Tuesday, November 26, 2013

We’re Number 3 – Uh Hurrah?


Of the 72 central Massachusetts cities and towns surveyed by reporter Zeke Wright in Go Local Worcester Southbridge is tied for third place with Gardner.

Unfortunately, it is not a distinction that any community would relish.

You see, at 9.9% we’re tied for the third highest unemployment rate of those 72 communities. We are only beaten out by Fitchburg and Athol at 10% and 10.5 % respectively.

What is more disturbing to me, however, is how this survey is used as a premise for launching into the repetition of hackneyed attacks on plans to raise the minimum wage. 

Christopher Pinto of the Worcester Republican City Committee said unemployment rates would be hampered by efforts to raise the state's minimum hourly wage. The current measure, which would raise the minimum wage from $8 to $11 by 2016 and tie future increases to inflation, passed Tuesday in the state Senate and has the support of Gov. Deval Patrick.
Pinto called the move “misguided.”
“Here is the thing about unemployment: Raising the minimum wage creates unemployment,” he said.
“Raising the minimum wage will cause the cost of goods to rise and this hurts everyone's buying power, most especially the poor and the working poor who the legislation is intended to help,” Pinto continued.
Pinto also levied charges against the Affordable Care Act and Massachusetts Health Reform Act, which he said placed additional costs on business and made it more expensive for them to hire.

Now dealing with the last observation first, the most recent measure of statewide unemployment was at 6.4%, significantly better than a national average of over 7%. Certainly that data doesn’t support any claim of a harmful impact from the Massachusetts Health Reform Act.

More to the point, however, is the perennial Republican claim that raising the minimum wage has a negative impact on employment. The overwhelming bulk of research on that issue shows no measurable consequence.

Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis

A February 2013 study by the Center for Economic and Policy Research  concluded:

Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers.
The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms' overall costs and only modest relative to the wages paid to low-wage workers. In the traditional discussion of the minimum wage, economists have focused on how these costs affect employment outcomes, but employers have many other channels of adjustment. Employers can reduce hours, non-wage benefits, or training. Employers can also shift the composition toward
higher skilled workers, cut pay to more highly paid workers, take action to increase worker productivity (from reorganizing production to increasing training), increase prices to consumers, or simply accept a smaller profit margin. Workers may also respond to the higher wage by working harder on the job. But, probably the most important channel of adjustment is through reductions in labor turnover, which yield significant cost savings to employers.

Bloomberg News reported in April 2012: "[A] wave of new economic research is disproving those arguments about job losses and youth employment. Previous studies tended not to control for regional economic trends that were already affecting employment levels, such as a manufacturing-dependent state that was shedding jobs. The new research looks at micro-level employment patterns for a more accurate employment picture. The studies find minimum-wage increases even provide an economic boost, albeit a small one, as strapped workers immediately spend their raises.”

David Autor of the Massachusetts Institute of Technology, commenting on a study in The Review of Economics and Statistics in November 2010 concluded “The paper presents a fairly irrefutable case that state minimum wage laws do raise earnings in low wage jobs but do not reduce employment to any meaningful degree. Beyond this substantive contribution, the paper presents careful and compelling reanalysis of earlier work in this literature, showing that it appears biased by spatial correlation in employment trends.” 

I could go on regarding this matter. The point is that the author of the Go Local Worcester article does an injustice in conflating his report of factual statistics with highly dubious political bias.

8 comments:

  1. Ceratinly you must take your share of the responsibility for the high unemployment rate in Southbridge. Mister Carlisle assured us when they introduced the landfill tonnage increase plan that the jobs that would result would replace the jobs we lost when AO closed,

    Ha, but you had to delay the building of the Industrial Park, even though Mister Clark, Mr. & Mrs. Denise Clemence, the Manna's,, George Chenier Dick Whitney, Roger Caoette and others assured us that we had the PIM platics factory and others just waiting to come to our brand spanking new Industrial Park. If you listened to them we'd be in the lowest three in unemployment instead of the highest three if you tree huggers just let the freedom of free enterprise ring right here in Southbridge.

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    1. I sincerely hope that you're being ironic. I can't believe that anyone could be so seriously deluded as to believe what you re saying.

