JOBS | Rep. Tim Bishop and the Suffolk County

When Rep. Bishop was challenged two years ago for a second time by Randy Altschuler, Altschuler distributed tens of thousands of flyers accusing Bishop of having "forced more than 30,000 jobs to leave" Suffolk County.

That grossly erroneous number was based on an improper use of the household survey, which is based on a telephone interview of small sample of households to determine the unemployment rate.

Looking at the correct database, in September 2012, I showed that employment in Suffolk County had increased by 36,300 jobs, a difference of 66,300 jobs from that claimed by Altschuler.

Lee Zeldin, who has challenged Tim Bishop before in 2008, when Barack Obama swept into office, is back again in a different environment. When Zeldin first entered the 2014 race, he said his campaign would be based on economic issues.

In fact, Zeldin has avoided raising economic issues, and for a good reason. The national economy has been perking along to the point where recovery to an unemployment rate of less than 6 percent has finally occurred. Recovery is at a slower rate than anyone predicted, because the depth of the financial stress left in 2008 was greater than anyone knew at the time.

The economies of Suffolk County, Long Island, and Greater New York, have been doing fine, better than most of the rest of New York State and New Jersey.

To his credit, Zeldin has not attempted to argue that Suffolk County has lost jobs. His economic arguments, as outlined in this week's East Hampton Press (p. A5), have instead been drawn from the general ideology of the Tea Party, as follows:

• He opposes raising the Federal minimum wage, on the basis that it would be a burden on some small businesses.
• He argues that Medicaid is being abused and people should be denied the benefits.
• He says the Federal tax code should be simplified to reduce exploration of deductions and exemptions. He favors a flatter tax.
• He wants to cut Federal spending.
• He says he has had 48 new laws passed in Albany during the past four years.
• He voted for repeal of the MTA payroll tax and for a tax credit for New York State craft brewers.

Bishop answers that he is pragmatic and non-ideological, looking for solutions that benefit his constituents:

• He favors a minimum wage of $10.10 by 2016 to keep pace with inflation and help the working poor make ends meet. (The minimum wage and overtime laws have many exemptions based on type of business and type of employee; they reduce the impact on small businesses most concerned about the impact on their costs.)
• He has voted for tax cuts to help small businesses hire U.S. workers, has worked to eliminate tax loopholes to benefit companies outsourcing American jobs and favors tax cuts for the middle class.
• Having opposed efforts to end existing Medicare programs, he supports a guarantee of Medicare and Social Security. 
• He supports Federal spending on infrastructure spending, education and training - he led the fight for the Federal science and technology budget that was threatened and would have eliminated thousands of jobs at the Brookhaven National Lab.
• He is working with the FAA to ensure that a replacement of the air traffic control facility at Westbury is kept on Long Island.

Regardless whether one is a Democrat or a Republican, Tim Bishop has one huge advantage over Lee Zeldin - he has been in Congress since 2003. He knows his way around Washington. Zeldin does not. Bishop has built relationships with other Members of Congress, and has seniority on the committees he is a member of. He can do more for businesses and workers and jobs on the East End of Long Island than his challenger, who will be starting over from scratch.

EC POLICY | Minimum-Wage Facts Change Opinions

The U.S. minimum wage has been
$7.25 per hour since 2009. President
Obama wants to raise it to $10.10.

Yesterday I posted some news about initiatives to promote a living wage and to calculate what such a wage is in different places.

That prompted a few comments about the impact of imposing a minimum wage. Won't that put many workers out of their jobs?

Economists’ views on this topic have changed over the years, as one would hope, in the face of research that contradicts the conventional view. The neoclassical supply-and-demand curve for labor helped guide economists in polls to agree with the idea that a minimum wage would perversely reduce the number of workers that employers would hire and therefore would increase poverty. The preferred alternative approach was a government-guaranteed minimum income.

However, David Card and Alan B. Krueger challenged this orthodoxy and have brought many of their  economist colleagues along with them. They used a higher minimum wage in New Jersey in 1992 to look at the impact of a minimum wage on fast-food chains in New Jersey compared with fast-food chains across the state line, not affected by the higher minimum wage.

They found that since all of the chains in New Jersey had to adhere to the same rise in the minimum wage, the net impact of the minimum wage on their employment was zero. However, to cover the higher cost of labor, the chains in New Jersey raised their prices by an average of 3 percent - not something that would be very noticeable or would induce consumers to travel to another state. They found similar results for California’s minimum wage increase in 1988 and the Federal minimum wage increase in 1990-91.

(For more extensive summaries of the cumulative evidence on the minimum wage, go to a recent report by the Center for Economic and Policy Research. For a summary edited by people on different sides of the issue, go to the wikipedia entry on the minimum wage.)

The debate is not over. My friend Michael Phillips in California argues that the chain-store situation differs from that of small delis. Exemptions, or delayed enforcement, for small businesses might be reasonable.

But meanwhile, the popular debate has been reframed by evidence of rising levels of income and wealth inequality in the United States, leading to a closer look at both ends of pay scales. A flood of information in the wake of the financial crisis of 2008 showing compensation out of line with executive performance have been stirring up public sentiments in the same way that they were by the Pecora Committee in 1933. These sentiments have led to the news yesterday that more than 75 percent of shares were voted against a generous Chipotle executive-compensation package.

The international front offers evidence that countries with more equal incomes are performing better. Europe’s economic stalwart, Germany, doesn't have wide disparities of earnings, and will have a minimum wage of $11.75/hour in 2015. Germany exempts from the minimum wage minors, interns, trainees, long-term unemployed people for their first six months at work and, at least for the first two years, temporary or seasonal workers.

Denmark, which has the most equal incomes of the OECD countries, has strong unions that have negotiated a minimum wage of $20/hour. It also rates as the happiest country in the world, according to the U.N. in 2013. It has a lower unemployment rate and a higher labor force participation rate than the United States.

P.S. The CityEconomist blogsite just clicked over 78,000 page views. Thank you for reading.