A war of words — and statistics — over the minimum wage hike


Pundits are lining up to interpret 2015 restaurant hiring statistics in support of their favored positions for or against Seattle’s minimum wage.

Before the minimum wage rose to $11 last spring, restaurant owners and economic conservative think-tanks such as the American Enterprise Institute were screaming that it would put restaurants out of business and cause a massive drop in employment of restaurant workers. And one month in, the statistics seemed to confirm their fears: Seattle lost 1000 food-industry jobs from April to May.

But then a funny thing happened: it gained back 1,100 in June. And another 300 in June, and another 600 in August. The end of the summer tourist season in September showed a drop-off, but since then the numbers have been rising again.

Yesterday Erik Sherman of Forbes (an unlikely messenger in this case) penned an article calling B.S. on the predictions that jobs would disappear. In fact, he claimed, jobs are “soaring.”

Not so fast, says Mark Perry of the AEI today. In his view, they are hardly soaring. Perry calls the annual growth “anemic” and shows a chart to support his claim that compared to non-restaurant jobs, as well as restaurant jobs in the rest of the state and across the country, Seattle restaurant job growth is falling short.










Now of course they are both massaging their presentation of the data to support their claim. To Sherman’s credit, there is no measure by which jobs have fallen over the last year, so all the people who said Seattle would lose jobs (including the AEI) were flat-out wrong. But Sherman’s use of the word “soaring” is unwarranted; on a base of around 135,000 food-industry jobs in Seattle, a few thousand isn’t much.

But Perry strategically chose January as the starting point for his calculation, since it was a high-point (three months before the minimum wage increase took effect) that made the effect of the wage increase look bigger and the subsequent recovery smaller.

As an aside: this is the same trick that Ted Cruz uses to argue that there has been no increase in global temperatures over the last 18 years: 18 years ago was a particularly warm year, a statistical outlier:

Perry’s assertion does beg the question, however, of what kind of food-industry job increase Seattle might see in a typical year. According to the AEI’s research, the historical numbers look like this:


So the highest it’s been, over the past 25 years, is 4.8% for the January-to-November period. And it’s been in the current range before, often just before or after a recession. (which might itself be a bad sign for the economy).

We also need to recognize that January to November is a weird date-range to analyze, especially not knowing whether a given month’s number represents the first day of the month or an average across the month. If it’s January 1, then it still includes seasonal hiring for the holidays (and even if it’s an average, it still includes it to some extent) whereas November stats likely don’t. It would be good to see full year numbers, as well as to see what the typical trend-lines look like because there is of course seasonal summer hiring in Seattle as well.

So what do we know?  First, Forbes and AEI pundits are perfectly capable of massaging statistics to promote their message. Second, the minimum wage hike caused neither a dramatic increase nor a dramatic decrease in restaurant jobs in Seattle.

We do know from other reporting that the Seattle restaurant scene, by all appearances, is healthy. The Puget Sound Business Journal reported as such back in October, listing a number of new restaurants and even quoting local restauranteur Tom Douglas saying that he was naive about the impact he said it would have.

Investors Business Daily suggests that the numbers don’t look good for several cities that recently increased food-industry wages.

One last note on these stats: the “Seattle” numbers are actually for the Seattle metropolitan area, including Bellevue and Everett. Seattle is only a small fraction of the total population — and food industry jobs — in that area.

In June we should have better statistics for the full year of 2015, plus some early numbers for 2016, which should give us a better view of how things are going.  Also, to further confuse matters, the minimum wage just bumped up again, its next step on the way to $15. So we will have that to pick apart as well. This is why economics is called “the dismal science.”