Something to Ponder While Debating the Minimum Wage

Posted on by Michael Rathbone

The latest news regarding the minimum wage debate in Saint Louis makes me feel like Michael Corleone in The Godfather Part III. Just when I thought this thing was on ice, the Board of Aldermen decides it wants to hold a day-long debate on raising the minimum wage and mortgage city buildings in order to fund a new site for the National Geospatial-Intelligence Agency (NGA).

My colleague Joe Miller had a great run-down on what’s going on with the NGA, and I encourage you give it a read. I want to focus on the minimum wage. I’ve already laid out how increasing the minimum wage can cost jobs, hurt economic opportunity, and fail to alleviate poverty. However, it also can raise prices.

This is what is happening in San Francisco, which has raised its minimum wage (H/T Moe Lane). According to one report, Chipotle is seeing prices rise 10-14 percent in San Francisco versus 4 percent in other markets. The report says that the size of this increase is directly attributable to the increase in the city’s minimum wage.

When you artificially raise prices, businesses have to respond. Some (though not all) businesses can absorb the costs. Some will just shed workers or substitute workers with automation. However, others will just pass that cost on to consumers. It seems this is what Chipotle is doing.

As the Board of Aldermen once again debates whether to raise the city’s minimum wage, it should really consider whether the benefits outweigh the costs, not only to businesses and workers but to consumers as well. 

Dispute Shuts Down University City Firehouse

Posted on by John Wright

In what some are calling a “sickout,” a group of firefighters in University City appear to have deliberately closed down a firehouse last month. You can read about the incident here and here, and the mayor’s statement on the incident is published here. While it appears that University City residents were not put in significant danger by this incident (University City residents were still served by another firehouse and the mutual aid arrangement with nearby fire departments), the unauthorized shuttering of a firehouse is a serious public policy issue that raises questions about safety and government waste.

If a reduced level of service caused by the closed firehouse did not pose a threat to public safety, then keeping the firehouse fully operational might not be necessary. With a starting salary including benefits of $80,000 per firefighter, keeping an un-needed firehouse fully staffed is probably not the best use of public resources.

However, if the closed firehouse did threaten public safety—even minimally—an unauthorized work stoppage is inexcusable. The University City firefighters already have a labor agreement in place. Withholding their service in a way that puts the public at risk shows that they cannot be trusted to honor their agreements.

In this case, University City would be best served by decreasing its reliance on problematic fire department personnel. There are several changes University City could make to become less dependent on staff, including contracting out for emergency services, increasing its reliance on mutual aid, and exploring volunteer fire protection as a supplement to professional fire protection services. Privatized EMS, mutual aid, and volunteer firefighters are all widely used in Missouri, can save taxpayers money, and, if fire department personnel cannot be relied on to honor their contract, shifting to these alternatives will increase public safety.

Regardless of whether the work stoppage is a serious threat to public safety or a mere bargaining maneuver, last month’s closed firehouse indicates that it’s time to reform practices in the University City Fire Department.

Why Did Saint Louis Get Rid of Its Streetcars?

Posted on by Joseph Miller

In Saint Louis, and in many cities across the county, there is a push to bring back streetcars. And in cities like Saint Louis, which once had an extensive streetcar system, people often ask why the city got rid of them in the first place. After all, many people think that streetcars are quaint and give urban environments a charm that attracts residents and businesses. Some think their replacement with buses was shortsighted; others even push the idea of a GM-led conspiracy.

In reality, streetcars went away virtually everywhere because of cost, and what people now consider quaint was once seen as outdated technology. Streetcar ridership waned in the early and mid-20th century, as they were outcompeted by buses and private cars. When public transportation became publicly owned, policymakers switched to buses, which were seen as cheaper, faster, and more flexible. Cities where streetcars persisted tended to be those with long tunnel stretches, where diesel buses would have created ventilation issues.

Returning to the question of cost, it’s important to remember that streetcars require their own dedicated infrastructure, while buses can share roads with cars, freight, and bicyclists. People complain about highway subsidies, but from the transit planner’s point of view the local streets are going to be there whether they decide to run a bus route or not. With a streetcar, the rails need to be built, maintained, and replaced on a regular basis.

While Saint Louis is building a 2.2-mile vintage streetcar line and considering a modern seven-mile route from downtown to the Central West End, these efforts are more expensive showpieces than a return of streetcar transit. For instance, in 1902, Saint Louis City, Saint Louis County, and Saint Clair County had a combined 560 miles of streetcar lines. That’s a long way from nine miles. Even in cities like Portland, which have spent serious amounts of money to bring back streetcars, total mileage is still less than 20.

Nor could Saint Louis afford to bring such a system back. Modern streetcar lines now require more than $50 million in capital costs per mile. Even assuming some economies of scale and track sharing, building 560 miles of lines would cost billions, possibly tens of billions. If the region went for a less expensive vintage streetcar system (like the Loop Trolley), the cost could still be almost $10 billion to build. For comparison, MetroBus, which runs a system roughly three times as extensive as that 1902 streetcar system, only spent $333 million on capital expenses between 1992 and 2013.

