The journal of Aaron Yelowitz

Response from Pacheco

I received a reply, by mail, from Marc Pacheco today. The letter is dated April 5th, but I didn't receive it until today, April 19th. Here it goes:

Dear Dr. Yelowitz:

Thank you for your emails dated March 29th and April 4th relative to the impact of minimum wage legislation on employment.

Indeed my office is deeply committed to honestly evaluating both sides of the minimum wage debate. In so doing we have reviewed both your initial report on the Santa Fe wage hike and your December 2005 rejoinder to economists Robert Pollin and Jeannette Wicks-Lim. While Mr. Pollin and Ms. Wicks-Lim do not contest the appropriateness of using the Census's Current Population Survey micro-data set nor the validity of the time period you analyze, their report does appear to question the analytical methodology you employ.

More importantly, however, it is my opinion that the Santa Fe study must be viewed in broder context of several decades of empirical research which leaves many questions about the connection between minimum wage and unemployment unanswered. I refer you, for instance, to the work of David Card (University of California, Berkeley) and Alan B. Krueger (Princeton University) as well as the comments by the President's Council of Economic Advisors [sic], which I reference in my original letter to the editor. To be sure, the debate over minimum wage will continue for some time. I fully expect the legislation currently being considered in Massachusetts to draw its fair share of proponents as well as well-intentioned critics. This being said, it is a measure which -- in light of the research available as well as the concerns expressed by my constituents -- I am proud to support on behalf of the people of Massachusetts.

Sincerely,

Marc R. Pacheco

State Senator

In his letter, Pacheco says that Pollin and Wicks-Lim question the analytical methodology in my original Santa Fe paper. I disagree with Pacheco's assessment. You can see their study at http://wwwx.oit.umass.edu/~peri/html/0/200.html and my response at http://www.epionline.org/study_detail.cfm?sid=91.

Pollin & Wicks-Lim use the same data set, run similar regressions, and get similar results to my study. They replicated my results without any communication with me. They do not make statements questioning my "differences-in-differences" approach or the explanatory variables used in my analysis. If you are interested in the truth, you can click on the links above and read it for yourself.

What Pollin and Wicks-Lim do question is whether a rise in the unemployment rate -- which could indicate increased job search but perhaps no decline in jobs -- is necessarily a bad thing or whether it is indicative of lack of job opportunity.

I address their points in my December 2005 rejoinder, but let me highlight just one issue in this blog post.

Read the following statements:

“Since the purpose of raising minimum wage laws is to improve living standards and create better employment opportunities for the working poor, a rise in unemployment or business flight from the city would obviously be unintended and undesirable consequences of passing such a measure into law.”

Robert Pollin, 2004, in a report prepared for the Santa Fe living wage trial.

“As with Yelowitz, we find that the ‘probability of unemployment’ within the Santa Fe MSA for labor force participants with high school degrees or less rose by 9 percent from June 2004 – June 2005 relative to a pre-living wage base period of January 2003 – May 2004.”

Robert Pollin and Jeanette Wicks-Lim, 2005, in a comment examining the actual impacts of the Santa Fe ordinance.

“To date, the Santa Fe ordinance has succeeded in achieving its main aims: to improve the quality of jobs for low-wage workers in Santa Fe without reducing their employment opportunities.”

Robert Pollin and Jeanette Wicks-Lim, 2005, in a comment examining the actual impacts of the Santa Fe ordinance.

Pollin & Wicks-Lim replicate my original findings, and in earlier statements, Pollin stated that rising unemployment is undesirable. Pollin has a remarkable change about high unemployment in his conclusion in the 2005 comment that states that employment opportunities were not reduced. Also, as noted in my Boston Herald letter, full-time equivalent employment -- a better measure than a simple headcount -- did change.

A few other reactions to the Pacheco letter to me.

1. The main focus of my letter to the Boston Herald (both edited and unedited) was about the Santa Fe context. His portrayal of my Santa Fe study as "debunked" is irresponsible. I view his letter to me as backtracking on that very strong, misleading statement.

2. Pacheco is probably aware that Card and Krueger's most famous study has come under great scrutiny. See, for example, Neumark and Wascher's comment in the American Economic Review. The Employment Policies Institute -- a group that I have worked with -- has also published a paper that outlines a number of other problems with the original CK study.

3. I was surprised Pacheco replied to me -- I had given up about a week ago. I will at least give him credit for that.

4. If Sen. Pacheco feels he's representing his constituents interests by supporting the minimum wage, that's fine, but the title of his letter to the Boston Herald is "Higher Wage Works." Pacheco makes claims about economic efficiency (e.g., "wages would not hinder economic growth"), not about his constituent's preferences in his letter to the Boston Herald.

