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by ared38 3283 days ago
Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.

I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions. Obviously the UW study has flaws. Let's give economists a little time to figure out WHY the results are so different from previous studies before we draw any conclusions.

12 comments

The UW study was actually able to duplicate the results of previous studies, and had an explanation of why the results were different -- previous studies haven't actually known what wages people were getting and what hours they were working. This study did. Much better data gives you the ability to ask better questions. There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance, and is much more worth a read than this WaPo article.
>The UW study was actually able to duplicate the results of previous studies

That's not really true. The negative effect on employment demonstrated in the UW study is much larger than most previous studies have shown.

>There are still possible flaws with the UW study, but the UW study addresses many criticisms in advance

I believe it's much more than "possible" flaws and some of them are really quite damning. I don't think many people that read this criticism by Michael Reich (the author of the Berkeley study) could conclude that the UW study is really worth considering.

[pdf] http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-F...

Watching the Berkeley people dismiss this study because of how many employees are excluded by not having the multi-site data, when the Berkeley study excludes everyone not working for restaraunts, it's something.
The problem is that the Seattle law sets the minimum wage of multi-site businesses higher than single-site businesses. The expected effect of this is that minimum wage workers of single-site businesses will quit and work at multi-site businesses for the higher wage. A study looking only at single-site employment counts these people as having left the workforce when they've actually received a raise.
Okay, but if you look at the results of the UW study:

> This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. 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. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

There's a few things going on here.

1) Looking at just the restaurant industry, which is all the Berkeley study looked at, the UW study found an effect of zero. It's all the employment sectors Berkeley didn't look at where the UW study found other results.

2) They found a smaller increase in hourly wages than other studies, because they were able to figure out how many employees were earning more than the previous minimum wage but less than the new minimum wage. This should be agnostic to the multi-site data issue.

3) They found that the number of employees held steady and the number of hours worked dropped. That's not the effect that you speculate the lack of multi-site data would lead to.

Ha,I am actually one of those people who were being studied. I was a minimum wage worker in Seattle through both of these wage hikes. There are a lot of assumptions being made here that don't reflect reality. The biggest though is that every single person is a rational economic played that is looking to maximize their income. The reality is that a huge number of people living on minimum wage here are depressed, and many don't want to maximize their income. They want to do as little work as they can to pay the bills month to month. They are prioritizing time NOT working over whatever pay they get. A susprising number of these people are actually great job candidates with great degrees and intelligence who are in a period of their lives where they are seeking out things other than immediate career goals or money.
1) Looking at other industries doesn't invalidate the multi-site critique.

2) The problem here is they narrowly looked at only a small band; they don't even consider jobs which make more than $19/hr. Consider a hypothetical world where when the minimum wage goes from $12/hr to $13/hr, the people who were already making $13 get raised to $14, those making $14 get a bump to $15 and so on with zero effect on the number of people employed, essentially everyone gets a $1 raise. (Note: I am not saying this is our world.) What would the UW study show? It would show a decrease in labor equal to amount of people previously making between $18.01 and $19.00. All these people have been raised above the $19 boundary and so no longer are counted. So even in a situation with no change in the amount of jobs and only positive wage effects, the UW study will show negative employment effects.

This is actually where the difference between Berkeley's positive effect and UW's zero effect comes in, from the pdf I linked previously:

This pattern of average higher pay and more employment appears also in food services: a decline of about 150 jobs paying under $19 from 2014 to 2016 and a simultaneous increase of about 4,500 jobs in all pay levels at single-site food service establishments.

This actually brings me to one of the biggest problems, also from the pdf above:

The UW report nonetheless finds an unprecedented impact of wage increases on jobs, ten times higher than the average in 942 published minimum wage and non-minimum wage estimates, and triple that of minimum wage critic David Neumark.7 There is no reason why Seattle's low-paid employers should be so much more sensitive to wage increases than employers elsewhere.

Incredible results demand incredible proof and the UW study does not do a good job at all of providing that proof.

