Earlier this year, we saw a pathetic attempt to claim that the first phase of Seattle’s new minimum wage law was already–a month before it went into effect!–destroying the restaurant industry in the city make the rounds in a variety of right wing publications. It was based on a strikingly inept attempt to extrapolate a trend from a few anecdotes, and the narrative collapsed under the slightest scrutiny.
The latest effort in the desperate effort to show a negative effect on restaurant employment took the important step of using actual data. Unfortunately, not well. Mark Perry attempted to suggest that a Jan-Jun decline in restaurant employment in the Seattle MSA, which comprises the three most populous counties and around 50% of the state’s population, as indicating a negative effect of Seattle’s new law, even though the city comprises less than a 5th of the MSA. As
Barry Ritholz Invictus, writing at Barry Ritholz’ blog, notes, this hackishness was immediately repudiated: “Unfortunately for Professor Perry, when you live by short-term noisy data, you die by short-term noisy data. To wit: The very same metric highlighted by the good professor above just produced the biggest one-month gain in the entire history of the series.”
Unsurprisingly, Professor Perry has not been deterred. As of September 22, he’s still trying to use MSA data to demonstrate the job-killing effects of Seattle’s minimum wage laws. Of course, it’s theoretically possible that Seattle’s minimum wage is so brutally depressing job growth in the city that it’s dragging down the whole MSA. This is something we can actually check for. It’s as hackish as ever, as
RitholzInvictus and Goldy demonstrate. Goldy:
Fortunately, we’ve got plenty of other data to work with. For example, friend of the blog Invictus has been providing us with weekly updates on Seattle food service permits showing a roughly 3.2 percent increase in the number of establishments in-city since the start of the year. But what do the number of food service establishments tell us about the number of food service employees? Actually, quite a lot.
The US Census Bureau provides detailed employment data at the city, county, and MSA level every five years, and Seattle’s ratio of food service employees per food service establishment has stood near 14.5 in 2002, 2007, and 2012. And since there’s no reason to suspect a substantial shift in this ratio in the three years since the last city-level report, we must logically conclude that Seattle’s 3.2 percent increase in the number of food service establishments since the start of the year roughly correlates to a 3.2 percent increase in Seattle’s number of food service employees.
Meanwhile, the state provides monthly county-level data jobs data, which, seasonally-adjusted, shows a 2 percent increase in food service jobs since the start of the year in King County. Since we know Seattle’s food service job growth is roughly 3.2 percent year-to-date, and historical Census data tells us that Seattle accounts for about half of King County’s food service employment, we can extrapolate the data to conclude that the number of food service jobs in non-Seattle areas of King County have only grown by about 0.8 percent year-to-date.
In other words, food service jobs are growing four times faster in Seattle than in lower-wage surrounding King County. Wow!
What about the rest of the MSA? Seasonally adjusted, state data shows Snohomish County food service jobs growing at only 1.3 percent year-to-date, while food service jobs in Pierce County have actually declined by 0.5 percent. Thus, if there has been a loss of bar and restaurant jobs in the Seattle-Tacoma-Bellevue MSA, the loss has come entirely from Pierce County—where the Tacoma city council recently failed to raise the minimum wage. Food service jobs in the rest of the three-county MSA—especially in higher-wage Seattle—continue to grow.
So thank you, Professor Perry, for proving the job-killing impact of Pierce County’s lower minimum wage.
The connection between permits and overall job growth could turn out to be a off a bit, of course, but it seems unlikely it would considerably change the overall dynamic. It’s now clear that the use of MSA data is directly misleading: it an attempt to use the relatively weak economy of Pierce County and Tacoma–where the minimum wage increase effort failed!–as evidence about employment trends in Seattle.
But it’s worse than that. Even if Perry’s dishonest insinuations were correct–even if Seattle and the Seattle MSA were identical–the data he’s using doesn’t really do what he needs it to to make the case against raising the minimum wage nationally. The minimum wage for the rest of the state, whose restaurant industry job growth he’s trying to use against Seattle, is currently $9.47 and is indexed to inflation, so it cannot be expected to drift downward over time absent legislative action, as most minimum wages do. Is Prof. Perry willing to accept the implications here–that raising the national minimum wage by ~30% would not harm employment?