! ! ! September!20,!2016! ! ! ! Kshama!Sawant,!Ph.D.! Council!Member,!District!3! Seattle!City!Council! 600!4th!Avenue,!2nd!Floor! Seattle,!WA!98124G4025! Dear!Dr.!Sawant:! Thank!you!for!taking!the!time!to!express!your!concerns!regarding!our!study,!“Report!on!the! Impact!of!Seattle’s!Minimum!Wage!Ordinance!on!Wages,!Workers,!Jobs,!and!Establishments! through!2015,”!in!your!letter!to!Dr.!Jacob!Vigdor!today.!!We!also!thank!you!for!your!continued! support!of!the!need!to!study!the!impact!of!the!minimum!wage!ordinance.!!We!are!similarly! committed!to!study!this!impact,!with!a!planned!study!duration!of!at!least!five!years.! You!expressed!concerns!both!regarding!the!methodology!of!the!study!and!Dr.!Vigdor’s!public! comments,!in!that!order.!!This!response!from!our!study!team!will!follow!a!parallel!format.! First,!please!let!us!convey!clearly!that!the!research!products!generated!by!the!minimum!wage! study!team!are!the!work!of!all!team!members!and!not!one!member.!The!entire!team!has! participated!in!discussion!around!research!design,!analysis,!interpretation,!and!presentation!of! results.!We!have!taken!great!care!as!a!team!to!discuss!where!we!find!the!evidence!most! compelling!and!where!we!are!most!uncertain.!We!believe!our!report!reflects!this!care!and! caution.!!! As!you!are!no!doubt!aware,!the!task!of!determining!the!impact!of!the!minimum!wage!is!very! difficult.!!The!central!challenge!is!the!fact!that!we!do!not!(and!cannot)!know!what!would!have! happened!if!Seattle!had!not!passed!the!Minimum!Wage!Ordinance.!!We!lack!the! “counterfactual.”!!To!establish!such!a!counterfactual,!modern!scientific!research!relies!on! comparison!groups.!!Of!course,!a!minimum!wage!cannot!be!implemented!as!a!randomized!trial,! and!thus!a!comparison!group!cannot!be!established!in!this!manner.!!Consequently,!we!hew!to! the!standards!of!modern!social!science!research,!inferring!the!impact!of!the!ordinance!not!by!a! simple!before/after!comparison,!which!would!conflate!the!impact!of!the!ordinance!with!other! economic!trends!in!Seattle,!but!through!comparison!with!a!paired!region.!!We!clearly!described! these!challenges,!and!the!methods!we!proposed!to!address!them,!in!our!2014!proposal!to!the! City.! The!statement!in!your!letter!regarding!the!positive!trends!in!wages,!jobs,!hours,!and!net! business!growth!in!Seattle!since!April!1,!2015!is!a!correct!reading!of!information!we!very!clearly! provided!in!the!report.!!However,!the!goal!of!our!research!is!not!to!identify!the!overall!trends!in! Seattle!but!rather!the!specific!contribution!of!the!minimum!wage!to!those!trends.! To!accomplish!this!goal,!we!must!compare!Seattle!with!a!paired!region.!!Our!report!presented! two!different!strategies!for!pairing!Seattle!with!an!alternate!region.!!It!is!clear!from!your!letter! that!your!preference!is!to!select!a!region!immediately!adjacent!to!Seattle.!!Fortunately,!our! report!provides!results!using!this!methodology!in!addition!to!the!“synthetic!control”!method.!! These!are!clearly!reported!in!Appendix!D!in!the!report,!and!none!of!the!conclusions!reached!in! our!report!are!contradicted!by!use!of!this!alternate!methodology.!!We!emphasize,!however,!that! !!!!!Daniel!J.!Evans!School!of!Public!Policy!and!Governance!!!!!!Parrington!Hall!!!!Box!353055!!!!!Seattle,!WA!98195G3055! !!!!206.543.4900!!fax!206.543.1096!!!evansuw@u.washington.edu!!!http://evans.uw.edu! ! our!work!is!not!the!first!to!apply!the!synthetic!control!approach!to!the!study!of!the!minimum! wage.!!Prior!work!using!this!methodology!has!been!cited!in!support!of!minimum!wage!initiatives.! While!your!preference!for!the!crossGborder!approach!is!clear,!there!are!important! methodological!concerns!with!the!crossGborder!comparison!model.!!To!state!one,!the!Seattle! minimum!wage!may!have!had!the!impact!of!raising!wages!in!adjacent!areas!if!nearby! businesses!found!it!necessary!to!stay!competitive!with!their!Seattle!neighbors.!!To!the!extent! this!is!true,!crossGborder!methods!would!understate!the!true!impact!of!the!minimum!wage! ordinance!on!wages!and!other!outcomes.!!There!is!no!flawless!methodd!our!strategy!in!this! project!is!to!compare!results!using!a!variety!of!methods,!and!to!be!honest!in!stating!when! differing!methods!yield!differing!results.! We!agree!with!your!assessment!that!the!lack!of!standard!errors!represents!a!clear!limitation!of! the!report.!!It!is!a!limitation!clearly!acknowledged!on!page!10,!with!appropriate!cautions!offered! to!readers.!!We!are!in!the!process!of!producing!an!academic!version!of!the!July!report!which!will! include!standard!errors.! We!would!appreciate!clarification!around!your!statement!that!we!“fail!to!report!prior!quarterly! variation!in!employment.”!!Our!study!examined!data!on!the!Seattle!labor!market!going!back!to! 2005,!in!order!to!build!a!complete!model!of!Seattle!workforce!dynamics!under!“business!as! usual.”!!Similarly,!our!methods!are!indeed!sufficient!to!account!for!seasonality,!as!trends!in! Seattle!in!the!postGApril!1,!2015!period!are!consistently!compared!to!trends!in!the!same! seasons!in!prior!years.!!If!we!have!misunderstood!your!critique,!please!clarify!and!we!can! respond!accordingly.! You!are!correct!that!data!limitations!force!us!to!choose!between!two!imperfect!sample!selection! criteria.!!The!Employment!Security!Department!(ESD)!data!were!created!to!administer!the! Unemployment!Insurance!(UI)!program,!not!to!conduct!research.!!The!ESD!requires!multiG establishment!employers!to!report!information!for!every!person!on!their!payroll!in!order!to! determine!the!UI!benefits!owed!should!that!person!be!laid!off.!!These!benefits!do!not!depend!on! job!location!within!Washington!State,!therefore!ESD!does!not!require!employers!to!report!it.!! Our!options!are!(1)!to!focus!on!singleGsite!employers,!recognizing!that!they!do!not!constitute!the! full!work!force,!(2)!to!use!the!full!dataset,!recognizing!that!we!have!no!choice!but!to!accept!the! miscoding!of!worker!location!for!a!significant!number!of!employees,!or!(3)!to!ignore!this!rich! data!resource!entirely.!!The!limitations!of!the!ESD!data!are!clearly!stated!on!page!13!of!the! report,!and!we!provide!results!using!both!methods!(1)!and!(2).! We!should!note!that!the!“relatively!more!positive”!results!Jared!Bernstein!reports!can!be! summarized!as!follows:!! !! we!estimate!a!smaller!impact!of!the!ordinance!on!the!wage!rate,!regardless!of! methodology.! !! In!the!full!sample!we!estimate!effects!on!employment!and!hours!that!are!small!and! sensitive!to!methodological!choices,!but!negative!in!the!crossGborder!method!you!prefer.! !! In!the!full!sample!we!estimate!effects!earnings!of!no!more!than!$10/week!in!either! direction,!but!negative!in!the!crossGborder!method!you!prefer.! ! Your!secondGtoGlast!paragraph!suggests!that!we!characterize!a!7.7%!gain!as!“inconclusive.”!! This!reflects!an!erroneous!reading!of!the!report!that!Bernstein’s!article!also!promoted.!!The! !!!Daniel!J.!Evans!School!of!Public!Affairs!!Box!353055!!109!Parrington!Hall!!Seattle,!WA!98195G3055! !!!206.543.4900!!fax!206.543.1096!!!evansuw@u.washington.edu!!!http://evans.uw.edu! 7.7%!gain!pertains!to!hourly+wages.!!We!uniformly!refer!to!the!hourly!wage!effects!of!the! ordinance!as!positive.!!The!“inconclusive”!results!pertain!to!earnings!–!the!product!of!wage!and! hours!worked.!!Using!your!preferred!crossGborder!methods!earnings!effects!are!negative,!but!as! they!are!positive!when!using!the!synthetic!control!method!we!chose!to!describe!them!as! inconclusive.! The!notion!that!lowGwage!workers!struggle!to!obtain!enough!hours!on!the!job!was!one!of!the! key!motivations!for!the!City!Council’s!recent!vote!to!impose!new!scheduling!regulations.!!As! your!colleague!Lorena!González!put!it,!“the!promise!of!a!$15!minimum!wage!falls!flat!when! you’re!unable!to!work!more!than!10!hours!a!week.”!!Dr.!Jacob!Vigdor,!a!member!of!the!study! team,!worked!under!contract!with!the!City!to!generate!the!evidence!that!30%!of!Seattle’s! workers!are!given!fewer!hours!than!they!desire!on!the!job,!a!result!highlighted!in!the!preamble! to!Council!Bill!