EDIT: 3) Whether it's number of jobs or hours of work, both are affected by the $19/hr cap so the difference is inconsequential.

The multi-site critique is a dead end. Losses at multi-site businesses were likely worse, according to the survey.

---- http://m.startribune.com/seattle-study-shows-low-wage-jobs-d...

The study doesn’t include large employers, such as fast-food chains, that have locations both inside and outside Seattle. But the researchers say they did account for big employers in a separate survey of more than 500 Seattle businesses. The results showed employers with multiple locations were more likely to cut jobs as a result of the wage increase than those with just one location.

“It’s fair to say that it is a blind spot in our data, but it’s not a blind spot in our survey,” said Jacob Vigdor, a University of Washington public policy professor who worked on the study. “Our best guess as to what we’re missing is we’re missing effects that are even more negative than what we reported.”

The Seattle Minimum Wage Study survey is a dead-end, it's completely qualitative which is why multi-site businesses were excluded from this study.

The authors argue that excluding almost 40 percent of state employment from the analysis will likely have no effect on their findings. They cite results from a survey of 500 business owners before and after the minimum wage went into effect in Seattle. According to the survey, before the increase, multi-site employers were more likely than single-site employers to report that they intended to reduce employment in the wake of the Seattle ordinance and, after the increase, multi-site employers were more likely to report a reduction in employees. These qualitative reports of employer intentions before the increase and the retrospective, qualitative assessments of employer actions one year after the increase, however, are not a substitute for hard data on what these businesses actually did after the ordinance went into effect. And—what is at least as important—these qualitative reports on Seattle businesses tell us nothing about about the employment changes in the rest of Washington, the comparison group for this study’s estimates of the effects of the minimum wage.

http://www.epi.org/publication/the-high-road-seattle-labor-m...

Businesses have a vested interest in saying that the minimum wage hike will cause them to lower employment. That's why we should rely on the numbers.

It's not clear to me why you can draw conclusions about the impact on employees from the UW study. I read it as "minimum wage increase hurts small employers more than big ones", which is less headline-worthy.
I worked in Seattle at minimum wage through this for a "small employer"(this term isn't very nuanced) who was still a millionaire and making huge profits. More significant than the cost of any wage hikes he was experiencing is the skyrocketing real estate market here. This doesn't even begin the discussion on the concern for the welfare of employers who complain that their large profits are being hurt because they can't squeeze dimes from poor people as easily.
Yes and no. They have to get a job at the multi site place which might not happen due to competition for jobs or location.
So your theory is that employment rates actually improve most in the businesses where minimum wage goes up the most?
Did the authors of the report make this hypothesis?
The results the commenter was referring to is the fact that prior studies found good results with minimum wage within the restaurant-worker class, and so did this new study. But the new study found that looking at a larger superset of these workers showed poor results for minimum wage.
I've read the UW study didn't count employees in chains, that had to pay the higher minimum wages, and that was a significant amount of the people subject to the new min wage.
will be curious is this pro article gets flagged off as fast as the previous story which wasn't supportive.

last i checked the UW was requested by the city and journalist and .gov email addressed users all have access to the study, so this claim that its not available is the first indication the WAPO article is nothing more than predisposed piece, meaning they had an outcome and went searching for support of it. the ideology of WAPO is well known so any other result than this could not occur

WaPo posted a descriptive article on the UW study days ago.[0] The OP is an op-ed by a member of a left-leaning think tank in a section called "PostEverything Perspective," described as "Discussion of news topics with a point of view, including narratives by individuals regarding their own experiences."

Let's not make accusations of media bias without any basis at all.

[0] https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...

It isn't media bias, it is bay area hacker news "I'll flag articles that don't agree with my worldview and upvote those that do" bias.
I have the same question. The WaPo article that described the results of the study (not good for minimum wage progressives) got flagged rapidly. Articles since attempting to counter the story happily remain.
Do you still have the link to that thread? I'm curious to see how the discussion went before the thread got flagged.
https://news.ycombinator.com/item?id=14637873

Looks like it was un-flagged? Don't know enough about the process around here. It was flagged for a long time though.

