Galactic Whopper
During the 2012 elections, opponents of increasing San Jose’s minimum wage spent hundreds of thousands of dollars to spread distorted and false information.
Although the voters decisively rejected their fear tactics, they’re still at it.
This time they’ve published a phony report and bought advertising to show the negative effects of the minimum wage increase on “San Jose businesses.” You can read their material at badideaca.com.
There’s a lot that’s deceptive in this so-called “study.”
First, it’s an unsigned document published by a corporate funded organization known for parroting the arguments of businesses that profit from paying poverty level wages.
Second, the survey data in the report utterly fails to prove a $10.00 minimum wage has hurt the local economy. The census estimates there are over 70,000 firms in San Jose. How many completed the survey – 163. Not only is this sample small, it isn’t a random sample. Without a random sample, it is false and misleading to imply the characteristics of the sample apply to any group larger than the sample itself. When this study trumpets that 66.3% of “employer responses” stated they raised prices, that doesn’t mean 66.3% of the 70,000 businesses in San Jose. It means 66.3% of 163 businesses raised prices. This data covers 108 businesses out of 70,000 – or less than 2/10ths of one percent of all the businesses in town.
Moreover, the 66.3% figure is itself a distortion. In an appendix, the report admits that another 79 businesses completed the survey; these responses were excluded because they said the San Jose ordinance didn’t require that they raise their workers’ pay. So the actual percentage of survey respondents that raised prices was only 46%.
Also, we don’t know if the survey data is accurate. The study made no effort to fact-check the survey data, not even spot checks. They simply relied on replies from business contacts supplied by an organization that fought hard against the higher minimum wage.
Not surprisingly, the survey failed to ask the amount of price increases. During the campaign, supporters of the minimum wage acknowledged there might be a few small price increases. The opponents argued consumers would be buffeted by widespread increases – for everything from burgers to groceries to gasoline. What’s the truth? The Consumer Price Index in Silicon Valley is growing so slowly that the government can’t even raise property taxes by the 2% allowed under Proposition 13.
Again, not surprisingly, the survey asks if businesses experienced higher labor costs but doesn’t ask if there were labor savings. Real studies of the minimum wage – done by university professors and subject to rigorous peer review – indicate a higher minimum wage does not negatively impact businesses because initial higher costs are offset by less turnover and reduced turnover. By not asking, they don’t have to tell the whole truth.
Finally, the survey completely ignores the massive boost to the local economy generated by the increased purchasing power of better paid low wage workers. That impact is estimated to be over $190 million dollars.
Probably the best way to demonstrate that these distortions lack credibility is for each of us to just look around. The minimum wage increase took effect last March. The economy is booming. Jobs in Silicon Valley are increasing, including jobs in the restaurant industry. Traffic is jamming the roadways as more workers commute to growing firms. Where’s the promised economic catastrophe?
The goal of this study is the same as it was during the campaign – to scare voters into keeping hard working people trapped in poverty. San Jose’s voters didn’t fall for these wretched tactics a year ago. They should reject them again today.
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