Wednesday, February 22, 2006

Minimum wage -- scare tactics

Re: Wage talk more than minimum by Edward D. Murphy, and

Minimum wage hike wouldn't have a big impact on MaineAs such, it's probably not worth sending this anti-business message.



I don’t have time to show up and wait on you at your Editorial Board hearings, either here in Cumberland or at your Portland offices, but I do care and most strenuously OBJECT to the shallow, sloppy work that Edward Murphy and John Porter did in today’s minimum-wage coverage and associated editorial, which belies the banner across your building trumpeting your perennial status as “New England’s Newspaper of the Year.” (You look more like a small-town gossip sheet to me.)

Your reporter (Murphy), failed to conduct even a rudimentary investigation of the true nature of the Employment Policies Institute (EPI), the supposed “think tank” that testified against the wage hike. EPI is in reality the creation of a restaurant-hotel-alcohol-tobacco lobbyist. (See footnote (1), below.) I looked through the list of minimum-wage studies on the EPI site. They look like they’re coming from academicians – then I remembered David Card and Andrew Krueger, the Princeton University economists whose studies showing no job loss from a moderate increase in the minimum wage have been reviewed and accepted by hundreds of economists. Neither Card’s nor Krueger’s name appears on the EPI site. That EPI is a smokescreen is built into its very name, chosen to confuse (reporters like Murphy) by its resemblance to the Economic Policies Institute, which supports increasing the minimum wage. The EPI site also includes a great deal of character assassination of Acorn, a grass-roots organization that represents the lowest-paid workers.

Your editorial page editor (Porter) is willing to set aside justice for fear of damaging an image of our state that’s he’s bought into at the behest of vested interests. The fallacy that he offers us, equivalent to “don’t make waves,” is, for an editorial page, just plain childish. But it’s a tipoff that the people Porter listens to are the state’s movers and shakers, especially those nearby the Press-Herald’s offices in the financial district. Porter probably lunches with corporate lawyers and bankers, maybe even hobnobs with them in his home community. As a result, when it comes time to make a tough call, he parrots their line. (Or maybe he just reads Murphy’s reporting and, like Murphy, starts taking at face value what EPI and like-minded “think tanks” have provided for the consumption of expedient thinkers such as himself.)

Let’s take an example of one way in which Porter’s reasoning could be extended: billboards. When I drive across Maine, I don’t have to look at billboards, and I’m thankful. I’m thankful because I get to see all that Maine has to offer, unsullied, and also because there’s a message in the billboards’ absence. It’s a sense of what’s just and a proper sense of priorities. I’m also thankful because, when I visit Michigan or Florida or Texas, there’s a billboard in every direction. I never get to see what those states have to offer, and I get a message about where their priorities are. Porter has been listening to people whine about how our state supposedly discourages business (never mind about the businesses that have been encouraged to locate in Santa Fe, New Mexico or San Francisco, California, because both of them have higher-than-national minimum wages, and never mind, right here in Maine, that there are plenty of people who visit, buy second homes, spend money on guides/antiques/hotels/restaurants because of a sense that the state is pristine that they get when they drive across it) for so long that it wouldn’t be beyond reason to see him come out in favor of allowing free rein to billboard advertising in the name of “improving” Maine’s business image. As with billboards, so with the Governor’s Dirigo health-care effort, environmental protection, and a host of other considerations, all for fear of sending an “anti-business” message.

In conclusion, I think you would do well to get rid of both Murphy and Porter and take me in their stead. That would save you money, plus you would get the job done right.