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    2. For a review of the specifics of why the PIMS proposal was nothing more than a bag of air go here.

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  2. OK, after reading the article you posted in your comments and some of the other articles and posts from recent weeks and talking to someone tonight about what Mister Clark is doing to Jim up at the airport, it appears that maybe Clark does put the landfill ahead of the rest of the town.

    I am from Southbridge originally and am home for Turkey day. Believe it or not,due to my reading the Telegram and the Southbridge News I didn"t really have any idea what a conniving critter Clark actually is. What I don"t understand is why the newspapers don>t tell the whole story. Now that I have read the whole story about PIM,it appears that the newspapers are as guilty at pulling the wool over our eyes as Clark and Nikolla is. Seriously, after reading the whole story, you"d think the DA would investigate potential fraud conducted to get that road built. It looks like you and Lazo and Logan and Vandal totally knew exactly what you were doing when you held up the road . After my comment I am eating a little crow too.I hope people realize that Maybe you ought to be Mayor?

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    1. Thanks. My only ambition at this point is to try to purvey the truth. I’m glad what I wrote had an impact on you.

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    2. Allow me to respond to your observation, “What I don’t understand is why the newspapers don’t tell the whole story.” by quoting again from the article I referred you to above.
      “In addition to the decline in reliance on them for information, the internet has undermined their primary source of income – advertising.
      These trends have created a “perfect storm” that has severely constricted the economic viability of local newspapers.
      As a consequence local traditional media has had no option but to reduce employment, cut staff and demand more from those who are still employed.
      Given this analysis, let me turn to the two major local press outlets, The Worcester Telegram & Gazette and The Southbridge Evening News.

      Both have substantially cut back. In the case of the T&G, their local reporter was moved to a Worcester office, after substantial layoffs. In the case of The Evening News, there has been a constant turnover in staff as well as management.
      In both cases the demand for output from the reporters has, as a result of staff cutbacks, been increased.
      Like any other human beings seeking to make a living they have sought to provide what was demanded by their employers – articles.
      In order to do so they have gone to the easiest source of information. In this particular case it has been the Town Manager – whether it was Clayton Carlilse, John Healy or Christopher Clark.
      The Town Manager was happy to provide access to the press. It helped him to further his agenda.
      Simultaneously, any rational person can realize, there was an unspoken but realistic assumption that negative comments about the Town Manager or his agenda might restrict access. Such a restriction on access would clearly limit the ability of the reporter to have material for the articles that are the foundation of their income.
      Thus, over time, reporters became advocates for one point of view. This was not any kind of insidious conspiracy. It was purely a case of enlightened economic self-interest to provide what was needed to keep their jobs. That, folks, is co-optation.”

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    3. The final factor I want to address is the matter of an access road.
      The press virtually ignored the fact that at a council meeting I presented an alternative route that would have gone directly to route 20 making the “industrial park” a far more viable prospect.
      Such a route had been discussed for years with no progress.
      I presented the council and the town manager not only with a professionally prepared topographical map outlining such a road, but most critically, letters of agreement from all of the property owners along the route agreeing to allow a right of way. They’re only demand, all of them, was the provision of access to Southbridge water. That was for only four property owners.
      The then council chairman then stated to me flatly that he would never do anything to benefit Charlton residents. We were talking only four such people.
      What I could not have known at the time was that the next year the Federal stimulus program would go into effect looking for “shovel-ready” projects. Had the council chair and the town manager cooperated with me we could have had a far more practical road project with a likely substantial infusion of Federal money.

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  3. I was reading the other day that both Devens and Worcester are or have major film production facilities the cost of which was offset by the State. I'm not saying that we need a film production facility, but it started me thinking about Southbridge's major problem-- the lack of a major highway or any type of transportation system that would support a light industrial base.

    Short and sweet, the town should take over the area that was the AO by eminent domain and turn it into a technology services center that may very well include a film or sound production facility. Other businesses that could be attracted (using tax incentives from the state and local governments) could be web design companies, web hosting companies, web services companies and any company that provides most of its business through the internet.

    I think it is time for us to get out in front of technology instead of living in the past.

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