If Gov. Cuomo has his way, New York could soon become the first state in the nation to raise its minimum wage to $15 an hour.
While a gradual boost to $15 has been approved on a local level in Los Angeles, San Francisco and Seattle (and, just this week, rejected by the voters of Portland, Maine) the wage floor has never before been raised so high on a statewide scale, anywhere in the United States.
What Cuomo is proposing is more than double the current federal minimum and a full 70 percent higher than New York’s current minimum of $8.75 — which, adjusting for inflation, is about as high as the federal minimum wage has ever gone.
Cuomo’s proposal, which will require the state Legislature’s approval, came in September on the heels of his labor commissioner’s “wage order” setting $15 as the hourly minimum for fast-food workers, to be phased in by 2018 in New York City and 2021 in the rest of the state.
While a statewide minimum of $15 would be enormous by historical standards, the governor and other advocates frame it as win-win — good for the economy in general and for low-wage workers in particular.
In reality, most economic research points in precisely the opposite direction. Low-wage, low-skill workers actually have the most to lose in the “fight for $15.”
Enacting a statewide, all-industry $15 minimum would cost New York at least 200,000 jobs — including 95,600 in New York City, with proportionately larger employment decreases in upstate regions. That’s the key finding of a research paper to be released today by my organization, the Empire Center for Public Policy, and the Washington, DC-based American Action Forum.
Co-authors Douglas Holtz-Eakin and Ben Gitis drew from three different research models to estimate the impact of Cuomo’s proposal. The projected 200,000-job loss is actually their lowball estimate, based on the methodology used in a recent study by the Congressional Budget Office (CBO), of which Holtz-Eakin is a former director. The two other minimum-wage impact models cited in the research paper say the employment impact could be even larger — resulting in somewhere between 432,200 and 588,000 fewer jobs.
Under the worst-case scenario, net total wages would increase by just $1 billion. But even if wages rise by the $10.6 billion projected in the low-impact CBO scenario, barely $700 million would be pocketed by workers at the poverty line, who would need it the most (and who this legislation is intended to benefit).
And where would the money to pay those higher wages come from? The answer, in part, would inevitably be higher prices—and not just for low-wage workers. Among many other forseeable impacts, an hourly wage minimum of $15 also would significantly increase the cost of the day-care services many working middle-income families depend on.
Evoking the memory of his late father, the governor calls his $15 wage push the “Mario Cuomo Campaign for Economic Justice.” But in three terms as governor, Mario Cuomo never proposed anything more than a modest minimum-wage hike, which he didn’t get through the Legislature.
The elder Cuomo does deserve lasting credit for one innovation that actually did a lot to help the working poor. It was under Mario that New York state enacted its own earned-income tax credit (EITC), bolstering the value of the larger tax credit for low-wage workers. The credit was tripled by his successor, Republican George Pataki.
Taken together, state and federal tax credits now boost the annual cash income of a single parent working in a minimum-wage job by $4,000 or more — not counting the value of other benefits intended to help low-wage workers. If Andrew Cuomo thinks the state should do more to boost the living standards of low-wage workers, a further expansion and improvement of the EITC would be a far more efficient way to do it.
Yes, millions of New York’s workers, most of them not impoverished, would see pay gains from a $15 minimum wage. But hundreds of thousands would be stuck with the ultimate minimum: zero.