The City of Seattle’s minimum wage is now $11, going up to $15 for some employers by 2020. Mark Perry has posted his monthly missive on how April’s minimum wage hike is destroying restaurant employment there:
I’ve pointed out ad nauseam that this larger region is irrelevant to any discussion of the minimum wage debate. While the min wage has gone up in the City of Seattle, that may or may not have an impact on the entire — and many times larger — Seattle MSA.
The Seattle-Tacoma-Bellevue Metropolitan Statistical Area (MSA) that Perry likes to harp on is comprised of three counties – King (in which Seattle resides), Pierce, and Snohomish. The MSA has a population of some 3.6 million versus the city’s population of about 660,000. In other words, almost 3 million people, or about 72% of the total, reside (and likely work) outside the area are where the minimum wage was hiked.
To use this as the basis of a minimum wage critique is either incredibly ignorant or purposefully misleading. It does not reflect well on its authors. This inexcusable approach means that AEI has been party to what is an obviously false analysis. That is why amongst knowledgeable analysts, AEI are known as a “Stink Tank.” Everything they produce comes with the stank of its dubious validity and questionable intellectual honesty.
AEI seems to have finally figured out that obviously lying about data is going to get them called out as the fabricators they have unfortunately morphed into: The most recent post by Perry includes a disclaimer indirectly admitting this entire line of argument has been a scam. There has not been the sort of intellectual honesty where one admits error — no mea culpa like BR does — but instead a “Technical Note” at the end of the post essentially explaining why the entire post is utter nonsense. I assume AEI forced this on Perry in order to protect their already damaged reputation.
Technical Note: The BLS restaurant employment data for the Seattle MSA covers the entire metro area of 3.6 million people, while the population in the city of Seattle, which is the only part of the MSA that is subject to the eventual $15 an hour minimum wage, is only about 652,000. Therefore there are several possibilities when considering the loss of 900 restaurant jobs this year . . .
Even that is not a fair and honest disclaimer, as it posits a number of possible scenarios, rather than admit that the MSA is not relevant to the City of Seattle. We just don’t have sufficient data to draw a conclusion.
As I’ve said all along, there are simply no inferences to be made about the city from the MSA. But don’t take my word for it – here (again) is what regional economist Annaliese Vance-Sherman had to say about it:
It is not possible to draw conclusions about the city based on the MSA.
I think it is important to remember that the $15 minimum wage was a city-level ordinance. The City of Seattle falls within a large urban county (King County), which consists of 39 cities including Seattle. In turn, the county is one of three large urban counties that make up the Seattle MSA.
People from the City of Seattle are not going to drive two counties north or south, or cross the mountains, for a burger. If there is a border effect, it would be well within the MSA (well within the boundaries of the county, actually), and would register as a net zero change.
Without re-creating the chart, what could be showing up in this chart is that the recovery in Seattle has been stronger (and earlier) than the remainder of the state. The increased momentum in hiring could be representative of the relatively delayed recovery outside of the Seattle MSA.
For those who may (inexplicably) be new to this issue, here’s a map of the aforementioned tri-county area:
Sadly for Perry, who has married his original bad analysis and refuses to do any further investigating, there is more accurate data out there on employment in the state of Washington, compiled by the Employment Security Department of Washington State. At their site, we can explore and examine each of the counties on a stand alone basis.
To be clear here, I’m not suggesting that even looking at King County itself tells us much about the city of Seattle (one of only 39 municipalities in the county), but it has to be an improvement over looking at a three county behemoth like the Seattle-Tacoma-Bellevue MSA.
As the ESD explains about their data (emphasis mine):
How are these employment estimates different from Current Employment Statistics (CES) employment estimates?
To develop our employment estimates for Washington industries, we replace CES survey data with data from the Quarterly Census of Employment and Wages (QCEW). QCEW data are actual counts of employees, while CES data come from a survey of employers.
Each month, economists estimate monthly job gains and losses based on the survey of employers (CES). Then, at the end of each quarter, economists revise the estimates based on actual numbers from employer tax records (QCEW). The process that replaces employment estimates with the actual number of job gains or losses is called benchmarking. While we benchmark our data quarterly, the BLS benchmarks its data only once a year.
By benchmarking our data quarterly rather than annually, we can provide the most accurate and current information possible on Washington’s economy and labor market.
What is the data source of the report?
The basis of our industry employment estimates is CES.
So, we’ve got a source for more accurate data – benchmarked quarterly instead of annually – and the ability to break the MSA down and look at its component counties. What does that tell us?
Well, if we get the NAICS 722 numbers (Food Services and Drinking Places) – not seasonally adjusted – and then apply a seasonal adjustment, we get a graph that looks as follows, where green represents the raw NSA data from ESD, and the smoother blue line represents that data with a seasonal adjustment.
In terms of numbers, King County finished 2014 with 89,700 NAICS 722 workers (seasonally adjusted), and now has 92,300, for a 2015 YTD gain of 2,600 – a far cry from the 900 Perry claims the MSA has lost. (I pointed out in September that it’s Pierce County that appears to be the problem area of the three.)
- King County has added, seasonally adjusted, 2,600 NAICS 722 jobs in 2015
- Looking at the Sea-Tac-Belle MSA continues to be futile for divining any information about the city of Seattle proper
- Pierce County appears to be the trouble spot in terms of NAICS 722 jobs
Perry is – as he has been all along – grasping at straws. We will not know with any certainty how Seattle’s experiment plays out for years to come. And when we do, it will likely be from academic studies like this one being undertaken at the University of Washington, which will hopefully factor in all the moving parts, e.g. rising rents, the fact that Seattle is already #2 in the country in eateries per capita, etc. The issue is far more complex than ideologues like Perry would have their audience believe. But Perry’s misbegotten droppings get picked up and circulated throughout the conservative echo chamber, occasionally making their way on to Fox News (Stuart Varney: “You don’t trust the numbers? Those are hard numbers – 1,000 jobs gone. I mean, that’s, they didn’t make it up.” Actually, they may as well have.) This is all by design, of course – Perry’s the guy with a sufficient ability to torture the data and get his results onto the talking points conveyor belt, from which they are subsequently picked up and echoed.
Finally, I would point readers to this recent piece by Bethany Jean Clement at the Seattle Times. Here, in my opinion, is the money shot:
The Washington Restaurant Association recently reported that outlying areas are raising wages to compete with Seattle’s rising minimum, rather than restaurants fleeing the city as some feared.