From the press release:
Progressive cities are raising their labor standards, but conservative state legislatures are preempting them
A new report by EPI Associate Labor Counsel Marni von Wilpert analyzes the recent wave of preemption laws that have swept across the country in the last decade. State governments use preemption laws to supersede city or county laws, or prevent local governments from legislating in certain areas at all—including blocking local governments’ efforts to raise labor standards. The paper explores the rise of preemption in five key areas of labor and employment: minimum wage, paid leave, fair work schedules, prevailing wages, and project labor agreements.
From the summary:
The Community Development Block Grant (CDBG) program is the key tool cities use to revitalize low and moderate-income neighborhoods and serve the people who live in them. Administered by the Department of Housing and Urban Development, CDBG was launched in 1974 and has served thousands of communities across the nation. “Entitlement” communities receive funds directly from the federal government based on a highly targeted formula. The balance of funds go to States which administer CDBG resources to smaller towns and communities on a competitive basis. CDBG allows local governments the flexibility to design their own comprehensive revitalization plans in the context of targeted objectives to serve low and moderate income people. ….
…. CDGB is not just another federal program. It is a lifeline to poor neighborhoods that for too long have suffered disinvestment in both their physical infrastructure and their people. This publication, CDBG WORKS, is designed to illustrate the types of projects CDBG makes possible. CDBG funds housing rehab programs for in-home seniors and those with disabilities, making it possible for them to gain access and stay in their homes. It funds Boys and Girls Clubs to provide youth productive activities as an alternative to the streets. It supports community and social service organizations that provide counseling to victims of domestic violence and those who suffer from homelessness and mental health problems. The list goes on and on. ….
From the abstract:
Pensions play a critical role in the ability of local governments to attract and retain the workforce needed to meet citizen demands. The costs associated with this employee benefit, however, can be substantial. A recent National League of Cities (NLC) survey revealed that over the past year the cost of pensions increased in more than 70 percent of cities. One in three cities identified these expenses as the factor most negatively affecting their budgets.
From the abstract:
Fragmented authority and service responsibilities within governments can impact the design and implementation of policy. Administrative structures can play an important role in mitigating the challenges associated with coordinating activities across independent units within city government. In this study, we use the broad policy arena of sustainability as a testbed to explore “Functional Collective Action” problems and the consequences of cities’ administrative design on the portfolio of policy actions related to energy and climate protection. Empirical analyses of survey data from a national sample of local governments indicate that political institutions, government capacity, and community support influence, to varying degrees, administrative structures related to sustainability initiatives. Our analyses also suggest that these are not inconsequential decisions, since they influence the extent to which cities achieve greater policy integration.
Source: Michael Reich, Sylvia Allegretto, and Anna Godoey, University of California – Berkeley, Institute for Research on Labor and Employment, Center on Wage and Employment Dynamics (CWED), June 2017
From the abstract:
This brief on Seattle’s minimum wage experience represents the first in a series that CWED will be issuing on the effects of the current wave of minimum wage policies—those that range from $12 to $15. Upcoming CWED reports will present similar studies of Chicago, Oakland, San Francisco, San Jose and New York City, among others. The timing of these reports will depend in part upon when quality data become available. We focus here on Seattle because it was one of the early movers. …. Our results show that wages in food services did increase—indicating the policy achieved its goal—and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13. …
Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle
Source: Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, Hilary WethingNBER Working Paper No. 23532, June 2017
From the abstract:
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.
Five Flaws in a New Analysis of Seattle’s Minimum Wage
Source: Rachel West, Center for American Progress, June 28, 2017
A team of faculty and students at the University of Washington was tasked with assessing how Seattle’s 2014 minimum wage ordinance, which is gradually raising the city’s minimum wage to $15 per hour, is affecting low-wage workers. This week, the group released a working paper—without peer review—that looks at the ordinance’s first two phases, under which the minimum wage for most workers increased from $9.47 to $11 per hour in 2015 and then to $13 per hour in 2016.
Methodological flaws plague the group’s approach, causing them to draw conclusions wildly out of step with dozens of studies of similarly sized wage increases cited by both critics and proponents of higher minimum wages. The vast majority of rigorous, credible studies conclude that higher minimum wages have appreciably boosted workers’ earnings with little or no effects on employment. By contrast, the University of Washington researchers conclude that higher minimum wages not only reduced employment and hours worked in Seattle, but that the costs of the wage hike outweigh the benefits for the average low-wage worker—a finding at odds with the conclusions of even the most skeptical mainstream researchers. At the same time, the study’s results suggest—implausibly and largely inexplicably—that the wage hike to $13 per hour caused substantial growth in jobs paying more than $19 per hour in the restaurant industry. That’s just one of several questionable results that should give readers serious pause…..