If State Senator Pacheco wants to support a minimum wage hike because it is politically popular with his constituents, more power to him. I have no problem with him catering to those interests to get re-elected. When he writes a letter that crosses into the economics realm and misrepresents my work -- as he did -- then I have to take his claim that his "office is deeply committed to honestly evaluating both sides of the minimum wage debate" into question. Just another politician.

Marc Pacheco Update
As of today, April 4th, I still have not heard from State Senator Marc Pacheco regarding his letter to the editor to the Boston Herald; I emailed him a week ago and still no response on an issue that he felt compelled to write to the newpaper about. Pretty sincere, huh?

In any case, the Boston Herald published an abridged version of my response. Here's the published version:

Letters to the Editor
All Editions
Boston Herald
Boston, Mass.
Apr 3, 2006
pg. 024

Pacheco misrepresents
State Sen. Marc Pacheco falsely claims that economists at the University of Massachusetts-Amherst debunked my September 2005 analysis on the Santa Fe citywide minimum wage increase ("The minimum wage myth," March 24).

In particular, he claims that there was no decline in jobs. This is not true. A raise in minimum wage in Santa Fe reduced full-time equivalent employment.

The authors of the UMass study - who are supporters of minimum wage increases - were able to find no criticisms of my data, period of analysis or empirical methodology. In fact, they actually replicated my results, also finding that the Santa Fe minimum wage increased the unemployment rate and reduced the hours worked among workers.

- Aaron Yelowitz
Department of Economics
University of Kentucky

I sent in a more extensive response which you can read here:

Senator Needs to Do His Homework
In his letter "Higher wage works" (March 28), Senator Marc Pacheco falsely claims that economists at University of Massachusetts-Amherst debunked my September 2005 analysis on the Santa Fe city-wide minimum wage increase. In particular, he claims that there was no decline in jobs. This is simply not true. A raise in minimum wage in Santa Fe significantly reduced full-time equivalent employment.

The authors of the University of Massachusetts study – who are supporters of minimum wage increases – were able to find no criticisms of my data, period of analysis, or empirical methodology. In fact, they actually replicated my results, also finding that the Santa Fe minimum wage increased the unemployment rate and reduced the hours worked among workers who kept their jobs. In order to make a claim of “no job loss,” the authors had to use a simplistic and naïve measure of jobs—a simple headcount—to arrive at their conclusion, rather than the more sophisticated indicator of full-time equivalent employment– a widely accepted measure used by economists to assess the impact of minimum wage policies on jobs which I used in my study.

Both my original study and the follow-up are available at www.epionline.org.

Dr. Aaron Yelowitz
Department of Economics
University of Kentucky

Finally, here is an email that I just sent off to Marc Pacheco today:

State Senator Pacheco –
As you are surely aware, I wrote a response to your letter about my minimum wage study; the Boston Herald published it yesterday on April 3rd. I am surprised that you have not corresponded with me regarding the study, since I sent you an email nearly a week ago. Given that you are motivated enough to write a letter to Boston Herald claiming that my study was “debunked,” I would have thought that you would be willing to have a dialogue with me. The intent of my previous email was to make sure you knew about my follow-up study that addressed the criticisms of the U-Mass study you cite. That study is located at: http://www.epionline.org/study_detail.cfm?sid=91.

My hope from corresponding with you is to better educate you of the effects that occurred due to the Santa Fe minimum wage. A responsible policymaker – either for or against raising the minimum wage – should be willing to honestly evaluate both sides of a debate. I certainly hope to hear from you in the near future.

Respectfully,
Dr. Aaron Yelowitz

Another, more complimentary letter was recently offered by Don Steiny, a Santa Cruz resident. Santa Cruz is currently considering a city-wide minimum wage of $9.25 per hour.

http://www.santacruzsentinel.com/archive/2006/March/26/edit/stories/06edit.htm

Don Steiny: Wage-boost plan a progressive ploy

Various letters have favored the minimum-wage increase with the simple formula that it will transfer money from the greedy business people to the deserving workers. This might work if lower-paid workers had no competition, but this is not the case. They are competing with automation, the business owners themselves and the economics of keeping a business open.

