A tale of two studies: poor research leads to poor findings on minimum wage

Seattle’s economy is booming: construction everywhere, crowded streets and transit, housing costs soaring, bustling neighborhood restaurants, and a 2.6% unemployment rate. Much of this growth is driven by high wage-tech jobs and the spillover effect of all those workers eating out, shopping, and paying premium prices.

It’s in this context that Seattle instituted its higher minimum wage ordinance in 2015. In the past week, two studies have come out with very different conclusions on the impacts of those wage increases on low wage work – one says it’s positive, and the other negative. But the two studies are not created equal.

The first study, led by Michael Reich and Sylvia Allegretto based at the University of California, Berkeley, concludes that the 2015 and 2016 increases to $11 and $13 an hour had the intended effects of raising incomes for low-wage workers without having discernible impact on the number of jobs. These findings are consistent with the bulk of economic studies of minimum wage increases over the past couple of decades.

In the second, a University of Washington team concluded that the 2016 wage increase reduced the number of low-wage jobs by 9% and actually lowered the incomes of low-wage workers. This diverges from the majority of economic research. Across the U.S., city, state, and federal governments have changed minimum wages dozens of times over the past two decades. Multiple economists from across the ideological spectrum have studied these changes, and even opponents of minimum wage increases have not found impacts anywhere near the scale of the UW team.

The UW’s counter-intuitive findings underscore several methodological flaws:

  • They limit their study only to single-site establishments, because their data could not distinguish whether employees of multi-site chains – think Molly Moon’s, Mud Bay, Mod Pizza, Starbucks – actually worked inside or outside the city limits. That leaves 40% of workers excluded from their study. It also means that leaving a job at small business for a job at a larger company counts incorrectly as a job loss.
  • The UW team created a control by comparing Seattle’s employment statistics with other parts of the state. But there is no place in Washington that has a similar economy to Seattle. Seattle has an economy more like San Francisco or New York than Everett or Spokane. The Berkeley team used the more accepted methodology of generating a control from similar areas across the country, rather than just the state. Moreover, the Berkeley team compared numbers for the previous 5 years, while the UW only looked at the previous 9 months.
  • The UW study focused on jobs paying $19 an hour or less, making the assumption that fewer jobs in this bracket meant lost opportunity for workers who used to be in this pay range. But what we’re seeing in Seattle is that jobs that used to pay $18 an hour now pay $20 due to competition for employees. In the UW study, this was unaccounted for and incorrectly counted as job loss.

The quality of a study hinges on the quality of its methods. But the UW study was too myopic in its lens. It eschewed all of the hallmarks of good science – including all the data, equivalent control group, breadth of time. There’s a reason its findings go against what the vast majority of previous studies found: the UW study isn’t as academically rigorous.

If something seems too bad to be true, it probably is.

Originally published at EOIOnline

Raising wages statewide is a job for We The People

Over the next couple weeks, young people across the region will be graduating with new degrees and high hopes for the future. They are competing for jobs in an economy where the contrast between the the haves and have nots is stark.

i1433

The occupations projected to have the most job openings in King County and statewide over the next five years include computer-related and business jobs that usually come with high pay and full benefit packages. But the top ten list also includes positions in fast food, restaurants, retail sales, and office administration, where current wages are barely enough to support a single person, let alone a family, even outside the greater Seattle area.

Not everyone can or should end up a software engineer. We need people working in restaurants, groceries, childcare, health care, and social work, too. And those jobs should not trap tens of thousands of workers and their children in poverty and constant struggle.

By enacting paid sick days and a higher minimum wage, Seattle has started on the right path toward ensuring every job provides a pathway to opportunity and supports a thriving economy. But not every job is in Seattle. Statewide progress on these same policies hasstalled year after year in our divided State Legislature.

The Raise Up Washington campaign is now collecting signatures to qualify Initiative 1433 for the November ballot. I-1433 will raise Washington’s minimum wage from the current $9.47 to $11.00 starting in January 2017, then raise it in three further steps to $13.50 in 2020, with cost of living increases after that. Importantly, it also sets a minimum standard for paid sick leave, assuring that all workers across the state are able to earn at least an hour of sick leave for every 40 hours worked.

For people now working at or near minimum wage in Renton, Southcenter Mall, or Yakima, that means an immediate pay increase of $250 a month, and an increase of $650 in monthly income by 2020. That money will get spent right in local communities. The initiative also means that a million people who don’t have sick leave now – many of them working in restaurants, retail, and other direct service occupations – will have the ability to stay home when sick or with a sick child without losing their paycheck.

