Posts filed under “Current Affairs”
In yet another assault on economics, which is already begging for mercy in the wake of his ongoing intellectual dishonesty, Mark Perry recently tweeted the following:
Coincidence? Restaurant jobs in WA state ex-Seattle are up +5,600 since Jan. vs. down in Seattle MSA by -100? pic.twitter.com/lB8DZmHhai
— Mark J. Perry (@Mark_J_Perry) September 22, 2015
What Perry is trying to get at, of course, is that the new minimum wage in Seattle – implemented in April of this year – is failing miserably already. Except, not so much, as I’ll explain.
Although I understand the constraints of Twitter, reducing the Seattle-Tacoma-Bellevue Metropolitan Statistical Area (MSA) to the “Seattle MSA” is beyond misleading. (Beyond that, my first question was, “What does January 2015 have to do with anything? It was neither when the law was passed nor enacted. It’s an arbitrary cutoff signifying nothing.”) Wrote a regional economist – Dr. Annaliese Vance-Sherman – with whom I corresponded about Perry’s tweet (emphasis mine):
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.
Dr. Vance-Sherman’s final comment – that perhaps there’s a bit of catch up going on – had been my immediate thought, and I’ll have more on that below, but first things first. (By the way, it should be readily apparent that Dr. Vance-Sherman is echoing everything I’ve written in just about every post I’ve published on this subject.) The Seattle-Tacoma-Bellevue MSA is, in a word, huge. It encompasses three counties – King, Pierce, and Snohomish. It looks like this, as I pointed out in this post:
The Sea-Tac-Belle MSA has a population of about 3.6 million versus the city of Seattle’s 660,000 (more than 5x). It is the 15th largest MSA in the country and covers 5,872.35 sq mi. A business opening or closing in, say, Oso – over an hour’s drive to the north from Seattle – would be captured in the Sea-Tac-Belle MSA data. And yet the good professor insists that we can glean valuable information about the effects of the new minimum wage in the city of Seattle by looking at the Sea-Tac-Belle MSA. What he is doing, in fact, is nothing more than manufacturing lies for the right-wing echo chamber, very much including Fox News, which regurgitates his misinformation unquestioningly and unflinchingly. It is a shameful sight to behold.
To clarify exactly how useless Professor Perry’s information is, let’s try to break the numbers down as best we can. We can, in fact, get numbers for the city of Seattle proper. Unfortunately, we can only get them every five years – from the Economic Census – and last got them for 2012. In that year, the city had 38,483 employees in NAICS Code 722 – Food Services and Drinking Places – versus the 135,000 currently in the Sea-Tac-Belle MSA. So, the MSA (now) has roughly 100,000 more food services employees than the city itself (in 2012). In other words, inferring anything about the city from the MSA is an exercise in futility, and Perry knows it.
We can also go to the next level up from the city – to King County – and see what that looks like. The state of Washington maintains data that allow us to look at individual counties. Although their data for the time series are not seasonally adjusted, you can use the Census Bureau’s X-13ARIMA-SEATS Seasonal Adjustment software package to adjust the state’s data. So, moving from the city of Seattle to King County, we see the following:
At the end of 2012, there were about 81,300 NAICS 722 workers in the County (versus the 38,000 we know were in the city) and 120,500 in the Sea-Tac-Belle MSA (in 2012). The County currently has about 92,000 NAICS 722 workers versus the aforementioned 135,000 currently in the MSA, so some 43,000 workers are in Pierce and Snohomish Counties. And yes, King County is at a new all-time high in NAICS 722 workers as of August 2015, notwithstanding Professor Perry’s idiocy. It should be fairly easy to see how unhelpful – in fact destructive – Perry’s analysis is.
But wait, there’s more. With the other two counties – Pierce and Snohomish - seasonally adjusted, we can make an apples-to-apples comparison of the three counties that comprise the Sea-Tac-Belle MSA. Starting in June 2014, when the new minimum wage ordinance was passed, here is the breakdown of the MSA’s component counties, indexed to 100 at June 2014:
The problem – as we can clearly see – is in Pierce County, not Seattle’s King County. Professor Perry could have known this, but he’s too lazy to do the work, preferring instead to belch out “think tank” ideology that will get picked up and circulated far and wide. Circling back to a thought I’d had – subsequently echoed by Dr. Vance-Sherman – what did the Sea-Tac-Belle MSA look like versus the rest of the state over time? This is, after all, the crux of Perry’s new argument. Indexing to the end of the Great Recession – June 2009 – the Seattle-Tacoma-Bellevue MSA far outstripped the remainder of the state of Washington for years starting in 2011 and right through present day: Should we be at all surprised that, perhaps, after four years of lagging, the rest of the state is playing a bit of catch up to the growth in Sea-Tac-Belle? To recap:
- Use of the Sea-Tac-Belle MSA data is beyond useless with respect to Seattle’s new minimum wage in the first place. Perry’s continued use of it demonstrates his bad faith.
- That said, within the Sea-Tac-Belle MSA, it is Pierce County that is the drag, not King (in which Seattle resides).
- Washington ex- the Sea-Tac-Belle MSA has lagged in NAICS 722 worker growth for several years running. A bit of catch up should not be surprising.
- Mark Perry’s intellectual dishonesty knows few, if any, bounds.
- It will take literally years to know how the Seattle minimum wage experiment plays out.
- There is no evidence as yet that the April increase is producing any negative effect.
- As I chronicle every Thursday, the number of food service permits in issue for the city has been generally positive.
