New Study Finds Higher Wages, No Disemployment from Local Minimum Wage Hike

New Study Finds Higher Wages, No Disemployment from Local Minimum Wage Hike

A new working paper out of the Institute for Research on Labor and Employment at the University of California, Berkeley, significantly adds to our understanding of the impact of local minimum wage hikes by analyzing a previously untapped reservoir of economic data: online restaurant menus. “ Are Local Minimum Wages Absorbed by Price Increases? Estimates from Internet-based Restaurant Menus ” compares prices at 884 restaurants in and around San Jose, CA before and after that city raised its minimum wage 25 percent, and found that yes, the higher labor costs are largely absorbed through price increases and turnover cost savings—and with no citywide disemployment effect or negative impact on restaurants close to the border. We detect a statistically significant increase in wages for the combined limited- and full-service sector in San Jose at the time (quarter) of the minimum wage increase, but no such structural break in wages in the rest of Santa Clara County. We also do not detect a structural break in restaurant employment in San Jose or for the rest of Santa Clara County. These wage and employment trends are further confirmed by difference-in differences estimates. This finding of wage increases but no detectable employment effects motivates our analysis of whether restaurants absorbed the payroll cost increases through price increases. … Our estimated price elasticities fall with restaurants that have larger workforces, suggesting the presence of more adjustment margins among larger businesses. In a novel finding, price increases were less where restaurants face greater local competition—as estimated using a restaurant density measure. Our overall estimated price elasticity of 0.058 is nearly identical to our preferred estimate of cost pressure elasticity (0.59). This result indicates that minimum wages are largely absorbed by price increases, as well as by turnover cost savings, even when the minimum wage increases in one swoop by 25 percent. Our study of border effects indicates that market spatial areas
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Daily Clips: December 9th, 2015

Daily Clips: December 9th, 2015

Imagine if Steve Jobs’ Dad was turned away because he was Syrian:  In Nick Hanauer’s latest piece, he talks about the best way to ensure economic prosperity for all. At the core of his thesis is the principle of inclusion. From here, Hanauer claims, “America has succeeded primarily because it has an unbeatable record of inclusion.” He argues, “The more cognitive diversity we have — the more people simultaneously approaching the same problem from as many different backgrounds and perspectives as possible — the greater the rate of innovation. It’s not how hard you try; it’s how many different ways you try to solve a problem that leads to success.” It is an abomination, Hanauer claims, both morally and economically, that our leaders are “pulling up the welcome mat and barring the doors to the worshippers of the fastest-growing religion in the world.” What these racist leaders don’t understand, is that they “aren’t just failing the moral test — though they certainly are doing that — they’re also harming our economy.” Well said, boss. Better schools, better economies:  A new study found that “local economies flourish when there are more skilled and productive workers.” Fascinatingly, “Using data from other countries and from the National Assessment of Educational Progress, the authors built a model that predicts the economic effects of improving education. According to their model, if all students in the U.S. could be brought up to basic mastery as defined by NAEP, the U.S. GDP would increase by $32 trillion, or 14.6 percent.” Cruz spearheads anti-science push:  Idiotic. Moronic. Depressing. These are words that came to mind while watching Ted Cruz speak at aa Senate subcommittee hearing (he convened) on the validity of climate change. Best headline of the day: “VW says CO2 emissions scandal not as bad as feared”

This Is the Dumbest Thing Rand Paul Has Ever Said

This Is the Dumbest Thing Rand Paul Has Ever Said

We here at Civic Ventures have been kind of quiet about Donald Trump lately. That’s because the internet is overflowing with opinions about Donald Trump, most of them entirely unnecessary. There’s no point in adding any more noise to that cacophony. And reasonable people understand that what Trump is pushing is outright bigotry. Reasonable people also understand that giving Trump a whole lot of airtime in exchange for his statements is only making matters worse. And reasonable people understand that when Donald Trump says something outrageous, he’s normalizing it for a large segment of Americans. But presidential politics, right now, two months from the start of voting, is not about reasonable people. It’s about attention, and clicks, and eyeballs. But there’s a little sideshow to this particular circus that I wanted to focus on for a moment. Remember Senator Rand Paul? The fellow that TIME called “The Most Interesting Man in Politics?” Yeah, his campaign never really took off. It launched with some support left over from Ron Paul’s two viral presidential campaigns, but those people started sloughing off the minute the younger Paul started talking about, well, much of anything. It’s been a downhill slide in the polls ever since. We’ve documented his decline on this blog , but then, like pretty much everyone else on earth, we forgot about him. Luckily, New Hampshire radio station WGIR remembered that Paul existed. They asked him what he thought about Donald Trump’s recent statement on immigration. Paul’s response, as recorded by the good folks at Talking Points Memo , is astounding: “I think it’s a mistake to base immigration or moratoriums based on religion,” Paul said. “But you know, I’ve called for something similar, which is a moratorium based on high risk.” Look at that. Just read that quote again. Paul says something right—although it’s more than “a mistake” to base immigration or moratoriums on religion, it’s downright “unconstitutional”—and then
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Daily Clips: December 8th, 2015

