Groundhog Day on L.A.’s minimum wage proposals: Guest commentary

Original Article:

  • Author: Michael Saltsman

  • Publication Date: January 2015

  • Newspaper: Los Angeles Daily News

In the movie “Groundhog Day,” Bill Murray’s character Phil Connors wakes up every morning in the same guest house in Pennsylvania with the same song playing on the radio. This year, Los Angeles is having its own case of Groundhog Day déjà vu: A team of researchers affiliated with the University of California, Berkeley, who last year drafted an approving report of Mayor Eric Garcetti’s proposed $13.25 minimum wage, is back again — this time, to produce a supposedly even-handed analysis of the same proposal.

A growing contingent of prominent Angelenos, including City Council members Mitch O’Farrell and Felipe Fuentes, have raised concerns about whether this analysis could truly be called independent. And with good reason: This UC Berkeley crew is no ordinary team of researchers.

Like the repetitive tune played every morning in Groundhog Day, their papers repeatedly find that proposed minimum wage increases — no matter the dollar amount or the geography — will bring mostly gain and very little pain. In 2014 alone, they came to this conclusion in five separate California-specific reports for San Francisco, San Diego, Los Angeles, Oakland and the state as a whole.

These results are unusual, and not just because they contradict the stated concerns and testimony of businesses owners in those locales. They’re unusual because they’re out-of-step with the vast majority of economic literature on the impacts of minimum wage increases. In fact, a summary of all minimum wage studies over the last two decades by economists at UC Irvine and the Federal Reserve Board finds that 85 percent of the most credible reports point to jobs loss when the minimum wage is hiked.

A careful look at the fine print in the Berkeley team’s methodology explains this apparent contradiction. When analyzing the impact of a proposed wage hike, the researchers “do not make any adjustments for potential positive or negative changes in employment due to the minimum wage increase.” That’s a staggering omission, the equivalent of studying the impact of building the new football stadium in Los Angeles without taking into account any costs to taxpayers.

Of course, it’s a convenient omission for proponents of a higher minimum wage, but it’s certainly not convenient for the young jobseekers who stand to shoulder the consequences of an ill-conceived wage hike. Teenagers in the City of Angels already face an unholy unemployment rate of 30 percent, one of the highest rates in the nation. Employees like these, who may already be marginally attached to the workforce, deserve a credible and robust analysis before the city builds additional barriers to employment.

Unfortunately, that’s not what they’ll get from the UC Berkeley team. One of the lead authors, Michael Reich, has already accompanied Mayor Garcetti on minimum wage pitch meetings, according to the Los Angeles Times. Reich’s co-authors include staffers at the Center for Labor Research and Education, which has been funded by some of the same labor unions advocating for minimum wage increases.

Co-author Ken Jacobs was previously the co-director of the San Francisco Living Wage Coalition, and his colleague Annette Bernhardt was previously policy co-director at the National Employment Law Project — an organization that boasts of “coordinating the campaign to lift the federal minimum wage to more than $10 per hour.” The conflicts of interest would be humorous were the consequences of the policy they’re studying not so serious.

Bill Murray’s character in “Groundhog Day” was only able to break the cycle of repetition and wake up to Feb. 3 when he discovered the mistakes that were holding him back. To break the cycle of minimum wage impact reports coming to the same dubious conclusion, the City Council should recognize its own mistake and bring in a truly independent team to analyze the mayor’s proposal.