Home Economy $15 minimum wage creates economic test

$15 minimum wage creates economic test


The new state budget hasput Westchester County at the center of an experiment that will test the hopes and fears that a $15 minimum wage poses.

New York will have six different minimum wage schedules by the end of the year, compared with one statewide rate in 2015. Westchester is the only county that will encompass or share a border with all six tiers.

Gov. Andrew Cuomo’s “fight for fair pay” initiative and a generous family leave policy that he signed into law on April 4 put New York in the vanguard of liberal economic justice policies nationally.

Members of the Business Council of Westchester, however, are concerned about the economic effects of increasing the minimum wage, according to Executive Vice President John Ravitz, “because no state has made that kind of jump before.”

The minimum wage in Westchester will increase 67 percent, from $9 to $15, in six years.

Depending on where you work in the region, the lowest wages at the end of the year will vary from $9.70 to $12.

Let’s say you start a job search in Westchester. Employers will have to pay you at least $10 an hour at the end of the year. The same scale applies to Nassau and Suffolk counties on Long Island.

Now, cross the county line into the Bronx. You will be paid $11.

But it gets complicated. If you land a job flipping burgers, your fast food position will pay $10.75 in Westchester and $12 in the Bronx. If you find work in the city with a company that employs fewer than 11 people, you will make $10.50.

In Rockland or Orange counties or anywhere else in the state, most jobs will pay at least $9.70. Fast food workers will get $10.75, the same as in Westchester.

The wages increase every year, by 70 cents to $2, for three to six years.

The question for businesses and for job seekers is how the new policy will affect them.

Historically, minimum wage increases have been much smaller, so economists don’t have much to go on for estimating the impact of a large increase.

By setting up different wages on different timetables in different regions for different types of businesses, the governor and Legislature created economic laboratories.

Conservative economists argue that companies will have to replace jobs with automation, cut hours, fire workers or go out of business. The Empire Center for Public Policy, for instance, estimated that a $15 minimum wage will eliminate at least 200,000 jobs in New York.

Progressive economists believe that $15 will have a minimal effect on jobs. They say employees will stimulate the economy as they spend their extra earnings and work more productively. Any loss of jobs, they argue, will be offset by the benefit of lifting living standards for many people. The liberal Fiscal Policy Institute estimated that 3.2 million low-wage New Yorkers, including 105,500 in Westchester, will benefit from the $15 minimum wage.

The budget bill also includes a family leave policy beginning in 2018. It will allow employees to get 12 weeks of pay while caring for an infant or a family member with a serious health condition or to relieve family pressures when someone is called to active military service.

The program will be funded through a payroll deduction and employees will be eligible to participate after working six months. At first the program will pay 50 percent of their weekly wage, capped at 50 percent of the statewide average weekly wage. The rate will increase to 67 percent in 2021.

Cuomo promoted the $15 minimum wage and paid family leave as economic justice issues in the 2016-17 state budget.

The Legislature adopted the budget bills on April 1 by 61-1 in the Senate and 104-39 in the Assembly.

Members of the Westchester legislative delegation were generally positive about the economic initiatives.

Senate Democratic Conference Leader Andrea Stewart-Cousins of Yonkers, said the plans balance the needs of businesses and workers. She said a higher minimum wage enables low-wage workers to reinvest in their communities. The family leave program will help companies retain workers at no cost to employers.

Assemblywoman Shelley Mayer, a Yonkers Democrat, said paid family leave will make employees more devoted and consistent workers, thus helping employers. She described the new minimum wage as a “huge turning point for lower wage workers that will give them the ability to get beyond poverty.”

David Buchwald, a Democrat assemblyman from White Plains, said paid family leave will give employees a measure of financial security when they need to care for a loved one and will result in a more stable workforce.

“I think businesses and their employees are both winners,” he said.

Assemblyman Thomas Abinanti, a Mount Pleasant Democrat, wanted Westchester to use the same minimum wage schedule as New York City, as Cuomo originally proposed.

“It’s not even coming close to a living wage,” he said, and the cost of living in Westchester is as high or higher than in the city.

He said Westchester businesses will probably benefit from paying lower costs than businesses in the city, but will lose more qualified workers who flock to the city for higher wages.

Assemblyman Steve Katz of Yorktown is the only Republican in the Westchester delegation and the only local lawmaker to vote against the budget bill.

He said the minimum wage will reduce entry level and summer jobs and will hasten the use of robotics and technology to replace jobs.

“It’s a real job killer,” he said. “Upstate New York will suffer immensely from this.”

He said paid family leave will be costly because businesses will have to pay for replacement workers. “It’s like paid vacations,” he said, “except longer.”

He also voted against the state budget because of the non-transparent manner in which the governor and a couple of legislators negotiated behind the scenes and then put the budget up for vote at the last minute.

Ravitz of the Business Council was pleased that Westchester was decoupled from the city’s minimum wage schedule.

He also was pleased by a “safety valve” built into the plan. The state budget director will analyze the effects of the minimum wage in every region, beginning in 2019, and determine whether the program should be temporarily suspended.

The Business Council also will monitor the minimum wage.

“If we are hearing this is causing problems, we will let the Legislature and governor know,” he said. “We will not wait until the third year.”

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