UC Berkeley Slammed Over Allegedly Biased Minimum Wage Report

A top researcher has called out University of California, Berkeley for allegedly releasing a biased research paper that served as leverage for the San Francisco minimum wage increase.

Economic expert Michael Saltsman, research director at the Employment Policies Institute, argues that a biased research paper by UC Berkeley helped lead residents of San Francisco to support a rapid minimum wage increase, which possibly contributed to several businesses closing. As Saltsman argues, the wage increase makes the cost of operations a much worse burden for business owners. They often have to cut hours or even in some instances completely close their business.

The paper, “San Francisco’s Proposed City Minimum Wage Law: A Prospective Impact Study,” was released in August, and argued that an increase of the minimum wage will have a vastly positive impact for workers in the city.

“Drawing on a variety of government data sources, we estimate that 140,000 workers would benefit from the proposed minimum wage law, with the average worker earning an additional $2,800 a year (once the law is fully implemented),” the study noted. “Our analysis of the existing economic research literature suggests that businesses will adjust to modest increases in operating costs mainly through reduced employee turnover costs, improved work performance, and a small, one-time increase in restaurant prices.”

The following November, residents of the city voted to increase the minimum wage gradually to $15 an hour over the course of three years. Saltsman argued the UC Berkeley study used biased findings.

“These are the comforting studies they can turn to,” Saltsman told The Daily Caller News Foundation. “It creates stories that say you can raise the minimum wage without consequences.”

“If you look at the methodology,” Saltsman said. “Basically they didn’t take into account the fact it could have a negative impact on employment.”

Saltsman argued that the study only looked at how the wage increase will benefit workers, as opposed to how it may negatively impact businesses. If a business owner is unable to hire as many employees or has to close their business because of the higher cost of operations, it becomes bad for workers, too.

“These contribute to the public policy debate,” Saltsman continued. “It’s become a key position in the public policy debate.”

Saltsman said their approach and the results of the study are not at all surprising. Some of the researchers involved had activist backgrounds.

“The problem at UC Berkeley is they are presenting themselves as unbiased economists,” Saltsman notes. “This is the sort of thing you expect from an advocacy group.”

Michael Reich, one of the researchers involved in the report, shot back at the claims the study was biased.

“In restaurants and retail, stores both open and close all the time. You’d need to know whether closings increased and openings decreased relative to a control group,” Reich told TheDCNF. “That’s an objective method that all economists, including me, use to identify the causal effects of a policy.”

Though the wage increase has not gone into full effect yet, opponents are already pointing to several businesses that have closed. These include Borderlands bookstore, Abbot’s Cellar, Luna Park and Source.

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Originally published by the Daily Caller News Foundation. 

Sen. Leno’s “Income Inequality” Lost Cause

California’s minimum wage is set to rise to $10 an hour on January 1st of next year. But for Senator Mark Leno (D-San

CA Senator Mark Leno, D-San Francisco

CA State Senator Mark Leno, D-San Francisco

Francisco), this already-dramatic wage hike isn’t nearly dramatic enough.

Citing an “income inequality crisis,” Sen. Leno has called for a minimum wage increase to $11 an hour in 2016, followed by another jump to $13 an hour in 2017. Unfortunately for the senator, the evidence suggests a hike in the base wage will do very little to solve this crisis — and might even make it worse.

San Francisco, which Sen. Leno represents, has one of the highest minimum wages in the country — and one of the country’s most dramatic gaps between the rich and the poor. (One analysis last year compared the city’s inequality level to that in a developing nation.) City voters in November resolved to fix this problem by approving a proposal to raise the city’s minimum wage even higher, to $15 an hour, by 2018.

Thus far, the looming $15 minimum wage only seems to be worsening the city’s inequality crisis. Several small business owners have been forced to close their doors as a consequence of the coming cost hike, hindering their own entrepreneurial dreams and those of the people they employed. This trade-off isn’t unique to San Francisco. If you’re an employee working at a business with small profit margins, your employer will be faced with one of two difficult choices when the minimum wage goes up: Either raise prices, or cut labor costs by reducing staffing levels or employees’ hours.

