The Wall Street Journal Lies About Seattle's Minimum Wage Increase

American conservatives endlessly recycle a lot of rhetoric that has no application in the real world. For example, Republican Presidential candidate Jeb Bush is currently pushing a plan that would dramatically reduce taxes for the rich. Won't that mean significantly lower revenues, and thus a greatly increased federal deficit? Don't worry about that says the Bush team, lower rates will unleash tremendous economic growth. There just one problem with this talking point: It's demonstrably false. And by, "demonstrably," I mean it's been proven over and over and over again that tax cuts for the wealthy do not significantly spur economic growth.

Similarly, conservatives want Americans to believe that increasing the minimum wage is a bad thing. Most especially, the executive leadership of America's fast-food corporations want everyone to believe that increasing the minimum wage will cost jobs, because those corporations like to pay employees poverty wages. So that executive leadership isn't too happy with my hometown of Seattle, WA. Washington already has the nation's highest state minimum wage; $9.47 as of January, 2015. Separately, the city of Seattle increased minimum wage for large businesses to $11.00 in April, and all business will be required to pay $15.00 within seven years.

Seattle is America's fastest growing city, so it's difficult to find any negative impact to the recent increase in minimum wage. So difficult in fact, that the Wall Street Journal is prepared to simply lie. Recently the Journal welcomed an opinion piece written by Andy Pudzer, the CEO of CKE Restaurants. CKE owns Hardee's, Carl's Jr. and other fast-food chains. The article is hidden behind the Journal's paywall, but there's easy ways around that. According to Mr. Pudzer,

"It’s still early to know how the hikes are affecting the job market, but the preliminary data aren’t good. Mark Perry of the American Enterprise Institute, Adam Ozimek of Moody’s Analytics and Stephen Bronars of Edgewood Economics reported last month that the restaurant and hotel industries have lost jobs in all three cities. Mr. Bronars crunched the numbers and discovered that the “first wave of minimum wage increases appears to have led to the loss of over 1,100 food service jobs in the Seattle metro division and over 2,500 restaurant jobs in the San Francisco metro division.” That is a conservative estimate, he notes, as the data include areas outside city limits, where the minimum wage didn’t increase."

The loss of 1,100 restaurant jobs in Seattle area would be significant. And I have to emphasize, "would be," because Mr. Pudzer is lying. Let's have a look at what Mr. Bonars found when he analyzed the numbers from the Bureau of Labor Statistics. Bonars notes that growth in restaurant employment in the Seattle metro area significantly outpaced the national average between 2011 and early 2014. Between early 2014 and early 2015 however, restaurant employment in Seattle grew by 2.42% while the balance of the country saw growth of 3.52%. The difference of 1.10% apparently translates into at least 1,100 jobs.

So to summarize,
*Seattle continued to add restaurant jobs despite the minimum wage increase, yet Mr. Pudzer refers to a "loss" of jobs because he's prepared to assume that more jobs might have been created under different circumstances.
*He's also prepared to assume that the minimum wage increase is driving the loss or gain of jobs, despite the fact that three out of four jobs in the Seattle metro area are outside the city limits and not affected by the minimum wage increase.
*He's further prepared to assume that there are no other variables in the equation. Consider for example that for years the growth of restaurants in the Seattle area outpaced the rest of the country, so that the city now has more eateries per capita than any city except San Francisco. So it's just possible that our restaurant infrastructure is now over-built, and the pace of new hiring is now bound to slow down.
*As already noted, growth of restaurant employment in Seattle significantly outpaced the nation average between 2011 and the end of 2014, a time during which Washington state also increase minimum wage from $8.67 to $9.42. One wonders how that could happen if the impact of increasing wages is as great as Mr. Pudzer claims.

The right-wing American Enterprise Institute also decided to get in on this game, although this article by Mark J. Perry is a little more cautious in its conclusions. He notes that according to the BLS, the Seattle metro did in fact lose 1,000 restaurant jobs in April, the same month is which the minimum wage increase went into effect. so in Mr. Perry's opinion, "it looks like the Seattle minimum wage hike is getting off to a pretty bad start."

This opinion is already moot. Although the Seattle metro saw an decrease of 2,000 restaurant jobs between January and May of this year, the months June, July and August saw an increase of 1,900 jobs.

So what's the actual effect of increasing minimum wage? I'll leave the answer to economist Paul Krugman:

"Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs. But there’s evidence on that question — lots and lots of evidence, because the minimum wage is one of the most studied issues in all of economics. U.S. experience, it turns out, offers many “natural experiments” here, in which one state raises its minimum wage while others do not. And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.