Agreed. The facts borne out by the University of Washington study are what they are. The counterpoints in this article appear weak, and designed to support a specific political point of view held by the Washington Post and many of its readers. They are essentially saying that the Berkley study used a different methodology, and that they like the Berkley methodology better (because it produced results they agree with).

Cherry picking studies that support your own point of view isn't journalism, and it is irresponsible. It's done by both sides, and has helped create the dismal state of political discourse in the US.

> Cherry picking studies that support your own point of view isn't journalism

This is in the opinion section.

True, but it's interesting that the headline doesn't say "Opinion:..." like most publications of this stature do. This author made a statement of fact in his headline, and proceeds to justify it with an incredibly biased opinion.
Mouse over "Perspective" at the top of the page and you will see:

"Perspective: Discussion of news topics with a point of view, including narratives by individuals regarding their own experiences" ¯\_(ツ)_/¯

Again, how many people are doing this? Most people read the article and headline and move on with their day. WaPo allowed this guy to make a statement of fact in his headline with zero indication that it was an opinion.
> WaPo allowed this guy to make a statement of fact in his headline with zero indication that it was an opinion.

No, they didn't. “...actually working just fine.” is inherently a claim about how facts fit into the speakers subjective value framework; it is not a fact claim.

> True, but it's interesting that the headline doesn't say "Opinion:..."

The section header above the headline includes “Perspective”, a common journalistic synonym [0] for opinion.

[0] Well, not quite synonym: “opinion”, “analysis”, and “perspective” are related not-just-the-facts categories, with subtle differences (but frequent overlap) in how they are generally used, but lumping then all together is useful in contexts where the interest is distinguishing from “straight” news reporting.

A good opinion piece doesn't cherry pick either.
How can you tell? I don't see any sort of indication that it is.
Apparently WaPo's name for the "Opinion" section is "Perspective" which is somewhat misleading. Also most people reading online won't care to look - I had to go back and look after reading this comment, because it isn't mentioned at all in the headline that this is a biased opinion piece.
> it isn't mentioned at all in the headline that this is a biased opinion piece.

Claims of bias simply for expressing a point of view in an opinion piece are amusing.

How many opinion pieces have you found which in your view do not advocate for a point of view, i.e. biased?

Again, you're missing the point. Most publications (newspapers etc. that also publish hard news) indicate that it is an opinion right in the title of the article so that there is no mistaking it.
The point is that it isn't clearly labeled as an opinion piece. Not that opinion pieces can't be biased.
That is what PostEverything Perspectives is. The description for PostEverything itself on the main page is "The conversation is bigger than you think."

Or as I said above in response to a similar comment:

Mouse over "Perspective" at the top of the page and you will see: "Perspective: Discussion of news topics with a point of view, including narratives by individuals regarding their own experiences"

They're giving that opinion a "platform". And a very public one at that, as it comes with the reputability and prestige of the Washington Post.

Calling it an "opinion" piece is just an excuse. Letting both promote their agenda and claim to be impartial at the same time.

Exactly -- economics is a science. I don't pretend that the world is perfectly modeled by classical macroeconomic laws, but the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation (labor market), rather than the other way around.

If you are not familiar with what classical economic laws would suggest about a minimum price control on labor (minimum wage), it would

1. reduce the demand for labor

2. create deadweight loss (net value changing hands decreases)

The politicization and down-voting of ideas that people (particularly liberals, in this case) disagree with has a chilling effect. As Warren Buffett says, the human mind is best at interpreting all information such that prior conclusions remains intact.

Not sure why you're being down-voted.

It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss. Everyone needs to understand that raising prices of almost anything will reduce the amount of that thing demanded. When price goes up, people buy less. Wages are just price and labor is a thing that people buy.

