Gov. Cuomo’s ‘half-truths’ propel the minimum wage debate

by E.J. McMahon |  | Syracuse.com/Syracuse Post-Standard

Gov. Andrew Cuomo’s guest commentary on his proposed minimum wage increase was filled with the sort of misinformation and half-truths that have propelled the “fight for $15” for months now.

For example, the governor claimed that “an independent review of 70 studies on minimum wage increases found no discernible negative effect on employment.” In reality, the review in question (by the Upjohn Institute for Labor Research) focused on employment declines following minimum wage increases of 10 percent — barely one-seventh the size of the unprecedented increase he is now proposing. The findings of such studies obviously don’t apply to the situation in New York.

Other economic research, consistently ignored by the governor and his union allies, has reached different conclusions. As summed up in a recent paper published by the San Francisco Federal Reserve Bank, “the overall body of recent evidence suggests that … a higher minimum wage results in some job loss for the least-skilled workers—with possibly larger adverse effects than earlier research suggested.”

On another aspect of the minimum wage, Cuomo cited a University of California at Berkeley study as support for his assertion that public assistance to low-wage workers actually serves to “subsidize high salaries for CEOs making millions of dollars.” But the Berkeley study has been debunked by, among others, Gary Burtless, a Brookings Institution economist who called it “flatly wrong” in assessing who benefits most from government assistance to the poor. Far from subsidizing employers, the availability of generous benefits to the non-working poor means that “many [employers] must pay somewhat higher wages or recruit more intensively to fill their job vacancies,” he pointed out.

Surprisingly, the governor also denounced the cash supplements provided to low-income workers by the federal and state Earned Income Tax Credit (EITC) – a program initiated in New York by his father, Mario Cuomo.

In fact, the EITC has been widely hailed by politicians and policy analysts across the partisan spectrum. For a single parent of two working in a minimum wage job, the EITC alone boosts annual cash income to 129 percent of poverty, equivalent to $12.44 an hour. Small wonder that the man Cuomo appointed to oversee New York’s welfare programs, former Syracuse area state Assemblyman Samuel Roberts, recently called the EITC “the most effective tool we have in helping middle- and low-income families escape poverty and achieve increased economic security.” And an economic study cited by the governor’s office to back up his criticism of the tax credit actually found that nearly three-quarters of the spent on the EITC directly benefits workers, not employers.

Last but not least, the governor remains completely oblivious to very real and significant differences in living costs, labor markets and economic conditions around the state. According to 2014 Labor Department data, the median wage in most of Upstate New York hovers not far above $15, compared to nearly $22 in the New York City region. In the Syracuse area, it’s $17.36.

Worse, there are increasing signs that the sluggish Upstate economy is now weakening. Private job growth on a year-to-year basis declined in December for the first time since the end of the Great Recession. Under the circumstances, imposing the same $15 minimum wage on struggling Upstate regions is especially risky and reckless.

Supporters of the governor’s respond to such concerns by saying that a five-year period will give businesses time to adjust to the hike. But that’s the problem: “Adjust” employers certainly will. The question is how.

Cuomo concludes that the debate on the $15 minimum “should focus on facts, not fear.” Too bad he’s actually taking the opposite approach.