In the end, it was mostly costs that killed the streetcars, and mostly costs that will prevent them from ever being anything more than retro-transportation options for cities with more money than sense. As for Saint Louis, the city needs to consider whether its transportation goals are about moving people or moving the city back 100 years. 

East St. Louis transit

McKee’s Northside Plans Fail, City to Buy Land for NGA

Posted on by Joseph Miller

Back in 2009, city government had grand plans for a massive redevelopment of North Saint Louis City. To that end, Northside Regeneration LLC (led by developer Paul McKee) cashed in tens of millions in state subsidies to buy private property and received hundreds of city properties for very low prices. The hope was that Northside LLC would use those properties, along with hundreds of millions in promised local tax breaks, to bring new residential and business developments to North Saint Louis City.

Six years have passed without even the initial parts of the plan coming to fruition. With Paul McKee encountering legal issues it was doubtful whether it ever would. And now, finally, it seems that the city is giving up on McKee. Unfortunately, they’re not giving up by withdrawing the promise of further tax incentives, but by buying many of Northside’s properties to give to a federal agency.

This buyback is part of the city’s efforts to retain the National Geospatial-Intelligence Agency (NGA), which is considering leaving Saint Louis City. To keep the agency, the city plans to gift it a new site in North Saint Louis City, an area where Northside LLC was supposed to bring new development. According to St. Louis Public Radio, the proposed NGA site contains 360 Northside-owned properties. Northside LLC purchased 260 of those properties from the city for a total of $600,000 between 2009 and 2011. The rest were bought from private owners, but Northside LLC received reimbursement from the state to the tune of $3.5 million.

To assemble the land for the NGA site, the city plans to mortgage existing city property to purchase the aforementioned Northside properties for $20 million. Perhaps relieving Paul McKee and Northside LLC of a large chunk of the city will be good for the region in the long run, but all these actions leave a number of important questions unanswered:

  1. With much of the property originally slated for the Northside Redevelopment Plan now being bought back, what is the status of the remaining properties and tax subsidies?
  2. Will the city be able to buy back the land at the price they sold it, or will McKee (or his creditors) profit from the transaction?
  3. Will Northside LLC be forced to return the state tax subsidies it received to buy private land?

More on this to come. 

Kansas City Streetcar Advocates Argue Expensive Streetcar Not Country’s Most Expensive

Posted on by Joseph Miller

Recently, an article in the Kansas City Star reported that the cost of the city’s two-mile streetcar line is par for the course among streetcars. The mayor is quoted as saying that those who claim Kansas City’s plan is the most expensive in the country are talking “nonsense.” But whether or not it holds first place, Kansas City’s streetcar will be extremely costly.

According to the Star, the cost of Kansas City’s streetcar is comparable to similar projects in cities like Tucson, Seattle, Cincinnati, and Portland. The paper got their “data” from the Community Streetcar Coalition, which is a pro-streetcar lobbying organization (of which the city of Kansas City and KCATA are members), not a research group.

In dissecting the numbers, the first thing to note is that streetcars are virtually all incredibly expensive for the level of service they provide. That service is comparable to a short bus route, yet they are often an order of magnitude more expensive. That being said, the Star’s claims on the relative expense of the Kansas City streetcar are disputed. According to a report by AECOM (an architectural consulting firm), Kansas City’s streetcar system is more expensive per mile than Tucson, Seattle, and Cincinnati. Furthermore, the system is much more expensive per mile than many “vintage” streetcar lines like the Loop Trolley in Saint Louis, as the following chart demonstrates:

 

Kansas City

Tucson

Seattle

Cincinnati

Portland

Saint Louis

Year

2016

2014

2007

2015

2001

2016

Length

2

3.9

1.3

3.6

4.6

2.2

Total Cost (Millions)*

102

196

64

148

76

43

Cost per Mile (Millions)*

51

50

50

41

17

20

*2014 dollars                                                                                                                                                                                                                                                                                       

Of course, there are different ways of estimating cost per mile, and (being custom projects) no streetcar system is exactly alike. Asking which streetcar has the highest cost per mile is akin to identifying the most costly SUV on the market given factors like gas mileage, amenities, and dealer warranties. However, arguing the Kansas City streetcar is not the most expensive streetcar out there is a little like saying the Escalade is a better value than the Land Rover. It’s an expensive luxury, whether or not it’s the most expensive luxury.

When Kansas City planned its streetcar, it did not plan a cost-effective transportation system. Instead, it opted for an expensive status symbol designed to move money, not people. And while its costs may be comparable to similar vanity projects in other cities, that in no way indicates shrewd spending by Kansas City planners. 

No Child Left Behind the Times

Posted on by Michael Highsmith

Technology has given us some amazing things over the years, but you don’t see people using VHS and cassette tapes today. Times are changing, and if something better is available, why should we be stuck in the past? Much like cassette tapes, the federal government’s role in education needs an update.

Last month, Missouri’s No Child Left Behind (NCLB) waiver was extended to the 2017-18 school year. In exchange for adopting administration-favored policies such as teacher equity plans, Missouri will receive relief from the accountability decree, “All children will be proficient by 2014.”

