A Canary in the Coal Mine?

Posted on by Michael Rathbone

Among the primary reasons for opposition to increasing the minimum wage is that doing so will result in job losses. Numerous academic studies show the negative effects of minimum wages on employment. New information from Seattle gives even more evidence that increasing the minimum wage will cost jobs.

In June of 2014, the Seattle city council passed a new law that will increase the city’s minimum wage to $15 an hour, with the increase being phased in over a period of years. The first increase (to $11/hour) came in April of this year. The American Enterprise Institute (AEI) studied restaurant employment in Seattle for the first 6 months of 2015, and what they found falls in line with what many other studies have shown.

According to AEI, between January and June of 2015 the Seattle Metropolitan Statistical Area (MSA) saw restaurant employment fall by 1,300 jobs—the largest decline since 2009 (during the Great Recession). It’s true that this figure counts job losses in months before the city minimum wage went up. However, the state of Washington’s minimum wage increased starting in January. In fact, after its latest increase, Washington has the highest state minimum wage among all 50 states.

AEI also found that the 1,000 jobs lost during May (which followed the city minimum wage increase in April) was the largest 1-month decline since January 2009.

During this same 6-month period, restaurant employment increased nationally by 130,700, overall employment in the Seattle MSA increased by 1.2 percent, and non-Seattle MSA restaurant employment in Washington increased by 2,800 jobs.

It should be noted that the Seattle MSA includes more than just the city of Seattle. Job losses could be occurring outside the city, and that could be skewing the results. But aside from the minimum wage increase, what economic/policy differences would account for the restaurant job losses in the Seattle MSA and the restaurant job gains that occurred in the rest of Washington?

Is Seattle the canary in the coal mine for the rest of the country? More time is needed to see what the full effects of the minimum wage increase actually will be. However, if these kinds of job losses are occurring in Seattle, which is much better equipped to handle a $15 minimum wage than Saint Louis, what does such a wage floor portend for Saint Louis? Instead of rushing to pass a minimum wage increase that could cost people jobs, Saint Louis policymakers should wait for more results to come in. 

How a Cheap Airport Helps Kansas City

Posted on by Patrick Tuohey

The Kansas City Business Journal just published some good news for Kansas City:

On Tuesday, Allegiant Air announced it will start nonstop service from Kansas City to Orlando, Southwest Florida and Tampa in mid-November. The Las Vegas–based low-cost airline is operated by Allegiant Travel Co.

In an interview on KMBZ radio, Bill Grady asked airport administrator Mark VanLoh if this new service announcement raised questions about the real need for a new terminal. Mr. VanLoh replied, “I don’t see how the two are connected.”  

In fact, the two are very much connected.

The news of Allegiant Air is not only good news in and of itself, but it demonstrates exactly why Kansas Citians ought to be skeptical of taking on an unnecessarily large expense at the airport. Allegiant Air is a “low-cost” airline. According the The Memphis Business Journal: 

Allegiant often serves smaller markets like Orlando-Sanford International Airport instead of Orlando International Airport to avoid pricey landing fees.

Advocates of spending a great deal of money at the airport tell us that only travelers and airlines will pay the price. That is largely true. They also tell us that the prices airlines pay to serve an airport have little to do with ticket price; that may also be true. But pricey landing fees of the type that would follow an expensive rebuild or remodel may chase away airlines like Allegiant. And they would be a disincentive for bigger airlines like Southwest, too. A Southwest vice president said as much to the airport advisory group, “Higher costs can lead to less service, not more.” They have left other airports over similar price increases.

If Southwest wants to pour hundreds of millions of dollars into a new KCI, that might be welcome. But if improvements require issuing bonds resulting in higher fees to airlines, city leaders should think twice. A shiny new airport is of no use if airlines choose not to service it.

 

Is there evidence of a “teacher exodus” from Kansas?

Posted on by Michael Q. McShane

If you take the media’s account of the state of the teaching profession in Kansas seriously, you’d think that there was a line of cars filled with teachers on I-70 headed east right now.  “Kansas’s Teacher Exodus,” blared the Atlantic.  NPR’s take? “Shrinking Kansas Budgets Push Many Teachers Across State Lines.”

Is such an out-migration happening? Let’s dig into the numbers.

One frequently hyperlinked story comes from Sam Zeff of KCUR.  (A transcript can be found here.)  Unfortunately, it only offers two real data points. First:

“With just six weeks to go before classes begin, there are about 700 open jobs in Kansas, double, Wilson says, the number they usually have this close to school.”