If the wage goes up and the terms of your employment don’t change, you may be better off; if you lose job and your co-workers do, too, then you’re most certainly worse off. That means Sen. Leno’s plan for a statewide $13 minimum wage will create winners and losers in the entry-level workforce. Unfortunately, a team of economists writing in the Journal of Human Resources discovered that the “losers” from a wage hike — employees who are pulled below the poverty line, or at least closer to it, as a consequence — outnumber the “winners.”

Put differently: Instead of redistributing income from the top 1 percent, Sen. Leno may unintentionally redistribute it among the bottom.

The Senator’s office has pointed skeptics to comforting studies from a team of ideological researchers at the University of California-Berkeley, suggesting that the negative impact of a higher minimum wage in California—both on the city level, and statewide–would be minimal or nonexistent. But the Berkeley team’s estimates are looking less and less credible in the face of real-world evidence.

In San Francisco, for instance, one bookstore reported that the $15 minimum wage would cause a fatal 18 percent increase in operating costs—90 times greater than what UC Berkeley projected for city retailers. And in Oakland, where the minimum wage is rising to $12.25, restaurants are reporting price hikes of up to 20 percent—far greater than the 2.5 percent that the Berkeley team predicted.

These real-world examples are no doubt unsatisfying to the most dedicated ideologues, and it’s unsurprising that one of the Berkeley researchers insinuated employers might not be telling the truth. But spin like this only goes so far, especially in the face of real flesh-and-blood employees who no longer have jobs.

If Sen. Leno is serious about reducing income inequality and increasing opportunity, he owes it to the California residents who need those opportunities to examine the best way to help them. That starts by acknowledging that we should judge public policy by its outcomes rather than its intentions.

Michael Saltsman is research director at the Employment Policies Institute

SF Gun Case May Be Heading For Supreme Court

More than a dozen Second Amendment groups are asking the U.S. Supreme Court to take up a high-profile challenge to a San Francisco gun-control measure.

Led by the Firearms Policy Coalition, gun groups say the Ninth Circuit Court of Appeals erred in its decision to uphold San Francisco’s safe-storage law.

Under the ordinance implemented in 2007, the city “requires all residents who keep handguns in their homes for self-defense to stow them away in a lock box or disable them with a trigger lock whenever they are not physically carrying them on their persons.”

The groups referenced the 2007 case before the U.S. Supreme Court, District of Columbia vs. Heller, which upheld an individual right to “keep and bear arms” in the Second Amendment.

“The court should grant certiorari to reaffirm key principles concerning the scope and substance of the Second Amendment,” the groups wrote in their amicus brief. “Many lower courts have taken great pains to avoid the consequences of these decisions — defying a fundamental constitutional limitation this court made explicit in Heller. … At the forefront of this resistance is the lower courts’ refusal to follow this court’s command, made in Heller and reiterated in McDonald, that Second Amendment claims are not to be judged by unrestrained judicial interest balancing.”

Gun groups point to Heller decision

Last March, a unanimous three-judge panel of the Ninth Circuit Court of Appeals upheld the local restrictions on gun ownership, finding that gun storage mandates save lives.

“The record contains ample evidence that storing handguns in a locked container reduces the risk of both accidental and intentional handgun-related deaths, including suicide,” Judge Sandra Ikuta wrote in the ruling for the panel. She added that gun safes “may be readily accessed in case of an emergency.”

San Francisco wikimediaSecond Amendment groups have focused their arguments on the legal precedents, arguing that San Francisco’s regulations contradict the Heller decision, as well as McDonald vs. Chicago in 2009, which held the Second Amendment also applied to state laws.