Daily Clips: December 8th, 2015

Hillary talks Wall Street:  In a New York Times Op-Ed,  Hillary Clinton lays out a three point plan that will “rein in Wall Street” (a dubious political proposition, but a great one-liner). She states that “the proper role of Wall Street is to help Main Street grow and prosper.” How does she plan on achieving this? Firstly, “we need to further rein in major financial institutions.” How would we do this? Among other things, her “plan proposes legislation that would impose a new risk fee on dozens of the biggest banks – those with more than $50 billion in assets – and other systemically important financial institutions to discourage the kind of hazardous behavior that could induce another crisis.” While that all sounds good, we all know there’s no way in hell such legislation would ever pass through Congress. Secondly, Clinton “would appoint tough, independent regulators and ensure that both the Securities and Exchange Commission and the Commodity Futures Trading Commission are independently funded — as other critical regulators are now — so that they can do their jobs without political interference.” Finally, she claims “no one should be too big to jail. I would seek to extend the statute of limitations for major financial crimes to 10 years from five and enhance rewards for whistle-blowers.” (This coming from the woman who said Edward Snowden’s whistle-blowing helped terrorists .) All in all, it’s a pretty generic, bland, and pandering op-ed. My favorite tweet of the day (so far): I’ll admit that “5% unemployment and $38 oil will bring about our nastiest politics” wasn’t my expectation in 2011-12. — Conor Sen (@conorsen) December 7, 2015 The US is a low-tax country:  You’d never guess, seeing as Republicans spend 10% of their time complaining about how tax-burdened we are (the other 90% of their time is spent hating on other types of people.) In fact, “we’re an outlier, and you would never know
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No, Raising the Minimum Wage Isn’t a Socialist Experiment

No, Raising the Minimum Wage Isn’t a Socialist Experiment

In a delightfully deluded letter to the editor , a citizen of Maine, Douglas Papa, rails against a higher minimum wage and its effects on the local economy. He warns his fellow Mainers that there should be “no influence to determine a higher minimum wage from people who do not own a business with staff paid hourly.” (By this logic, no citizen can participate in a policy discussion unless it directly affects them. How ridiculous.) He perpetuates the myth that “every time the minimum wage goes up, available jobs disappear.” Yet, a quick fact-check by The Associated Press shows that this “supposed” negative employment effect “usually doesn’t happen.” In fact, according to Al Jazeera’s Gregg Levine , “if you go back to the late 1970s,  four of the five times an increase in minimum wage was followed by job losses came during recessions , when higher unemployment is part of the general economic picture. And that fifth time came only months after the end of the 1990 downturn.” But historical facts be damned! Papa warns his legislators that “there will be no socialist revolution that will divide people into bullying employers to increase their starting wages.” (I wonder if he would have thought government was “bullying employers” when the US government said “no more” to child labor and enforced a series of workplace safety standards?) He goes onto claim that Maine possesses an unemployment rate of 4.3 percent precisely because the minimum wage is at $7.50. But Maine’s unemployment rate is only 0.9 percent lower than Washington state’s unemployment rate of 5.2 percent and our minimum wage is currently the highest in the nation at $9.47 per hour. How can that be if Papa’s thesis is correct? And for Seattle, where “forced socialism” is “shoving us” to a higher minimum wage? Well, Seattle’s minimum wage is currently on its way to $15 an hour and our unemployment rate sits at an incredible 3.8 percent . But let’s be honest here folks: numbers will never convince people like Papa
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Daily Clips: December 7th, 2015

Daily Clips: December 7th, 2015

Bernie Sanders wins readers’ poll for TIME’s Person of the Year:  Sanders’ legion of supporters made a fantastic choice for the 2015 POTY. While the readers’ poll is important, the final decision for POTY will ultimately be decided by TIME’s editors. Rest assured, if Bernie doesn’t get the nod, his fans will point to the billionaire class trying to suppress his appeal. Fun fact about TIME’s POTY: “No presidential candidate has been named Person of the Year prior to the end of the campaign.” US chooses gun rights over public safety: What a depressing headline. This country is so backward in so many ways. Jeb!’s Super Pac releases a 15 minute video on his life: In a desperate plea to GOP primary voters, Jeb Bush’s campaign…I mean, Super Pac, released a video which hoped to humanize Veto Corleone. The problem? Jeb is a super boring, plastic individual. The video is full of empty platitudes, relying on the viewer to actually like Jeb. Moreover, this video comes across as desperate. Stuck at 3% in national polls, Jeb! simply isn’t a good candidate (or at least the right candidate for this time). No number of lame videos or TV ads can help him this cycle. Majority says Trump is hurting GOP brand:  According to a new MSNBC/Telemundo/Marist poll, only 58 percent of adults say Trump is hurting the Republican party’s image. How the hell is that number so low? Who are these people that think he’s not hurting the GOP’s brand?