The more complicated issue, which democrats and republicans both ignore, is the elasticity of demand. Democrats love saying "Minimum wage increases are good, and they've been proven not to affect the demand for low-wage labor!" and republicans say "Minimum wage increases are bad, and they've been proven to increase unemployment!"

The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.

http://ftp.iza.org/dp3150.pdf

> The real question is not if demand for labor will decrease (it will), the question is how much less low-wage labor will be purchased with a certain increase in the minimum wage, and whether policymakers consider this tradeoff good.

That is actually the false dichotomy that leads people to consider minimum wage as a good idea. Just because something might be better than nothing doesn't mean it's better than known alternatives.

Model minimum wage as a tax on employers for the difference between the minimum wage and what they would have paid without it, which is used to fund wage subsidies in the same amount to those employees.

Looked at in that way, minimum wage is obviously ridiculous. There is no reason to ever use that tax structure for anything. Even if you wanted to have the same subsidies for the same employees, it makes more sense to spread out the tax burden across everyone so that you don't have a de facto >=100% tax to hire someone who would have made half the minimum wage or less.

The only issue then is that without the disincentive to hire created by the minimum wage "tax", anyone could offer to do easy work for $.01/hour just to get the subsidy, so you might as well make the subsidy a fixed unconditional amount regardless of wages or hours.

At which point you have a UBI.

> It's of course disingenuous (and insane) to say that raising the minimum wage will not cause deadweight loss.

Except that there's good data that this doesn't happen, ie. that minimum wage increases are actually associated with small increases in employment.

There's also very good data that subject of minimum wage increases is fraught with rampant publication bias.

https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...

  In the minimum-wage literature, the magnitude of the
  publication selection bias is as large or larger, on
  average, than the underlying reported estimate. Overall,
  correcting for publication bias would transform a
  modestly negative average elasticity to a small positive
  employment elasticity.
Honestly, I haven't looked into your claim. But just off-hand, I'm very skeptical of any evidence that minimum wage increases cause anything but a decrease (even if tiny) in employment. How many goods in the world do price increases cause an increase of demand?

Economists have a term for this type of good, "Giffen Good"[1]. And for obvious reasons, they almost never exist. When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?

[1] http://lexicon.ft.com/Term?term=Giffen-good

> Honestly, I haven't looked into your claim.

You should read the article I linked. : ) It's a very solid meta-analysis including pretty much every peer reviewed article on the subject of the past few decades.

> ... When does an increase lead to a demand increase? Why would employers demand more labor with a price floor than they would without one?

The article explicitly doesn't go into why, but I can think of a few reasons.

Totally off hand, I'd put my money on the fact that businesses that employ minimum wage earners tend to also be disproportionately patroned by minimum wage earners. Add to that the fact that minimum wage earners tend to pretty much immediately spend their paychecks, you're left with businesses having their customer base with more disposable income.

Why don't employers simply raise wages themselves? Aside from the implicit information asymmetry sort of denoted by this very conversation, it doesn't make sense from a sort of game theory point of view for an individual business to go out on a limb without their competitors doing the same at the same time. In my mind, that makes it a perfect opportunity for government to step in, and add some lower bounds of acceptability. This way both employees and employers can have more success.

Who bothers to sell their goods at a loss?

A price increase increases sales, yes? My time is all I have to sell.

Also see http://econlog.econlib.org/archives/2017/06/yudkowsky_on_my.... for a detailed explanation of how this particular topic tends to get people talking past each other.

(The tone of that explanation does come across as elitist, because it's intentionally exaggerating to demonstrate how people "hear" certain explanations as insensitive when they're not.)

> I don't pretend that the world is perfectly modeled by classical macroeconomic laws

Understatement of the century. Would you tell someone working at CERN "I don't pretend Newton's laws are perfect, but..."?