Why is this true? That’s a subject of continuing research, but one theme in all the explanations is that workers aren’t bushels of wheat or even Manhattan apartments; they’re human beings, and the human relationships involved in hiring and firing are inevitably more complex than markets for mere commodities. And one byproduct of this human complexity seems to be that modest increases in wages for the least-paid don’t necessarily reduce the number of jobs.

What this means, in turn, is that the main effect of a rise in minimum wages is a rise in the incomes of hard-working but low-paid Americans — which is, of course, what we’re trying to accomplish."

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(Somewhat) Legitimate Criticism of Obamacare, Part Two

I've had a great deal to say about conservative myths regarding the highly successful Affordable Care Act, otherwise known as Obamacare. In my last post, I commented on the fact that although it's true that some of the newly insured are using emergency rooms at public expense, those folks are also healthier, more likely to have access to preventitive care, and less likely to stick emergency rooms with expenses for which hospitals will find it difficult to get reimbursed.

This time I'll tie off the last of the partially-true criticisms of Obamare.

Criticism Two: Obamacare is driving insurance companies out of business.

True, Assurant Health of Wisconsin is closing its doors. And it's pretty clear that Assurant struggled with complying with Obamacare's new rules, such as forbidding higher premiums based on medical history and age. However, just because Assurant couldn't make it under the new rules doesn't mean that the industry in general is hurting. On the contrary. From Daniel Jennings of Seeking Alpha:

"UnitedHealth, Cigna, Aetna, and WellPoint have shown significant TTM revenue growth in the last year." "TTM revenue figures indicate that the changes to the health insurance market in the past year are having a positive impact on those companies."

Last September, Daniel Mangan of CNBC also pointed out:

"The number of insurers set to sell health plans on Obamacare exchanges in the upcoming open-enrollment period is 25 percent higher than for 2014, as 77 issuers jump into that market."

Finally, some states saw few insurers ready to operate on the exchanges in Obamacare's early days. Now choice of plans is growing. From blogger demoinesdem at bleedingheartland.com:

"The Iowa Insurance Division announced today that "seven companies have applied to offer Iowans health insurance through the federal health insurance marketplace" for 2016. This year, Coventry was the sole provider selling through the exchange, following the collapse of CoOportunity Health. Although Iowa's dominant insurance provider, Wellmark Blue Cross/Blue Shield, is staying off the exchange for another year, Coventry and Minnesota-based Medica want to sell individual plans statewide, and United Healthcare wants to sell in 76 of Iowa's 99 counties."

Criticism Three: "Giving people Medicaid insurance is almost like giving them nothing, because you can't find a doctor that will see Medicaid patients." - Republican house majority leader John Boehner

As I discussed in my last post, there's some truth to the claim that folks newly insured with Medicaid are having trouble seeing clinicians, and busy clinics are instead referring them to emergency rooms for care. This problem however is fairly limited. From Jason Millman of the Washington Post:

"The Commonwealth Fund, a health research foundation supportive of the health-care law, is out with a new survey this morning examining the experiences of the newly insured under the Affordable Care Act. The survey, conducted by SSRS between April and June, found that 60 percent of people with new coverage, either through Medicaid or a private health plan, said they had already visited a health-care provider or filled a prescription.

Just about one in five of those with new coverage, though, said they tried to find a primary care doctor — but of those, 75 percent said their search was somewhat easy or very easy. And once they found a primary care doctor, most new enrollees said they were able to make an appointment within two weeks."

 According to a study just released by the peer-reviewed journal Health Affairs, primary care has actually improved for Michigan Medicaid patients under Obamacare. The authors conclude:

"It is noteworthy that Medicaid appointment availability in Michigan increased rather than decreased during a period when approximately 350,000 adults entered the Medicaid system and the number of primary care providers likely remained stable." and that, "appointment availability increased 6 percentage points for new Medicaid patients."

Conservative cyberspace has also been circulating the claim that, "214,000 doctors refuse to take patients with insurance bought on marketplaces." Long story short, Politifact.com rates this claim as, "False."

Criticism Four: The President said, "If you like your plan you can keep it." That wasn't altogether true.

Yes, but it was about 99.8% true. At one time, we heard claims that millions had seen their policies cancelled. Here's an update on the facts, as summarized by of Forbes:

"About 2.2% of Americans who purchased coverage on their own, or 400,000 people, had individual policies cancelled, according a new analysis from the nonpartisan Urban Institute. And just 0.3% of  Americans with coverage through their employer, or 500,000 people, had their health insurance policies cancelled in 2014, the Institute said. Authors of the issue brief, funded by the Robert Wood Johnson Foundation, said there was no evidence of a significant number of policy cancellations in either the self-insured or small group markets."

