Guest Commentary: Montgomery Co. Report on Wages Flawed

By Marc Elrich

Having just celebrated Labor Day on Monday, I am reminded about the importance of the dignity of work and the importance of decent wages. In July, I (along with four of my colleagues) re-introduced a bill to raise the minimum wage to $15 in Montgomery County. Businesses with over 25 employees would reach $15 in 2020, while small business, non-profits and certain adult health care providers would reach $15 in 2022.

Days after the bill introduction, a county-commissioned report predicted massive job loss as a result of raising the minimum wage to $15. Hours after the report’s release, an editorial appeared in The Washington Post lauding the report’s conclusions, citing it as “evidence-based policymaking” and a “vindication” of the editorial board’s views on the dangers of increasing the minimum wage.

In reality, what the evidence pointed to was the need for a better examination of the report and its methodology. Multiple critiques have led the report’s authors and the county executive to admit there are problems with the report. This report – it can’t be called a study – is unscientific and poorly constructed, and there is no connection between the data, the comparisons and the projected job loss.

Elrich

Marc Elrich

The central piece of the report is a poorly designed survey asking minimum wage employers what they would do in response to the proposed increase, and then tells them their answers will shape the county’s policy. This is a push-poll at best and bears no semblance to “evidence-based policymaking.”

The study said terrible things would happen, that more than half of the low-wage jobs would vanish. The actual data in the report shows that that conclusion make no sense. The report includes job loss projections for four other urban areas – Washington, D.C., Los Angeles, Seattle and San Jose, Calif. The total projected job loss for all four jurisdictions (with six times the population of Montgomery County) is 13,000 jobs compared to our projected loss of 47,000 jobs. If that’s not illogical enough, Montgomery County has the longest phase-in to $15, so the impacts will be less severe here than in any comparative jurisdiction. But then, after citing these cities, the authors conclude that none of them could be compared to us.

The report ignores well-respected research of impacts of the minimum wage, including an important meta-analysis in an award-winning book, that conclude that minimum wage increases have little or no impact on job loss. Instead the authors of the report focus on the work of one researcher who does not support increasing the minimum wage. The authors cited one study on Seattle, and ignored a larger study that was released a week earlier. The authors did not look at our own experience. Montgomery (along with the District and Prince George’s County) raised the minimum wage from $7.25 to $11.50 over the last four years. Montgomery’s unemployment dropped to levels we haven’t seen since before the Great Recession. Following the report’s reasoning, we should have experienced massive job losses. It didn’t happen.

There is not a shred of evidence from the real world to support its conclusions.

While the study includes a summary of positive effects on people of raising wages, there’s no econometric data on the impact of poverty on families and children: no quantification of future earnings lost, of psychological damage like depression, or failure in public schools. Poverty is the number one link to low academic achievement and all the consequences that follow. While the authors have a dollar cost impact for raising wages, there is no cost measurement for poverty.

The report suggests that welfare is better than wages. That is a false choice. Decent wages build self-worth and independence and are meant to allow people to move beyond public assistance. Because this isn’t a living wage, some government subsidies will remain, but the cost per person should be markedly reduced, and money would be freed up and could be redirected to other necessary services. Poverty wages send the signal that you’re not worthy of a wage that supports you.

Minimum wage jobs are not “beginner wages.” There’s no beginner housing, no beginner transportation, no beginner food and clothing. A poor person cannot ask a landlord for “beginner rent” to go with his or her “beginner job,” and people with families to support don’t have the luxury of holding out for a higher wage when the rent is coming due. And minimum wage jobs are no longer jobs mostly for kids. Adults have displaced kids because these are the jobs left from the hollowed-out economy.

I’m asking people to think about what’s important here. I grew up being told that a fair day’s work should get a fair day’s pay. It was part of the American Dream at one time.

The poor people among us probably put us to shame for the number of hours they work in order to put so little on the table. There should be a floor on wages that provides for the basics in life. No one will get rich, but people will have a shot at stability. That’s what everyone deserves.

Marc Elrich, a Democrat, is an at-large member of the Montgomery County Council and a candidate for county executive.

 

 

 

2 comments

  • I agree with you Marc and I will support you in your run for County Executive..

  • I thought that report was suspect when I read about it in the Washington Post, yet it was presented there as if it were the final word. Thank you for debunking this. You sound like the kind of Democrat that I always thought Democrats were until the last couple decades. I don’t live in Mont. Co, but I’ll pass this along to friends that do.

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