“The Ninth Circuit’s lamentable decision in Jackson shows why it is the most overturned circuit court in the nation,” said Firearms Policy Coalition President Brandon Combs, one of the state’s leading gun rights activists. “The Supreme Court should take up this case not only to correct a clear wrong, but to stem the tide of judicial resistance in recognizing the right to keep and bear arms as fundamental Constitutional rights.”

He added, “The Second Amendment doesn’t protect second-class rights, and it’s time for courts to take the enumerated right to keep and bear arms at least as seriously as they do unenumerated rights like abortion.”

Other gun groups that have joined the Firearms Policy Coalition in filing the friend-of-the-court brief include the Second Amendment Foundation, the Calguns Foundation, Firearms Policy Foundation and California Association of Federal Firearms Licensees.

San Francisco City Attorney has “faith in the judiciary”

Six San Francisco residents, with the help of the National Rifle Association and the San Francisco Veteran Police Officers Association, first challenged the safe storage law in 2009. The case underscores the lengthy process of seeing gun-control restrictions ultimately become established law.  Long after the press conferences and publicity stunts, government attorneys struggle to defend the restrictions.

Scales of justice, wikimedia“I have complete faith in the judiciary to affirm our position that San Francisco’s gun safety laws protect the public in a manner that’s both reasonable and constitutional,” San Francisco City Attorney Dennis Herrera said in a 2013 press release on the case. “San Francisco has been a top target of the NRA for many years, and I’m proud of the efforts we’ve made to aggressively battle these legal challenges, and protect sensible gun laws that can save lives.”

As CalWatchdog.com has previously noted, the nation’s leading Second Amendment advocacy groups have begun to shift their efforts from the California Legislature to the courthouse. Since 2009, The Calguns Foundation has found great success in its legal challenges, which have targeted the implementation of concealed weapon permits and mandatory waiting periods.

A copy of the brief in the case of Espanola Jackson, et al. vs. City and County of San Francisco, et al., can be viewed at the Firearms Policy Coalition’s website.

Originally published at CalWatchdog.com

Report: Unions Avoid The Minimum Wage

Unions love raising the minimum wage, so long as they are exempt.

A new report, “Labor’s Minimum Wage Exemption,” by the U.S. Chamber of Commerce found many labor unions are exempt from the various local minimum wage laws they support for everyone else.

“Not all minimum wage increases come in the same form,” the report notes. “Some local ordinances in particular include an exemption for employers that enter into a collective bargaining agreement with a union.”

The report explains that these sort of “escape clauses” are often designed to encourage unionization because they make membership a low cost alternative for employers. This, explains the report, raises questions about who these minimum wage laws are actually meant to help.

The report cites the experience of one union after the city of Los Angeles included an exemption for unions when they raised the minimum wage for the hotel industry.

“Local 11’s membership increased from 13,626 in 2007 to 20,896 in 2013,10 while its revenue increased from approximately $7.5 million per year to nearly $12.7 million,” the report details.

The same thing happened for UNITE-HERE Local 2 when San Francisco passed a minimum wage ordinance with a union exemption in late 2003.

Another notable example is when the city of SeaTac, Washington passed a living wage ballot initiative in 2013, known as Proposition 1. At the time the initiative established the highest minimum wage rate in the country of $15 per hour with an annual adjustment for inflation.

Proposition 1 also included an exemption for unions. The report explained, “Supporters of Proposition 1 spent more than $1.7 million, with union spending accounting for 98.4% of that amount.”

San Francisco’s move to raise its minimum wage to $10.55 per hour, which gained national attention, also included an exemption for unions.

According to the report, minimum wage laws passed in Oakland, San Jose, Long Beach, Milwaukee County and Chicago all included an exemption for unions.

“Many advocates for a higher minimum wage portray it as a means of improving the lives of workers, putting more money into the economy, and increasing growth,” the report concluded. “So, it is surprising that some minimum wage ordinances include an exemption that potentially undermines all three goals.”

