UPDATED: County Will Not Pay For Discredited Minimum Wage Study

Authors previously admitted that error in calculations overestimated potential job losses


Published:

The cover page for the study created by PFM for Montgomery County on the economic impact of the $15 minimum wage

Updated - 8:40 p.m. - Montgomery County will not pay $149,000 to a Philadelphia-based consulting and research company for a now discredited study on the local economic impact of raising the minimum wage to $15 per hour.

Patrick Lacefield, a spokesman for County Executive Ike Leggett, wrote in an email to Bethesda Beat Tuesday, “We are not paying the bill.”

The county also does not want Public Financial Management (PFM) to conduct any additional work on the problematic report, Lacefield wrote. He did not respond to email and phone messages on Tuesday and Wednesday asking for further comment.

A spokesman for PFM said Wednesday evening the firm will waive its fee for the report.

“PFM is proud to have served the county for many years," Kirk Dorn, the spokesman, wrote in an email. "In support of efforts to reach a positive resolution to the county’s minimum wage issues, we have decided to waive our fee for our work and that of our subconsultant who worked on the economic impact portion of the study.  We will continue to be as helpful as possible.”

The move comes after Council member George Leventhal publicly asked Monday during a council committee meeting whether the county could “recoup” what the firm charged the county for the report.

Leventhal said he was informed by Lacefield the county wouldn’t be paying for the study.

“I don’t think the county was going to get its money’s worth,” Leventhal said Tuesday. “I’m glad to hear we haven’t paid and we won’t pay.”

The council is considering legislation to raise the minimum wage to $15 per hour. Leggett commissioned the study after vetoing a bill that the council narrowly passed. The bill would have raised the minimum wage for many businesses in the county to $15 per hour by 2020. Leggett said he wanted to study the economic impact to the county of raising the wage to $15, so he commissioned the report.

In August, the report was widely criticized for relying heavily on surveys of business owners after it was released. Critics said business owners have a financial incentive to say that raising the wage would lead them to cut jobs, even if that wasn’t what would happen.

As backlash against the study mounted, PFM Managing Director Dean Kaplan admitted there was an error in the study—the firm used the wrong data from its surveys of business owners. He said the original estimate that 47,000 jobs in the county would be lost by 2022 if the wage were increased to $15 per hour likely would be cut in half once the error was corrected.

It was unclear this week if PFM had given the county a corrected version of its work yet, two months after the error was acknowledged.

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