And even among this group, we have to ask how many really lost policies they liked and planned to keep. As I've pointed out before, while it's true that certain health care plans are no longer available due to changes in the law, many of these were not insurance at all, but junk plans that didn't offer real coverage.  Furthermore, Obamacare is not the reason why most of the folks who changed plans did so. On the individual health insurance market, plans typically are sold with one-year contracts that change prices and/or benefits year-to-year. Even before Obamacare, only 17 percent of consumers in this market kept the same plan for two years or more. Fewer than one million people who previously had individual market insurance transitioned to being uninsured. And insurers were given the option of continuing even the junkiest plans for one year after Obamacare went into effect.

So, did anybody lose a real insurance plan they liked? A few did. Some folks were getting cheap insurance because their plans didn't accept anyone with preexisting conditions. Those plans are no longer allowed. Sorry folks.

Criticism Five: The President said his plan would, "cut the cost of a typical family's premium by up to $2,500 a year." That wasn't true.

This last one is hard to spin. What the President said is not true. His statement was prompted by a report that estimated the total savings of everything Obamacare would do, then divideded that figure by the number of households in the country. The problem is the President used the word "premium." While Obamacare has reduced the annual year over year increase of health care costs, it certainly has not reduced insurance premiums by a couple of hundred bucks a month.

Good night, and good luck.

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(Somewhat) Legitimate Criticism of Obamacare, Part One

Last week, the Supreme Court upheld the Affordable Care Act's federal subsidies in the case of King v. Burwell. Obamacare is here to stay. Obamacare works. The number of uninsured is at an all-time low. Obamacare greatly reduces the federal deficit. It improves solvency of the Medicare Trust. It reduces health care cost inflation. It creates jobs. It's helping the population become healthier. People who have Obamacare policies like their policies. And criticism of Obamcare by conservatives is almost entirely a pack of lies.

Now, "almost entirely a pack of lies," is not the same as, "entirely a pack of lies." Fair is fair, it's time for some thought on the criticism of Obamacare that actually has some legitimacy.

Criticism One: Obamacare was designed to reduce expensive emergency room visits. But some people with Obamacare are actually using emergency services more rather than less frequently.

According to acasignups.net, 14 million of the 32.7 million Americans who have signed up for Obamacare are lower-income folks eligible for policies under Obamacare's Medicaid expansion. These folks can now receive preventative clinical care instead of higher-priced care in emergency rooms at public expense. Reducing emergency room traffic is a specific goal of Obamacare. In 2009, President Obama said,

"One of the areas where we can potentially see some saving is a lot of those patients are being seen in the emergency room anyway, and if we are increasing prevention, if we are increasing wellness programs, we're reducing the amount of emergency room care, then that frees up doctors and resources to provide the kind of primary care that will keep people healthier, but also allow them to see more patients and hopefully give more time to patients, as well."

Unfortunately, as Ray Fisman of Slate.com explains, that's not what happening:

"The clear and compelling evidence that ER usage increases with Medicaid coverage is the latest finding to come out of the landmark Oregon Health Insurance Experiment, which randomly selected low-income uninsured adults in Oregon to receive health insurance through the state’s expansion of Medicaid."

Why are new Medicaid enrollees using the emergency room more? Fisman notes:

(1) Rather than try to see a doctor, "the uninsured typically try self-medicating first, or just wait and hope the chest pain is heartburn and not cardiac arrest."
(2) "Patients aren’t, in fact, substituting primary care for the ER to the extent that many insurance advocates have hoped they would," because a busy clinical practice may be, "booked up with regular, predictable appointments, which doesn’t leave much slack to handle these urgent (but nonemergency) cases." Overbooked clinics may then refer patients they don't have time to treat to the emergency rooms.

Also significant is a recent poll released by the American College of Emergency Physicians, in which 28% of doctors surveyed nationally saw large increases in patient volume, while 47% saw slight increases.

So does this mean the President was wrong to state that health care reform would reduce emergency room visits, and the corresponding cost to taxpayers? Not necessarily. A 2014 study in California by UCLA’s Center for Health Policy Research found that ER use was higher among new enrollees in California’s Low Income Health Program, the state's Medicaid-like program, but also found that the spike was temporary. From Olga Khazan of The Atlantic,

"In fact, after two years in the program, the enrollees used hospitals at roughly the same rate as people who had already been insured. The study authors said a likely reason for the eventual decline was that the LIHP program offered preventative care and treatment for chronic illnesses. Over time, LIHP patients were able to see regular doctors for their lingering medical issues, and they used hospitals less as a result."

A temporary increase in emergency room visits, followed by a significant decline was also observed in Massachusetts following that state's 2006 health care reform program, which was a model for Obamacare. In other words, health care reform is working as designed: people who were formerly uninsured are now getting preventative care which is keeping them healthier and out of hospitals, including emergency services.

