No, Rob Robb, the GCI prop. 206 analysis is centrist

November 7, 2016

No, Rob Robb, the GCI prop. 206 analysis is centrist. It’s modeled after a CBO study that you praised.

 

Rob Robb in his most recent column takes issue with GCI’s centrist moniker saying our Prop. 206 study favored Prop. 206 and GCI is “reliably left-wing.” http://www.azcentral.com/story/opinion/op-ed/robertrobb/2016/11/06/prop-205-prop-206-debates-never-had/93299054/

While it may be fair to say the Grand Canyon Institute study found evidence that many readers might interpret as more favorable to Prop. 206 (http://grandcanyoninstitute.org/raising-the-minimum-wage-to-12-an-hour-the-impact-of-prop-206-on-arizona/), it’s misleading to characterize it as left-wing unless you also characterize the nonpartisan Congressional Budget Office (CBO) study on which the analysis was based as left-wing. In a prior column Robb seemed to recognize the CBO estimate as a good indicator. http://www.azcentral.com/story/opinion/op-ed/robertrobb/2016/09/30/arizona-minimum-wage-initiatives/91286378/.

The GCI study estimates job losses at between around none to 26,000 with following the CBO methodology but with heightened elasticities due to the higher min. wage  (CBO was only looking at $10.10) and a larger assumed threshold effect–that 13,000 jobs would be lost.

This estimate is very similar to the study that opponents of Prop. 206 have highlighted which put the number of estimated jobs lost with a $12 min. wage at 15,000 (https://www.minimumwage.com/2015/11/the-impact-of-a-12-federal-minimum-wage/).

Those economists are clearly right-wing–We can say that because the only part they look at is the job loss–that’s the only focus of their analysis.

Like the CBO, the GCI study also looked at the number of workers who gained, estimating nearly 800,000 would. Yes, the GCI study also used estimates from the Economic Policy Institute to provide a deeper demographic profile of those who gained-but in doing so made sure that the aspects were consistent with CBO.

Finally, unlike the CBO and unlike the right-wing economists, the GCI study looked at what the likely impact on prices would be as that would be one of the principle means by which a business would adjust to higher wages. The economic literature here is fairly consistent and the low end was about 0.5 percent from one model and from another study the upper likely bound seemed to be 1.6 percent (for a 40 percent increase in the min. wage). Fast food restaurants were singled out for a higher increase of about 6 percent.

The GCI study tried to comprehensively look at Prop. 206.

If it was left-wing, it would have purely emphasized the large number of economic studies following Card and Krueger’s analysis of the min. wage increase in New Jersey relative to a no min. wage increase in Pennsylvania and other work out of the Univ. of Calif. Berkeley to say there would be no significant impact on employment.

Instead the GCI looked at that as a low end estimate–looked at the Wascher and Neuman end as a high end estimate and CBO which reviewed the literature as a reasonable middle.

 

Dave Wells is research director for the Grand Canyon Institute. He can be reached at dwells@azgci.org.

image credit: Copyright:lightwise / 123RF Stock Photo