Monthly Archives: November 2015

Minimum wage reality check

Perhaps you saw the piece that ran in the Buffalo News over the weekend called “Raising the minimum wage is good economics” co-authored by an economics professor at SUNY Buffalo. Well, hopefully you don’t know anyone who is taking that professor’s class, because his reasoning is way off base.

Our Vice-President Ken Pokalsky decided to give a few of the more outlandish claims in the piece the Minimum Wage Reality Check treatment:

“In Seattle, the first city to adopt a $15 minimum wage, unemployment just hit an eight-year low of 3.6 percent.”

Reality Check: Seattle is not at a $15 an hour wage today, the city’s phased-in wage is currently at $11 an hour. Moreover, Seattle wages could be depressing jobs in low wage sectors, while others continue to grow. We need to wait and see. But job counts and unemployment rates with an $11 an hour wage isn’t evidence of what job counts and unemployment rates will be under a $15 an hour wage.

“In fact, Nobel Prize-winning economist Paul Krugman has said,”

Reality Check: The rest of the sentence doesn’t matter. Paul Krugman is a left of center political commentator now, regardless of his prior work. What he says is hardly evidence of anything, other than his blatant bias.

“The City of Buffalo defines a living wage as enough to keep a family of three out of poverty; in 2016 the rate will be $13.06 per hour.”

Reality Check: So what, this applies only to vendors who VOLUNTARILY choose to do business with the city, and only applies to contracts > $50,000.

“Inflation in this country over the last century has averaged over 3 percent.”

Reality Check: Again, what is the point? Over the last 10 years inflation has averaged a smidge over 2 percent. The last 5 years it’s been under 2 percent. So why use a figure 50% higher than recent trends? Unless of course you’re simply trying to deliberately mislead.

Facts not on union’s side

You know you’ve hit a nerve when the opposition resorts to misleading arguments.

Today’s Newsday features an article where the Long Island Labor Federation dismisses a new report by the Long Island Association projecting significant job losses resulting from a $15 an hour minimum wage. The Newsday story is here. (it is behind a paywall, sorry)

According to the Federation, the LIA’s report projecting job losses of up to 23,000 is “disproved” by “numerous” studies, and cites a letter from “600 economists” to President Obama arguing that a minimum wage increase won’t hurt jobs. The Long Island Federation of Labor is being completely disingenuous. Five seconds of searching on the web finds the letter being referred to here. While the federation is right, “600 economists” do support an increase in the federal minimum wage, the proposed increase is from $7.25 to $10.10 an hour. That’s nowhere near $15 an hour, the target wage that was the focus of the LIA’s analysis and a recent Empire Center report. In fact, New York’s minimum wage is already set to go to $9 at the end of the year, a level close to the 600 economists’ target level. At $9, New York’s minimum wage will be one of the highest in the U.S.

We are unaware of “numerous” other studies that “disprove” the projections from the Empire Center and the Long Island Association on a $15/hour minimum wage. Most studies we have seen look at far lower target levels. For example, a CBO study issued in 2014 suggested that a $10.10/hr. minimum wage would reduce national employment by 500,000. That same study conceded that the actual job impact could be “very slight” or climb as high as 1 million. New York is talking about going well beyond $10.10 an hour and the only credible studies to date indicate significant job loss.