The Fight for 15 Fizzles in Seattle

Last week, Seattle Mayor Ed Murray marked the 3rd anniversary of the city’s minimum wage hike, but a new University of Washington study shows there is little to celebrate for many of Seattle’s employers and employees. The report finds Seattle’s incoming $15 minimum wage has reduced hours, earnings and jobs for entry-level employees:

“Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.”

To put this reduction in hours in context, the number of hours worked in Seattle for those in low-wage jobs fell by 3.5 million hours per calendar quarter. Employees in Seattle are losing more than they gain: While they see a bump in hourly pay, that bump isn’t translating into more money in their bank account each pay period because they’re working fewer hours–or no hours at all.

EPI profiled one affected Seattle business in a recent video. The owners were forced to slash staffing levels in response to the city’s new wage mandates.

 

Policymakers should heed the words of David Autor of MIT, one of the country’s leading labor economists, who reviewed the paper before it was published:

“This is a study that has the power to move people’s beliefs. It will have a substantial impact on the debate,” said David Autor of MIT, one of the country’s leading labor economists, who reviewed the paper before it was published. “It suggests we should be proceeding cautiously when we start pushing minimum wages into ranges where they are pretty significant.”

 

 

Compensation Hypocrisy on Capitol Hill: $15 Minimum Wage Supporters Hire Unpaid Interns

Last month, the Congressional Progressive Caucus introduced the Raise the Wage Act of 2017, which would hike the federal minimum wage by 107 percent to $15 an hour. However, a new Employment Policies Institute (EPI) analysis shows that the majority of the bill’s cosponsors have unpaid interns who earn $0 an hour. Specifically, at least 174 of the 184 bill cosponsors – or 95% — hire unpaid interns. (This figure should be considered conservative; members who advertise limited paid stipends were counted as paying their interns, even if they have unpaid interns on staff.)

Of those that do offer a stipend, Senator Bernie Sanders is the only member who pays an hourly wage. However, Senator Sanders’ office only pays interns $12 an hour, short of his $15 demand from the private sector.

Members of Congress might respond that paying their interns would reduce the number of available opportunities. They’re right about that–and the same dynamic applies in the private sector, where a much higher minimum wage has been proven to reduce opportunities for the least-skilled employees.

Methodology notes: All intern data was collected via the official websites of Senators and Representatives or via calls with staff members.  Offices which paid either an hourly wage, a flat stipend, or travel/housing stipends were counted as paying their interns, even if they still offered unpaid internships. In this sense, our conclusions above are conservative. Contacts with each primary sponsor and respective cosponsors were made between June 6th and June 8th 2017. Variation in the final tally could occur as cosponsors may be added after this time period. The tallies are rounded to the nearest whole number.

The full list of sponsors and cosponsors and the compensation details of their internship programs are available here.

The Foolish Arguments For a $15 Minimum Wage

In 2014, the nonpartisan Congressional Budget Office estimated, based on a review of 60 studies, that a $10.10 federal minimum wage would cost 500,000 jobs nationally. Economists from Miami University and Trinity University replicated the CBO’s methodology for a proposed $12 federal minimum wage and estimated 770,000 jobs would be lost nationally as a result.

Bizarrely, the Congressional Progressive Caucus has ignored this data and decided that a $15 minimum wage is a good idea. A bill introduced today would raise the federal minimum wage by 107 percent from $7.25 while raising the tipped minimum wage by 604 percent.

A 2015 University of New Hampshire survey found that nearly three-quarters of surveyed US labor economists were opposed to a $15 minimum wage. The vast majority of the economists responded that a $15 minimum wage would have negative effects on youth employment levels, adult employment levels, and the number of jobs available. Even former members of the Obama and Clinton administrations have also spoken about the risks to job opportunities from a broad $15 mandate.

EPI has been chronicling the stories of job loss, reduced hours, and business closures in places that are already experimenting with such wage mandates on our site Facesof15.com.

Harvard Study Finds Minimum Wage Increase Causes Restaurant Decrease

At our sister site, Faces of $15, we’ve been documenting the “death march” of Bay Area restaurant closures due to dramatic minimum wage increases. Now a new Harvard Business School study provides additional analytical support to our observational findings.

The study concludes that every one dollar increase in the minimum wage leads to a 14 percent increase in the likelihood of median-rated restaurants going out of business. As Bay Area cities continue their march toward $15 over the next couple of years, the death march in the restaurant industry will only intensify.

We profiled one of these business closures last year–The Abbot’s Cellar in San Francisco.

“The conclusion,” writes Austin Yack over at National Review, is that, “over the next two years, San Francisco’s restaurant industry – the industry with the highest percentage of minimum wage workers – will likely shrink, as nearly 6,000 restaurant employers contemplate whether paying $15 per hour salaries is feasible.” Stay tuned to Faces of $15 for ongoing updates.