This article was originally published by the Daily Caller News Foundation

An Economic Win-Win For California – Lower the Cost of Living

A frequent and entirely valid point made by representatives of public sector unions is that their membership, government workers, need to be able to afford to live in the cities and communities they serve. The problem with that argument, however, is that nobody can afford to live in these cities and communities, especially in California.

There are a lot of reasons for California’s high cost of living, but the most crippling by far is the price of housing. Historically, and still today in markets where land development is relatively unconstrained, the median home price is about four times the median household income. In Northern California’s Santa Clara County, the median home price in October 2014 was $699,750, eight times the median household income of $88,215. Even people earning twice the median household income in Santa Clara County will have a very hard time ever paying off a home that costs this much. And if they lose their job, they lose their home. But is land scarce in California?

The answer to this question, despite rhetoric to the contrary, is almost indisputably no. As documented in an earlier post, “California’s Green Bantustans,” “According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. Think about this. You could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14 percent of it. If you scattered those homes among all of California’s farmland and grazing land – which is far more likely – you would only use up 3 percent of it. Three percent loss of agricultural land, to allow ten million people to live on half-acre lots.”

So why is it nearly impossible to develop land in California? The answer to this is found in the nexus between financial special interests, who benefit from asset bubbles, and powerful environmentalist organizations who apparently view human settlements as undesirable blights that should be minimized. In the San Francisco Bay Area, to offer a particularly vivid example, the Santa Cruz mountains are being targeted to be cleansed of human habitation. Instead of creating wildlife corridors, they are eliminating human corridors. Is this really necessary?

20141203_Ring

If you are familiar with the San Francisco peninsula, you will see that the area proposed for the “Great Park of the Santa Cruz Mountains” encompasses nearly the entire mountain range. A coalition of environmentalist organizations and government agencies are proposing to create a park of 138,000 acres, that’s 215 square miles, in an area that ought to make room for weekend cabins, mountain dwellers, and vacation communities. Why, in a region where homes cost so much, is so much land being barred to human settlement? The pristine stands of redwoods in Big Basin and Henry Cowell State Park were preserved a century ago. There is nothing wrong with preserving more land around these parks. But do they have to take it all?

This is far from an isolated example. Urban areas in California, primarily Los Angeles and the San Francisco Bay Area, have been surrounded by “open space preserves” where future development is prohibited and current residents are harassed. Ask the embattled residents of Stevens Canyon in the hills west of the Silicon Valley, if there are any of them left. Once you’re in a “planning area,” watch out. Backed by bonds sold to naive voters, endowments bestowed by billionaires, and the power of state and federal laws that make living on any property at all increasingly difficult, the relentless land acquisition machine continues to gather momentum. Anyone who thinks there isn’t a connection between setting aside thousands of square miles in California for “habitat” and the price of a home on a lot big enough to accommodate a swing set for the kids needs to have their head examined.

It doesn’t end with open space that is actually purchased, cleansed of humanity, and turned into government ran preserves for plants and wildlife, however. Acquiring permits to build on any land is nearly impossible in California. Land developers who fight year round to try to build housing for people shake their heads in disbelief at the myriad requirements from countless state, federal and local agencies that make the permit process take not months or years, but decades. And it isn’t just farmland, or wetland, or special riparian habitats where development is blocked. It’severywhere. Even semi-arid rangeland is off limits for housing unless you are prepared to spend millions, fight for decades, and have the staying power to pursue multiple expensive projects simultaneously since many will never, ever get approved.

What is the result? Here is an aerial photo of a subdivision in the Sacramento area, one that every hedge fund billionaire turned environmentalist in California – especially one who runs cattle on his own special 1,800 acre fiefdom in the Santa Cruz mountains on a property that just happens to be in a “non-targeted area” – might consider living in for the rest of his life in order to understand the human consequences of his ideals – cramped homes on 40′ by 80′ lots, at a going price in October 2014 of $250,000. Notwithstanding being condemned to a claustrophobic existence at a level of congestion that would drive rats in a cage to madness, $250,000 is a pittance for a billionaire. But for an ordinary worker, $250,000 is a life sentence of mortgage servitude. And even this, the single family dwelling, is under attack by “smart growth” environmentalists and public bureaucrats who prefer density to having to divert payroll and benefits to finance infrastructure. The excess! The waste! Stack them and pack them and let them ride trains!