> the burden of proof is on the pro-minimum wage camp to disprove the laws of supply and demand in this situation

Which previous studies of the minimum wage have consistently done (well, more accurately shown that the deadweight loss is more than offset by increased wages). That's the whole reason this article is interesting.

Every minimum wage increase is different!

Even the staunchest free market economist wouldn't claim that a hypothetical minimum wage increase from $.10/hr to $.50/hr in Seattle would increase unemployment. And even the staunchest socialist economist would not claim that a minimum wage increase from $8/hr to $800/hr wouldn't increase unemployment.

Similarly, how can you compare an increase from $5-6 in New jersey in 2005 to one from $11 to $13 in Seattle in 2017? You can't extrapolate this stuff.

The question is not "Are minimum wage increases good in general?" the question is "Given the potential tradeoffs, is this specific minimum wage increase good?"

> Every minimum wage increase is different!

Sure, but

> You can't extrapolate this stuff.

Why not? I'm not saying it's like physics where we can make nearly exact models, but can't we at least make educated predictions based on previous examples, taking into account the different circumstances?

After all, in your hypothetical you already implicity modeled that a minimum wage a certain percentage of a "reasonable" wage won't hurt employment, while one much higher will.

> The question is not "Are minimum wage increases good in general?" the question is "Given the potential tradeoffs, is this specific minimum wage increase good?"

This only underscores the importance of extrapolation -- lawmakers need to be able to predict these tradeoffs to make good decisions (if extrapolation is possible).

Fair point, I agree that extrapolation could be important here. If the effects of the $13 minimum wage are considered positive in Seattle, that would be good for the Portland government to know.

I guess my issue with your first comment is that it seemed like it was trying to consider minimum wage increases as generally good or bad, which I disagree with. I think it's much more nuanced than that, and it sounds like you agree.

The question I now read your first comment as asking is, "Why have studies shown this minimum wage increase as more harmful than other minimum wage increases? Of course, the answer is just that the elasticity of demand for low-wage labor in this case appear greater than in other cases.

The question is: what does the labor elasticity graph look like? And that's what these studies are really trying to figure out.

> Which previous studies of the minimum wage have consistently done (well, more accurately shown that the deadweight loss is more than offset by increased wages).

No, studies have been mixed and controversial, at best. This is just another study that shows how empirically ambiguous it is (by supporting the anti-minimum wage position), so again, I challenge the left to hold their evidence to a higher standard since it goes against common sense economics.

Regardless, the minimum wage and most other forms of welfare put forward by mostly the Democratic Party are economically foolish and distort incentives (TANF, unemployment benefits, minimum wage, mandatory social security, etc.) A very basic income is much cleaner and simpler -- I have yet to hear an argument for why our current welfare complex is superior.

I agree with your point about burden of proof, but economics is not a science. Setting aside economics and science, common sense demands the burden of proof go to those who say raising wages won't decrease demand.
Maybe, or maybe common sense says the burden of proof go to those who say increased consumer purchasing power won't increase demand.

Maybe common sense demands thats businesses won't pay for more employee hours than they have to in the first place and thus demand only decreases if overall revenue decreases.

I mean just saying "common sense" is as usual a way of pretending that your own biases are obviously correct.

> Exactly -- economics is a science

Nope. To anyone who still hasn't gotten the memo: neoclassical econ is mystery religion dressed up in poor mathematics[1]. If we held other sciences to the same norms as economics we'dd still be living in the dark ages.

[1] http://tinyurl.com/debunking-economics-digital

This is utterly incorrect and not at all what the neoclassical micro/marco economic laws suggest.

For the sake of brevity, you are not making the proper distinction between demand and quantity demanded - a change in the price of labor does not change the DEMAND for labor.

Poor choice of wording -- in the simplest sense, you are correct. However, labor markets are far too complex to be modeled as a single commodity with a supply and demand curve, and contrary to popular belief, both supply and demand can change in the wake of a price control.

