There is a big difference between analysis and advocacy. If you are an analyst, you start with a question and try to find the answer. If you are an advocate, you start with a position and work to develop a message to support that position regardless of the underlying facts. At Beacon Economics, we sell analysis, not advocacy. While it should be clear to most observers who’s who in the policy arena, it is amazing how often the two are mistaken for each other. This is the case because advocates, by definition, often pose as analysts in order to improve their credibility and promote their message.
This is one of the reasons why studies on critical policy issues so often reach what appear to be completely opposite conclusions. Too often those conducting the studies are actually advocates who—to paraphrase the famous quote—use data like a drunk uses a lamppost, for support rather than illumination.
For the most part we try to avoid useless debates with advocates, as they really aren’t concerned with the merits of our arguments, only that we don’t agree with their preset conclusions. Instead we focus our efforts on those who are willing to think through policy decisions and who try to figure out the best economic and social course of action.
One group that should really know the difference between advocates and analysts is the media—after all we entrust the 4th estate with getting to the bottom of policy issues and ferreting out as best they can the underlying truth. Yet, often distinctions between analysis and advocacy are more or less ignored, either out of non-understanding, laziness, or possibly from having a pre-conceived point of view.
It seems to have been the latter that led to a recent, quite misinformed news story on a report Beacon Economics conducted two years ago. The story, by Kiet Do for KPIX Channel 5 in San Jose in November, critiqued a minimum wage impact study Beacon Economics did for the Silicon Valley Chamber of Commerce during the City of San Jose’s contentious ballot measure about raising the wage. Judging from his story, he clearly didn’t understand the arguments we had made, nor did he understand the data he was using to try and refute our points.
But the most glaring misstep was in solely interviewing people who were advocates for a higher minimum wage. These folks used the opportunity for news coverage to push their political agenda by twisting the facts even further. Had the reporter talked to an unbiased analyst they might have explained his errors to him. Since we wrote the report the story was critiquing, it seems the most obvious analysts to reach out to would have been at Beacon Economics, but we were never contacted.
The question the report addressed was what the job impact would be of raising the minimum wage in the City of San Jose to $10 per hour. That ballot measure has since passed and was put into place at the start of 2014. Our study, for the record, suggested the City could see the loss of up to 2,800 low paid jobs over time as a result of the hike. That was on the high end, the low end of our estimate was a loss of 500 to 600 jobs. We described how higher incomes for some would be offset by a loss of jobs for others—always an issue with minimum wage policies. But in the end there would be a net decline in employment.
The news story began by noting that the San Jose MSA has done very well over the course of this year—which was intended to show that our study’s predictions were wrong. The reporter was correct on one level—San Jose is not only one of the strongest economies in the state—it is one of the strongest in the nation at the moment. Job growth is well over 3% year-over-year, and wage growth is even more impressive. The average worker in the area is earning close to $100,000 per year.
But this doesn’t in any way contradict Beacon Economics’ study. We never claimed that the MSA would see a net job loss as a result of an increase in the City’s minimum wage, nor did we say that “the sky was going to fall” if the wage increased, as claimed by the San Jose State professor who spearheaded the ballot initiative and was interviewed for the story.
Quite the opposite, we clearly stated that the vast majority of companies in the area wouldn’t even notice the change—since they their highly skilled workforce had pay rates far outside the minimum range. The losses would primarily affect companies that hire lower skilled, lower paid workers. For other companies, economic life would continue as if nothing changed, and the hot pace of tech firm hiring was surely going to continue. In short, the loss of 600 to 2,800 jobs from raising the minimum wage would be on top of the growth expected in other sectors. If the City was to add 12,000 jobs, the impact of the minimum wage would be to lower this to the range of 10,000 jobs.
Additionally, if we were to try and trace what was actually happening off trend, the MSA level employment data the reporter cited wouldn’t be the place to look. Our study was on San Jose City employment where the minimum wage was passed—not the entire MSA, which includes all of Santa Clara and San Benito Counties. The City itself is only home to roughly 30% to 40% of the jobs in the region. Much of our analysis’ concern about the loss of low skilled jobs is that the City will lose them to other portions of the region.
If anyone should understand the important distinction between city employment and MSA level employment, it should be the academics at the Berkeley Center for Labor Research and Education who were also interviewed for the story. Yet, they didn’t bother to point out the fact that the comparison was an apples to oranges one. This is not surprisingly since the center is not in the business of analysis despite their university appointments and their location at one of the best universities in the nation. Rather, these are publicly funded labor advocates who have been busily lobbying for minimum wage hikes across the region regardless of any potential economic or employment impacts to any groups. This is also a center that regularly produces reports on the minimum wage that most academics view as flawed in approach, at best.
Indeed, the researcher from the center who was interviewed compounded the error by discussing the fact that restaurant employment, one major industry of concern, in the MSA was growing—sure, but where? In the City of San Jose or outside? They don’t know. No one does because that data has not been collected or studied yet. To make such a point to the reporter was a clear effort to obfuscate the true issues in support of a political point of view. It was not to illuminate the true underlying issues to the reporter and, in turn, the public.
Almost humorously the distortions continued. One question about minimum wages is if the costs are foisted onto consumers in the form of a wage tax. The good folks at Berkeley suggested that the San Jose City minimum wage hike hasn’t caused prices at restaurants to go up—more support for their benign views. On what basis do they make such a claim? The only local price data available is for the entire 7-county Bay Area economy—not for Santa Clara or the City of San Jose by itself. The researcher was citing completely irrelevant data. And must have known this.
To pretend that the data supports the Berkeley center’s benign view of the impact of minimum wage hikes is at best a dodge, and at worst academically and professionally dishonest. They should be ashamed and the University outraged—but don’t bet on it. As for the reporter, who was used as a tool to promote a political message, it isn’t clear why he made the critical error of asking an advocate a question about analysis. But we hope in the future he realizes the disservice he foists on his audience by doing so.