(1) From Source Watch, a project of the Center for Media and Democracy: (http://www.sourcewatch.org/index.php?title=Employment_Policies_Institute)
“The Employment Policies Institute is one of several front groups created by Berman & Co., a Washington, DC public affairs firm owned by Rick Berman, who lobbies for the restaurant, hotel, alcoholic beverage and tobacco industries. EPI, registered as a 501(c)(3) tax-exempt organization, has been widely quoted in news stories regarding minimum wage issues, and although a few of those stories have correctly described it as a "think tank financed by business," most stories fail to provide any identification that would enable readers to identify the vested interests behind its pronouncements. Instead, it is usually described exactly the way it describes itself, as a "non-profit research organization dedicated to studying public policy issues surrounding employment growth" that "focuses on issues that affect entry-level employment." In reality, EPI's mission is to keep the minimum wage low so Berman's clients can continue to pay their workers as little as possible.
EPI also owns the internet domain names to MinimumWage.com (http://www.minimumwage.com) and LivingWage.com (http://www.livingwage.com), a website that attempts to portray the idea of a living wage for workers as some kind of insidious conspiracy. "Living wage activists want nothing less than a national living wage," it warns (as though there is something wrong with paying employees enough that they can afford to eat and pay rent).”


3 Comments:

Blogger Richard Wolfe said...

From: "Murphy, Ed" EMurphy@Pressherald.com
To: "'Richard Wolfe'" richardrwolfe@yahoo.com
CC: "Guttman, Jeannine" JGuttman@Pressherald.com, "Blom, Eric" EBlom@Pressherald.com
Subject: RE: MT Visitor Question/Comment via form
Date: Wed, 22 Feb 2006 10:59:31 -0500

Mr. Wolfe:
Thank you for taking the time to respond to the column.
The point of the article was to look at how two people, or
organizations, can look at the same relatively straight-forward issue, do their own research, and come up with diametrically opposed conclusions, which politicians can then seize upon to "prove" why their stance is correct.
The minimum wage is a prime example: whenever there's a proposal to raise the rate, at either the national or state level, studies come out of the woodwork to suggest that it will either help or hurt workers, help or hurt businesses and help or hurt the overall economy.
The political philosophy of EPI was very clear to me as it would be
for anyone who talks to people in the organization or looks at its Web
site.
Likewise, MECEP has policy goals that influence how they frame the
issues.
In retrospect, I should have provided that background in the article, although I think it was clear to anyone looking at their distinct points of view.
Thank you again for reading the column and sending me your thoughts.

Edward D. Murphy
Business Writer
Portland Press Herald/
Maine Sunday Telegram
207-791-6465

February 22, 2006 5:20 PM  
Blogger Richard Wolfe said...

Date: Wed, 22 Feb 2006 16:58:18 -0800 (PST)
From: "Richard Wolfe" richard@r-wolfe.com
Subject: RE: MT Visitor Question/Comment via form
To: "Murphy, Ed" EMurphy@Pressherald.com
CC: JGuttman@Pressherald.com, JBlom@Pressherald.com

MECEP is a non-profit, whereas EPI is a front, which makes YOU an ENABLER.

But never mind. I should have known, just from the “angle” you were pursuing with your article, that you’re lazy.

Have you read the Card and Krueger study? Have you ever even heard of them?

You get an assignment, you see that economic research is involved, and you click your brain’s “off” button. Better to find an “angle” to write about. That way, you won’t have to wade through the research. No need to really think this through if we don’t have to, right? We can just spin it.

Fortunately for you, another reporter has already thought it through for you: “What Is a Living Wage?” by Jon Gertner in the The New York Times, Jan 29 2006. (An example of the Times’ superior resources? I don’t think so. I think it’s an example of the courage to actually report as distinguished from putting your paper’s spin on a story. Another reason I think it should be me who’s doing your job.)

Oh – and, just for your further edification, I’ll share my letter to the Times, in response to Gertner’s work:

“What is a living wage?” missed a key aspect of the job-loss debate, namely, where would the jobs go? If the US were to match the UK’s minimum wage, the restaurant industry couldn’t move its jobs overseas and neither could our retailers. If the nation were to suddenly double the minimum wage, then we might expect a depressive effect on employment (since Card and Krueger’s work can only be relied on for modest wage hikes), but what would such a depressive effect imply? By definition, it would imply substitution: either of capital for labor within an industry (such as hamburger flipping machines) or a shift out of labor-intensive sectors. A reversal of the trend to eat meals away from home (a trend fueled by below-living wages) would be bad for restaurateurs but good for the rest of the country (including our national obesity rate).