The problem with this statistic? It has no context. On Monday, The New York Times dedicated its front page  to a story on states all across the country struggling to recruit and retain teachers. As author Motoko Rich points out:

“In California, the number of people entering teacher preparation programs dropped by more than 55 percent from 2008 to 2012, according to the California Commission on Teacher Credentialing. Nationally, the drop was 30 percent from 2010 to 2014, according to federal data. Alternative programs like Teach for America, which will place about 4,000 teachers in schools across the country this fall, have also experienced recruitment problems.”

This is a macro-trend in education right now, not just an issue for Kansas. To wit, the Times story focuses on California, where voters dramatically raised taxes via Prop 30 at roughly the same time Kansas was cutting them. They’re struggling just as much, if not more.

The second bit of hard evidence from the KCUR story is even more underwhelming:

“Data from the Missouri Department of Elementary and Secondary Education suggest there is indeed a migration of teachers from Kansas to Missouri. In 2011 before huge tax cuts were enacted, only 85 applications for Missouri teaching licenses were filed with a Kansas address. In the next three years, as school budgets were slashed, applications doubled.”

That would be around 170 teachers total, and only 85 more than normal.  For a little perspective, Kansas has 41,243 teachers, so those 85 teachers represent 0.2% of Kansas’s teaching force. I’m not sure “migration” is the right word for that.

Probably the second most cited resource is this AP report that found 3,720 Kansas teachers leaving either Kansas or the profession entirely last school year, compared to an unnamed date in the recent past when only 2,150 left.  

Again, context: Using the numbers above, 3,720 teachers make up roughly 9 percent of Kansas’s teaching force. According to the National Center for Education Statistics, 8 percent of teachers leave the profession nationally every year, and an additional 8 percent move to different schools.  That means Kansas’s numbers are right in line with, or possibly even better than, national averages.

Kansas has not been immune to national trends affecting the number of people becoming or remaining teachers, but I see little justification for Kansas-specific alarm. I know it doesn’t fit the preferred narrative, but the truth often doesn’t.

Friedman Legacy Day with Hon. Jabar Shumate

Posted on by Jabar Shumate

This year’s Friedman Legacy Day event in Saint Louis focused on the importance of school choice with guest speaker Hon. Jabar Shumate. Shumate is a former Oklahoma state senator and state representative. He has been an advocate for kids trapped in low-performing schools and has fought for increased funding for public education. The Friedman Legacy Day celebrates the life and ideas of Economist Milton Friedman, who championed school choice.

The question and answer portion begins at 31:06.

Local Fuel Tax in Foristell Fails by a Nose

Posted on by Joseph Miller

On Tuesday, voters across Missouri cast ballots on many different local issues. Most had to do with bond issuances and local board elections, but in Foristell (located in Saint Charles County), residents voted on transportation funding.

The idea that a Missouri city would vote on a tax increase to fund transportation is not news in and of itself. After all, virtually all cities and counties already use property and sales tax levies to fund various types of transportation. But Foristell did not vote on a property or sales tax, it voted on a fuel tax.

As we’ve written before, Missouri cities and counties can impose local fuel taxes, as long as tax proceeds are spent exclusively on roads, which is what Foristell’s 1 cent diesel fuel tax would have done. Fuel taxes can be a fair and economically sound way of raising funds for local road spending.  Those who benefit most from the roads pay more for them, and driving is not subsidized by shoppers or homeowners. Moreover, legal protections in Missouri guarantee that money raised via fuel taxes must be spent on roads, which reduces the likelihood that money is wasted on pet projects.

In Foristell, 65% voted for the fuel tax, but that was not enough because (unlike other forms of transportation funding) local fuel taxes require a 2/3rd majority to pass. The need to obtain a 2/3rd majority for a local fuel tax levy, but only a simple majority for property or sales tax increases, is likely a large reason why no local fuel taxes exist in Missouri.

Foristell’s fuel tax proposal failed. And that may be a good thing, as this specific proposal appears to have been targeted at unsuspecting truckers making a quick stop in Foristell. However, local fuel taxes are in general an option worth considering. If other localities are truly in need of more money for roads, they could try local fuel taxes before attempting to push for sales or property tax increases.

If charter schools are ruining education in Missouri, more please!

Posted on by Michael Q. McShane

The Kansas City and St. Louis school districts saw two of the largest gains in the country in their graduation rates from 2011 to 2013, according to the recently released 2015 Building a Grad Nation report. Kansas City shot up 17 percentage points, and St. Louis 14.

Now, this might strike you as odd when you hear over and over that charter schools are destroying public education.  Kansas City and St. Louis each have more than one-third of their students enrolled in charter schools, and yet, the traditional public school districts seem to be getting better.  How can this be?

It’s possible that either by stirring competition, more efficiently sorting students into options that serve them, or relieving pressure from school districts, charter schools are helping once struggling districts turn a corner.  Whatever the reason, it is hard to look at these numbers and see charter schools harming either district.

