EVIDENCE-BASED POLICYMAKING is a hot concept in government these days, but politicians still often draft legislation or propose regulations based on what they think voters will like — not the public interest as demonstrated by objective data.
A notable exception has been the recent response of Montgomery County Executive Isiah Leggett (D) with regard to efforts by members of the County Council to raise the county’s minimum wage from the current $11.50 per hour to $15 per hour. In January, Mr. Leggett vetoed a bill, passed on a 5-to-4 vote, that would have raised the minimum to $15 by 2020. He cited cost increases to the county government and the likely negative impact on the county’s economic competitiveness. However, advocates of a $15 minimum are trying again, with Council member Marc Elrich (D-At Large) recently introducing a bill slightly adjusted to address some of Mr. Leggett’s objections.
Wisely, Mr. Leggett’s veto message called for an objective economic study of the probable consequences, intended and unintended, of the proposed hike — which would leave Montgomery as the highest-minimum-wage jurisdiction in the area except for the District. Proponents of the increase should have waited for the results of this study; they’ve just come in, and they vindicate Mr. Leggett’s caution.
According to the 146-page report by Philadelphia-based consulting group PFM, the proposed higher wage would indeed yield benefits for low-wage workers who received it, in the form of reduced stress, greater food security and better mental health. Employers, in turn, could benefit from their workers’ improved morale, in the form of higher productivity. However, there would be offsetting costs and they could be substantial: a loss of almost 47,000 jobs and $396.5 million in total income by 2022, due to workers’ being priced out of the job market by the higher minimum wage. This would spell a reduction of nearly $41 million in expected county tax revenue between fiscal 2018 and fiscal 2022; meanwhile, the county government’s payroll costs would go up $10 million.
The results of similar experiments elsewhere in the country should also give boosters of $15 per hour in Montgomery more pause than it apparently does. A team of economists at the University of Washington recently found that low-income workers across all businesses in Seattle lost an average of $125 a month because of reduced hours or job loss after that city enacted a $15 minimum. No doubt the PFM study can, and will, be attacked on the basis that it was produced at Mr. Leggett’s request. No doubt, too, a different study of Seattle restaurant workers by a University of California at Berkeley team found much more benign results from the city’s mandated wage hike. But the existence of so much controversy over the real-world impact of previously untried minimum-wage levels suggests that it’s better to proceed cautiously, especially because the risks of error would be borne by the very workers the policy intends to help. At the least, $15-an-hour advocates owe the new report a careful reading and a respectful response.