WASHINGTON – Just four blocks from the White House is the headquarters of the Employment Policies Institute, a widely quoted economic research center whose academic reports have repeatedly warned that increasing the minimum wage could be harmful, increasing poverty and unemployment.
But something fundamental goes unsaid in the institute’s reports: The nonprofit group is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that Democrats in Congress and the White House have pushed for.
“The vast majority of economic research shows there are serious consequences,” said Michael Saltsman, the institute’s research director, in an interview, before he declined to list the restaurant chains that were among its contributors.
The campaign illustrates how groups – conservative and liberal – are again working in opaque ways to shape hot-button political debates, like the one surrounding minimum wage, through organizations with benign-sounding names that can mask the intentions of their deep-pocketed patrons.
They do it with the gloss of research, and they play a critical and often underappreciated role in multilevel lobbying campaigns, backed by corporate lobbyists and labor unions, with a potential payoff that can be in the millions of dollars for the interests they represent.
“It is the way of Washington now – and that is unfortunate,” said John Weaver, a GOP consultant who has helped run several presidential campaigns. “Because if it’s not dishonest, it’s at least disingenuous.”
In this case, the policy dispute is over whether increasing the minimum wage by nearly 40 percent to $10.10 an hour by next year would reduce poverty or further it.
Even if the legislation never passes – and it is unlikely to given the political divide in Congress – millions of dollars will be spent this year on lobbying firms, nonprofit research organizations and advertising campaigns, as industry groups like the National Restaurant Association and the National Retail Federation try to bury it. Liberal groups, in turn, will be spending lots of money as they try to make the debate a political issue for this year’s elections.
The left has its own prominent groups, like the Center for American Progress and the Economic Policy Institute, 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 Employment Policies Institute, founded two decades ago, is led by the advertising and public relations executive Richard B. Berman, who has made millions of dollars in Washington by taking up the causes of corporate America. He has repeatedly created official-sounding nonprofit groups like the Center for Consumer Freedom that have challenged limits like the ban on indoor smoking and the push to restrict calorie counts in fast foods.
The dividing line between the institute and Berman’s firm was difficult to discern during two visits last week to the eighth-floor office at 1090 Vermont Avenue, a building near the White House that is the headquarters for both.
The sign at the entrance is for Berman and Co., as the Employment Policies Institute has no employees of its own. Berman’s for-profit advertising firm, instead, “bills” the nonprofit institute for the services his employees provide to the institute. This arrangement effectively means that the nonprofit is a moneymaking venture for Berman, whose advertising firm was paid $1.1 million by the institute in 2012, according to its tax returns, or 44 percent of its total budget, with most of the rest of the money used to buy advertisements.
The major reports released by the institute are prepared by outside academics, like Joseph J. Sabia, an associate professor of economics at San Diego State University, who has collected at least $180,000 in grant money from Berman’s group over the last eight years to deliver seven separate reports, each one concluding that increasing the minimum wage has caused more harm than good – or at least no significant benefit for the poor.
“There is never a good time to raise the minimum wage,” Sabia said late last month at a briefing on Capitol Hill co-sponsored by the institute. “You are not reaching the poor workers you want to help.”
Restaurant industry groups, in their own statements and news releases, often cite the institute’s reports, creating the Washington echo chamber effect that is so coveted by industry lobbyists.
“Once you have the study, you can point it to it to prove your case – even if you paid to get it written,” said one lobbyist, who asked not to be named because his clients rely on him to use this technique.
But some questions have been raised about the institute-funded work.
Saul D. Hoffman, a professor of economics at University of Delaware, examined the employment data Sabia used for a 2012 paper funded in part by the institute. Hoffman concluded that the narrow cut of data Sabia picked was perhaps unintentionally skewed, and once corrected, it would have shown that the 2004 increase in New York State’s minimum wage had no negative effect on employment – the opposite of the conclusion the institute proclaimed in its news releases.
Berman, 71, a onetime auto mechanic turned labor lawyer and restaurant industry executive, rejected any suggestion that his reports were based on bias or faulty data.
“I get very upset when people say we are putting out junk science and twisted economics, because that happens to be our criticism of other people,” Berman said.