The Real Faces of 15

A new commercial from the Employment Policies Institute shows the hardships caused by dramatic minimum wage increases across the country. While “Fight for 15” protests occur today, there are numerous stories of the harm of a $15 minimum wage increase.
The stories of five business owners are featured in the ad:
  • Kelley Ulmer, owner of Almost Perfect Books in Roseville CA, was forced to close her store in July 2016 due to “the ever increasing minimum wage.”
  • Houman Salem of ArgyleHAUS of Apparel in San Fernando, CA is expanding in Nevada rather than California because of the state’s minimum wage. You can read his op-ed in the LA Times here.
  • Nat Cutler, owner the Abbot’s Cellar in San Francisco, was forced to close his doors in January 2015 due the city’s rising minimum wage, as well as other high business costs in the city.
  • Larry Georgeton, co-owner of the Del Rio Diner in Brooklyn, NY, closed in July 2016 because of New York’s rising minimum wage. He explained of his employees, “when I told them we were closing the store a lot of tears were shed.”
  • Muriel Sterling, owner of Sterling’s Family Childcare in Oakland, CA had to let one employee go and release some families due to the increase. Sterling states, “This wage increase has not only hurt the employees, it has hurt the families and the children.”

The Fight For $15 Loses Steam

Last week, Baltimore Mayor Catherine Pugh vetoed legislation to create a $15 minimum wage in the city. On the other side of the country, the City Council in Flagstaff, Arizona, took the rare step of rolling back a planned increase to $12 this summer.

In both cities, the relevant decision makers were heavily-influenced by real stories of minimum wage harm, from the small businesses, nonprofits, and employees who are the real Faces of $15.

This morning, Employment Policies Institute’s managing director, Michael Saltsman, appeared on Fox Business’ “Mornings With Maria” to describe some of these stories, and explain what happened in Baltimore and Flagstaff.

 

Democrats, not Republicans, Killed $15 in Cleveland

Earlier this year, the SEIU attempted to ram through a proposal in Cleveland to raise that city’s minimum wage by 85 percent to $15. The Cleveland City Council, consisting of 16 Democrats and 1 Green Party member, overwhelmingly rejected the idea, and even some union leaders opined that it would hurt the city’s progress.

Not satisfied with the democratic outcome, the SEIU threatened to take the issue to the ballot, where they could spend thousands of dollars to paint a misleading picture of the proposal’s impact. To prevent this, Cleveland city officials–led by Democratic City Council Kevin Kelly–asked state lawmakers to pass legislation that would block harmful initiatives like this one. The legislature granted the request, and this week Gov. John Kasich sign the bill.
It’s a simple story, but it’s an unflattering one for unions. That’s why it wasn’t surprising to see union-sympathetic reporters this week write headlines like this:

Ohio’s Kasich blocks local control over minimum wage

 

Cleveland’s minimum wage hike just failed — thanks to lobbyists and Gov. John Kasich

 

The Policy.Mic story bizarrely blames the American Legislative Exchange Council for the preemption legislation, arguing that it (and Kasich) refused to let “democracy play out in cities like Cleveland…” Of course, democracy did play out in the city–the Council just didn’t vote the way that unions would have hoped.

The post on Rachel Maddow’s blog was equally misleading, suggesting that the state’s preemption law violates “the wishes of…local officials.” Of course, it’s those same local official in Cleveland who asked for the wage preemption, so it’s unlikely that their wishes were violated here.

The Democratic City Council in Cleveland took a stand for economic common sense. The only thing shocking for the SEIU is that it didn’t get its way, which is why it’s now trying to spin a story that didn’t happen.

As The Ball Drops, The Minimum Wage Rises In 42 States and Municipalities

 

With January 1, 2017 around the corner, 42 states and municipalities are poised to ring in the New Year with extreme minimum wage increases. 
Nineteen states are raising their starter wages on New Year’s Day and some of the numbers are shocking. Arizona (24 percent increase), Maine (20 percent), and Washington state (16 percent) will see the largest increases. Meanwhile, twenty-three localities, including 12 cities in California, are also ringing in the New Year with starter wage increases. See the full table of New Year’s minimum wage increases below.
 
However, New York State and California provide employers with a dizzying maze of minimum wage increases. 
 
In New York State, where starter wage increases are dependent on business size, location, and type; small businesses and their employees are facing 14 different government dictated wage rates taking effect on December 31st.  View a full table of New York State’s patchwork of wage increases, published by the New York State Restaurant Association, here.
 
In California, 12 different cities are increasing their minimum wage on New Year’s Day in addition to the state-level hike. Cupertino, Los Altos, and San Mateo, which are all raising their starter wages by 20 percent to $12 an hour. Mountain View and Sunnyvale are both raising their starter wages by 18 percent to $13 an hour.
Labor unions and their activist allies may be popping the champagne on New Year’s to celebrate minimum wage increases, but businesses and their employees are the ones that will feel the hangover effects of business closures, lost jobs, and reduced hours.

