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Meet the Anti-Minimum-Wage Group Funding Those Minimum-Wage Studies

A Washington D.C. research hub that’s funded some widely cited studies casting doubt on the effectiveness of minimum-wage hikes is operated by a public relations firm that represents high-powered corporations and industries that oppose such increases, the New York Times revealed Monday [1].

The Times’ story dovetails with our Monday fact check [2] that found a 10-year-old conclusion about minimum-wage workers doesn’t translate to today’s economic climate. The basis for the claim we checked – that two thirds of minimum-wage workers receive raises in their first year on the job – came from one of many such studies bankrolled by the Employment Policies Institute [3]. The statistic was mentioned in recent op-eds by San Diego tech entrepreneur Michael Robertson [4] and Washington Post columnist George F. Will [5].

We gave Robertson’s claim an Unfounded [2] rating, in part because the only research on the issue was funded by EPI, a group that has opposed minimum-wage increases.

The researchers behind that study maintain their analysis wasn’t colored by EPI’s slant on the issue. But without any other studies to compare it to, that’s virtually impossible to verify.

Monday’s Times story will likely inspire more questions about this and other EPI-funded studies [6], which are often used to buttress arguments against minimum-wage hikes.

EPI is led by advertising exec Richard B. Berman, whose PR firm [7] counts major corporations among its top clients and has run websites such as minimumwage.com [8], which includes a list of several apparent myths [9] about minimum-wage hikes and points visitors to EPI research to support its points, according to the Times.

The Times found Berman’s D.C. office also serves as the headquarters for both the firm and EPI, which has no employees, and that Berman’s ad firm “bills” the nonprofit EPI for services his PR shop provide to it. Major donors to what could be seen as the ad agency’s nonprofit arm include a foundation that has long supported conservative causes.

While the Times story focused on EPI, which opposes minimum-wage hikes, it pointed out that there’s no shortage of left-leaning groups that support minimum wage increases and similarly tout their research as neutral:

The left has its own prominent groups, like the Center for American Progress [10] and the Economic Policy Institute [11], whose donors include nearly 20 labor unions, and whose reports, with their own aura of objectivity, consistently conclude that raising the minimum wage makes good economic sense. But none has played such a prominent and multifaceted role in recent months as the conservative Employment Policies Institute.

The story also pulled San Diego State economics professor Joseph J. Sabia into the debate.

Sabia has received more than $200,000 in research grants [12] from the group. One [13] of his seven studies for EPI concluded New York’s 2004 minimum-wage hike led to a significant decline in employment for 16-to-29-year-olds without high school diplomas and projected more than 16,000 lost jobs.

That study got particular attention in the Times’ report because University of Delaware economist Saul D. Hoffman reviewed [14] the same data and found it lacking.

More on that from the Times:

Mr. Hoffman concluded that the narrow cut of data Mr. Sabia picked was perhaps unintentionally skewed, and once corrected, it would have showed that the 2004 increase in New York State’s minimum wage had no negative impact on employment — the opposite of the conclusion [15] the institute had proclaimed in its news releases [16].

Sabia said he stands by his research.

“In any research grant I have ever received — whether from Employment Policies Institute, the National Institutes of Health or any of the academic institutions at which I have worked — I have always retained the right to publish my scientific work and maintained the academic freedom to pursue the truth wherever the data led,” Sabia wrote in an email to Voice of San Diego [17].