Think Tanks Share Similar Names but Not Views on Living Wage

As organized labor, church groups, and activists continue to pound the pavement for so-called

living-wage laws, nonprofit research groups continue to pound one another over the effectiveness of legislation designed to increase pay for needy workers.

Two think tanks with opposing opinions on the issue — and whose opinions appear tied to the interests of those who finance them — are engaged in a nasty battle that has included choosing a sound-alike name and making accusations of trumped-up or unethical research.

The Economic Policy Institute, in Washington, has published the results of several studies that found little negative effect on local economies when employers were required to pay hourly workers more than the federal minimum wage. Such laws are designed to make it possible for workers to earn amounts that would raise them out of poverty. The think tank receives nearly 25 percent of its $3.3-million annual budget from labor unions.

Since its founding in 1986 by unions, nonprofit activists, and scholars, the Economic Policy Institute has regularly kept an eye on pay for the poor, according to Jared Bernstein, the organization’s senior economist.

He denies that his group has any political leaning, or that it is beholden to the organizations that support it. “We’re nonpartisan, but some consider us liberal,” says Mr. Bernstein. Despite that perception, he says the Economic Policy Institute never steers researchers whose work it publishes. “If I came across strong evidence that a living wage would hurt people, I’d publish it,” he says.

The Economic Policy Institute’s determination to increase wages prompted Richard B. Berman to start the similar-sounding Employment Policies Institute, also in Washington, in 1991. But Mr. Berman’s group mirrors the Economic Policy Institute in name only.

The group was started with money from employers of low-wage workers, such as hotels, restaurant chains, and retail corporations. All were clients of Mr. Berman’s Washington lobbying firm when the organization was formed. Many trade associations from those industries still finance Mr. Berman’s institute.

The Employment Policies Institute believes that higher minimum wages will result in more unemployment and fewer hours for those who hold on to their jobs, as well as higher taxes because of increased costs in government contracts.

Mr. Berman says the academic research published by his group counters that used by pro–living wage organizations backed by labor unions.

Strategies employed by Mr. Berman’s group include using the Economic Policy Institute’s initials — he and others at the Employment Policies Institute refer to Mr. Bernstein’s group as “EcPI” — and discrediting the research of groups whose findings back living-wage laws.

“I have a real problem with some of the manufactured evidence I see out there,” Mr. Berman says.

Counters the Economic Policy Institute’s Mr. Bernstein: “They stole our initials in an attempt to muddy the waters, but they haven’t really succeeded. Even though some people think of us as a research group with a progressive agenda, it’s pretty clear they’re the ones with the slanted research.”

In addition to handing out research grants, the Employment Policies Institute conducts publicity campaigns. The Employment Policies Institute has also spent some of its $1-million annual budget to put together a 95-page book attacking university professors whose research has touted wage increases for the poor as a way to reduce poverty.

The institute touched off controversy among nonprofit organizations, such as the Association of Communities Organized for Reform Now, known as Acorn, last year when it asked for copies of their latest informational tax returns. Advocacy groups worried that the institute would accuse them of illegally conducting partisan political campaigns, but the think tank used the tax forms to buttress its argument that major foundations have joined labor unions in financing the living-wage movement.

Laws May Reduce Poverty

A third research group, the Employment Policy Foundation, also in Washington, receives about 90 percent of its $1-million in annual support from corporations. Among the corporations represented on the organization’s board are Ford Motor, Pfizer, and Lockheed Martin.

The Employment Policy Foundation believes that making higher wages mandatory would be less effective than giving needy workers more-generous tax credits and concentrating efforts on making sure the poor receive more education.

Despite the presence of these organizations, few studies have measured whether wage laws have had an effect on poverty. Perhaps mindful of that, leaders of the living-wage movement were heartened by a study published in March by the Public Policy Institute of California, in San Francisco. The institute was established in 1994 with an endowment from the technology magnate William R. Hewlett.

Written by David Neumark, a previous skeptic of wage laws and an economics professor at Michigan State University, the national study found that laws that raise the wage floor have reduced poverty, while accounting for only a slight increase in unemployment.

“Living wages actually reduce poverty,” says Mr. Neumark. “Despite the alarmist efforts of some, there’s really no evidence that they cause any kind of employment disaster.”