Answering machines and computers have taken over many low-end jobs. A business owner can decide it is better to work extra hours himself or herself rather than pay an employee. There can be times of the day when business is slow that it makes more sense to close a shop than keep it open. All of those things contribute to the pool of available hours for low-wage workings shrinking. A careful study of the effects of the minimum-wage increase in Santa Fe showed that it increased unemployment for people with 12th grade education or less by 8 percent. Along with other factors, the amount of money available to this part of the population shrank. The study is at http://www.epionline.org/study_detail.cfm?sid=91 .

Santa Cruz has already made policy decisions that have driven up housing prices the green belt, draconian and expensive permitting; it has lost or driven out most of its major businesses; and is working on driving out the university as much as possible just go to the general plan meeting to see this. This will be another move that makes Santa Cruz available to fewer people.

Were there a "how-to" book on converting an area into one where only wealthy, older people can afford to live — a quiet community unsullied by boisterous youngsters and other undesirables — the Santa Cruz progressives could write it. There is an awesome brilliance in tricking low-wage workers into voting themselves out of jobs and benefits. They won't be able to stay and the wealthy "progressives" will have their quiet paradise.

Don Steiny is a Santa Cruz resident.

On March 24th, the Boston Herald ran an editoral that cited my Santa Fe minimum wage study. Here it is:

http://news.bostonherald.com/opinion/view.bg?articleid=131895

The minimum wage myth
By Boston Herald editorial staff
Friday, March 24, 2006
We realize unions are a powerful force for Democrats, but boy has Tom Reilly been led down the garden path by labor on the minimum wage issue.
Reilly has now come out in favor of a hike in the state’s minimum wage to $8.25 from $6.75, including automatic annual increases tied to inflation. It’s a slam-dunk issue for hardcore Democrats so it makes political sense.
But business sense? Hardly. Sure, it’s tough to pay the rent and buy the groceries on $6.75 an hour. But it’s downright impossible when the low-skilled, low-paying jobs shrivel up entirely.
In Santa Fe, a city-wide minimum wage increase to $8.50 an hour has had a “significant and negative” impact on the labor market, according to a report by a University of Kentucky professor and the Employment Policies Institute. The least-skilled workers - the very people the increase was designed to help - felt the impact most.
“This is about basic fairness,” Reilly said. He might tell that to teenagers looking for a way off the streets, once employers limit hiring or hours for entry-level jobs.
Reilly’s not alone. Kerry Healey, Christy Mihos and Deval Patrick all say they support a minimum wage increase in some form. Each, apparently, buys into the notion that a minimum wage hike is the key to financial independence - and not the empty promise it will turn out to be.

Perhaps not too surprisingly, Democrat State Senator Marc R. Pacheco decided to pipe in. On March 28th, he wrote a letter to the editor:

Higher wage works
Your editorial ``The minimum wage myth'' (March 24) rightfully acknowledges how difficult it is to make ends meet on Massachusetts' minimum wage of $6.75 per hour.
However, your concerns about the effect that raising the minimum wage would have on employment are ill-founded. The study of Santa Fe's citywide minimum wage that you cite was recently debunked by two University of Massachusetts-Amherst economists, who concluded that the Santa Fe ordinance did not produce any decline at all in the availability of jobs. Moreover, the President's Council on Economic Advisers noted seven years ago that the weight of the evidence suggests that modest increases in the minimum wage have had very little or no effect on employment.
Raising the Massachusetts minimum wage to $8.25 would expand economic opportunity by raising the pay either directly or indirectly of 483,000 workers.
Of those workers who would be affected by such an increase, more than four out of five are adults, three out of five are women and the majority are full-time workers. Paying these nearly half a million workers fair wages would not hinder economic growth.
- Sen. Marc R. Pacheco, Taunton

I sent the following email to State Senator Pacheco today:

E-mail to Pacheco
State Senator Marc Pacheco –
I read in the March 28th Boston Herald that you claim that my September 2005 Santa Fe minimum study commissioned for Employment Policies Institute – located at http://www.epionline.org/study_detail.cfm?sid=90 – was “debunked” by Robert Pollin and Jeannette Wicks-Lim in their study located at http://wwwx.oit.umass.edu/~peri/html/0/200.html. Did you bother to read my response to their criticisms in my December 2005 study which responded to their criticisms? Secton 2 of that study specifically addresses the issues brought up by Pollin and Wicks-Lim. In case you have not yet read my response, it is located at http://www.epionline.org/study_detail.cfm?sid=91.

Respectfully,
Dr. Aaron S. Yelowitz
Associate Professor of Economics
University of Kentucky

I'll update this blog letting you know whether State Senator Pacheco responds, and I will be sending a response to the Boston Herald in the next few days.

