Austin Affordability — Income

Lately the expense side of the rising cost of living in Austin has dominated the news. Time for some consideration of income. The Austin city council passed an $11/hour living wage that applies to full-time city employees and any companies to which incentives are offered to locate in Austin. The living wage has been extended to construction workers on projects for companies brought to Austin/Travis County by an incentive package. Including part-time and seasonal city employees is under consideration. They also approved asking the state legislature to allow Austin to set it’s own minimum wage, something that is forbidden to cities by Texas law. Well, the lege is preparing for it’s next session five months away. Are the city’s elected officials or staff testifying before some legislative committee, lobbying the legislators who are in town, or meeting with the Travis County delegation?

Robert Grattan of the Austin Business Journal makes the usual statement about job losses, citing a CBO report.

There is one drawback to such an effort, considering raising the minimum wage can cause employers to cut lower-income jobs. For example, the Congressional Budget Office estimated that raising the national minimum wage to $10.10 an hour would lead to about 500,000 job cuts across the country.

His colleague Andrew Brod of the Charlotte Business Journal delves deeper.

However, the report also found a great deal of uncertainty about that estimate and placed it at the center of an interval from nearly zero up to about 1 million. So when business groups say that an increase to $10.10 would cause “up to” a million lost jobs, they’re not wrong. But it’s equally correct to say that it could cause no job losses whatsoever.

Looking beyond the technical issues of gathering, analyzing, and presenting data, where does this uncertainty arise? Economists such as those at the CBO and the University of Chicago’s IGM Forum have become less certain over time that the simple relationship reflected in Mr. Bratton’s statement adequately represents the reality of the job market. In Supersize My Wage, Annie Lowrey presents the two-decade-old research of David Card and Alan B. Krueger that so upset economists. Their small study was expanded and repeated, confirming that raising the minimum wage is not so directly related to job losses.