Priced to Sell at $250,000 – Housing for Humans on 40′x80′ Lots

201402_Sacramento-500px

When public employee union leadership talk about the importance of paying their members a “middle class” package of pay and benefits, they’re right. Government workers should enjoy a middle class lifestyle. But they need to understand that the asset bubbles caused by high prices for housing are not only making it necessary to pay them more, but are also creating the inflated property tax revenue that they rely on for much of their compensation. They need to understand that the phony economic growth caused by everyone borrowing against their inflated home equity is what creates the stock market appreciation that their pension funds rely on to remain solvent. And they need to understand that all of this is a bubble, kept intact by crippling, misanthropic land use restrictions that hurt all working people.

There is another path. That is for public employee union leadership to recognize that everyone deserves a chance at a middle class lifestyle. And the way to do that is not to advocate higher pay and benefits to public employees, but to advocate a lower cost of living, starting with housing. One may argue endlessly about how to regulate or deregulate water and energy production, essentials of life that also have artificially inflated costs. But as long as suburban homes consume less water than Walnut orchards – and they do, much less – build more homes to drive their prices way, way down. There’s plenty of land.

Ed Ring is the executive director of the California Policy Center.

San Francisco Passes Retail Worker Bill Of Rights

Ahead of the Thanksgiving holiday, San Francisco passed a law designed to prevent employers from scheduling workers with little notice.

The law, also known as the Worker Bill of Rights, was passed by the San Francisco’s City Council and combines two pieces of legislation containing five provisions designed to make it easier for hourly workers at many of the city’s restaurants and stores.

KTIC explains the law will require employers to post schedules two or more weeks in advance and restrict these businesses from hiring new employees before giving additional hours to existing part-time employees. Additionally, the law will require employers to pay employees for any hours where they are put on call, even if the shift is ultimately canceled.

A writer for Vox argued that the absence of such laws can make life very tough for workers who have to schedule their work around other life commitments like children and other jobs. Uncertain hours also mean unpredictable income.

However, some experts see such a law as having profoundly negative outcomes for businesses and employees alike.

“Anyone who has ever run a lemonade stand knows this won’t work,” Michael Saltsman, a research director at Employment Policies Institute, told The Daily Caller News Foundation.

Saltsman predicts that the law will cause employers to give their employees less hours. Before a business may “staff up” or hire more part time workers to accommodate busy days or shifts, they will be less likely to do so knowing they may be penalized if they had to change the schedule at the last second because they got less or more customers then what they expected.

The law will also likely lead to worse service because fewer people than needed will be working a given shift.

“The net result is there is going to be fewer opportunities created,” Saltsman added.

The Friday after Thanksgiving is a particularly busy time for retail employees.

This article was originally posted on the Daily Caller News Foundation

VIDEO: CA Spending $33 Million to Remove Birds from Bridge

“Taxifornia” author James Lacy discusses the massive sums of money California is spending to remove birds from blocking Bay Bridge.

Minimum Wage Truth and Consequences: Who’s Listening?

Let’s hope that voters become more engaged in the minimum wage debate than some elected officials.

Voters will be subject to counterarguments in the minimum wage debate. Raising the minimum wage will undoubtedly make things better for minimum wage workers – more to spend, raising some out of poverty. At the same time it likely will cost some minimum wage workers their jobs and raise costs for all consumers, including, of course, those minimum wage workers who get a raise.

California cities are in the forefront of the debate. San Francisco voters will consider raising the minimum wage from $10.74 an hour to $15 by 2018. Oakland voters will be asked to raise the minimum wage from $9 an hour to $12.25 by March 2015. San Diego faces a referendum in two years over a minimum wage increase passed by the city council over the mayor’s veto.