Ok ... I can't help myself ... but it seems like Judge Daniel Sanchez actually looked at this David Letterman case and actually thought it might have some merit!

See http://www.freenewmexican.com/news/36651.html

"Judge Sanchez signed the temporary restraining order Thursday afternoon and set the case to be heard Jan. 12, according to court documents. In a phone interview Tuesday, Sanchez said he couldn’t comment on the order. When asked if he might have made a mistake, Sanchez said no. He also said he had read Nestler’s application. In his motion asking Sanchez to quash the order, Rogers said the District Court lacks jurisdiction over Letterman, Nestler never served Letterman with the necessary restraining-order papers, and she didn’t meet procedural requirements for issuing a temporary restraining order. Rogers said Tuesday that he was surprised Sanchez signed the temporary order against Letterman. “It’s unusual,” he said, “but judges have a lot of discretion, and I hope he’ll reconsider.” Rogers said he’s hoping Sanchez will agree to address the motion to quash the order sooner than Jan. 12."

Aside from how obviously ridiculous the story is, remeber that Daniel Sanchez was the guy who decided the merits of the Santa Fe minimum wage ordinance. To date, the ordinance has increased the likelihood of unemployment in Santa Fe by 3.3 percent. For less-educated individuals, however, the results were much higher, with their likelihood of unemployment increasing 8.3 percentage points. In addition, the usual hours of work fell by 1.0 hours for the all workers and 3.2 hours for less-educated individuals.

See http://www.epionline.org/study_detail.cfm?sid=91 .

Santa Feans might be concerned that Judge Daniel Sanchez's blunder with David Letterman makes the city a laughing-stock, but his blunder with the Santa Fe minimum wage is much more serious.

A bit more on Judge Daniel Sanchez ... see "Stupid Judge Tricks" in The Smoking Gun ...

http://www.thesmokinggun.com/archive/1222051dave1.html

For those of you who have read my posts on the Santa Fe living wage, you will note that Judge Daniel Sanchez was the one who evaluated the case. During the trial, Sanchez showed his bias by allowing Monsignor Jerome Martinez, whom Sanchez is related to, testify in favor of the ordinance (see my post on June 24, 2004).

Well, Judge Sanchez is back in the news again, and has plenty to be embarrassed about. It turns out that on December 15, 2005 Sanchez issued a Temporary Restraining Order against David Letterman, because a mentally ill woman thought that he was harassing her through the television.

See:
http://www.freenewmexican.com/news/36760.html

http://tmz.aol.com/article1?id=20051223140009990001

and many more ... just google "Sanchez Letterman"

That's the kind of judge that was deciding the living wage ordinance in Santa Fe ... I knew he was a complete flake a year and a half ago.

Still no publication in the Santa Fe New Mexican ... are they afraid?

The Santa Fe New Mexican threw a few bombs in an editorial about a recent study I did ... see
www.santafelivingwage.org/10-1-05%20Our%20View%20-%20Living%20Wage%20Raises%20Questions,%20Brows.htm.

The editorial says:

OUR VIEW
‘Living wage’ issue raises questions, brows

As Santa Fe leaders prepare to raise the minimum wage from $8.50 to $9.50 an hour just three months from now, and Albuquerque voters face a ballot question on a $7.50 “living wage” as part of Tuesday’s municipal election, our state is aswirl in studies supporting and refuting the wisdom of paying people more than the $5.15 federal minimum.

The latest is by economist Aaron Yelowitz of the University of Kentucky, claiming the $8.50 phase has cost our city 540 jobs. Could be — but higher-wage advocates cite reports that Santa Fe has gained 1,400 jobs.

The City Council should take both claims with a grain of salt: As one of a few test-case cities, Santa Fe is attracting nationwide attention — and all manner of outside influence, for and against higher pay. That includes analyses of varying quality, conducted with built-in biases to please whoever paid for the studies.

The issue also is a focal point for flat-out false information — including a bogus claim that the living wage has driven The New Mexican out of Santa Fe.

This paper was paying more than $8.50 before the living wage took effect. And while our new printing plant is out past the city limits where our supply and delivery trucks have ready access to the freeway, our corporate offices remain a block and a half from the Plaza, where they and the newsroom soon will be rebuilt. We’re subject to the new wage ordinances — but we’ve known for years that better pay goes hand in hand with better workers.

For some employers, that’s been a bit of a revelation during the first phase of the city’s living-wage campaign. Because the higher wage allows businesses to be a bit fussier about whom they hire, less-dedicated workers might be having trouble finding and holding jobs.

But are there reliable statistics to support even that theory? And are there numbers accurately reflecting the reality of mandated higher pay?

