Major themes emerging from Acushnet Ave study

As you may know from my previous posts, we have been studying the economic impact of businesses in the Acushent Avenue commercial corridor with the help of grant from the Garfield Foundation. With the assistance of the CEDC, we convened a steering committee to help us define a study area for the project and help inform our research team. At the end of September, we began a survey of business owners. Among other things, the survey asked for employment and revenue history, business longevity and estimated customer residency. We also asked for general thoughts on neighborhood conditions, and gauged receptiveness to the formation of a business improvement district. Throughout the survey period, which lasted until early November, we conducted interviews with 69 business owners or managers. The population we spoke with reflects the range of establishments doing business in the neighborhood, from auto service stations and large manufacturers to fledgling cafes and multigenerational restaurants. While, the people we spoke with expressed an array of opinions, they agreed on a few key issues.

A major theme throughout our interviews was the number of opportunities for the neighborhood:

  1. Owners identified the conditions of the neighborhood as crucial to their success. These opinions were tied to questions about cleanliness, safety, and the public perception of the neighborhood. Some owners cited what might be called a lack of pride in the neighborhood, noting that they often have to clean trash left on the sidewalk outside of their business by residents and visitors. Others pointed the lack of proper lighting and a low police presence near their business as incubators for criminal activity. Regardless of their major concern, our interviewees recognized that these elements feed a negative perception of the neighborhood, which they feel limits the number of customers from other areas. Indeed, nearly half said that 50 percent or more of their customers live within walking distance.
  1. However, since their clientele is so hyper-local business owners have many direct interactions with residents throughout the day. There is an opportunity for the business and residential communities to build on this relationship, recognize their shared interests, and work together to effect change. Neighborhood groups must actively engage with the vibrant business community here. Greater alignment between the missions of these major stakeholders means a greater chance of having the needs of this neighborhood met. Through organization, they can broadcast a clear message to city officials.
  1. Our interviews revealed that the business community is ready to organize and receptive to the formation of a merchant’s association. Such a group could advocate for the needs of the community at state and local level, securing more resources for the part of the city they represent. Indeed, our research demonstrated that under current conditions many interviewees lacked knowledge of the number of assistance and incentive programs available. An active and aggressive merchant’s association would be an effective intermediary between the government and nonprofit entities that administer such programs and the community.

The results of our study will be released on December 15, and it is our hope that neighborhood organizations, such as this one, will be able to use our findings to advocate for more resources and better services. Check back here for more updates on this report’s release.

 

Minimum Wage

I have been writing a paper about the minimum wage for our microeconomics course, and I found the topic quite interesting. Most of the public favors raising the minimum wage (Dube, 2013), which is not surprising given that the real value of the minimum wage has fallen since the 1960s even as worker productivity has doubled (Krugman, 2013). The current federal minimum wage is $7.25, and some state minimums are higher.

One of the arguments against raising the minimum wage is that the increased cost of labor has a negative effect on employment. However, much of the evidence seems to suggest that negative effects on employment are small or non-existent (e.g., Blanchard, Jaumotte, & Loungani, 2014; Dube, Lester, & Reich, 2010; Leonard, Stanley, & Doucouliagos, 2014). For context, note that the Congressional Budget Office (2014) estimates that raising the minimum wage to $10.10 per hour would increase the earnings of 16.5 million workers and lift 900,000 people out of poverty while costing the economy 500,000 jobs. Given this estimate, it seems favorable to raise the minimum wage. It is worth mentioning that a debate is still ongoing regarding the best methodology to use in this line of research.

Some opponents of raising the minimum wage claim that the Earned Income Tax Credit (EITC) is more effective at assisting low-income workers. The EITC is a refundable tax credit that is available to low-income households that earn income from wages, salaries, tips, business or farm revenue, or disability income (IRS, 2014). Interestingly, the EITC puts downward pressure on wages, and the minimum wage helps to mitigate this (Dube, 2013). Thus, the EITC and the minimum wage are complementary policy tools.

Furthermore, some claim that the minimum wage only benefits teenagers from well-to-do families. Cooper and Hall (2013) provide demographic information for low-income workers that debunks this myth. Nearly 88 percent of workers earning the minimum wage are over 20 years old, around 55 percent work full-time, nearly 45 percent have some post-secondary education, and nearly 70 percent of workers’ families earn less than $60,000 per year. Furthermore, the average minimum wage worker earns nearly half of their household income.

Given this evidence, it seems that raising the minimum wage is a good idea. Doing so would provide security to working families and may lift a significant number of workers out of poverty. Some of the arguments against raising the minimum wage seem out of date given the knowledge that we now have regarding the effects of such a policy choice. Please see this blog post, written by SOC 350 students Victoria Wood and Lioma Terrero Soto, for local context.

-Jason Wright

Blanchard, O. J., Jaumotte, F., & Loungani, P. (2014). Labor market policies and IMF advice in advanced economies during the Great Recession. IZA Journal of Labor Policy, 3(2), 1-23. Retrieved from http://www.izajolp.com/content/3/1/2

Congressional Budget Office. (2014) The effects of a minimum-wage increase on employment and family income [Publication 4856]. Congress of the United States, Congressional Budget Office. Retrieved from http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf

Cooper, D., & Hall, D. (2013, March 13). Raising the federal minimum wage to $10.10 would give working families, and the overall economy, a much-needed boost. Washington, DC: Economic Policy Institute. Retrieved from http://www.epi.org/publication/bp357-federal-minimum-wage-increase/

Dube, A. (2013, November 30). The great divide: The minimum we can do. The New York Times. Retrieved from http://opinionator.blogs.nytimes.com/2013/11/30/the-minimum-we-can-do/

Dube, A., Lester, T. W., & Reich, M. (2010). Minimum wage effects across state borders: Estimates using contiguous counties. The Review of Economics and Statistics, 92(4), 945-964.

Internal Revenue Service. (2014, February 25). Do I qualify for EITC? Retrieved from http://www.irs.gov/Individuals/Do-I-Qualify-for-EITC%3F

Krugman, P. (2013, February 17). Raise that wage. The New York Times. Retrieved from http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html?_r=0

Leonard, M. L., Stanley, T. D., Doucouliagos, H. (2014). Does the UK minimum wage reduce employment? A meta-regression analysis. British Journal of Industrial Relations, 52(3), 499-520.