In Los Angeles, the mayor is proposing a $13.25 minimum wage with future increases tied to inflation. The L.A. City Council couldn’t wait. They already passed a $15.37 minimum wage for hotel workers and some councilmembers want to introduce a minimum wage increase to $15.25 for all city workers by 2019.

The Congressional Budget Office laid out the consequences of raising a federal minimum wage from $7.25 an hour to $10.10 an hour. Most workers would receive higher pay, some would lose their jobs, and the share of low-wage workers who are employed would fall.

There is the additional concern of setting off some inflationary movement as costs go up putting pressure to raise wages across the board.

Many businesses worry about continued government dictates to business. Small business in particular is worried how raising the minimum wage will affect their ability to hire new employees or even to stay in business.

The job loss threat should be considered real. When the Los Angeles City Council passed the minimum wage for hotel workers, economist Christopher Thornberg opined in the Los Angeles Times after studying the matter for the council that the results of his study “strongly suggest that such a steep increase in the minimum wage could result in a sharp decline in the number of jobs in the hotel industry.”

More troubling was Thornberg’s assertion that the council didn’t bother to look at his findings. Thornberg wrote, “But the City Council never seemed interested in really examining the potential economic consequences of the ordinance. We got our instructions about what questions to address just two weeks before the vote, and we were surprised to learn that the council intended to vote on the day after we turned in our final analysis, which suggests none of the members spent time looking at our findings.”

Further, Fernando Guerra, head of the Center for the Study of Los Angeles at Loyola Marymount College said of the message sent to the business community opposing the hotel minimum wage increase, “This decision seemed to say: ‘Not only are you going to lose, we’re not going to listen to you. You’re a non-factor.’”

Will those members of the business community who oppose the minimum wage increase have any better luck with the voters? History indicates that voters tend to support minimum wage increases.

Importantly, will the voters be willing to listen to arguments about the consequences of raising wages and balance that against any pluses that come with the government order?

A possible outcome of the minimum wage debate may produce a third way. Call it job wage classification: for example, increasing pay for some minimum wage jobs but keeping a lower cap on other jobs for new workers so they can enter the job market.

Job wage classification may occur because the one size fit model doesn’t satisfy all companies, especially small businesses. But be wary and concerned about such a move. Job wage classification for minimum wage is more micromanaging government interference with businesses.

This article was originally published on Fox and Hounds Daily

 

SF Mayoral Race: Ed Lee Takes Commanding Lead

From BeyondChron:

Ed Lee took a commanding lead in his race to become San Francisco’s first elected Chinese-American Mayor, with victory coming as soon as tomorrow when the ranked-choice voting process begins. With 100% of votes counted (and prior to the counting of Election Day absentees and the implementation of ranked choice), Lee leads John Avalos by a 31.38% to 18.67% margin, with Dennis Herrera third at 11.27%. David Chiu and Leland Yee rounded out the top five at 8.93% and 7.48% respectively. While Lee was careful not to announce victory before he hit the 51% threshold, the combination of spoiled ballots and Lee’s second place votes from low finishing candidates makes his election virtually certain. One year ago, Ed Lee was the City Administrator who had never sought public office; today, he is on the verge of being handily elected to a four-year term as San Francisco’s Mayor.

(Read Full Article)

From SF Chronicle:

Appointed San Francisco Mayor Ed Lee, a political rookie, holds a commanding lead in his effort to turn his temporary post into a four-year job.

With 16 candidates on the ballot, it will probably take a day or two for clear results to emerge in the city’s first competitive mayor’s race using ranked-choice voting, in which voters can select their top three choices. With 100 percent of the precincts reporting Tuesday night, Lee was the top vote-getter in the first round with more than 31 percent.

At an election night party with supporters, Lee stopped just short of declaring victory after he emerged from the first round of voting with an almost 13-point lead over his closest rival, Supervisor John Avalos.

(Read Full Article)