employees working over 30 hours per week, which creates an incentive for businesses to employ part-time workers below the 30-hour threshold.[38] Forcing businesses to favor full-time employment over part-time would increase their costs because of the benefits, like healthcare, associated with full-time employees.

As it turns out, though, some workers may actually be better off working part-time. As of next year, part-time workers will begin receiving health insurance benefits.  

As economist Casey Mulligan of the University of Chicago explains,

Because part-time workers will be eligible for the [health insurance] subsidies except in the rare instances in which their employer covers them, full-time work will no longer carry the advantage of access to health insurance. That by itself will encourage more people to seek part-time work.[39]

Furthermore, health insurance premiums for part-time workers will be so heavily subsidized by taxpayers that “some part-time workers at 29 hours might actually do better financially than their full-time counterparts at 40 hours.”[40]

Consequently, while the implementation of the Affordable Care Act will create incentives for both businesses and employees to prefer part-time work, Prop. 1 arbitrarily requires that full-time employment be preferred, to the detriment of both businesses and workers.

Tip “Protection”

While Sage contends that Prop. 1’s mandate that tips be paid directly to the worker performing the service “increase[es] fairness for individual workers,” it may have the opposite effect in certain situations. While the measure is aimed at preventing employers from taking a cut of workers’ tips, tip sharing does serve some valid functions, and “some low-wage employees may see their compensation reduced as a result of this provision.”[41]

Worker Retention

Prop. 1’s worker retention requirement, according to Sage, “encourages airport-wide workforce stability.” As a policy idea, the worker retention requirement is not new; it has been promoted by labor unions for the last several years. In their report on Prop. 1, the Washington Research Council does an excellent job explaining the problems with the requirement: (1) it is potentially illegal, (2) would be expensive to enforce, (3) is opposed by most airport businesses, (4) would decrease the presence of small and local businesses in the airport concessions program, and (5) is unnecessary to protect workers.[42]

Conclusion

Taken as a whole, the Sage report vastly overestimates the benefits of Proposition 1, while ignoring or downplaying nearly all of the negative consequences. Aside from Sage’s analysis of Prop. 1’s coverage, nearly every aspect of the report is flawed in some respect.

Sage’s estimate that Prop. 1 would increase local spending by $40 million failed to account for the implications of their own estimates about price increases. The best intellectually honest claim Sage can make is that Prop. 1 would inject $25.9 million in the local economy, not $40 million.  

Far more likely, however, is that Prop. 1 would actually decrease local economic activity. The reduction in employment associated with such a drastic increase in wages would be significant and would harm primarily low-income, low-skill workers. The evidence which indicates that minimum wage hikes decrease overall employment further indicts the claim that the economy would benefit. Since minimum wages cost jobs overall, any increase in spending they generate must not be large enough to offset the reductions cause by diminished employment. Even the minimum wage advocates cited by Sage agree that a $15 minimum wage would do more damage than good.

Furthermore, all of Sage’s estimates are based solely on the $15 minimum wage requirement, and fail to take into account a number of important factors, such as: (1) the many other costs imposed on employers by Prop. 1, (2) the outsized impact on spending of any businesses shutting down, (3) reductions in future economic development, and (4) a potentially increased tax burden as the City of SeaTac seeks to enforce Prop. 1’s provisions.

The secondary benefits touted by Sage would also fail to materialize. SeaTac should not expect reductions in the cost of local government human services since minimum wages do nothing to reduce poverty. Even if Prop. 1 reduced demand for such services, it would have little impact on the city budget, and would likely be outweighed by the increased enforcement costs placed on the city.

Seattle’s experience so far with mandatory paid sick leave proves that the need for the policy is not as pronounced as advocates contend, and indicates that a legal mandate may not produce the desired results. At the same time, the requirement imposes additional costs on businesses which respond by further increasing prices or reducing employment, hours or benefits.

Forcing businesses to favor full-time employment at the expense of part-time employment harms businesses and workers, as it reduces flexibility that both parties may desire in adapting to upcoming changes in health care policy.

While some may stand to benefit from passage of Prop. 1, local businesses and workers certainly do not.



[1] Union LM-2 reports to the Department of Labor indicate that Puget Sound Sage received $10,500 from SEIU Local 6 in 2012, over $30,000 from UFCW Local 21, and $27,500 from Teamsters Local 117. Each of these three unions is an active proponent of Proposition 1 in SeaTac. 

