Portland’s minimum wage hike will be a touchdown

Rather than send an ordinance to raise the minimum wage in Portland to the full City Council for a vote, the Finance Committee punted last week and requested that an economic-impact study be conducted before they reconsider the matter next year. The timeframe is tight — Mayor Mike Brennan reportedly said the City Council could vote on the increase in February. That gives whoever conducts the study about a month and a half to research and analyze the potential economic effects the wage hike could have on thousands of workers and hundreds of employers of many different types and circumstances.

That’s a daunting, if not impossible, task, so allow me to simplify it. The researchers don’t need to start from scratch. They need to start with Vice News.

That’s right: Vice, the wise-cracking Canadian punk magazine that, against all expectations, has grown over the past two decades into a global multimedia conglomerate with a news division respected enough to have its investigative reports cited by mainstream organizations like National Public Radio.

My own online research into the impacts of a minimum wage hike immediately led to a May 15, 2014 Vice News story by Jason Toon, helpfully headlined: “What Will Happen to the Economy If We Raise the Minimum Wage?” In a refreshingly straightforward and plainspoken reporting style, Toon examined the evidence, interviewed some experts, and arrived at the answer: No one knows for sure, but in all likelihood, not much.

“The economics of the minimum wage are complex enough, and the historical record inconclusive enough, that economists can make arguments either way,” Toon observed. “So they do.”

I especially appreciated the way Toon punctured one of the most common arguments made by opponents of a federal minimum-wage increase: that an increase to $10.10/hour would result in the loss of 500,000 jobs. Among the politicians who repeatedly cited that misleading figure as fact on the campaign trail this year is Republican Sen. Susan Collins.

The figure is contained in a report released last February by the nonpartisan Congressional Budget Office (CBO). But 500,000 is actually the CBO’s “central estimate” of potential job losses. There is a “two-thirds chance” that an increase to $10.10 would result in job losses ranging from “a very slight decrease in employment and a decrease of 1.0 million workers,” the report states. There’s a “one-third chance” such an increase either would not cost any jobs or would result in over a million workers getting pink slips.

In other words, the CBO, relying on past studies of minimum-wage increases at the state level, could not conclude with any certainty that even one job would be lost if the federal minimum was $10.10 per hour.

“If a higher minimum wage isn’t going to destroy the economy, it’s not going to be a magic pill, either,” wrote Toon. He cites another CBO estimate — that a $10.10 minimum would lift 900,000 people out of poverty — and notes, “that’s less than 2 percent of the 47 million Americans who currently live in poverty.”

The proposal Portland is considering is even more modest: an increase to $9.50, two bucks above Maine’s $7.50 minimum wage, beginning next summer, with smaller increases in subsequent years. The city’s researchers can crunch those numbers into dust between now and February, and councilors will still have little more than guesswork to inform their decision.

“This is a political debate, not an economic debate,” Christopher Thornberg of Beacon Economics, an independent research firm that advises governments, told Toon. He’s right. In the absence of reliable, consistent economic models, the question is less about what will happen to workers than what should happen to workers.

Given the current makeup of the Portland City Council, which is collectively more liberal than it’s been in decades, I have no doubt the proposed increase will pass regardless of what the impact study concludes. I’ve heard grumbling that the latest delay is a sign the proposal is in trouble. But keep in mind: Even the Patriots punt sometimes.

Chris Busby

About Chris Busby

Chris Busby is editor and publisher of The Bollard, a monthly magazine about Portland. He writes a weekly column for the BDN.