In 2012 the Education Department began issuing waivers as more and more states failed to hit the “adequate yearly progress” targets set forth in NCLB. Since then, 42 states, the District of Columbia, and Puerto Rico have received waivers.

Until Congress passes a new law, NCLB will ensure that students remain victims of the federal government’s failing status quo. The School Superintendents Association represented more than 10,000 school administrators across the United States saying the law contained federal overreach and unworkable mandates and requirements.

When more than 80 percent of the participants of the program are granted explicit permission to waive penalties, there must be some call for change.

In April, the Senate Education Committee voted unanimously in favor of a bill to revise NCLB.

This bill, the Every Child Achieves Act (ECAA), would:

1.       Eliminate Adequate Yearly Progress targets and all of the sanctions that come along with them. Standardized testing would be required as informational for parents and taxpayers, not as part of a federally imposed accountability system.

2.       Allow statewide annual performance tests to be broken up into smaller portions. This would allow many districts to eliminate additional tests they used to measure performance throughout the school year and increase efficiency.

3.       Prohibit any federal official from mandating or incentivizing states to adopt or maintain any particular set of standards (including Common Core, which is explicitly named).

4.       Allow states to set up their own accountability systems and to develop their own turnaround strategies for low-performing schools to be implemented at the local level.

All in all, the ECAA represents the federal government taking a big step back from NCLB waivers. Whether this bill will become law is another question entirely, but for now it is promising that a bipartisan group of senators can see that the federal government overreached and it is time for a course correction.

Saint Louis County Would Be Safer With a Rational Policy for Hiring Firefighters

Posted on by John Wright

The St. Louis Post-Dispatch recently called for reform to the hiring practices for firefighters in Saint Louis County. The Post argued that forcing county firefighters to go through the Saint Louis County Fire Academy has a disparate impact on African-American firefighters, effectively preventing these firefighters from getting jobs in the county. Regardless of whether race is a factor here, Saint Louis County would benefit from reforming its hiring practices. Hiring only from the county academy prevents fire departments from hiring perfectly qualified firefighters. Unnecessarily limiting the pool of qualified firefighters can harm public safety and drive up the cost of public services.

Suppose you’re a firefighter in the Kansas City region. You’ve worked there a number of years and have done a good job. One day your spouse gets a job offer in Saint Louis County and you consider moving your family across the state. If you want to continue in your profession when you get to the county, you’re going to need to go back to school first; Saint Louis County only allows fire departments to hire firefighters who have been through the Saint Louis County Fire Academy.

The  academy only accepts about 40 applicants each session. Applicants who do not already have a job lined up are selected by lottery. This ensures that it’s very hard to become a county firefighter unless you already have a connection to the county fire industry.

Fire departments outside of Saint Louis County do not share this problem. The Saint Louis Fire Department and fire departments in Saint Charles and Jefferson counties hire firefighters who have been through any state-certified fire academy.

Other academies, such as Saint Louis City’s fire academy, also typically have more applicants than they can accept. Rather than give preference to some applicants and send the rest through a lottery, the city academy accepts students based on an entrance exam.

At very least, Saint Louis County fire departments should be able to hire firefighters who already work in Missouri without forcing them to pay for and attend another fire training program. The best solution would be to end the Saint Louis County Fire Academy’s monopoly on fire training and allow fire departments to hire firefighters who have attended any state-certified training program.

Blaine Amendments: Plaguing State Constitutions Since the 1800s

Posted on by Brittany Wagner

Douglas County School District in Castle Rock, Colorado, was dealt a tough blow Monday. The Colorado Supreme Court ruled Douglas County’s educational voucher program unconstitutional. Unlike other cases where public school districts fight school choice programs tooth and nail, Douglas County is defending its parents’ right to choose. The Choice Scholarship Pilot Program provided students who had attended Douglas County for one year with a voucher worth 75 percent of per pupil public funding. Funds could be directed toward private schools, including religious schools.

The program was challenged in 2011, because, like Missouri, Colorado has a Blaine Amendment. “This stark constitutional provision makes one thing clear: A school district may not aid religious schools,” the ruling stated.

Blaine Amendments prevent states from directing public funds toward religious schools. Thirty-seven state constitutions have them.

Douglas County School District officials said they will likely ask the U.S. Supreme Court to review the case. In 2002, the Supreme Court found Ohio’s voucher program did not conflict with the Establishment Clause of the Constitution. The Court found the program was neutral toward religion as it was created to provide educational assistance to poor children, not to divert funds solely toward religious schools.  

In 2004, though, the Supreme Court ruled in favor of a state’s Blaine Amendment. The Supreme Court upheld the constitutionality of Washington’s scholarship program, which excluded theology majors from receiving public funds. Still, the majority of rulings concerning voucher programs and Blaine Amendments have favored school choice programs.

It is unclear how the school district will proceed, but it is clear by the 500 students who opted to participate in the program that parents want a choice in how their children are educated. I will be rooting for this innovative school district, and I hope that, ultimately, #choicewins. 

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