How do the new wages relate to the cost of, say, the fast food now being prepared by $8.50-an-hour workers? For that matter, are higher wages a factor in grocery prices — or do those tabs reflect what’s happening nationally rather than locally?

Santa Feans long have sensed that we pay more for just about everything, especially housing — but it doesn’t take many trips out of town to know we’re not alone in the inflationary spiral our national leaders love to deny.

If Albuquerque voters approve their “living wage,” the Duke City still will be a buck an hour behind Santa Fe. So would the rest of the state if Gov. Bill Richardson and House Speaker Ben Luján succeed in their campaign for a minimum wage, also likely to be pegged at $7.50.

It’s too late for a truly objective study that would guide the Albuquerque vote; it’ll be influenced instead by wild claims from proponents and the opposition. But our City Council, and the state Legislature, should seek nonpartisan advice before taking another step up the wage ladder.

The University of New Mexico’s Bureau of Business and Economic Research might be the ideal agency; the bureau is expected to issue a report between now and the end of the year. Itchy as some councilors are to enact the $9.50-an-hour step, they should wait at least until they’ve heard from UNM.



I submitted the following letter to the editor on October 1st ... let's see if they have the courage to publish it. It would be longer, except for a 150 word limit.

Editor:

I must respond to your recent editorial "Living wage issue raises questions, brows."

In that editorial, you discuss a study I conducted on behalf of Employment Policies Institute. You characterize my study, and others, as "analyses of varying quality, conducted with built-in biases to please whoever paid for the studies."

You fail to mention the steps I took to make my report free from bias. I draw my conclusions using free, publicly available data from the U.S. Bureau of Labor Statistics -- an objective government source. I also offer to share my data and computer code with others who are interested in the statistical methods I used. Other research groups -- such as New Mexico’s BBER group -- are encouraged to replicate my study and probe the results further.

My goal in taking these steps is to avoid the accusation that you make. My study is available at http://www.epionline.org .

Dr. Aaron Yelowitz

Today's Lexington Herald Leader ("Gas prices shoot past $3 at some Kentucky pumps") discussed gas prices ... and I was shocked.

"Gov. Ernie Fletcher declared a state of emergency in Kentucky because of gas prices. In an executive order he said that no one may sell gasoline at a price grossly in excess of the price before his declaration."

If Fletcher's hiring nepotism and pardons weren't enough to enrage people on the political left, then this decision should also isolate any conservative that believes in the free market. Fletcher, and the government, have no role in regulating gas prices. Weren't any lessons learned from the gas rationing in the 1970s.

I voted for Fletcher the last time around ... but that is because I thought he was a Republican. If Fletcher is going to act like a Democrat, might as well vote for one instead!

I thought that I would be done with blogging for a while (say, for 4 years!), but apparently I can't just be happy with an election blowout.

The Herald-Leader today published an extremely defensive, in-your-face editorial called "Paper holds to its values, priorities" by the editor of the editorial page. See http://www.kentucky.com/mld/kentucky/news/editorial/10171213.htm.
The article made one legitimate point -- taking positions on issues isn't a popularity contest. I certainly agree with that. But what that editor completely misses is that the Lexington Herald-Leader doesn't take thoughtful stands, but is rather a mindless pawn for the most left-leaning part of the Democratic party.

Let me give you a contrast from an issue with which I am very familar: California's Proposition 72. This was an anti-business, union-supported proposition. The cost to California business was not modest -- $12.9 billion. Despite the anti-Wal-Mart appeals of the "Yes on 72" advocates, the near-universal endorsement from Democratic politicians, the union backing, as well as the distortions on what the costs of Proposition 72 really were, virtually all major newspaper editorial boards came out against Proposition 72. This includes the Los Angeles Times and San Francisco Chronicle -- two newspapers that are considered to be very liberal. Ultimately, Proposition 72 was defeated by a margin of 200,000 votes out of 10 million cast, or by a 51%-49% margin. I believe the fact that liberal newspapers took a stand against it pursuaded many Democrats to take a second look at the legislation rather than having a knee-jerk response to the costly employer mandate.

The point is that there is a difference between "having values" and "having a brain." Neither Republicans nor Democrats can possibly be correct about everything. The true split is much closer to Republicans being correct 62% of the time, Democrats 15% of the time, and both parties being wrong 23% of the time.

The endorsements against Prop 72 by liberal California newspapers shows that sometimes using one's brain goes against being a Democrat. Yet, is there one instance when the Herald Leader has done that? I'd love to know.

