Building an Economy that Works for Everyone

Minimum wage opponents rely on corporate-backed front group for misleading data

It’s that time of year again. No, not for a holiday singalong – I mean it’s time for opponents of Washington’s best-in-the-nation minimum wage to dust the cobwebs off their pro forma “minimum-wage-job-killer-blah-blah-blah” arguments, gin up a few facts sheets, and pen an op-ed or two. After all, that’s what happens most every year there’s an increase.

Remember last year, when Washington’s corporate business lobbyists – along with Attorney General Rob McKenna – failed in their “throw mud at the wall and see what sticks” approach? Their end-run around the extremely popular voter-approved minimum wage initiative went down in flames, but it hasn’t deterred their ideological march toward eliminating the minimum wage altogether.

Take the Washington Policy Center (WPC), a research organization focused on “free market solutions,” which attempts to tie teen unemployment to a higher minimum wage in this post:

If you are forced to pay at least $8.55 per hour to someone with work experience or someone without experience, you most likely will hire the person with experience. This hurts the teen because they are shut out of the labor market because employers deem that the minimum wage is too high a price to pay for someone with no experience.

Read closely and you’ll see the WPC is undone by their own reasoning: teen unemployment is high not because of the minimum wage, but because high general unemployment has created a surplus of labor, so experienced workers fill entry-level jobs typically taken by teens.

The Evergreen Freedom Foundation (EFF), a libertarian group, makes a similar claim that young workers “find themselves in the crosshairs again” due to the voter-approved increase. It’s distasteful analogy at best. But when telling a tall tale, it’s best to not let facts get in the way.

That may be why both the Evergreen Freedom Foundation and Washington Policy Center both cite the Employment Policies Institute in their posts, which despite the seemingly innocuous name, is actually a front group for corporate interests set up by D.C. lobbyist Rick Berman.

Berman is the executive director of at least 23 other industry-funded front groups like the Employment Policies Institute, which function as mouthpieces for big business, but operate under the veil of nonprofit “research” organizations. Their well-timed press releases are often picked up by news outlets seeking to “balance” the findings of  well-established research.

Of course, most mainstream economists – and many responsible business owners – have a different point of view, which you can find in peer-reviewed economics journals from MIT, UMass and UC Berkeley: high teen unemployment is due to more competition from older workers – not a higher minimum wage. Their findings have also been confirmed by the U.S. Bureau of Labor Statistics.

The Employment Policies Institute’s reports – and others like it – have come under fire for using poor research methods that result in inaccurate data and spurious findings.The most recent critique came from a University of California report:

[T]he estimates are often biased and not robust to the source of identifying variation. Including controls for long-term growth differences among states and for heterogeneous economic shocks renders the employment and hours elasticities indistinguishable from zero and rules out any but very small disemployment effects.

Translation: When researchers control for economic shocks and long-run job growth differences in the data, the negative effects claimed by these reports disappear. Oops. Berman and the Employment Policies Institute can order up press coverage, and the WPC and EFF can cite it, but they still can’t buy good data.

In 1998, voters overwhelmingly voted to index Washington’s minimum wage to inflation, largely because they were tired of the Rick Bermans of the world predicting economic doom with every increase in the minimum wage.

You can’t have an honest debate about the minimum wage with dishonest data. But that probably won’t stop the WPC and EFF from trying.

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