@TBPInvictus The opening paragraph of this CNNMoney piece (over one year ago) perfectly captures a growing sentiment that I’ve seen making the rounds more frequently of late: As protesters across the country call for the fast-food chains to raise their wages, a number of companies have begun experimenting with new technology that could significantly reduce…Read More
@TBPInvictus (Pun intended in the title) There are myriad factors that typically go into determining the success or failure of any legislative policy. It will be no different with regard to the minimum wage. Let’s turn (again) to Seattle, currently Ground Zero for the minimum wage debate, where the minimum wage was recently kicked up…Read More
@TBPInvictus here: As I recently highlighted, Mark Perry – an AEI scholar and professor of economics - is playing very fast and loose with data surrounding employment in Seattle post its recent minimum wage hike. In his recent “report” on the subject, which was picked up far and wide by conservative outlets, Professor Perry wrote (emphasis mine):
“In June of last year, the Seattle city council passed a $15 minimum wage law to be phased in over time, with the first increase to $11 an hour taking effect on April 1, 2015. What effect will the eventual 58% increase in labor costs have on small businesses, including area restaurants? It’s too soon to tell for sure, but there is already some evidence that the recent minimum wage hike to $11 an hour, along with the pending increase of an additional $4 an hour by 2017 for some businesses, has started having a negative effect on restaurant jobs in the Seattle area. The chart below shows that the Emerald City MSA started experiencing a decline in restaurant employment…”
The minimum wage hike took place in the city of Seattle, population ~650,000. What’s all this talk about “area restaurants,” “the Seattle area,” and the “Emerald City MSA”? (Note that companies with under 500 employees — that includes most restaurants — the actual date is 2021, not 2017).
This is simply someone with an agenda deliberately being intellectually dishonest in an attempt to mislead readers and spread misinformation widely through the conservative echo chamber. It’s a tried and true method that, unfortunately, has worked time and again.
When Perry talks about Seattle (city proper) and the “Seattle area,” you may not know it, but he’s talking about two very, very different areas.
Legislatively, economically, legally and socially, these are two completely different regions. Perhaps most important of all, in terms of data collection for the subject at hand, the map below shows exactly how different they are:
Seattle, the city in question whose minimum wage is now $11, on its way to $15 over the next 3-7 years – is (as best as Paintbrush lets me draw it) the area within the red oval. The “Seattle area” or “Emerald City MSA,” as Perry misleadingly wrote, are the three more darkly shaded counties – Pierce (bottom), King (middle), and Snohomish (top) – engulfing Seattle and making it look, well, geographically tiny in comparison.
The MSA Perry referenced as being impacted by the new minimum wage has an overall population of some 3.6 million versus the aforementioned population of Seattle at about 650,000. What’s to compare? As Media Matters put it in their takedown of Perry’s work: “The employment trends of the entire region are not representative of the impact of a local wage ordinance in a single city.” But Perry does not care, as he’s repeatedly referenced the same irrelevant data point multiple times on Twitter. He is exactly the man whom Upton Sinclair was referring to when he said, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
Why would anyone look at a MSA when it is the city – and ONLY THE CITY - that has the new minimum wage law. The New York equivalent would be to suggest that perhaps an ordinance in New York City might somehow have a ripple effect in White Plains, N.Y., or Hackensack, N.J. After all, they are both part of the greater tri-state region (there is a massive New York-Newark-Jersey City MSA). It’s absurd on its face, and any honorable analyst understands this.
This suggests that Perry is engaging in fraud or ignorance. Neither reflects on him favorably. Perry should apologize and AEI should retract that piece in entirety.
An analyst as intellectually dishonest as Perry apparently is could do something similar on the flip side:
Seattle Passes Higher Minimum Wage; Area Food Biz Employment Now at 134,000!
First, I’d point out that at the end of 2013, the most recent year for which we have good statistics on the city itself, Seattle city employment in two broad categories combined – Arts, Entertainment & Recreation and Accommodation & Food Services – totaled about 40,000, as seen below.
Source: American FactFinder
Then, I’d trumpet the “fact” that the “Seattle area” or “Emerald City MSA” (see what I did there?) has more than tripled that total to a whopping 134,000. I’d then claim victory at having “demonstrated” that the ordinance I supported was having its desired effect.
Source: St. Louis Fed
But I’d never do such a thing. Most reputable people wouldn’t.
@TBPInvictus I am reminded of the above law each and every day. And a law it is. Inviolable. No sooner had I posted the other day about the shoddy “work” coming out of AEI than, voilà, said shoddy “work” is being trumpeted by pompous blowhard Stuart Varney on Fox News. I’ve seen this happen…Read More
@TBPInvictus If you’re just joining us, here’s our story thus far: Some on the right took a fairly benign article out of a Seattle publication and twisted it to fit their agenda, i.e. that the increased minimum wage there would spell disaster for the Seattle restaurant scene as eateries closed in rapid succession. Their hopes…Read More
@TBPInvictus Among the more overlooked data sources out there is the Federal Reserve’s Survey of Consumer Finances (SCF). My guess as to why it’s overlooked is that it’s only published triennially – not exactly a high frequency release. The most recent (2013) update was issued last September. As I saw very few, if any, write-ups…Read More
@TBPInvictus here It’s been a few months since the first increase in the Seattle minimum wage (see here for the schedule of bump ups). Even before the initial April 1 rise, we were treated to a chorus of conservative voices claiming that the restaurant business in Seattle was doomed. The nexus for many of the claims was…Read More
@TBPInvictus here. We have interesting experiments going on in the state of Kansas and the city of Seattle. Herewith a brief update on both. Thanks to the following Tweet, I was made aware of the fact that – as you can see – the state of Kansas, under Sam Brownback’s awesome tax cuts, recorded the…Read More
The never ending sturm und drang over the state of Greek debt, membership in the euro zone and the potential shocks of a debt default have moved from tragedy to comedy to monotony. The solution is simple. It won’t be fast, it won’t be easy, but it will be a huge improvement for all concerned….Read More