[2] Nicole Vallestero Keenan and Howard Greenwich, “The Economic Impacts of a Transportation and Hospitality Living Wage in the City of SeaTac,” Puget Sound Sage, September, 2013,  http://www.pugetsoundsage.org/downloads/Economic Analysis of SeaTac Living Wage - 9-25-13.pdf

[3] David Mendoza, Howard Greenwich, Megan Brown, and Thea Levkovitz, “First-class Airport, Poverty-class Jobs,” Puget Sound Sage, May, 2012, http://www.pugetsoundsage.org/downloads/First-class Airport, Poverty-class Jobs.pdf

[4] Scott Carmichael, “Skycaps take America Airlines to court over loss of tips,” Gadling, February 6, 2010, http://www.gadling.com/2010/02/06/skycaps-take-american-airlines-to-court-over-loss-of-tips/

[5] U.S. Census Bureau, Social, Economic, and Housing Statistics Division, “Poverty,” February 01, 2013, http://www.census.gov/hhes/www/poverty/data/threshld

[6] Mendoza, et. al.

[7] San Jose Office of the City Manager, “Minimum Wage Ordinance,” http://www.sanjoseca.gov/?nid=3491. City of Santa Fe, “Living Wage Ordinance,” http://www.santafenm.gov/index.aspx?NID=84. City and County of San Francisco Labor Standards Enforcement, “Minimum Wage Ordinance,” http://sfgsa.org/index.aspx?page=411.

[8] Daniel Aaronson, Sumit Agarwal, and Eric French, “The Spending and Debt Responses to Minimum Wage Increases,” Federal Reserve Bank of Chicago, February 8, 2011, http://www.chicagofed.org/digital_assets/publications/working_papers/2007/wp2007_23.pdf

[9] Daniel Aaronson and Eric French, “Product Market Evidence on the Employment Effects of the Minimum Wage,” Federal Reserve Bank of Chicago, April 4, 2006, http://www.chicagofed.org/digital_assets/publications/working_papers/2003/wp2003-17.pdf

[10] Daniel Aaronson, Eric French, and James MacDonald,  “The Minimum Wage, Restaurant Prices, and Labor Market Structure,” Federal Reserve Bank of Chicago, August 3, 2007, http://www.chicagofed.org/digital_assets/publications/working_papers/2004/wp2004_21.pdf

[11] Aaronson and French, “How does a federal minimum wage hike affect aggregate household spending?,” Federal Reserve Bank of Chicago, Chicago Fed Letter 313, August 2013, https://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cflaugust2013_313.pdf

[12] Port of Seattle, “Operating a Concession Business at Seattle-Tacoma International Airport,” http://lease.seatacshops.com/assets/Uploads/PDF/seatac-operating-concessions.pdf

[13] Jamie Skorheim, “Employer says raising SeaTac minimum wage to $15 an hour would put him out of business,” MyNorthwest.com, July 28, 2013, http://mynorthwest.com/11/2322267/Employer-says-raising-SeaTac-minimum-wage-to-15-an-hour-would-put-him-out-of-business

[14] John Schmitt, “Why Does the Minimum Wage Have No Discernible Impact on Employment?,” Center for Economic and Policy Research, February , 2013, http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

[15] David Neumark and William Wascher, “Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research,” National Bureau of Economic Research, Working Paper 12663, January, 2007, http://www.nber.org/papers/w12663.pdf

[16] Maxford Nelsen, “How radical is a $15 minimum wage? Pretty Radical,” Freedom Foundation, August 29, 2013,   /blog/liberty-live/detail/how-radical-is-a-15-minimum-wage-pretty-radical

[17] Schmitt is actually referring to a $16 minimum wage, but his point is that an increase on that scale would be too much, too fast. Schmitt, “Minimum Wage: Catching Up to Productivity,” Center for Economic and Policy Research, June 12, 2013, http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/minimum-wage-catching-up-to-productivity

[18] In a podcast debate with minimum wage opponent David Neumark, the interviewer asked Allegretto, “Okay, if it’s good to raise it [the minimum wage] to $9.00, why not raise it to $15, $20, $30?,” to which Allegreto responded, “Well, because that’s absurd. Nobody is saying that. And nobody is putting up this idea that we want to raise the minimum wage to points where we know they’ll have negative employment effects. I’m the last person who wants to put low-wage workers out of work.” Bloomberg, “Neumark, Allegretto Debate Minimum Wage Impact,” February 15, 2013, http://castroller.com/podcasts/BloombergAll/3378792

[19] Dylan Matthews, “A $15 minimum wage is a terrible idea,” Washington Post, WonkBlog, June 22, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/22/a-15-minimum-wage-is-a-terrible-idea/

[20] Aaron Yelowitz, “The Labor Market Effects of Citywide Compensation Floors: Evidence from San Francisco and other ‘Superstar’ Cities,” Employment Policies Institute, http://www.epionline.org/studies/EPI_SanFrancisco_Studyv4.pdf