We know from studying dozens of minimum wage increases and sick leave laws across the country that these policies succeed in boosting incomes for low wage workers, decreasing employee turnover, and allowing businesses of all sizes to continue to prosper.

Over the past few decades across the U.S., wealth has piled up for the top 1%. The top 10% has also done pretty well, but incomes for most working people have stagnated or even fallen. Here in Washington between 2010 and 2014, during the so-called economic recovery, the annual wages for full-time workers in the middle of the earnings spectrum actually fell by 3% after inflation, according to the Census Bureau. Meanwhile, costs for childcare, college tuition, healthcare, and housing continue to escalate.

Growing economic inequality compounds racial and gender inequities and deepens divisions in our society and democracy. We all lose – with less innovation, economic vibrancy, and cultural richness – when so many are denied the opportunity to reach their full potential and pursue their dreams.

It doesn’t have to be this way. We the people make the rules for our economy. Usually it’s through our votes for President, Congress, Governor, and state Legislature. With the contrasts in ideology and policy positions up and down the ticket so stark, those votes will matter more than ever this fall.

The initiative process also lets us act directly. I-1433 won’t reverse decades of economic policies that have driven growing income inequality, but it’s a step toward making our state economy work better for everyone.

We don’t have to wait until November to act. The Raise Up Washington campaign needs to collect 246,000 valid signatures from registered Washington voters by the beginning of July to qualify for the November ballot.

You can help right now by signing yourself, registering to vote if you haven’t already, and volunteering for the campaign.

Originally published in the South Seattle Emerald.

We can assure a good quality of life for all

What are the elements of a good quality of life? Good, accessible and affordable health care. Being able to pay your bills. Living in a welcoming home. Having a job with a wage that reflects the value of your work. Knowing your kids can get a good education in our public school system, our community colleges and our universities. Knowing that when you have a child, or you adopt a child, you will have the time to care for these infants, and not worry about working for a while. Knowing that as they grow up, you will have the ability to teach them, instilling thoughtfulness, consideration, and, of course, love, into their lives and souls.

A good quality of life means that as you age, you don’t have to worry about having enough money for your groceries and your housing. You are able to have a community of friends and family, not isolated in worry, debt and poverty. A good life includes a vibrant and sharing culture, in which we talk, have eye contact, argue and drink beer and coffee in real time with real people.

How much does this good quality of life cost? When you add in housing, health care, child care, food, transportation, taxes and other necessities like your phone and internet, a very low-ball estimate is about $52,000 for a family with one adult and one child and $70,000 for a family with two adults and two kids. (And this doesn’t include savings for retirement.) In terms of wages, that is about two-and-a-half times the minimum wage for that single mom and her child, and about twice the minimum wage at full-time for both parents working with two kids. Here is the problem: The wage of the average worker is $25 an hour. That means that half of all workers make less than $25 an hour, which means that they are on the margins of insecurity, falling away from a good quality of life.

Could we in Washington state do something different and enable all citizens the ability to earn enough money for a good quality of life and be able to enjoy an peaceful retirement? Of course. This universal good quality of life, adding up all households in our state, would cost about $225 billion a year. Our current state personal income is $350 billion. The problem is that with money migrating to the very top, the incomes of the middle class have been stagnant. That is no way to have a mutually beneficial and good and healthy quality of life.

This increasing insecurity is the product of conscious public policy decisions to act and not to act. For example, there is a law on the books for gradually increasing the wages of child care teachers. Right now these wages hover around $11 an hour, enabling a child care teacher to work her way deeper into poverty! And she will continue to do this, because the Legislature fails to fund the policy for gradually increasing wages which they voted into law in 2005.

Similarly, there is no constitutional prohibition against taxing the income of the very wealthy. By not taxing that income, the incentives encourage piling money on top of money for the already privileged, and create a feedback mechanism that encourages employers to push down wages for their workers. At the same time, public services, such as higher education, are starved for tax revenue and priced out of reach for middle class families.

There are numerous similar acts and omissions of public policy that undermine a good quality of life in our state. It is not enough to get depressed at the insecurity of our neighbors, our children, our parents or ourselves. It is not the natural order of things. We do have the power to create laws that insure elemental things like health care, education, retirement security, a balance of work and family. Legislators won’t act if we cower in discontent and depression. We have to express ourselves and build a new reality, if not for ourselves, then at least for our kids and their kids. That’s possible, in a democracy, after all.

