Reconciling Anecdote and Data in the Minimum Wage Debate

http://www.eoionline.org/blog/reconciling-anecdote-and-data-in-the-minimum-wage-debate/

Yesterday the City of Seattle hosted a symposium on income inequality, bringing together researchers from around the country, local business owners and workers, politicians and activists to talk about minimum wage policy. The several hundred people who attended represented quite diverse perspectives. At several points, the data from the economists seemed to contradict the analysis that some business owners offered based on their own individual circumstances.

Michael Reich, a professor in Economics at UC Berkeley with a Ph.D. from Harvard, presented the results of research that he and a team of other well-credentialed academics have conducted on minimum wage increases. Reich and his team have compiled all the data from around the country from the past 25 years, including pairing every set of counties in the U.S. across state lines with different minimum wages. Their conclusions are clear. These minimum wage increases resulted in higher incomes for low-wage workers, lower rates of job turnover, and had no impact on the number of jobs in low-wage industries. Reich added the caveat that most of the increases in their studies had been implemented in stages, and none were as large as a jump from $9.32 to $15 would be.

Reich’s team also looked at the data from San Francisco, which raised its city minimum wage and required businesses to provide both health insurance and paid sick leave. When a Seattle restaurant owner stated that a friend from San Francisco reported that the cost of complying with all those regulations was forcing restaurants to leave the city, Reich responded that the data show San Francisco has not had any loss in the number of restaurants or restaurant workers.

Several of the local business owners who attended said that it would not be possible for them to continue their business with a $15 minimum wage. I had a separate conversation with two restaurant owners who said that a $15 minimum wage, even if phased in over several years, would force them to close less profitable shifts, like lunch and those Monday nights, meaning fewer workers.

I don’t doubt the sincerity of many of the local business owners opposing a $15 minimum wage, but this brings me back to my own anecdote. The people who want to eat lunch or go out on Monday night or make a purchase are most likely to walk down the street to another business if their original choice turns out to be closed. That is one of the factors that gets picked up by those crunching the data on jobs from all the businesses, but is likely to be missing in the analysis of individual business owners.