Seattle and the (Methodology of the) Economics of Minimum Wage
Source: Benjamin Sachs, OnLabor blog, June 26, 2017
….Noam Scheiber also has a good story on the UW paper which lays out a critique worth mentioning here. In sum, the employment effects identified by the UW study might be due, not to Seattle’s minimum wage increase, but to a booming job market in which high-wage jobs are replacing low-wage jobs. On this theory, the employment “losses” in the low-wage sector that the UW study reports would actually just be people moving from low- to high-wage employment. …
How a Rising Minimum Wage Affects Jobs in Seattle
Source: Norm Scheiber, New York Times, June 26, 2017
Seattle and the Economics of Minimum Wage
Source: Benjamin Sachs, OnLabor blog, June 26, 2017
….There are, as always, caveats. First, the Washington paper has yet to be subject to peer review – it was released online as an NBER working paper. Second, another recent study – this one from Berkeley – found that the Seattle ordinance “raises pay without costing jobs.” As FiveThirtyEight also reports, the Berkeley study focused exclusively on the fast food industry, and the Washington study itself found no employment effects of the minimum wage hike on the restaurant industry. One possibility, then, is that the Washington study’s broader focus is picking up effects that are missed by the (more traditional) focus on the restaurant industry. Many economists, including Jared Bernstein, however, defend the methodological decision to focus a minimum wage study on restaurants. There are also, as always, additional methodological criticisms of the Washington study. (EPI has a press release and paper that identifies a number of these concerns.)
Then there is an important caveat in the other direction: Seattle might be a city in the best position to absorb minimum wage increases, which means – if the Washington study is right – that the employment effects could be even stronger elsewhere. ….
The “high road” Seattle labor market and the effects of the minimum wage increase – Data limitations and methodological problems bias new analysis of Seattle’s minimum wage increase
Source: Ben Zipperer and John Schmitt, Economic Policy Institute, June 26, 2017
From the summary:
A team of researchers at the University of Washington has released an analysis of the economic impacts of the 2015 and 2016 increases in the Seattle minimum wage. The study, Jardim et al. (2017), looks at the first two stages of a phased-in set of increases that will eventually take the minimum wage in the city to $15.00 per hour. The authors of the study argue that they find large job losses associated with these first two rounds of increases, in which the minimum wage for most workers rose from $9.47 per hour to $11.00 per hour in April 2015 and then to $13.00 per hour in January 2016.
The authors’ analysis, however, suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all. One initial indicator of these problems is that the estimated employment losses in the Seattle study lie far outside even those generally suggested by mainstream critics of the minimum wage (see, for example, Neumark and Wascher )—as the authors themselves acknowledge.
In this report, we describe the most important shortcomings in the new analysis and make suggestions for how the researchers can attempt to correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
See also: press release
…According to estimates by the nonpartisan Congressional Budget Office, the recently proposed American Health Care Act — unofficially going by the names “Trumpcare” and “Ryancare” — would raise the average health-insurance premium for an individual policyholder by 15 to 20 percent just one or two years from now and lower federal subsidies. In contrast, the CBO projected, average Obamacare premiums would decrease 10 percent by 2026.
In order to gauge the AHCA’s impact on people who buy their own insurance, WalletHub’s analysts compared the differences in premium subsidies that the average households in 457 U.S. cities would receive under Obamacare and Trumpcare. Read on for our findings, commentary from a panel of experts and a full description of our methodology….
The United States is coming to resemble two countries, one rural and one urban. What happens when they go to war?
Climate change will bring more frequent and fierce rainstorms to cities like Houston. But unchecked development remains a priority in the famously un-zoned city, creating short-term economic gains for some while increasing flood risks for everyone. ….
The Roy Wilkins Center replicated the techniques used in prevalent economic literature to simulate the relative impact of a local minimum wage increase in the city of Minneapolis and in Hennepin/Ramsey County. These simulated minimum wage changes are at the $12 and $15 per hour levels. The research team finds the following:
– The industries with the largest number of persons likely to be affected by the change in minimum wage are food service, retail, non-hospital health, and administrative support ….
Minimum wage earners in Minneapolis often
o Have at least some college education
o Are not currently in school
o Work at least 35 hours per week
o Are over age 25
Firms that currently pay the $9.50 minimum wage in Minneapolis often
o Are eligible to pay the current lower minimum wage of $7.75 as a small business
o Will increase prices of food by less than 5% to cover labor costs of a $12/$15 minimum wage
o Face lower employee turnover after an increase in the minimum wage
Current literature on the minimum wage suggests
o Increases in average employee monthly earnings vary by industry
o Average employee monthly earnings in the Minneapolis metropolitan area are more sensitive to the minimum wage than the country as a whole
o Most estimates of the change in workforce participation find no statistically significant change after a minimum wage increase
Households with minimum wage earners in Minneapolis
o Are currently less likely than the general public to meet their food needs
o Are likely to spend $27 more a week to meet their food needs after the proposed increase in the
o Would face food insecurity 4-7% less often under the proposed policy
Immigrant workers earning the minimum wage in Minneapolis
o Are slightly more responsive to an increase in the minimum wage than the general population
o Are especially more responsive to an increase in the minimum wage if they are recent immigrants in a low skill job
Nonwhite employees are more likely to be affected by an increase in the minimum wage than white workers, when controlling for the number of workers in each group
o Minority Owned Business Enterprises are, however, likely to face smaller changes in payroll costs after a change in the minimum wage, as fewer minority owned enterprises qualify to pay their workers a reduced minimum wage
Firms within industries with relatively few minimum wage workers are not very likely to see a large change in their operating costs as a result of the proposed minimum wage
Firms within industries with relatively many minimum wage workers may see an increase in their operating costs, however, if employee earnings increase by a smaller rate than we simulate, the change in labor cost would be smaller as well…..