Here's an email I sent to Ed Lane.

Mr. Lane -

Congratulations on your victory. I was glad to see that the voters in my precinct, Cumberland Hill, cast the most votes of any precinct, and that they voted disproportionately for you (57%). This happened even thought Gloria Martin proponents sent personalized letters to the voters in my neighborhood (with gushy newspaper clippings about Gloria Martin from residents of other districts). This is a great change for the 12th district. I took a look at the Herald-Leader tabulations today, and it is clear to me that one of the untold stories is that Gloria Martin did not represent the interests of the typical voter in our district. The Herald Leader poses the vote as between farm special interests & real estate special interests, but the story is deeper.There is a strong correlation between voting "No" on the LexTran tax and voting for you (+.65). Overall, 1,130 more people in the 12th district voted "no" on Lextran than voted "yes", which bucks the trend in the rest of city. There is a statistically significant, negative association between the Yes/No Gap on LexTran & the Martin/Lane spread by precincts. Basically, for every additional 100 votes no on LexTran (above & beyond the yes votes) resulted in 73 additional Lane votes.I hope that analysis is helpful to you when you are making decisions in the future. I am convinced that Martin's vote in June, which made no sense to me (versus, say, a dedicated property tax for police officers & firefighters?), helped to defeat her. Given that the LexTran tax is in place, I would hope that you could use your clout to make sure that our district is served by LexTran - even now, with their coffers full of money, their proposed service in our area is still abysmal!Below are the tabulations from the Herald Leader.

Sincerely,

Aaron Yelowitz

Victory on (almost) all fronts! It was a much better day than I was expecting.

President Bush wins convincingly.

California's Proposition 72 crashes & burns.

Daschle is kicked to the curb.

Ed Lane eeks out a victory in the closest city council race in Lexington.

But unfortunately Lexington voters decided to raise taxes on themselves for a poorly targeted and inefficient transit system.

I'll take 4 out of 5.

When I went to the polls early this morning (6:30 am), it was the tale of two subdivisions. My subdivision, Cumberland Hill, had perhaps 50-75 people waiting in line to vote; it took about 30 minutes to get through the line. The other subdivision, Charwood, had no line. I'm not sure what to make of that, but I'm glad to see my neighbors getting out there and voting for what is in our best interests.

Hmm ... does the Herald Leader reads this blog ... they published an abridged version of my letter today:

http://www.kentucky.com/mld/kentucky/news/editorial/10043712.htm

Finally!

If you want to see a good example of how LexTran advocates doctor the numbers, read the article in today's Herald-Leader. Advocate Nicole Dummitt makes arguments that it is in the interest of Lexington taxpayers to fund LexTran, because if we don't, the LexTran riders will go onto government assistance and cost all of us money.

LexTran itself notes that most LexTran passengers earn less than $15,000 per year, and Dummitt notes that 60% of passengers are single mothers. An income of this level, along with this family structure, would already make many current LexTran passengers eligible for welfare -- Medicaid, food stamps, SSI, and so forth. The fact that many passengers already collect welfare means that taxpayers are already bearing this burden, and it is inappropriate to count these as "new costs" -- they already exist!

Moreover, most of these welfare programs, such as Medicaid, food stamps, and SSI, receive large federal subsidies. Thus, the taxpayers of Lexington are not currently bearing the burden, but rather the federal government. As earnings go up for LexTran passengers, we are exporting federal dollars from our local economy.

I submitted the following letter to the Lexington Herald Leader, but I wasn't shocked that they didn't publish it. After all, it doesn't fit in with their agenda.

"The Large LexTran Tax"

On November 2nd, the voters in Lexington will decide on whether or not to fund LexTran through a property tax increase. Although the advocates for such a tax increase call the tax "small," a more careful examination of the numbers shows the tax to be surprisingly large. Advocates motivate the tax by pointing to the fact that of 2.3 million annual trips on LexTran, 73% are for travel to and from work. Using their own numbers, 1.679 million "trips" are work-related. Of course, the number of riders is smaller than that. The typical rider takes two trips per day, and some riders transfer across buses and take four trips per day. If only 10% of work-related riders fall into the second group, there are 763,181 work-related riders per year. If the typical work-related rider has a five-day-a-week, full-year job, then he or she uses the bus system roughly 260 days per year, corresponding to 2,935 workers. The proposed property tax increase is expected to generate $10.9 million of revenue, corresponding to a subsidy of $3,713 per working LexTran rider. That sounds like a pretty large subsidy to me!

