Tuesday, July 11, 2017

New York Times Misleads On Seattle Minimum Wage Study

By Michael Saltsman in Forbes.
"Nothing to see here.

That's the baffling conclusion the editorial board of the New York Times reached after reading a University of Washington (UW) report that was critical of Seattle's major minimum wage increase.

Here's what the Times wrote this morning, in an editorial titled "Seattle Shows The Way To Higher Pay":

    "...[It] seems safe to conclude that Seattle has tolerated its minimum wage increase well and that, by extension, other strong economies could do so."

To understand just how bizarre this conclusion is, contrast the board's rosy editorial with the conclusions of the UW authors. You don't have to dig to find them: They're in a summary on the first page of the empirical report, and in a two-page white paper that accompanies it.

    Hours worked by affected employees fell by around nine percent
    Affected employees' net earnings fell by $125 a month on average

Neutral third parties have reviewed this evidence and drawn the logical conclusion that Seattle's wage experiment isn't going well. For instance, David Autor of MIT--one of the country's top labor economists--read the paper, called it "very credible," and concluded that policymakers "should be proceeding cautiously when we start pushing minimum wages into ranges where they are pretty significant." Columbia economist Jeffrey Sachs, who has previously supported a higher minimum wage, reached a similar conclusion.

How did the Times read the same study as everyone else and reach the exact opposite conclusion? It's not clear, and it's certainly not based on evidence offered in the editorial. In the editorial's fifth paragraph, the editorial writers note that the paper "excluded workers at...chains and franchises like Starbucks and McDonald's"--which, the Times claims, caused them to "most likely underestimate" how well employers have adapted to the wage hike. Again, the UW authors say exactly the opposite: Survey evidence that they collected from these same multi-location businesses suggested they were more likely to cut back than other businesses.

The Times briefly acknowledges the negative Seattle results, but then describes them as being "at odds with a large body of previous research." Any fair reading of the evidence shows the Seattle study result is entirely consistent with much of the past research, which finds that even smaller increases in the minimum wage have reduced employment. It is also consistent with the views of most US labor economists, as surveyed in 2015 by the University of New Hampshire Survey Center.

The Times editorial board once understood the link between more mandates and fewer jobs. As recently as 30 years ago, the paper editorialized that the "right" minimum wage was $0.00. The economics of the minimum wage haven't changed; unfortunately, the Times' understanding of them has."

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