Originalinally published at Everett Herald

Voter support clear for wage, sick leave legislation

The just-concluded elections helped to resolve nothing in our state.

We will have a small Republican majority in the state Senate and a small Democratic majority in the state House. They won’t agree on much of anything.

Perhaps the Legislature can take a few hints from other states and cities around the country. In Arkansas, the Republicans enjoyed a clean sweep of all statewide offices, all Congressional seats and increased their majorities in the State Senate and the State House. At the same time, the people voted by a 2-to-1 majority to increase the minimum wage in their state by $2.25. In South Dakota, the Republicans swept all offices, and the people voted to increase the minimum wage by $1.25, effective on January 1, and, taking a tip from our state, made sure that the minimum wage keeps up with inflation after that. In Nebraska, GOP victories for U.S. Senate, governor, secretary of state, attorney general, lieutenant governor, auditor, and other offices were accompanied by a strong victory for raising the minimum wage by $1.75 to $9 by 2016.

Alaska voters elected Republicans as U.S. senator and Congressperson, an independent former Republican as governor, and kept Republican majorities in their state Senate and state House. And Alaskans also voted more than 2-to-1 to increase the minimum wage to $9.75 as of January 2016, which will be higher than our current minimum wage in Washington state. On the East Coast, Massachusetts voters elected a Republican governor and put into law a statewide paid sick days law modeled on Seattle’s ordinance. And ping-ponging back to our coast, Oakland, California, passed an ordinance raising the minimum wage to $12.25 and requiring businesses to provide five paid sick days a year.

Something is happening here, and it is pretty clear what it is. When voters are faced with a clear-cut decision on actual policy, they vote for their own economic security and that of their neighbors and friends. When they are faced with candidates who promise everything (and often deliver nothing, or even the opposite of what they promise), they swing back and forth between Republicans and Democrats. Candidates of both parties hype themselves to the voters, with rhetoric and platitudes. And once they are in office, they often stand down from their own promises.

In Washington, our elected public servants in the state House and state Senate have a chance now to turn campaign slogans into actual policy. If the voters in both conservative Republican-controlled states and Democratic-controlled states have endorsed new policy for increasing the minimum wage and for making paid sick days a labor standard, our political leaders should be able to do the same thing here. These issues have support across party lines. It should be simple. In fact, legislation for paid sick days was introduced in the House last year, sponsored by state Reps. Mike Sells, D-Everett; Hans Dunshee, D-Snohomish; Luis Moscoso, D-Bothell; and Cindy Ryu, D-Shoreline. The Democratic-controlled House passed this bill to the Senate, and the Republican leadership of the Senate let it die.

So, in considering the votes across the country for paid sick days, why don’t we just consider that inaction a Mulligan, and take a do-over this year. The Democratic House can pass it over to the Senate, and this time, the Senate could actually consider this bill and take an up-or-down vote on it. That would be refreshing.

While they are at it, the Legislature might want to consider increasing the state’s minimum wage to $12 an hour over a three-year period. This was introduced by Rep. Jessyn Farrell, D-Seattle. It made it through one committee and stopped there. Some members of the House thought that they had done enough for workers by passing the paid sick days bill. Increasing the minimum wage was just too heavy a lift for them. But our minimum wage is still less than what it was, adjusted for inflation, in 1972. Raising the minimum wage is good for workers. It also adds a bit of equilibrium to the growth in productivity, ensuring that is not just hogged by the top echelon of executives. The people know this, and so they support it. But will our Legislators do the right thing?

Originally published at the Everett Herald

Increase wages to protect Social Security Trust Fund

This week the Social Security Trustees reported that our FICA contributions plus interest, net of all benefits paid out, have increased the Social Security Trust Fund by $32 billion. The trustees also forecast that Social Security benefits are completely sustainable for the next two decades.

The media hasn’t played these reports up much, perhaps because they don’t fit into the narrative that finances for Social Security are collapsing and the only way to save Social Security is to dismantle benefits now… That’s a solution akin to amputating someone’s foot now, because he might get gangrene 20 years from now.

We shouldn’t disregard the financing of Social Security two decades from now. But the “solutions” proposed by the guardians of privilege only add to the recipe of redistributing money upwards to the already wealthy and powerful. We have had enough of that over the past 35 years.

