Category Archives: Minimum Wage

Elrich Slams Berliner on Minimum Wage

The following is by Councilmember Marc Elrich (D-At Large):

Earlier this week, the Council’s HHS committee voted 2-1 (Berliner and Rice vs Leventhal) to delay the full implementation of the minimum wage by two years for BOTH large and small businesses. (My bill cosponsored by 4 of my colleagues would raise the minimum wage 2020 for businesses with more than 25 employees and 2022 for those under 25.) While everyone acknowledges that there will be some impact on some small businesses, yet again no evidence was presented that demonstrated that it would be a significant impact.  While there are numerous studies, the meta-analysis of those studies show slight to no impacts on employment.[1] Statements should be supported by data or analysis.  The absence of data is part of what made the PFM study so bad, because their original massive job loss assertions, and even their second lower revised figure, did not reflect the data from anywhere (as this blog and others have documented[2]).  On the other side of the scale, studies clearly show the devastating impacts of poverty on children and families. I taught for 17 years at a high poverty school, and I saw up close the impact of poverty on students.

We have an opportunity to move toward a decent standard of living for these workers who have been working hard at low wages. Councilmember Berliner’s amendment to delay large businesses by two years to 2022 puts us two years behind Target’s stated nationwide plan. That is particularly inappropriate given that our county is one of the wealthiest in the entire country.

Councilmember Berliner argued for the delay using Minneapolis as the model and said that Montgomery County should use the same timing as they had. Using Minneapolis’ implementation schedule as a model would assume that it is a comparable jurisdiction. But it is not. Below I compare the living wage in the two jurisdictions. There are some big differences.

This table compares the living wage NEEDED TODAY in each jurisdiction.

Living Wage Minneapolis Montgomery County
Single adult $11.36 $15.80
1 adult 1 child $24.68 $29.82
1 adult 2 children $31.04 $34.87
2 adults 2 children $16.85* $18.72*

*This number is per adult in the two-adult family
(Source: Living Wage Calculator, MIT)

In every case, more than $15 an hour is needed TODAY in Montgomery County, but the cost difference between living here versus Minneapolis is the equivalent of $4 an hour, or $2 an hour if 2 adults are working.

However, the most important factor in cost of living differences is housing. Housing costs are what drives the cost of living and necessitate a particular wage. Here is a comparison of housing costs:

Jurisdiction 1br  yr/mo 2br  yr/mo 3br  yr/mo
Minneapolis $7824/ 652 $12635/1075 $17967/1497
Montgomery $15684/1307 $19476/1645 $25728/2144
Difference – or how much higher it is MoCo $7860/655 $6841/570 $7761/646

(Source: Living Wage Calculator, MIT)

A MoCo resident would need between $570-655/month more than a Minneapolis resident to pay the difference in housing costs. For all other expenses combined, Montgomery County is a few hundred dollars per year more costly to live in than Minneapolis, but annual housing costs are between $6841 and $7860 higher for Montgomery County. To suggest that a wage in Minneapolis, or a schedule for raising wages, should be replicated in Montgomery County ignores the enormous cost difference between the two jurisdictions which leaves our working poor deeply mired in poverty. We are simply prolonging an untenable situation for tens of thousands of families.

Finally, there is one last incorrect assumption in delaying the implementation date, and that is that Minneapolis is noticeably more gentle to small business. It’s been said that the proposed rate of increase is too fast. However, the facts show a different story.

Here is the pace of increase in the two jurisdictions:

Jurisdiction Small business increase # of years Cost/year Large business

increase

# of years Cost/year
Minneapolis $7.25 7 $1.03 $5.50 5 $1.10
Montgomery County $3.50 5 $.70 $3.50 3 $1.16

In other words, the impact in Minneapolis on small businesses is greater in terms of total increase than Montgomery County ($7.25 vs $3.50) and greater as a per-year expense ($1.03 vs .70) For large businesses, the difference in total increase in Minneapolis is also greater than MoCo ($5.50 vs $3.50) but is slightly less per year ($1.10 vs $1.16).

So for small businesses, if the issue is pace, then the Minneapolis schedule is worse for their small business than what I’ve proposed, and for large businesses our target is 2020, no different than what Target has committed to nationally for 2020.

In short, Minneapolis is so different regarding affordability for its citizens that the impact of raising the minimum wage, and the urgency for raising the minimum wage, is simply not the same. Our residents are far more rent burdened and have far less disposable income. And if you’re worried about small employers, our steps are smaller, only 2/3 of the average annual increases that Minneapolis is implementing.

