Cuomo backs job-killing wage hike

by E.J. McMahon |  | NY Torch

cuomo-wfpGovernor Andrew Cuomo, who already signed into law one increase in New York’s statewide minimum wage, has agreed to support raising the minimum another notch and giving localities the discretion to go even higher — all reportedly as a condition for receiving the endorsement of the labor union-dominated Working Families Party (WFP).

New York’s minimum wage was raised from $7.25 to $8 this year, making it one of 22 states above the federal floor as of 2014. The minimum is scheduled to rise again to $8.75 in 2015 and to $9 in 2016. However, the WFP and its allies are pushing for further increases.

The governor now appears set to go along with them. As reported today by Gannett’s “Politics on the Hudson” blog:

In February, Gov. Andrew Cuomo said it would be a chaotic situation to let local governments set their own minimum wage.

But Cuomo said today that a plan he supports as part of Saturday’s deal with the Working Families Party is different.

The proposal, which Cuomo vowed to seek approval for next year, would raise the state’s minimum wage to $10.10 an hour while indexing it to inflation and allowing localities to raise it up to 30 percent higher than the statewide wage.

[snip]

It’s unclear what the specifics details would be, but it sounds like Cuomo would let downstate areas, particularly New York City, raise its minimum wage to around $13 an hour based an a cost-of-living formula.

Cuomo’s official website touting the 2013 minimum wage hike said the previous minimum was “unlivable,” adding:

A reasonable minimum wage increases the standard of living for workers, reduces poverty, incentivizes fair and more efficient business practices, and ensures that the most vulnerable members of the workforce can contribute to the economy.

 The WFP’s platform offers this trite rationale:

New York should raise the minimum wage so that nobody who works full time lives in poverty.

But there’s a considerable body of economic research suggesting that, at very best, a higher minimum wage would be enormously counterproductive. It would inevitably lead to fewer jobs, especially for those “most vulnerable members of the workforce” cited by the governor, while the added pay would flow mainly to individuals (such as students) who are not the primary wage-earners in their families.

Moreover, thanks to the state’s (appropriately) generous Earned Income Tax Credit (EITC), no New Yorker working full time in a minimum-wage job actually has to “live in poverty.”

In fact, as Russell Sykes explained in this 2012 Empire Center paper, the EITC effectively raises the minimum wage to $10.44 hour* without driving up the cost of labor or killing jobs. Neither the governor nor the WFP is taking about an increase in the EITC, which would be a far more direct and cost-effective way of helping low-income workers without reducing job opportunities, although that’s now a priority of President Barack Obama.

* This equates to full-time job paying $21,715, without counting the value of thousands of dollars in added cash benefits including $526 a month in food stamps. The official poverty level for a family of three is $19,790.

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