The Social Security Trustees forecast projected revenue and costs for 10 and 75 years into the future. Obviously, this is at best a “guestimate.” The trustees can’t foresee each economic downturn. They can’t foresee immigration and the Social Security contributions of these immigrant workers. The guessing is educated, but not accurate. In 1986, the trustees predicted that the Social Security Trust Fund would run out of money in 2051. Then in 1994 they predicted that the trust fund would be drawn down to zero in 2029. Now their “prediction” is for 2033.

The funny thing is that the trust fund was purposely built up in anticipation of baby boomers retiring, and intended to be drawn down to help finance their retirement. So while the guardians of privilege see a problem with this drawdown, it is actually the model developed by one of their own, Alan Greenspan, the former chair of the Fed. And when the trust fund is drawn down, it won’t result in the demise of Social Security. Up to 1981, Social Security was pretty much a pay-as-you-go program, with current revenues from taxes paying for current benefits. That is still the way it is for the 80 percent of benefits.

In developing their forecasts, the trustees include a factor estimating worker productivity increases. But while productivity increases were proportionately shared between workers and corporations after World War II, in the recent decades these increases have accrued more and more solely to corporations. That detracts from Social Security contributions through FICA taxes.

There is a simple way to increase contributions to Social Security, insure sustainability of benefits, and actually increase those benefits. Increase the minimum wage, and have all wages reflect increases in productivity. For every $1 increase in wages, Social Security receives 12.4 cents. Increasing the minimum wage to $10 an hour for the 3.6 million American workers who make $7.25 or less would bring a minimum of $2.5 billion each year into the Social Security Trust Fund. If we were to increase wages by $2 for the one-fifth of all workers who make less than $10 an hour, the trust fund would gain $11 billion each year. That equals more than the combined Social Security benefits for over 750,000 recipients.

We often forget about the interconnections between different facets of our economy. If we continue to hold wages down, and not adjust them upwards for productivity, we let more and more income slide into corporate profits, and hundreds of billions of dollars is exported to other economies via the outsourcing of production. It also means that the social programs Americans hold closest to their hearts and depend on for their economic security are undermined by a diminished stream of revenue, that is, FICA taxes. We are willing to pay those taxes. But we can’t when our wages stagnate.

Here is why the effort for increasing the minimum wage is so important. We not only begin to insure that workers will get appropriate compensation (and respect), but in turn, these workers and their employers, through FICA taxes, build up Social Security funds for current and future retirees. It’s mutually beneficial, for all of us.

Via The Everett Herald 

Legislature’s turn to raise minimum wage

If you are awake at 4 a.m. these days, you will notice the sky is already getting a little light. As you go to sleep at 11 p.m. you can still make out some light in the night sky. We are at the beginning of our summer in the Northwest, and it is a great time to celebrate being alive in this gift of nature and weather.

Last weekend more than 10,000 bicyclists rode 200-plus miles from Seattle to Portland. Next month another 2,000 will bicycle from Seattle, through Snohomish, up the Centennial Trial, to Lake Stevens, and eventually to Bellingham and onto Vancouver. For us more ordinary people, we are out gardening, hiking in the mountains or walking in the neighborhood, bicycling to work, or just enjoying these days of sun, warmth, and low humidity.

I had a couple of days in Washington D.C. this week. No wonder people are grumpy there. Getting out of the airport you walk into a virtual hot mist of humidity. Makes you want to turn around and go right home. This actually makes sense, not just for the weather, but also for the politics. Gridlock is getting us nowhere in this country, so it is up to us in the states and cities to make progress as best as we can.

Here’s one approach to chew on as we run down the last half of this year and get ready for 2015. A lot of people watched the Seattle process for a $15 minimum wage. The result was good, but didn’t do a whole lot for minimum wage workers in Everett, Marysville, and pretty much anywhere outside of Seattle. But at the same time the $15 minimum wage was advancing in Seattle, state legislators were putting together a proposal to increase the minimum wage across the state. That is unfinished business, to be completed next year.

The proposal is pretty simple. Over three years, the minimum wage increases, first to $10, then to $11, and then to $12. It is an actual minimum wage, covering all workers in all industries. It enables workers to earn a minimum wage that is close to what that wage brought in 1968 in terms of real purchasing power (right now our minimum wage is only about 85 percent of its 1968 value). This $12 minimum wage would still be well below what it would have been if it had kept up with productivity increases since 1968. (If it had kept up, it would be at about $18 an hour.) But it is a lot better — two and a half dollars better — than our current standard.