For one last comparison, I looked at Flagstaff, Arizona, which is also raising its minimum wage to $15.  Their living costs are slightly higher than Minneapolis but still much lower than Montgomery County.  And housing costs in particular are slightly higher than in Minneapolis, but about $6,000 a year lower than those costs in Montgomery County.  Yet they are raising their minimum wage for all businesses from $8.05 in November 2016, to $11.00 in January 2018, and then up to $15 an hour in January 2021.  So they are increasing by $7 per hour over just 5 years – a rate of increase that exceeds anything proposed in Montgomery County.

The minimum wage needs to reflect the costs that people have to bear in order to sustain themselves.  Prolonging the implementation simply erodes the value of the wage.  Frankly, in a perfect world we’d be close to $15 today and then let it rise with inflation.  Even my bill, with 2020 and 2022 implementation dates will mean that when $15 is reached it will be worth less than $15 today, and I wish we could do better, but the proposed delay just makes things worse and is completely divorced from the reality that low-income families face.

[1] http://jaredbernsteinblog.com/the-minimum-wage-increase-and-the-cbos-job-loss-estimate/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JaredBernstein+%28Jared+Bernstein%29 and https://www.hendrix.edu/news/news.aspx?id=64671

[2] http://www.epi.org/blog/the-montgomery-county-minimum-wage-impact-study-is-absurd-junk-science/

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Will There Be a Deal on MoCo’s Minimum Wage?

By Adam Pagnucco.

The question of whether Montgomery County will have a $15 minimum wage has simmered for months.  After County Executive Ike Leggett vetoed Council Member Marc Elrich’s bill last January, the county commissioned an ill-fated study on the effects of a wage hike that has been discredited.  But Elrich, not waiting for any study, introduced a new bill that was little different from his previous one.  The Executive has now announced his terms for signing it.  We reprint his letter to the council below.

We summarize the differences between the bill and the Executive’s terms below.

Advocates for the bill reacted harshly to the Executive’s letter.  They sent out the following press release today.

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Economists, Community and Labor Groups Slam Executive Leggett Memo Say: “No More Delay Tactics, Working Families Need a Strong $15 Minimum Wage Now”

After Failed Study, Leggett Makes 2nd Attempt to Deny Low-Wage Workers a Living Wage

Rockville, MD- A coalition of economists, community and labor groups today condemned Montgomery County Executive Ike Leggett over his memo requiring County Council members to follow a set of criteria that would dramatically weaken Council’s $15 minimum wage legislation. The group also demanded that Leggett suspend his attempts to amend an irredeemable study and sign a strong bill before the end of session. Leggett’s minimum wage “study,” was widely criticized and eventually halted by the Executive himself.

The statement below is attributable to Maryland Working Families, the National Employment Law Project (NELP), 32BJ SEIU, Jews United for Justice, Progressive Maryland and CASA.

“In one of the nation’s wealthiest counties, County Executive Leggett is making a second attempt to avoid raising the wage like so many other economically prosperous cities have done successfully. His youth exemption would keep thousands of working men and women under the age of 20 in poverty, leaving them to continue struggling to support themselves and their families. County residents are counting on the Council and the Executive to resist corporate lobbyists whose self-interests are out-of-sync with the needs of working families. It’s time to stop looking for excuses and raise the minimum wage by passing and signing a clean bill, without delayed implementation or exemptions.”

Research has shown that overwhelmingly, cities that have raised the wage have not experienced job loss and the local economy continues to prosper. Moreover, a wage increase can reduce reliance on public assistance from a safety net that faces extreme cuts from the Trump administration, placing a heavier burden on local taxpayers.

With more than 163,000 members in 11 states, including 18,000 in the D.C. Metropolitan Area, 32BJ SEIU is the largest property service workers union in the country.

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So will there be a deal?  Under normal circumstances, the answer is yes.  The Executive is recommending a combination of delays and relatively modest adjustments for some categories of workers.  He is not proposing a fundamental overhaul of the bill.  A properly functioning legislative process would smooth out these details, probably by splitting the differences, and result in a 9-0 vote and a signed bill.  That’s how Rockville works most of the time.

But the circumstances are anything but normal.  Three Council Members are running for Executive and five more are running for reelection next year.  The two Council Members who are Executive candidates and are sponsoring the bill must decide if they prefer a signed bill or a campaign issue.  The bill advocates must decide whether they want another upheld veto which would cause further delay and take their chances with a new Executive and council.  These decisions, which are ultimately political in nature, will determine whether there is a deal on minimum wage.

