Wednesday, July 6, 2022
Hawai'i Free Press

Current Articles | Archives

Friday, May 20, 2022
Gov. Ige urged to review new research before deciding on minimum-wage hike
By Grassroot Institute @ 6:56 PM :: 575 Views :: Labor, Small Business, Cost of Living

Gov. Ige urged to review new research before deciding on minimum-wage hike

A popular 2010 study claiming minimum-wage hikes do not cause ‘economic shocks’ has just been reanalyzed and overturned

from Grassroot Institute of Hawaii, May 17, 2022

HONOLULU, May 17, 2022 >> The consensus in Hawaii seems to be that Gov. David Ige will sign HB2510, raising the state’s hourly minimum wage from $10.10 to $18 over the next six years. But maybe new research by one of the nation’s leading minimum-wage researchers will help change his mind.

Economist David Neumark, along with colleagues Priyaranjan Jha and Antonio Rodriguez-Lopez, all of the University of California, Irvine, recently examined a popular 2010 paper often cited in defense of minimum-wage increases and found its methodology to be inadequate and its conclusion erroneous.

As Neumark, Jha and Rodriguez-Lopez explain in their study — “What’s across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects,” published just this month — it can be useful to estimate the “economic shocks” of minimum-wage increases by comparing changes in “local economic areas” that span state borders, since this allows researchers to separate the actual effects of minimum wages from other changes in local economic conditions.[1]

However, they say, the 2010 paper examining employment in restaurants and other low-wage sectors used “local economic areas” made up of pairs of counties on opposite sides of state borders, without regard to whether their economies were related. As a result, the 2010 paper concluded that minimum wage increases on one side of the border did not reduce employment there in the targeted sectors.[2]

Neumark’s new study, on the other hand, used a more natural definition for local economic areas — commuting zones that span state borders.

In an email to the Grassroot Institute of Hawaii, Neumark said commuting zones are a much more compelling way to control for economic shocks because they are defined as “common economic areas.” Some of the county pairs in the 2010 study, by comparison, “may be economically unrelated and hence not serve as good controls. Indeed, as the [new] paper notes, some of the authors of the 2010 study have made this very argument.”

Neumark’s new study explains that commuting zones are groups of counties with strong commuting ties based on U.S. Census journey-to-work data. Specifically, they are intended for use as spatial measures of local labor markets, which is “not necessarily the case for county pairs: Even if they are contiguous, two isolated U.S. counties may share little or no commuting and economic activity.”

Thus, Neumark’s new study overturns the results of the 2010 study, finding that the evidence points rather sharply toward restaurant employment declines in response to higher minimum wage.

“In the short run,” Neumark said by email, “the evidence indicates that a 10% increase in the minimum wage reduces employment by 2.4%, and in the longer run by 6.9%.”

Keli‘i Akina, Grassroot Institute of Hawaii president and CEO, said he hopes Ige will take a little more time to study this latest minimum-wage research before deciding on whether to sign HB2510 into law.

“Gov. Ige has qualified economic advisers with whom he can discuss this,” Akina said. “I urge them all to read professor Neumark’s latest research so they can see for themselves that we simply must not enact the drastic wage increase that HB2510 calls for.”

He continued: “There are many ways to help lower-income people increase their purchasing power and improve their standard of living, but increasing the state’s minimum wage isn’t one of them. If the governor wants more information about those other ways, the institute would be happy to offer suggestions, many of which are included in our 2020 report ‘Road map to prosperity: How Hawaii can recover and even excel after the coronavirus lockdowns.’”

Akina hosted Neumark — one of the top 5% of published economists in the U.S. based on the number of his distinct works, citations and other criteria — on his “Hawaii Together” program in March on ThinkTech Hawaii to talk about the minimum wage, which you can view here. Akina also wrote two “President’s Corner” columns on the issue, here and here.

You can read the institute’s testimony on HB2510 here. And institute policy researcher Jensen Ahokovi produced an outstanding commentary on the issue, “Five myths about the minimum wage.”
____________

[1] David Neumark, Priyaranjan Jha and Antonio Rodriguez-Lopez, “What’s across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects,” IZA Institute of Labor Economics, May 2022.

[2] Arindrajit Dube, T. William Lester and Michael Reich, “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties,” The Review of Economics and Statistics, November 2010. 

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT