Given how unpopular a minimum wage hike is among key parties in the state, it’s no surprise that some people have been contemplating alternatives.

Gov. Andrew M. Cuomo is pushing legislators aggressively to raise the state’s minimum wage from its current $9 per hour to $15 per hour by 2019 in New York City and by 2021 everywhere else. The raises would be phased in incrementally until then.

When he couldn’t persuade members of the state Legislature to approve this measure last year, Mr. Cuomo decided to play hardball. He called for a wage board to examine the wages of fast-food workers — and low and behold, the board declared these employees weren’t being paid enough. Now many of those who believe their jobs are even more important than those of fast-food workers have been lobbying their elected representatives in Albany to secure a wage hike for them.

Many employers, those who actually have to come up with the money for Mr. Cuomo’s raises, have opposed the idea of hiking the minimum wage.

They have good reason to be concerned.

In a free market economy, rising wages must result from increased efficiencies within a company or more revenue coming in due to additional business being conducted.

And the climate in New York state for businesses is generally poor. So the governor’s plan to have companies cough up more money that they don’t have for pay raises they can’t afford is a crisis waiting to happen.

The Empire Center for Public Policy and the American Action Forum jointly released a report last year showing that raising the minimum wage to $15 per hour could result in a loss of at least 200,000 jobs statewide. The Cuomo administration is marching down the wrong path, but it doesn’t have to carry on this way.

In an article published Wednesday in the Albany Times Union, Russell Sykes documents “A better way to help the working poor.” He writes that Mr. Cuomo’s father, former Gov. Mario M. Cuomo, pioneered the earned income tax credit on the state level.

“As its name implies, the EITC isn’t a welfare entitlement but can only be ‘earned’ by people who work and file income tax returns,” Mr. Sykes wrote in his article. “Crucially, it is ‘refundable,’ which means that when the credit exceeds the amount of taxes owed, the difference becomes a net payment to eligible tax filers. As a result, it puts money directly into the pockets of eligible workers, effectively acting as a negative income tax.”

The combined federal, state and city EITC in New York averages nearly $3,000, but it can range from just a few dollars to as much as $8,427 in cash, depending on income, marital status and family size, according to the article. Making full use of all tax credits available to New York workers could effectively raise their hourly wages to $16.67 per hour without adversely affecting a business’s cash flow, Mr. Sykes wrote.

The governor and state legislators should examine this path closely and promote it as a better way of raising personal income. It’s a sensible plan that accomplish Mr. Cuomo’s goal without risking major job losses.

© 2016 The Livingston County News


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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

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