Going for broke on wages?

by E.J. McMahon |  | NY Torch

Cuomo headshotThe $15-an-hour minimum wage proposed by Governor Andrew Cuomo has enormous potential implications for labor markets and employer costs in many New York business sectors, especially upstate.

And the impact of the proposal, announced by Cuomo today at a New York City union rally also attended by Vice President Joe Biden, wouldn’t necessarily be limited to the lowest-level unskilled service jobs.

Nearly half of the 807 titles covered by the state Labor Department’s Occupational Employment Statistics (OES) survey—a total of 358 occupations, including an array of clerical as well as blue-collar positions—have entry-level wages starting at less than the $31,200-a-year annualized equivalent of $15 per hour. Nearly two-thirds of that group had entry-level wages equivalent to $12 or less on an annualized basis. The current statewide minimum wage is $8.75 an hour, set to increase to $9 at the end of the year.

Those are statewide numbers, mind you. The proposed minimum is even further out of line with prevailing wages in upstate regions. In the Southern Tier, for example, $31,200 exceeds the current  average wage for one-fifth of all occupations, covering roughly 145,000 of the 244,680 total workers in jobs counted in the OES. Indeed, $15 an hour is more than the current “experienced” worker wage (the average for the highest-paid two-thirds) in 74 occupations that employ more than 100,000 Southern Tier workers.

To be sure, those wages would be expected to naturally rise a bit anyway—but, in the absence of a government mandate, not by anything close to the $6 an hour (i.e., 66 percent) hike the governor proposes to phase in by 2021 outside New York City.

One result is likely to be a significant loss of jobs, as shown in this recent study estimating the national impact of raising the minimum to $12 and $15 an hour. As economist Mark J. Perry reports on the American Enterprise Institute blog, there’s evidence that Seattle restaurant employment already is being affected by the early stages of that city’s march to a $15 minimum.

In various ways, a $15 minimum also would have a significant impact on government costs in New York. For example, looking at the relatively small subset of hourly workers in each level of government, a pay bump to $15 an hour would boost personnel costs by $25 million for the state’s executive branch agencies, and by $39 million for New York City.

That’s just the tip of the iceberg: in addition to hourly employees, the state and local governments employ tens of thousands of full-time workers in salaried positions with starting salaries equivalent to less than $15 an hour.

Add to that the ripple effect of boosting salaries in much of New York’s non-profit human services sector, which is heavily dependent on government subsidies and private philanthropy.



- E.J. McMahon is the President at the Empire Center for Public Policy.