fbpx

Latest Posts

Home

Facebook

Twitter

Search
About

Wisconsin-Minnesota comparison was flawed

This op-ed appeared July 28, 2018 in the Star Tribune

In “Progressive policies in Minnesota are working for workers” (July 26), her counterpoint to an earlier column from Prof. Noah Williams, Katie Hatt of the North Star Policy Institute writes as follows:

“Studies that consider only one pair of states — like the one cited in the earlier commentary … are inferior guides upon which to evaluate the impacts of public policies.”

And yet, in the next three paragraphs, Hatt goes on to use the findings of a May 2018 study by the Economic Policy Institute (EPI) to do that very thing — to consider only one pair of states in evaluating the impacts of public policies.

It is even the very same two states.

Hatt should heed her own advice. The EPI report makes a number of bogus claims based on cherry-picked data. For example, it uses annual data for 2010 to 2016 to claim that Minnesota’s economy has grown faster than Wisconsin’s since January 2011. But we have quarterly data available running from the final quarter of 2010 — a more precise starting point — into the last quarter of 2017. These more precise data show that over this period, in real terms, Minnesota’s economy grew by 10.9 percent and Wisconsin’s by 11.9 percent.

And there are plain misrepresentations. The EPI notes that, by December 2017, Wisconsin and Minnesota “have reached effectively the same unemployment rate, at 3 percent and 3.1 percent, respectively” and argues that “Minnesota was back at its pre-recession (December 2007) unemployment rate of 4.7 percent by September 2013, fewer than three years after Governor Dayton took office. In contrast, it took until December of 2014 — 15 months later — for Wisconsin to reach its pre-recession unemployment rate of 4.8 percent.”

But the EPI fails to mention that in the race to these pre-recession levels of unemployment, Wisconsin was starting from a rate of 8.1 percent and Minnesota was starting from a rate of 7.1 percent. From December 2010 to March 2018, Wisconsin’s unemployment rate fell by 5.2 percentage points to 2.9 percent, while Minnesota’s fell by 3.9 percentage points to 3.2 percent.

On the minimum wage specifically, Hatt writes, “As a resident of Minneapolis, I can attest that the sky is not falling following the City Council’s passage of a $15 minimum wage ordinance last year.”

Well, as the grandson of a 20-cigarette-a-day smoker who died at 86, I could attest that smoking isn’t bad for you. But anecdote is not the singular of data, and it is data upon which we must base public policy decisions.

What do the data show about the employment impact of minimum wages? In 2008, economists David Neumark and William L. Wascher surveyed two decades of research. They found that “minimum wages reduce employment opportunities for less-skilled workers … [that] a higher minimum wage tends to reduce rather than to increase the earnings of the lowest-skilled individuals … [that] minimum wages do not, on net, reduce poverty … [and that] minimum wages appear to have adverse longer-run effects on wages and earnings.”

In 2014, along with economist J.M. Ian Salas, they examined the subsequent literature and concluded “that the evidence still shows that minimum wages pose a trade-off of higher wages for some against job losses for others … ”

Prof. Williams is right about the minimum wage; the weight of evidence supports him. Data matter.

John Phelan is an economist at the Center of the American Experiment.

Comments

Subscribe

Categories

Upcoming Events

  • Morning in Minnesota: St. Cloud

    Location: St. Cloud

    Sign up HERE! Courtyard by Marriott St. Cloud 404 West Saint Germain Street St. Cloud, MN, 56301 Please join Center of the American Experiment on Tuesday, July 21 for breakfast with Center policy fellow and education expert Catrin Wigfall as she explains K-12 education in the state and its persistent disparities despite decades of increased spending. Following her presentation, Catrin will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude   Catrin Wigfall is a Policy Fellow at Center of the American Experiment. She is also the director of EducatedTeachersMN and EmployeeFreedomMN. Catrin’s…

    Register Now
  • Kristi Noem: The Courage to Reject a Shutdown

    Location: Online

    Sign up HERE! Join us Wednesday, July 8th for an interview with South Dakota Governor Kristi Noem over Zoom. In response to COVID-19, Noem defied the norm of a statewide shutdown and let South Dakotans choose for themselves what safety precautions to take. Tune in to this live online event to hear how Governor Noem preserved her state’s economy while still keeping citizens safe. Wednesday, July 8th at Noon CT Sign up HERE!  

    Register Now
  • Morning in Minnesota: Marshall

    Location: Marshall Golf Club

      Sign up for this event HERE! Please join Center of the American Experiment on Thursday, July 16 at Marshall Golf Club for a breakfast with Center economist, John Phelan, as he discusses Minnesota’s economic future. Following his presentation, John will lead a Q&A session. 7:30 AM Check In and Breakfast 8:00 AM Presentation 9:00 AM Conclude John Phelan is a graduate of Birkbeck College, University of London, where he earned a BSc in Economics, and of the London School of Economics where he earned an MSc. He worked in finance for ten years before becoming a professional economist. He…

    Register Now