I just received some campaign material sent by some Gloria Martin supporters in my Cumberland Hill neighborhood. My neighbors state that Martin “Kept a close eye on government spending by reducing some taxes and eliminating waste.” Really?!? See yesterday’s post.

One of the interesting things is that they sent some gushy letters-to-the-editor to the Lexington Herald Leader from Gloria Martin supporters. Of the eight gushy letters, however, as many as four of the letter writers do not live in the 12th district! These imposters include:

Ray Sabbatine (who lives in Georgetown)
Mary Ann McCauley (who lives in Versailles)
Martha Jenkins (who lives in district 4, not district 12)
Missy Rogers (whose address is not easily available)

Four out of eight outside of the district? Hey Gloria: “Is that the best you’ve got?”

Why I’m voting for Ed Lane for the 12th district

The Lexington Herald-Leader (10/18/2004) has called the 12th district a “battleground” district between challenger Ed Lane and incumbent Gloria Martin. I am writing this open letter to my neighbors in the 12th district to express my support for Ed Lane. My conclusions below come from my analysis of Martin’s recent record. I promise that I won’t mention the water company!

In June 2004, Gloria Martin voted to put a dedicated tax for LexTran on the November ballot. This tax would impose an expensive burden on the residents of the 12th district, without any commensurate benefit. LexTran’s “service” is abysmal outside of Man O’ War – notice that many residents of the 12th district have absolutely no service from LexTran. Yet, here are a few neighborhood-by-neighborhood calculations of the current cost of the LexTran tax based on publicly-available property tax records:

Ashbrooke - $14,163

Cumberland Hill - $34,653.96

Fairhaven - $13,544.70

Hartland/Kenesaw Village - $141,022.20

Tanbark - $18,202.38

Woodfield - $19,562.40

The cost of the LexTran tax is substantial, yet all of the neighborhoods above get very poor service (if any) from LexTran. If your neighborhood is not listed above, the tax you pay is still probably very substantial. The LexTran tax imposes an unfair burden on the 12th district, because LexTran doesn’t provide service here. Yet Gloria Martin supports taxing our residents, while other districts benefit.

If this seems like the wisest use of your tax dollars, consider the following: The starting salary for a police officer in Lexington is roughly $32,000. The taxes that would be paid for LexTran by the Cumberland Hill neighborhood alone could instead pay for one dedicated police officer that patrolled only this neighborhood! The taxes paid by the residents of Hartland/Kenesaw could pay for four dedicated police officers! In my view, this one of many choices that would benefit the residents of this district more than the LexTran tax.

Our elected councilmember is supposed to represent our interests, regardless of whether it conflicts or supports with the liberal agenda of Teresa Isaac. In my opinion, we need an independent, vigorous proponent for our district, not a pawn for the mayor. The fact that Martin did not have the political courage during an election year to oppose this senseless tax shows that her agenda is not in the best interest of the 12th district. Please join me in supporting Ed Lane for city council.

Sincerely,
Aaron Yelowitz

... Breaking news ... Socialism prevails in Santa Fe ...

Judge Daniel Sanchez today upheld the Santa Fe living wage ordinance. This isn't terribly surprising. During the course of the trial, Sanchez even let Rev. Jerome Martinez, whom Sanchez is related to, testify in favor of the ordinance.

The ordinance requires firms with 25 or more employees to pay $8.50 per hour, rising to $10.50 in 2008 (more than double the federal minimum wage). Living wage advocates will certainly call this a big victory, but in general, only extremely liberal cities like San Francisco and Santa Fe have been successful in implementing city-wide minimum wages. Almost all of the other living wage ordinances are restricted to firms doing business with the locality, and more invasive ordinances have been rejected by voters or struck down at the state level with premption efforts.

... Expect unemployment, higher prices, and business relocation to Albuquerque ...

My friends came to visit this past weekend for the Kentucky Derby, so I managed to go to it for the first time. Its very easy to get into the Derby if you are willing to go in the "infield" with about 50,000 other people. Its was certainly a spectacle that I have not witnessed in a very long time -- I would say that it reminded me of Halloween at UCSB. It rained & hailed & thundered for about 45 minutes. Drunk crazy people losing money on horse races. I would certainly go to the Derby again, but next time, I'm shelling out the money it takes to sit in the grandstands. Sad to say, but I'm too old for the infield.