Daily Clips: December 7th, 2015

Daily Clips: December 7th, 2015

Bernie Sanders wins readers’ poll for TIME’s Person of the Year:  Sanders’ legion of supporters made a fantastic choice for the 2015 POTY. While the readers’ poll is important, the final decision for POTY will ultimately be decided by TIME’s editors. Rest assured, if Bernie doesn’t get the nod, his fans will point to the billionaire class trying to suppress his appeal. Fun fact about TIME’s POTY: “No presidential candidate has been named Person of the Year prior to the end of the campaign.” US chooses gun rights over public safety: What a depressing headline. This country is so backward in so many ways. Jeb!’s Super Pac releases a 15 minute video on his life: In a desperate plea to GOP primary voters, Jeb Bush’s campaign…I mean, Super Pac, released a video which hoped to humanize Veto Corleone. The problem? Jeb is a super boring, plastic individual. The video is full of empty platitudes, relying on the viewer to actually like Jeb. Moreover, this video comes across as desperate. Stuck at 3% in national polls, Jeb! simply isn’t a good candidate (or at least the right candidate for this time). No number of lame videos or TV ads can help him this cycle. Majority says Trump is hurting GOP brand:  According to a new MSNBC/Telemundo/Marist poll, only 58 percent of adults say Trump is hurting the Republican party’s image. How the hell is that number so low? Who are these people that think he’s not hurting the GOP’s brand?

Panicking In Response to Mass Shootings Does Not Help Anyone

Panicking In Response to Mass Shootings Does Not Help Anyone

Hamilton Nolan at Gawker has been doing particularly excellent work lately. This morning, he published a wonderful post titled “ You Will Not Die in a Mass Shooting .” It addresses the fact that as mass shootings increase in frequency, Americans are terrified that they’ll be caught in a mass shooting situation. And when people get scared, they do stupid things. In particular, people who are scared of mass shootings will frequently buy guns. This is the dumbest thing you could do: if you really fear getting shot, having a gun in your house is much more risky for you and your loved ones than, say, going to the movies. I’ll let Nolan explain it: …Mass shootings are very scary. And very visible. But in all likelihood they are not going to happen to you. You are more likely to die in a mass shooting than to win the Powerball drawing, but the truth is that you are not going to do either. That does not stop people from buying lottery tickets, and it does not stop people from fearing being killed in spectacular acts of terrorism. It is true that guns kill tens of thousands of Americans every year—the majority of them from suicide. Of the fraction that are homicides, only a vanishingly small fraction of those are high profile mass shootings of the type that make people fear to go to office parties, or to movie theaters. If gun violence itself is what you fear, the most prudent action you can take is to not have a gun in your home. This is a negative feedback loop: more mass shootings happen, so people buy more guns to feel safe, which cause more people to be killed or injured by guns, which inspires more fear and causes more people to buy guns in order to feel safe
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Daily Clips: December 4th, 2015

Daily Clips: December 4th, 2015

Why today’s jobs report is a big deal for the economy:  The economy added 211,000 jobs – a whopping 20,000 more jobs than expected this month. These numbers suggest that the Fed will indeed raise interest rates this month. 3 conclusions from today’s job report: While the above article does a nice job of outlining the basic implications of today’s jobs report, this Bloomberg column goes into more detail. Certainly worth a read. Oh no, Jeb! You’re at 3% in the latest poll!  It must be hard for Jeb! to look at the latest polls and rationalize why he still needs to be in this race (other than the copious amounts of money he has stored up). I still cannot get over how far Jeb! has fallen. I was convinced going into this cycle that it would be Clinton v. Bush. I seriously underestimated the GOP’s appetite for outsiders, racism, and delusional leadership. Everyone who has ever worked for Ted Cruz despises him: In most jobs, references from past work plays a huge role in whether or not you get the position. Thankfully for Ted Cruz, this is not necessarily the case for POTUS, because almost everyone who has ever encountered Cruz…hates him. From his freshman roommate at Princeton to his time on the 2000 Bush campaign, colleagues have found Cruz to be a nightmare. Are you surprised?

Daily Clips: December 3rd, 2015

Daily Clips: December 3rd, 2015

Brady Walkinshaw to take on Jim McDermott in next year’s WA House race:  State Rep Brady Walkinshaw confirmed yesterday that he will be running for McDermott’s seat. Walkinshaw stressed he has “incredible respect and admiration” for McDermott, but said it’s time for a change. “I believe this region is ready for its next progressive leader,” he said.  The “welfare state” is a terrible name for an essential system:  “‘Welfare’ has two main meanings: general well-being, and, in some circles, government handouts. Welfare, though, is not designed with either of those meanings in mind—it’s a system of programs, including Social Security, Medicare, and unemployment insurance, that automatically props up consumer spending during recessions by making sure workers are getting by. Yes, an individual who receives money when unexpected, uncontrollable events stop him or her from working is getting help from the government. But it also helps on the level of the economy, as it makes sure that aggregate demand stays high during labor-market slumps. In this sense, the welfare state stabilizes capitalism.” New York Daily News cover: Perfection. An early look at tomorrow’s front page… GOD ISN’T FIXING THIS: https://t.co/eKUg5f03ec pic.twitter.com/j4gEFg9YtJ — New York Daily News (@NYDailyNews) December 3, 2015

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