I should also point out that both districts started in very bad places.  In 2011, Kansas City had a graduation rate of 50 percent and St. Louis was at 54 percent.  Even with their gains, the Kansas City School District sits at only 67 percent and St. Louis at 68 percent. This puts them on par with cities like Newark, New Jersey (68 percent) and Compton, California (65 percent). They perform worse in absolute terms than neighboring cities like Little Rock (75 percent) and even Chicago (70 percent).  Inauspicious company. Clearly, there is still a long, long way to go.

Around the rest of the state, there was both good news and bad news.

The overall graduation rate in Missouri is up, from 81% in 2011 to 85.7% in 2013. That gain represents the 6th best growth rate in the country over that time period. At the same time, though, Hispanic students in the class of 2013 graduated at a rate of 81 percent, low-income students graduated at a rate of 78 percent, and African-American students graduated at a rate of only 72 percent.

The report also broke out the performance of districts with at least 15,000 students:

  • Around Kansas City, North Kansas City saw a graduation rate of 91 percent and Lee’s Summit clocked in at 94 percent.
  • In greater St. Louis, Hazelwood saw an 86 percent graduation rate, Ft. Zumwalt 89 percent, Francis Howell 92 percent, Parkway 93 percent, and Rockwood 94 percent.
  • Columbia had a graduation rate of 86 percent and Springfield had one of 87 percent.

All in all, a very interesting report that should inform conversations about education around the state.

The Commission’s Omissions?

Posted on by George Reynolds

This summer, Missouri passed a troubling piece of legislation—SS HCS HB 137. The main provisions of it essentially state that license fee offices may not award points to bidders based on the amount of money they would return to the state. While I do not have a major problem with the central purpose of the law, I do find one specific provision very unsettling. It reads as follows:

 “The leases, agreements, contracts, or subleases and any amendments for space, usage, or services in any convention center or related facilities owned or operated by a regional convention and visitors commission… must not be considered public records under the Open Meetings and Record law, commonly known as the Sunshine Law…”

It goes on to say that this is only the case if transparency would put the commission at a competitive disadvantage; however it never defines such a situation and seems to leave it to the commission’s discretion.

Upon reading this, I immediately found myself wondering a few things. How is it ever a bad thing for the public to know how a public entity is spending public dollars? What is the possible competitive disadvantage regarding documents to which the parties have already agreed? If there really are legitimate situations in which the Convention and Visitors Commission would be hurt by transparency, why did nobody take the opportunity to tell us what these situations look like? At least the law states that this exemption does not apply if a sports franchise is involved, but I doubt it should apply under any circumstances.

I understand that secondary provisions get tacked on to bills fairly frequently, and perhaps legislators felt very strongly about getting the rest of this bill passed. However, questionable policy is questionable policy. Even if the legislature felt strongly that the main of the bill needed to pass, why did it not take the time to clean up this unrelated, troubling provision?

Some Comments on a Minimum Wage Testimony

Posted on by Michael Rathbone

There’s been a lot said on the prospect of increasing the minimum wage in Saint Louis. A lot of that has come from Show-Me Institute researchers. However, an interesting perspective on raising the minimum wage comes from Nahuel Fefer, the newly hired Special Assistant to the Mayor for Policy and a recent graduate of Washington University. He testified  (testimony starts at 1:20:28) before the Ways and Means Committee the day after I did and he raises some points that are worth discussing.

It appears from the testimony that Mr. Fefer supports raising the minimum wage. The first thing to notice when listening to his testimony is that a lot of it simply relates to the number of workers making below a certain wage level. For example, Mr. Fefer says that 44 percent of the workers in Saint Louis City make less than $15 an hour and 14 percent of workers make the minimum wage or less. Even if Mr. Fefer’s numbers are correct, and for the sake of argument, let’s say that they are, these statistics don’t tell us a whole lot. A key point people need to understand in discussing the minimum wage is that people who earn low wages aren’t necessarily in poor households. A man working as a greeter for $9 an hour at Wal-mart might be an upper-middle class retiree who just wants to stay active. Of course, he might not be, but Mr. Fefer’s statistics don’t tell us one way or another. This information is useful in that it captures the raw number of workers who could see pay increases, but nothing much beyond that.

A bigger problem with Mr. Fefer’s testimony is that he overstates the evidence in support of his position. Mr. Fefer states, “The theory that raising the minimum wage results in job loss has been proved wrong in just about every case.” That’s simply inaccurate. One can point  to several studies that show that raising the minimum wage does harm employment.

The minimum wage is certainly a contentious issue. Voices on both sides should be heard and given due consideration. However, it is important that any information which is presented to the public is put in the proper context and any errors are corrected. 

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