Well, I just got back from Santa Fe, New Mexico, where I served as an expert witness in a "living wage" trial. If you want to read a bit about the trial, go to the Santa Fe New Mexican newspaper, or a more complete index at the Santa Fe living wage network. I'm not going to use this space to talk about the economics of the living wage, but I do want to offer some personal impressions about the trial. The city of Santa Fe was being represented by seven lawyers, most of them from New York City. The plaintiffs were being represented by Glenn Ellington and Kathrin Kinzer-Ellington, both from Santa Fe. The plaintiffs were a coalition of owners of restaurants and hotels in Santa Fe whose professional livelihood is at stake. Having spent a good deal of time with the plantiffs and their attorneys over the course of three days, I can say they are all caring, hard-working, moral people who are simply trying to make a living, and they improve the Santa Fe economy by creating job opportunities for many people.

Well, Kentucky lost today to UAB, in what will surely be an ESPN instant classic. I wasn't completely surprised after their subpar performance against FAMU, but it is still really depressing. Hats off to the Cats for a pretty good season when no one expected much of them at the beginning.

This sucks. And I lost $50.

I've been in Las Vegas for the past week, losing money in slot machines. I put a $50 bet on University of Kentucky basketball's team to win the entire tournament at 3-to-1 odds to win it all. After yesterday night's weak game against a 16-seed, I am regretting this decision ... UK will need to step it up against UAB (and beyond). Anyhow, Las Vegas was fun and we were several hotels away from where the Ohio sniper suspect was caught.

I listened to the CEO of DISH try and justify his behavior last night -- unbelievable. He never came out and say how much Viacom wanted per customer, only that it was not 6 cents. The discussion was totally slanted -- they picked emails from people who were not furious with DISH, always adding in a couple of emails that told Charles Ergen to hold his ground. What a crock! He should be docked his pay for this mess!

The CEO's email is: CEOofDishNetwork@Dishnetwork.com ... he should step down as CEO, given this incredibly bad performance.

One last comment ... I put a little ad up on Google that may attract people to this page. Feel free to link directly to it with your web site (at http://stopthelivingwage.blogspot.com/ ) so that I don't have to pay to vent to the world! And for more interesting stuff, feel free to visit my web page at http://gatton.uky.edu/faculty/yelowitz ... and do email me at aaron@uky.edu and I will put your reactions into my blog ... Thanks and enjoy watching Survivor, The Real World, and the NCAA tournament without me!

I am really annoyed today. The scummy company Echostar, which runs the lousy DISH network, has eliminated CBS, MTV, VH1, and a variety of other channels owned by Viacom. Altogether, it includes CBS, BET, Comedy Central, MTV, MTV2, MTV Espanol, Nickelodeon, Nick Games & Sports, Noggin, VH1 and VH1 Classic. See USA today; note that DISH network's web site is currently down (as I write this blog), and I spent 30 minutes on hold trying to reach someone on their telephone line. I, along with 9 million other DISH customers are affected by this. DISH claims that Viacom is trying to hold them hostage. The scumball head of EchoStar, Charles Ergen, accused Viacom of "holding the public airwaves hostage, trying to extract concessions and higher rates on programming unrelated to CBS." On DISH's site, they explicity say that they will not waive the early termination fee for those of us who want to get out of their DISH contract. DISH is holding their customers hostage, not Viacom. We didn't bargain for this when we signed up. Viacom says that the additional fees amount to 6 cents per DISH customer. I would urge anyone to read this to avoid signing up for the DISH network. I'm still deciding whether to bite the bullet and terminate my service (and then fight over the termination fee), or to call my Congressman (Ben Chandler, D-Lexington), or both, or nothing. I will absolutely, positively, terminate my DISH network connection the day my contract runs out, if not sooner. Anyone who reads this -- any suggestions.

Who knows? Maybe we can get EchoStar's board to fire Charles Ergen, who is responsible for this mess. Is he being docked pay for screwing over his loyal customers?

Email me at aaron@uky.edu.

I'm sure this isn't news to some savy computer people, but when you type in "miserable failure" into Google's search engine, it comes up with the link to President Bush. Apparently, Google's search algorithm takes into account how many other web pages have certain hyperlinks and phrases on them. Filmmaker Michael Moore and Senator Hilary Clinton come in second and third, respectively. This kind of behavior is known as Google bombing. At some point in the future, I think I'll chat about the economics of search engines.

Today is my first posting ... I thought I would use this blog to offer my perspective on the living wage. I have recently testified to the City of Atlanta and at the U.S. Chamber of Commerce on the living wage. The key point of those presentations was that in addition to other problems, the living wage doesn't help the people it is intended to. See my testimony at my web site for some details. Many single parent families are eligible for several transfer programs, and these benefits decline as the wage increases. Overall, the families are not much better off after these interactions are accounted for.