Increasing the minimum wage is good for our economy. There are 300,000 minimum wage workers in Washington. Add $1 an hour to their wages, and they receive and spend over $600 million of new money in purchases for goods and services. That means Main Street businesses in all our communities benefit from more customers at the same time that they gain more productive and loyal workers. That new spending also adds to tax receipts, to pay for things like education.

Several Snohomish County state representatives joined the primary sponsor, Jessyn Farrell, D-Seattle, in this effort for a better minimum wage. They include Mike Sells, D-Everett, Cindy Ryu, D-Shoreline and Lynnwood, Derek Stanford, D-Mountlake Terrace, June Robinson, D-Everett, Mary Helen Roberts, D-Edmonds, Luis Moscoso, D-Bothell, and Hans Dunshee, D-Snohomish.

No Republican legislators, not one, sponsored this minimum wage increase. All Republican state representatives in the Labor and Commerce Committee opposed this increase. The last time the Legislature refused to increase the minimum wage was in 1998. The people countermanded them by passing Initiative 688 by a two-to-one margin, increasing the minimum wage while tying it to inflation.

Let’s hope next year legislators see the wisdom of increasing the minimum wage. It is simply a needed update to move closer to a wage that reflects the real value of work.

Via the Everett Herald 

Boycott Seattle burger chains on Feb 20

Seattle fast food workers have called for a citywide boycott of the big burger chains — McDonald’s, Burger King, and Wendy’s — on February 20th in support of a $15 an hour wage that boosts the economy and lifts workers out of poverty.

Join us: Pack your lunch, spread the word, and show support for $15 for Seattle by pledging to Boycott McPoverty on February 20th. (Ready to do more? Sign up to join us on a boycott line in your neighborhood to help reach out directly to customers about the big burger boycott.)

For Brittany, who works at a Seattle McDonald’s, “making minimum wage means I cannot afford daycare, healthcare, or my own place for me & my daughter. Instead we live with 7 other people in a 2-bedroom, 1-bathroom apartment.”

That’s why Brittany has joined the call to Boycott McPoverty on February 20th.

We can’t sustain a healthy economy when multi-billion-dollar corporations pay workers less than it takes to support themselves. After all, you can contribute a whole lot more to the economy on $15 an hour than you can on $9.32 — and consumer spending is what drives the economy.

But even though they take in billions of dollars a year, the big three burger joints — McDonald’s, Wendy’s and Burger King — pay wages that leave fast food workers in McPoverty.

That needs to change.

And that’s why we’re boycotting McPoverty on February 20th.

RSVP to our Facebook event to let your friends and family know about the big burger boycott.

Sat. Feb 15, help fight for $15, in Seattle

EIU 775 Headquarters
215 Columbia St.
Seattle, WA 98104

Sat. Jan 15 at 2:00 PM

From the facebook page:

Join 15 Now to launch a group in your neighborhood to educate, mobilize and help raise the Fight for 15 to the next level!

The Fight for 15 in Seattle has been gathering momentum, but winning $15/hour will require the active participation of thousands. Big Business will not let a $15 minimum wage pass without a fight. They will mobilize their resources to derail, delay, and dilute efforts to end the poverty wages that are the source of their profits.

The only way we counter the power of Corporate America is by building a massive grassroots campaign with local neighborhood and campus action groups, town hall meetings, mass rallies, and strikes.

The long march for a $15/hr minimum wage

Last Thursday, on one of the coldest days in years, more than 100 fast food workers & community allies marched all the way from SeaTac to Seattle City Hall for $15 an hour — that’s 13+ miles and the temperature never got above freezing.

A day-long march in the bone-chilling cold may sound pretty rough, but it was actually a great time. Don’t believe it? Check read our travel-log style write up or checkout out the video highlights:

Fast food workers led the all-day march to trace the path from the first big victory for the $15 movement in SeaTac to our next destination: Seattle City Hall. And we got there with spirit, enthusiasm, and even light-up signs. (Seriously. There are photos.)

Our march for $15 was big news. How big? Every local TV & radio outlet showed up, and we were on The Seattle Times front pagetwice.

This quote from a KING 5 anchor pretty much sums it up:

“The $15 minimum wage fever is spreading to Seattle, and these activists have the momentum.”

Exactly.

Just a month after the November elections, our march served notice that we expect city officials to follow through on the commitments they’ve made to support $15/hour.

Now let’s keep the momentum going: help spread the word by sharing our video on Facebook and letting your friends know why you support striking poverty and raising Seattle with $15/hour pay.