Leggett Asks Firm to Review Job-Loss Estimates in Controversial Minimum Wage Study

PFM, which produced the report, told the county there might a problem with the figures, letter shows


County Executive Ike Leggett

Bethesda Beat file photo

Montgomery County Executive Ike Leggett on Tuesday asked the authors of a controversial study to review their findings that the county could lose 47,000 jobs by 2022 if the minimum hourly wage increases to $15.

Leggett’s letter comes after significant questions were raised about the methodology used to create the study by Philadelphia-based research firm PFM. Critics have questioned the study for relying on a survey of employers in the county who the critics say may have overestimated potential job losses to try to influence the legislative process.

Local politics blog Seventh State first posted the letter, which the county’s public information office confirmed as accurate to Bethesda Beat.

The PFM study also estimates raising the wage would result in an aggregate loss of $400 million of income.

Leggett wrote that the chief of the county’s treasury department, Robert Hagedoorn, raised concerns about the methodology used to determine the job loss number on July 7. The county released the study publicly on Aug. 1.

Since its release, new information has arisen about the study’s results, Leggett wrote to PFM leaders.

“And now today we have received word from your firm that there might be a problem with the methodology and calculation of fiscal impact and resulting job impacts,” Leggett wrote. “You have indicated that the job losses might be less than what is expressed in the report.”

PFM has declined multiple requests from Bethesda Beat to discuss the findings of its report.

The authors are scheduled to face questions from council members about the report at a briefing scheduled for Sept. 19. Already, council members have prepared and sent to PFM a comprehensive list of questions related to the report’s methodology.

In the letter, Leggett formally requested “a comprehensive review of the findings in your report.”

“The $15 per hour minimum wage issue is an important policy decision that requires sound financial analysis,” Leggett wrote. “I am requesting your immediate attention to this review and I look forward to your response.”

The county paid $149,600 for the report, according to a county spokesman.

Montgomery County Council member Marc Elrich said Tuesday afternoon that the study cannot be salvaged.

“There’s nothing they can fix in that study,” Elrich said. “There’s no way to fix the survey. To me, it’s totally unredeemable.”

Elrich introduced amended legislation in July that would incrementally raise the minimum wage to $15 per hour by 2020 for larger businesses and by 2022 for smaller businesses. The current minimum wage is $11.50 per hour.

Leggett in January vetoed a $15 minimum wage bill approved by the County Council after saying he would like more information about the impact of the proposed minimum wage increase on the county’s economy. The council lacked the minimum six votes needed to override Leggett’s veto.

The county executive later commissioned the study to provide more information as the council considers Elrich’s new version of the bill this fall.

Since the study’s release, it has been trumpeted as a cautionary tale for jurisdictions aiming to raise the minimum wage in a Washington Post editorial, as well as by numerous conservative media outlets.

Elrich said he wasn’t too concerned about the study’s findings being propagated outside the county.

“I think intelligent people everywhere will read it and realize what a worthless report this is,” Elrich said. “It’ll generate headlines though, which is a real disservice to the discussion.”

County Executive Ike Leggett letter to PFM - Provided by Montgomery County by AJ Metcalf on Scribd

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