This is because there is no single supply and demand curve for labor -- instead, there are dozens of curves for specific labor markets. For instance, the minimum wage does not really affect the SDE labor market in the US, but it can literally wipe out certain markets (farm labor, for example) that typically pay below the new minimum wage, resulting in a complex new supply and demand profile, automation, etc.

It can if there are substitutes for labor.
> I'm sickened by my "pro science" party

They aren't any more "pro-science" as any other party. For instance, it's notable how the science of biology has been excluded from women's and gender studies university programs for many years now.

Like any other political group they will use what they can to advance an agenda with whatever tools are out there. If they need science for one argument they'll use it while conveniently avoiding it for others. If you need "morality" for one you use it when convenient and avoid when not. It's all politics that do this unfortunatly.

The "the science of biology" is also excludes from physics, computer science, languages, classics, English, political science, etc. What's your point? Are you implying that an academic field that studies the gender constructs of society is somehow intrinsically anti-science?
I'm just saying social constructionism isn't science but portrays itself as science. Biology is _specifically_ left out of the conversation on purpose because it conflicts with the theory. The theories found in a women's or gender studies course would be more valuable if they included relevant hard science instead of purposefully avoiding it. Just like how an EE program utilizes relevant sciences. Or linguists for another example.

I'm not a disgruntled person crack-potting here. This is a complaint of many highly regarded people who spend considerable time studying and critiquing these disciplines. Camille Paglia comes to mind.

Paglia mostly seems to argue that the current state of the field is too abstract, which strikes me as being similar to Computer Scientists complaining about the lack of focus on electrical engineering. She also seems to spend a lot of time and words just calling people smug.

I'm not really up on the literature, but I don't see an inherent problem in focusing on abstract and high level ideas. I'm also not sure that biology offers much insight into the way society constructs gender roles. Even Paglia who you cite only seems to use biology to describe a theory for the underlying causes of sexual coercion.

I suggest you pick up and read "Galileo's Middle Finger" [1] by Alice Dreger. In short it points to hypocrisy when dogma and science collide. When your worldview is shattered by actual science and how we can be better people by not politicizing science only when convenient.

NYMag had a decent review too. [2]

[1] https://www.amazon.com/Galileos-Middle-Finger-Heretics-Activ...

[2] http://nymag.com/scienceofus/2015/12/when-liberals-attack-so...

I'm familiar with the premise, and don't disagree. I'm just of the opinion that for a social science to ignore biology is probably fine at a certain level of abstraction. I'm not arguing anything else at all.

Again, this is a bit outside of the areas in social science in which I regularly read. So if a particular set of dogmatic ideas run counter to our best scientific understanding, then those ideas deserve criticism. I think we agree on that.

I at least am skeptical of their claims mainly because there's a very well established case of publication bias in the space of the effects of minimum wage increases.

[PDF Warning]

https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...

>Convenient of this article to ignore that the Berkley study only looked at food service workers while the UW study looked at a much wider range of jobs than previous studies.

And the UW study was consistent with the Berkley study--for food service workers. It appears food service workers really weren't hurt by the increase, but non food service workers were.

If both studies are so flawed, it seems indefensible to draw _any_ conclusions right now.
Maybe if you limit your scope to this single event. There is a large body of prior evidence and theory to suggest that disemployment was likely to occur from such a large increase in the minimum wage, so I don't think it's really proper to act as though two studies represents our entire universe of human knowledge about these sorts of policy changes.
The studies on that are mixed (see Card/Kreuger). But it's worth noting that the UW study was able to explain the results of previous studies that showed no effect on employment: those studies did not have access to info about hourly wages and hours/week.
If your data isn't available, you're going to get these kinds of critiques.

With the data available, people could see how strong the various effects are and how much "p-hacking" it is susceptible to.

which party is "pro science"?
*Berkeley
>I'm sickened by my "pro science" party rushing to ignore results that don't agree with our ideological intuitions.

It's possible it's valid, just as it was possible that all those studies that cast doubt on global warming were valid.

Both are, of course, are very profit friendly results.