Some other points in defense of Obamacare:

(1) Clearly some new Medicaid patients are pushing new costs onto taxpayers through hospital visits. But remember, as Ray Fisman pointed out in the Slate article linked above, "the uninsured typically try self-medicating first, or just wait and hope the chest pain is heartburn and not cardiac arrest." One of the health care reform's biggest goals is to stop people dying simply from lack of medical care in the richest country in the world. And while someone who visits the ER may cost taxpayers more than someone who just dies, and (to paraphrase Ebeneezer Scrooge), "decreases the surplus population," that investment in health care usually means another productive American citizen who can pay into the system more than they take out in entitlements. (I would just say that it's wrong to let people die from lack of health care, but I always try to make the economic argument.)

(2) The US saw steady growth in emergency room visits during the two decades before Obamacare was implemented. The pace of that growth has actually slowed in some places since Obamcare went into effect including Los Angeles County, California (which happens to be America's most populous county). From Soumya Karlamangla and Doug Smith of the L.A Times,

"During the first three months of expanded health insurance coverage required by the federal Affordable Care Act, emergency room visits by patients who didn't require hospitalization increased 1.7% in the county compared with the same period last year, a Los Angeles Times analysis of data from 75 hospitals shows. Annual ER visits in the county had increased 3% last year and 5% in 2011 and 2012."

A recent study in the peer-reviewed Journal Health Affairs also concluded that the Affordable Care Act is reducing ER visits among young adults.

(3) Some Republican-dominated states have refused to expand Medicaid. There are many negative consequences to this decision, not the least of which is withholding health insurance from people who need it. But refusal to expand Medicaid can also have negative consequences for ER service availability. As of Joshua Holland of Moyers & Company noted last year,

"These states aren’t just rejecting an opportunity to expand coverage; Obamacare assumed that expanding Medicaid would dramatically reduce the number of uninsured patients showing up at emergency rooms for treatment they couldn’t afford, so it cut funding for hospitals that treat large numbers of these patients. Without those federal dollars coming in, a number of hospitals that serve low-income populations in refusing states have already been shuttered. According to the Urban Institute study, "these 24 states are also slated to lose a $167.8 billion (31 percent) boost in Medicaid funding that was originally intended to offset major cuts to their Medicare and Medicaid reimbursement.""

Obviously, if some emergency rooms close thanks to these Republican shenanigans, a greater burden will fall on those that remain open. How grim is the situation? This past March, Guy Gugliotta of the Washington Post reported that,

"48 rural hospitals have closed since 2010, the majority in Southern states, and 283 others are in trouble." He cites, "declining federal reimbursements for hospitals under the Affordable Care Act as the principal reasons for the recent closures. Besides cutting back on Medicare, the law reduced payments to hospitals for the uninsured, a decision based on the assumption that states would expand their Medicaid programs. However, almost two dozen states have refused to do so."

Florida Governor Rick Scott's refusal to expand Medicaid has crippled that state with a hospital funding crisis and a budget crisis. Governor Scott still wants federal dollars of course. He's actually demanding a return to the old, grossly inefficient system whereby millions were uninsured, went to emergency rooms for all their care, and the federal government wrote checks to hospitals to keep them in business.

(4) While some emergency rooms may be seeing more patients, those in states that have expanded Medicaid are seeing fewer who have no insurance. The LA Times article linked above noted that in Los Angeles County, emergency room patients without coverage and responsible for their own medical bills dropped from 18% to 16%. A decline in uninsured patients seeking uncompensated care increases revenue for health providers.

(5) Yes, it costs the taxpayers money to insure the uninsured who cannot pay for coverage themselves. However, from a financial standpoint, the smart thing to do is to provide very poor Americans with comprehensive services including health insurance, housing and income support. From Chris Zeigler of cracked.com:

"Boston Health Care for the Homeless tracked 119 chronically homeless people for five years. In that time, those 119 people racked up an astounding 18,834 emergency room visits, despite the fact that 33 of them died and seven were placed in a nursing home during that time. In Washington in 2002, 198 individuals generated 9,000 emergency room visits, or a little under one a week. At a minimum of $1,000 a visit, that's a heck of a medical bill that those hospitals are trying to collect from a homeless person. Unless they have a really good day panhandling, that money is coming out of your pocket.

Add in the annual cost of $24,000 if they take advantage of a shelter, plus the cost of the police to arrest and process those who misbehave (plus the round-the-clock housing, feeding and guarding they get once they're in jail), and it all adds up to a tidy sum for taxpayers to handle. Experts say it really would be cheaper just to house them and treat them.

For instance, a San Diego program found that "When patients were connected with housing, income benefits, health insurance and a primary care home, a 61 percent decrease in emergency department visits and a 62 percent decrease in inpatient days occurred over two years." Statistically, a person just doesn't get as sick, and doesn't get into as much trouble, once they have a roof over their head."

Good night, and good luck.

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