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Leggett Backs Away from Junk Science Study

By Adam Pagnucco.

County Executive Ike Leggett, who commissioned a county-financed study on the impact of a minimum wage increase blasted by the Economic Policy Institute as “absurd junk science,” is backing away from its results.  Leggett asked in a letter to the study’s authors that they review the methodology and findings in their report.  He also revealed that his administration had “received word from your firm that there might be a problem with the methodology and calculation of fiscal impact and resulting job impacts.  You have indicated that the job losses might be less than what is expressed in the report.”

Let’s recall that this very same firm prepared a study recommending retention of MoCo’s liquor monopoly – a study that did not include review of your author’s proposal to replace its revenue.  If the minimum wage study is so flawed that the Executive is retreating from it, what does that say about this same company’s work on the liquor monopoly?

It’s worth noting that the Executive’s letter to the study’s authors comes at the exact same time that the County Council is sending him an exhaustive list of questions about the study’s methodology.  The council is set to review the study in public next month.  One line of questioning examines the minimum wage bill’s impact on county labor costs, which could range into the tens of millions of dollars.  That issue is sure to become more prominent in time.

We reproduce the Executive’s letter below.

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Conservatives Spread MoCo Junk Science Far and Wide

By Adam Pagnucco.

Discussion of Montgomery County’s minimum wage study, branded “absurd junk science” by the Economic Policy Institute (EPI), is spreading like wildfire through online conservative outlets.  It is now fortifying right-wing arguments against minimum wage hikes all over the United States.

The study, exposed by EPI, Seventh State and economists interviewed by Bethesda Magazine as possessing numerous crippling methodological problems, has nevertheless been embraced by right-wing online media.  That includes articles by Fox News, Breitbart, Townhall.com, Young Conservatives, the New Right News, the Heritage Foundation’s Daily Signal, Glenn Beck’s The Blaze, Ben Shapiro’s The Daily Wire, L. Brent Bozell’s CNSNews, the Job Creators Network’s Information Station, the Washington Free Beacon, a Washington Examiner columnist, a Forbes Magazine columnist, the Competitive Enterprise Institute and Economic Collapse News. Because the conservative echo chamber cross-pollinates its content, it’s probably just a matter of time before the study makes its way to Rush Limbaugh, Sean Hannity and other big-time right-wing hosts.

It’s worth noting what a few of these outlets are saying.

Forbes Magazine columnist Tim Worstall:

The study’s findings are pretty bleak:

The county’s current minimum wage is $11.50. The study concluded that an $11 hourly wage was the local market rate needed to attract and retain employees. It found that increasing the wage would cost the county an additional $10 million per year to increase county employee wages.

The report found there are about 88,000 “low-wage jobs” in the county, in which employees make $1,250 or less per month that could be affected by the minimum-wage increase.

Economic Collapse News:

Study after study, report after report, common sense continually highlight a crucial fact: a $15 minimum wage results in lost jobs, lower pay, less work for workers and jobs that are not being created.

The Daily Wire:

In all, raising the minimum wage to $15 would result in the loss of $396.5 million of income in the county by 2022.  And even Democrats — or smart ones — know what a $15 minimum wage would do to low-income workers.

Washington Examiner Columnist Ron Meyer:

A county considering raising the minimum wage to $15 per hour commissioned a study on the impacts of the hike, and the results are staggering. It should serve as a wake-up call to other localities considering large increases…

For those who care about empowering low-income Americans and lifting workers out of poverty, the mounting evidence and data show raising the minimum wage to $15 isn’t compassionate, just, or charitable. It kills opportunity and creates more poverty, especially for young Americans trying to build their skill sets and make ends meet.

Those still doing #FightFor15 have important questions to answer: Why are you ignoring evidence that hurts low-wage workers? If you don’t care that it hurts low-wage workers, what are your real motives? Aren’t there other anti-poverty policy measures you can fight for that would be more productive?

None of these right-wing publications question the study’s methodology.  They embrace it uncritically because it agrees with their worldview.  And as other governments consider their minimum wage policies, the study will be used to discourage increases.  State Senator Rich Madaleno (D-18), lead sponsor of a $15 state minimum wage bill last year, debunked the study on WBAL radio but it will surely come up again.

We do not criticize County Executive Ike Leggett for being concerned about the employment effects of the minimum wage bill.  At some point, an excessively high minimum wage will lead to employment losses and business shutdowns that outweigh the positive benefits for workers who keep their jobs.  At present, no one knows what level of minimum wage that is.  But the MoCo junk science study, which cost the county $149,600, does not help us determine that wage level one bit.  What it does is give aid and comfort to right-wing ideologues who are willing to use any “information,” however flawed, to push their agenda.