New Year’s Minimum Wage Increases

State

Current MW

 2017 MW

Percent Increase

Alaska

$               9.75

 $            9.80

1%

Arizona

$               8.05

 $          10.00

24%

Arkansas

$               8.00

 $            8.50

6%

California¹

$             10.00

 $          10.50

5%

Colorado

$               8.31

 $            9.30

12%

Connecticut

$               9.60

 $          10.10

5%

Florida

$               8.05

 $            8.10

1%

Hawaii

$               8.50

 $            9.25

9%

Maine

$               7.50

 $            9.00

20%

Massachusetts

$             10.00

 $          11.00

10%

Michigan

$               8.50

 $            8.90

5%

Missouri

$               7.65

 $            7.70

1%

Montana

$               8.05

 $            8.15

1%

New Jersey

$               8.38

 $            8.44

1%

Ohio

$               8.10

 $            8.15

1%

South Dakota

$               8.55

 $            8.65

1%

Vermont

$               9.60

 $          10.00

4%

Washington

$               9.47

 $          11.00

16%

New York² (12/31)

$               9.00

 $          9.85

9%

Cities/Counties

Current MW

 2017 MW

Percent Increase

Albuquerque, New Mexico

$               8.75

 $            8.80

1%

Bernalillo, New Mexico

$               8.65

 $            8.70

1%

Cupertino, California

$             10.00

 $          12.00

20%

El Cerrito, California

$             11.60

 $          12.25

6%

Johnson County, Iowa

$               9.15

 $          10.10

10%

Las Cruces, New Mexico

$               8.40

 $            9.20

10%

Linn County, Iowa

$               7.25

 $            8.25

14%

Los Altos, California

$             10.00

 $          12.00

20%

Mountain View, California

$             11.00

 $          13.00

18%

New York City, NY³

$               9.00

 $          10.75

19%

Oakland, California

$             12.55

 $          12.86

2%

Palo Alto, California

$             11.00

 $          12.00

9%

Portland, Maine

$             10.10

 $          10.68

6%

Richmond, California

$             11.52

 $          12.30

7%

San Diego, California

$             10.50

 $          11.50

10%

San Mateo, California

$             10.00

 $          12.00

20%

San Jose, California

$             10.30

 $          10.50

2%

Santa Clara, California

$             11.00

 $          11.10

1%

Seattle, Washington

$             13.00

 $          15.00

15%

SeaTac, Washington

$             15.24

 $          15.35

1%

Sunnyvale, California

$             11.00

 $          13.00

18%

Tacoma, Washington

$             10.35

 $          11.15

8%

Wapello County, Iowa

$               7.25

 $            8.20

13%

¹ 25 or fewer employees, remains at $10
² Different tiers, $9.85 is avg. of two non-NYC rates
³ $10.50 for small businesses, $11 for large, $12 for fast food
⁴ $11 to $15 depending on size/type of employer

 

Discredited Berkeley Team Again Praises Wage Hikes

Earlier this year, the Albany Times-Union explored the cozy relationship between labor unions and a research outfit at the University of California-Berkeley. The Berkeley team–which is partially funded by and works closely with organized labor–is often called upon when a favorable report is needed on the impacts of a rising minimum wage.

They don’t disappoint: Asked by the Times-Union if their research had ever delivered anything other than a favorable report, the Berkeley team couldn’t name one example.

The latest entry in their rose-colored repertoire was released on November 29th, conveniently timed to the same day as the SEIU’s latest fast food strike. The press release predictably proclaims that “minimum wage increases are a real boost for restaurant workers and don’t hurt business.” In San Jose specifically, the professors claim that the city’s 25 percent increase in the minimum wage only caused a minimal increase in restaurant prices without reducing jobs.

But the authors conclusions about the labor market impact are only based on overall restaurant employment in San Jose. This is woefully incomplete: For starters, it completely ignores the impact on younger and less-skilled job seekers, who are greatest risk of being displaced.

Their approach also masks restaurant-specific changes–say, to staffing levels or hours– that have a negative effect on employees: Our survey of 163 restaurants after the increase took effect found that 45 percent had cut employee hours and 42 percent had reduced staffing.

The stories back up the statistics: The city’s oldest restaurant, Original Joe’s, had to cut back on staff and employee hours. Co-owner Matt Rocca told USA Today that the hike cost his restaurant $90,000 a year, forcing him to lay off five of his 67 employees and shift closing time up to 11 p.m. They also had to increase prices 10 percentseveral times higher than reported by the Berkeley team.

At the present moment, the rest of California is full of stories of otherwise healthy businesses that have closed or left the state as a consequence of aggressive minimum wage hike. Just last week, a call center in San Diego reported that it was moving 75 jobs to Texas because of the change in the minimum wage. Bookstores near Sacramento have even closed because of $15. (Dozens of stories are available at FacesOf15.com.)

When considering a minimum wage increase, the rest of the country should consider California’s example and answer, “No way, San Jose.”