It didn’t get published, but that doesn’t undermine my conviction that the point is valid, not by one wit. A little conviction, just what the Press-Herald needs, wouldn’t you agree? (That, and a little backbone.)

No need to save this communication. I’ve already posted it:

www.randompunditry.blogspot.com

I write this with several other professionals spread coast to coast.

PS - Rest easy that your column and Porter's editorial will make that little bit of difference to the bill's (mostly) Republican opponents in their efforts to assure that my friends at Walmart and the Regency Hotel and Bally Fitness will continue falling further behind the rate of inflation, while you (and Porter) go on drawing your salaries-plus-benefits.

February 22, 2006 5:28 PM  
Blogger Richard Wolfe said...

Rick:

I decided not to post this because I am going to take you to task for the tone of your postings.

Not because I disagree. I have not read the Card-Kreuger study, although I have read descriptions of it (from, I think, sources that you would not consider biased toward business). To comment intelligently would require work at the level of a thesis, for which I obviously do not have time.

With my comfortable level of ignorance, and my four years of undergraduate economics study, I can see potential weaknesses in the Card-Kreuger study (based on the second-hand reports I have read): (1) it focuses on only one industry; (2) it involves a rather small and, perhaps, immaterial change (as an aside, I reviewed one article with a graph of the federal minimum wage translated into real dollars, which was enough to persuade me that an increase is necessary simply to restore the real value of the minimum wage as it existed in the 1950s and 1960s--if accurate, I am surprised that fact does not play a larger role in the debate); (3) it involved only two states; (4) it may not have involved a long enough period. If I were going to spend a year on the issue, I would focus on those items and whether a study could be structured with proper controls to remove any bias that could result from these factors. On the other hand, the study clearly undercuts the contrary assumption, which is always progress. Also, I gather from my brief review of the literature that none of the conservative think-tanks has published a scholarly econometric study that disproves their thesis. Given the number of years since the original Card-Kreuger study, that strongly suggests to me that they're onto something.

It reminds me of my college roommate John Frantz's senior thesis, in which he set out to prove, and I believe made a good case (he received a summa cum laude grade on his work), that unionization of the furniture manufacturing industry in North Carolina had increased productivity, a result many would consider counterintuitive. It may not justify the statement "case closed," but it shows the importance of not accepting prevailing wisdom without question.

I also read Gertner's piece. It didn't persuade me of much of anything. It didn't show that one side or the other has the better of the economic argument, although he obviously has his own bias. It is interesting that the main arguments pro and con in his two example cities had nothing to do with the economic impact of the minimum wage increase, but focused instead on "morality" and "privacy". In other words, both sides decided to avoid the pertinent question and go with the arguments that their poll-takers told them would most prejudice the public in their favor. How Washington, D.C. of them. I say a pox on both their houses. (I seem to say that a lot lately).

I also question your assumption that the increase in the minimum wage could not have any negative impact. In Gertner's piece, there is a reference to employers taking care to stay under 25 employees, since they then would not be subject to the law. Further, his article cites anecdotal evidence of other negative impacts. Anecdotal evidence proves little, but I'm surprised someone hasn't attempted a rigorous analysis of such possible effects.

Of course, none of this debate touches me. Anyone I would deal with, down to the lowliest file clerk, makes far more than the living wage (which doesn't provide for much living here in the Bay Area with its astronomical housing costs).

All that being said, here's where I take you to task: your letters to the Portland paper sound just like the wild-eyed foaming at the mouth arguments from the right-wing that I dislike so much. No purpose is served by ad hominem attacks. I read both the articles. The reporter may have failed to highlight the bias of the Employment Policies Institute, but his reply more or less confessed to that failing. He may also be accused of being credulous. But he didn't deserve to be called names. He wasn't purporting to take a stand on who was wrong and who was right. I could find more fault with the editorial's view that the question should not even be raised because it sends a negative message to business. I agree that evidences a simplistic approach. But again, insults accomplish nothing.

Rick! Decaf! Chill out! Use logic and persuasion, not venom. Otherwise it is far too easy for people to dismiss you as a loony bird.

P.S. Of course if you want to post this, and respond on the blog, feel free.

March 22, 2006 7:41 PM  

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