Is This Maryland County Using ‘Junk Research’ to Study Wage Hikes?

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Is This Maryland County Using ‘Junk Research’ to Study Wage Hikes?

Nicole Knight

"This study is a clear attempt to validate the opinions of opponents to the wage increase and tamp down public support by threatening job losses for the county's most vulnerable workers."

Economists, advocates, and local leaders slammed a new report suggesting a $15 minimum wage hike in Montgomery County, Maryland, would cost roughly 47,000 jobs.

“The study is ludicrous,” County Council member Hans Riemer said of the results of the county-commissioned report on the effect of lifting the minimum wage from $11.50 to $15 over five years, according to Bethesda Magazine.

The report projected the massive job losses—including a loss of 45,300 low-wage positions—after surveying area business owners. The survey asked whether higher wages would make merchants more likely to lay off employees, among other questions. Fifty-seven percent said job cuts were very likely, while 63 percent said they’d very likely reduce hiring.

Critics blasted the survey’s methodology, saying the questions were freighted to bias respondents against the wage increase.

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“To put it bluntly, this is junk research,” wrote David Cooper, senior economic analyst at the Economic Policy Institute. “The closest analogy I can think of would be if the FDA was considering approval of a new drug and instead of reviewing any studies or trials, they instead simply asked the drug company, “What percentage of patients do you think this drug will harm versus help?”

Mimimim wage research typically doesn’t ask business owners what they might do in the future. A University of Washington survey conducted in a similar fashion to the Montgomery County report found shopkeepers’ gloomy predictions didn’t pan out. When asked, 62 percent of Seattle employers surveyed told researchers they expected to raise prices in response to a minimum wage hike. But when the University of Washington team went back and analyzed actual prices, they found the threatened price increases failed to materialize.

At least eight states and nine major cities have lifted the hourly minimum wage to between $12 and $15 as the Fight for 15 minimum-wage campaign makes inroads nationwide. Montgomery County’s unemployment rate of 2.9 percent is even lower than other jurisdictions that have recently lifted the minimum wage, such as Los Angeles and San Jose, as the report’s authors noted. In January, the Democratic-controlled Montgomery County Council voted in favor of a $15 minimum wage increase, as Bethesda Magazine reported. But County Executive Ike Leggett, a Democrat, vetoed the wage hike, and commissioned the $149,600 report from a Philadelphia-based firm called the PFM Group.

Labor advocates argued Leggett put his thumb on the scale by hiring a consulting firm known for helping employers cut costs.

“Sixty percent of Marylanders support a $15 minimum wage,” Larry Stafford, executive director of the advocacy group Progressive Maryland, said in a statement.This study is a clear attempt to validate the opinions of opponents to the wage increase and tamp down public support by threatening job losses for the county’s most vulnerable workers.”

Industry groups typically oppose wage hikes, and some have gone so far as to challenge in court the constitutionality of voter-approved minimum wage increases. A recent attempt failed to block a statewide minimum wage increase, to $12 per hour, in Arizona.

Two recent studies of Seattle’s $15 minimum wage arrived at dueling conclusions, as Rewire reported. A University of Washington study found those who work for low wages lost an average of $125 per month in pay under the new higher minimum wage, while a University of California analysis found no evidence of job loss in the Seattle food-service industry, the sector that employs the lion’s share of low-wage workers. Critics denounced the University of Washington study for failing to isolate the effect of higher minimum wages in a booming job market.