Is that a worthy purpose for your tax dollars?

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MoCo’s Dubious Minimum Wage Survey

By Adam Pagnucco.

The Executive Branch has released its long-awaited study of the impact of MoCo’s $15 minimum wage bill and it is taking fire.  The primary objection from bill supporters is that much of the study, including the assumptions for its economic modeling, is based on an unscientific, self-selected sample of business owners who were asked to predict what they would do if the minimum wage were raised.  A senior economic analyst with the Economic Policy Institute labeled it “absurd junk science” and wrote:

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?”

Your author agrees with these criticisms.  Want to know why?  Because your author was asked to fill out the minimum wage survey!

On May 12, the county sent me the email below asking for participation in the minimum wage survey.  Note that the email says, “All responses will be anonymous, and the project team will be unable to link responses to specific businesses. Your responses will be used to inform our analysis around wage compression, job loss, and other relevant issues.”

Now, I am self-employed, but I do not own an incorporated business or employ other people.  Just out of curiosity, I clicked on the Survey Monkey link right after receiving the email.  Yes, the link worked and the survey was ready to accept responses.  If I had filled it out (and I didn’t!), by its own admission above, the survey administrator would have had no way to filter out my responses or flag them as fraudulent.

Lord knows who else got the email and exactly who filled out the survey!

Your author does not express an opinion on the policy merits of the $15 minimum wage bill.  That’s a topic for a future post.  But the minimum wage business survey is a different matter.  It was obviously subject to self-selection bias and even potential manipulation.  The fact that it was administered in flagrant violation of all known scientific surveying techniques disqualifies it from being used as a tool to evaluate public policy.

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Leventhal Lurches Left on the Minimum Wage

As he prepares to run for County Executive, Montgomery County Councilmember George Leventhal (D-At Large) is taking a no-one-to-my-left approach on the minimum wage. He has heartily embraced the legislation by fellow Councilmember Marc Elrich (D-At Large) to raise the county’s minimum wage to $15/hour.

The legislation, recently vetoed by County Executive Ike Leggett after passing the Council by 5-4, would have indexed the minimum wage. Consistent with his position, Leventhal came out strongly on Facebook against a proposal by Del. Dereck Davis (D-Prince George’s) to limit the abilities of local jurisdictions to legislate on the minimum wage, and pointed out that the County’s current minimum wage law is not indexed for inflation:

His campaign consultant, Karen Murphy, then posted the first comment applauding Leventhal and attacking both Davis and Councilmember Roger Berliner (D-1), who voted against the legislation to increase the wage:

Berliner is a likely rival to Leventhal for the open county executive post in 2018.

At this point, my fellow blogger Adam Pagnucco, who formerly worked for the Council, pointed out that Leventhal had voted for an amendment sponsored by Berliner to strip indexing from the county’s minimum wage in 2013:

(Here is the link to the meeting in the screenshot of Adam’s post.)

George agreed that Adam is correct but then noted that Adam has done work for Berliner as a campaign consultant. Irrelevant but fair enough. On the other hand, it was only at this point that it was revealed that Karen Murphy, who earlier posted the SHAME on Berliner comment, works for Leventhal.

Can we look forward to Karen Murphy revealing her employer and pay in future political posts? (Note: Adam says he was paid less but the debate over the amount is not important here.)

George later explained his evolution on the issue:

The proposed new minimum wage of $15.00 is a 30 percent increase over $11.50. Councilmembers who voted no expressed concerns that a minimum wage set above a certain point could crimp the county’s economy. Councilmember Leventhal argued this point passionately during the 2013 debate. So this new lack of caution is a real shift.

The politics of this debate are interesting. The county’s Democratic Party continues to shift left, so taking a vocal, hardline pro-minimum wage stance may be politically advantageous. This should benefit Elrich, yet another candidate for county executive, and Leventhal would hope he too would reap the benefits, or at least mend relations with unions who didn’t endorse him 2014.

In theory, this leaves business oriented Democrats open for Berliner, or another potential candidate like David Trone. However, Leventhal has had strong developer and business support in the past and would likely try to win their support again, if only as clearly preferable to Elrich from their point of view.

(Note: I am not a consultant to any campaign or a supporter of anyone for county executive at this time. I have actively supported both Elrich and Berliner in some of their past Council races.)

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