#118765.! In!the!end,!we!believe!that!every+question+or+criticism+raised+in+your+letter+reflects+information+ fully+disclosed+and+discussed+in+the+report+itself.!!Our!study!team!will!be!the!first!to!acknowledge! that!our!data!sources!have!limitations,!that!our!methods!are!imperfect,!and!that!results!should! be!interpreted!cautiously.!!If!there!are!specific!passages!in!the!written!report!that!concern!you,! please!bring!those!to!our!attention.! As!regards!to!Dr.!Vigdor’s!public!commentary,!we!are!very!aware!that!the!value!of!this!study! rests!entirely!on!the!perception!that!it!is!an!objective,!nonpartisan!effort.!!We!are!also!aware,! however,!that!our!work!product!is!a!public!document,!subject!to!partisan!interpretation.!!As!you! know,!selected!findings!from!this!study!have!been!used!to!promote!both!a!positive!view!of!the! minimum!wage!(as!in!the!Bernstein!piece)!and!a!negative!view!(as!in!the!Monson!piece).!! Dr.!Vigdor!and!other!team!members!have!conducted!interviews!across!the!media!and!political! spectrum,!with!full!knowledge!that!anything!said!can!be!edited!or!taken!out!of!context.!!This!is!a! risk!that!we!can!only!avoid!by!refusing!contact!with!the!media.!!As!the!most!misleading! representations!of!the!report!have!been!authored!by!individuals!who!did!not!contact!any! member!of!our!study!team,!we!do!not!feel!that!a!withdrawal!from!public!commentary!on!our!own! work!would!enhance!public!understanding.! Our!entire!team!is!troubled!by!the!high!and!persistent!degree!of!income!inequality!in!the!United! States,!and!believe!our!nation!has!a!moral!responsibility!to!ensure!that!the!fruits!of!our! prosperity!are!shared!equitably.!!We!are!committed!to!producing!objective!and!rigorous! research,!however,!regardless!of!our!individual!preferences!or!concerns.!!Were!we!to!fight! inequality!using!only!tools!that!raised!no!concerns!from!efficiencyGminded!economists,!we!would! not!fight!inequality!at!all.!!At!the!same!time,!it!is!critical!for!us!to!understand!which!tools!are! more!or!less!effective!in!which!contexts.!!For!this!reason,!we!are!grateful!both!for!the!City!of! Seattle’s!commitment!to!take!action,!and!for!its!commitment!to!understanding!the!implications!of! what!it!has!done.! Sincerely,! Scott!Allard,!Ph.D.! Professor!of!Public!Policy!and!Governance! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! Anne!Althauser,!MPH! Research!Coordinator! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! !!!Daniel!J.!Evans!School!of!Public!Affairs!!Box!353055!!109!Parrington!Hall!!Seattle,!WA!98195G3055! !!!206.543.4900!!fax!206.543.1096!!!evansuw@u.washington.edu!!!http://evans.uw.edu! Caitlin!Aylward! MPA!Student! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! Heather!Hill,!Ph.D.! Associate!Professor!of!Public!Policy!and! Governance! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! Robert!Plotnick,!Ph.D.! Daniel!J.!Evans!Professor!of!Public!Policy!and! Governance! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! Emma!van!Inwegen! Research!Analyst! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! Hilary!Wething! Ph.D.!Student! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! ! ! ! Mark!Long,!Ph.D.! Professor!of!Public!Policy!and!Governance! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! Jennifer!Otten,!Ph.D.! Assistant!Professor!of!Health!Services! School!of!Public!Health! University!of!Washington! ! Ekaterina!Roshchina,!Ph.D.! Research!Associate! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! Jacob!L.!Vigdor,!Ph.D.! Daniel!J.!Evans!Professor!of!Public!Policy!and! Governance! Evans!School!of!Public!Policy!and!Governance! University!of!Washington! ! ! ! ! ! ! ! ! ! ! ! ! !!!Daniel!J.!Evans!School!of!Public!Affairs!!Box!353055!!109!Parrington!Hall!!Seattle,!WA!98195G3055! !!!206.543.4900!!fax!206.543.1096!!!evansuw@u.washington.edu!!!http://evans.uw.edu!