Economists split on effects of wage boost
Despite recently published reports citing the potential negative effects from increases to New York”™s hourly minimum wage, Gov. Andrew M. Cuomo announced that he was implementing a $15 per hour baseline salary for the state”™s roughly 10,000 public employees by 2021.
Cuomo has bolstered his minimum salary initiatives by promising to lift low-wage New Yorkers out of poverty, while some economists suggest that hundreds of thousands of jobs could be lost with minimum wage increases.
“We made a decision a long time ago that if you worked full time, you should have a decent lifestyle for you and your family,” Cuomo said Nov. 10 to a crowd of labor union members at Foley Square in New York City. “The nation is going to watch us and we are going to raise up this state and we are going to raise up this nation to a higher level than it has ever been.”
U.S. Rep. Sean Patrick Maloney, whose district includes the Hudson Valley, praised Cuomo for his leadership on the minimum wage issue.
“Raising our minimum wage is good for families and good for our state,” Maloney said in a statement. “It will boost our economy, close the pay gap for women, and more hardworking families from the Hudson Valley into the middle class.”
But the notion that a $15 baseline salary will be helpful has not been echoed by everyone.
A survey from the Employment Policies Institute, a nonprofit research organization, and conducted by the University of New Hampshire Survey Center found that 76 percent of the U.S. economists questioned said a $15 per hour minimum wage would have a negative effect on the number of jobs available. One percent of those economists said there would be a positive effect and 16 percent said there would be no demonstrable effect. Seven percent were unsure.
The survey was emailed to 555 economists around the country between Sept. 22 and Oct. 16, and elicited a response from 166 of those emailed.
However, the group of surveyed economists is split on the effect a $15 hourly wage would have on poverty rates. Twenty-nine percent of the survey”™s respondents said the minimum salary increase to $15 would lead to increased poverty rates, while 30 percent said it would lead to decreased poverty rates.
Another report ”” published in November by Albany-based Empire Center for Public Policy Inc., which describes itself as a nonpartisan think tank, and American Action Forum, a right-leaning nonprofit organization in Washington, D.C. ”” said the tradeoff of some workers earning more does not outweigh the hundreds of thousands that could lose jobs.
Douglas Holtz-Eakin, president of the forum and former director of the Congressional Budget Office, and Ben Gitis, the forum”™s director of labor market policy, both of whom authored the report called “Higher Pay, Fewer Jobs,” applied the findings of other economists to determine New York”™s potential job losses from $12 and $15 per hour minimum wage increases.
The lowest impact model the authors implemented in their study, which has been used by the Congressional Budget Office, determined that about 200,000 jobs would be lost with a statewide $15 minimum wage increase by 2021. Of those jobs, 18,000 would be in the Hudson Valley, which was the third-highest number of jobs losses by region. But as a percentage of the area”™s employees, the Hudson Valley”™s workforce would reduce by 1.9 percent, the second-lowest percentage drop of the state”™s regions.
The report notes that job losses is one of a few possible results from mandatory wage hikes. It does not take into account the possibility of employers decreasing net profits or increasing prices, which are the other two consequences the authors mention as possible results from a higher minimum wage.
The cacophony surrounding the $15 hourly wage debate in New York has remained constant all year, starting with a wage board impaneled by Cuomo in May that recommended an incremental increase in the hourly rate for fast-food workers across the state by July 2021. Mario J. Musolino, commissioner of the state Department of Labor, signed off on that measure Sept. 10. The next day, Cuomo stood with Vice President Joseph R. Biden to announce the governor”™s commitment to a $15 hourly rate for all workers in the 2016 legislative session.
Cuomo”™s latest proposal will follow the same incremental schedule as the fast-food workers, with the state”™s employees in New York City reaching $15 per hour Dec. 31, 2018 and the rest of the state following suit in July 2021.
Meanwhile, business groups opposed to Cuomo”™s wage initiatives have banded together to form a coalition earlier this month with the slogan: “Minimum Wage Reality Check.”
The group”™s more than two dozen partners include the Business Council of New York State, the Rockland Business Association, the New York State Restaurant Association and the National Federation of Independent Businesses in New York.
Mike Durant, the state director of the NFIB in New York, said a minimum wage increase would be harmful to business owners.
“This unprecedented proposal to cement a minimum wage of $15 will put another crack in New York”™s fragile economy, which is heavily reliant on small employers,” Durant said on the coalition”™s website.
The state”™s minimum wage for all employees is set to increase to $9 an hour by the end of the year. This is the final uptick from a policy signed by Cuomo in 2013, which incrementally increased the state”™s hourly wages from the federal minimum salary of $7.25 an hour.