[21] Yelowitz, “How Did the $8.50 Citywide Minimum Wage Affect the Santa Fe Labor Market? A Comprehensive Examination,” Employment Policies Institute, December, 2005, http://www.epionline.org/studies/yelowitz_12-2005.pdf

[22] Washington Research Council, “Proposition 1 and the ‘Living Wage’ Movement in SeaTac: Increasing Unemployment, Decreasing Opportunity,” August, 2013, http://www.researchcouncil.org/docs/PDF/WRCBusinessClimate/SeaTac2013Prop1.pdf

[23] Jonathan Meer and Jeremy West, “Effects of the Minimum Wage on Employment Dynamics,” Texas A&M University, July, 2013, http://econweb.tamu.edu/jmeer/Meer_West_Minimum_Wage.pdf  

[24] Eric Mathison, “Judge denies injunction to stop SeaTac initiative from being put on Nov. ballot,” The Highline Times, July 19, 2013, http://www.highlinetimes.com/2013/07/19/news/update-judge-denies-injunction-stop-seatac-initia  

[25] Meer, et. al.

[26] Edward Lazear and James Spletzer, “Hiring, Churn and the Business Cycle,” National Bureau of Economic Research, Working Paper No. 17910, March, 2012, http://www.nber.org/papers/w17910

[27] James Sherk, “What is Minimum Wage: Its History and Effects on the Economy,” testimony before the Health, Education, Labor, and Pensions Committee, U.S. Senate, June 25, 2013, http://www.heritage.org/research/testimony/2013/06/what-is-minimum-wage-its-history-and-effects-on-the-economy

[28] Schmitt, “Why Does the Minimum Wage Have No Discernible Impact on Employment?,” Center for Economic and Policy Research, February , 2013, http://www.cepr.net/documents/publications/min-wage-2013-02.pdf

[29] Neumark, et. al.

[30] Joseph Sabia, Richard Burkhauser, and Benjamen Hansen, “Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State,” Industrial and Labor Relations Review, January, 2012, http://www-rohan.sdsu.edu/~jsabia/docs/Sabia_Burkhauser_Hansen_ILLR2012.pdf

[31] Christina Romer, “The Business of the Minimum Wage,” New York Times, March 2, 2013,  http://www.nytimes.com/2013/03/03/business/the-minimum-wage-employment-and-income-distribution.html?pagewanted=all&_r=0

[32] Joseph Sabia and Robert Nielsen, “Can Raising the Minimum Wage Reduce Poverty and Hardship? New Evidence from the Survey of Income and Program Participation,” Employment Policies Institute, April, 2012,  http://epionline.org/studies/120228_EPI_CanRaisingtheMinWageReducePovertyandHardship.pdf

[33] Joseph Sabia and Richard Burkhauser, “Minimum Wages and Poverty: Will a $9.50 Minimum Wage Really Help the Working Poor?,” Southern Economic Journal 76(3), 592-623, 2010, http://www.people.vcu.edu/~lrazzolini/GR2010.pdf

[34] Thomas Leonard, “The Very Idea of Applying Economics: The Modern Minimum-Wage Controversy and its Antecedents,” Princeton University, http://www.princeton.edu/~tleonard/papers/minimum_wage.pdf

[35] City of SeaTac, “Human Services,” http://www.ci.seatac.wa.us/index.aspx?page=504

[36] Jennifer Romich, Cori Mar, and Chiho Song, “City of Seattle Paid Sick and Safe Time Ordinance Evaluation Project: Findings from the Initial Employer Survey,” Office of Seattle City Auditor, July, 2013, http://www.seattle.gov/audit/docs/SickSafeLeaveBaselineReport070213.pdf

[37] Employment Policies Institute, “Paid Sick Leave in Seattle: Examining the Impact on the Service Industry,” August, 2013, http://www.epionline.org/wp-content/uploads/2013/08/130801_EPI_PolicyBrief_final.pdf

[38] Alyene Senger, “Obamacare’s Impact on Businesses: An Update,” Heritage Foundation, Issue Brief #4026, August 26, 2013, http://www.heritage.org/research/reports/2013/08/obamacare-s-impact-on-businesses-an-update

[39] Casey Mulligan, “The New Economics of Part-Time Employment,” New York Times, Economix blog, July 3, 2013, http://economix.blogs.nytimes.com/2013/07/03/the-new-economics-of-part-time-employment/?_r=0

[40] Gene Epstein, “More Part-Time Jobs With Obamacare,” Wall Street Journal, September 14, 2013, http://online.wsj.com/article/SB10001424127887324549004579066930028432984.html

[41] Washington Research Council.

[42] Ibid.

Author

Maxford Nelsen

Labor Policy Analyst

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