Gov's Minimum Wage Plan Falls Short and Leaves Out 2M Workers Compared to Raise the Wage Act
New research from Berkeley + Columbia documents positive economic effects of previous increases to the minimum wage
ALBANY, NY (02/02/2023) (readMedia)-- Workers, lawmakers, and advocates held a virtual press conference today to explain how Governor Hochul's minimum wage proposal, which would index the wage floor without first raising it to at least $21.25, would deliver only tiny raises and leave 2 million workers out in the cold. The group also released new research from the University of California, Berkeley and Columbia University analyzing the positive economic impact that New York's first-in-the-nation $15 minimum wage, enacted in 2016, has had for both workers and employers.
Recording of the press conference is linked here.
The Raise Up NY coalition supports the Raise the Wage Act, sponsored by Senator Jessica Ramos and Assemblymember Latoya Joyner, which would increase the minimum wage to at least $21.25 by 2027 to catch up with 40-year-high inflation, and then index the wage rate annually after that to keep pace with rising living costs. The Act would benefit 2.9 million workers with an average annual increase of $3,300, or $63 a week -- enough to actually help families cover their sky-high grocery and gas bills.
By way of comparison, the National Employment Law Project and the Economic Policy Institute published a report last week projecting that Governor Hochul's proposal would deliver only tiny raises of about 45 cents an hour in 2024, and 35 or 40 cents in 2025 and 2026. That translates to an average annual increase of $670, or just $13 a week -- much too small to be meaningful. And only a small sliver of about 900,000 workers would benefit. The difference is substantial: 2 million fewer workers would benefit from the Governor's proposal, and their annual additional pay would be $2,600 less than under the Raise the Wage Act.
In fact, the details of the Governor's proposal released in her budget bill this week show that it is even stingier than it first appeared. That's because its very limited increases are capped at just 3% a year -- far less than inflation has averaged in recent years. And it includes so-called "off ramps" that would block any increase at all in many years, even when the economy is strong.
Contrary to the Governor's misleading framing in her budget book, raising the wage does not primarily concern youth employment: 95% of workers making low wages are adults 20 or older, and 28% are parents of young children.
"I love my home, but New York City is one of the most expensive places to live in the world," said Alease Annan, a UPS package handler and member of Teamsters Local 804. "I work two jobs – sometimes three, and willingly sign up for overtime when it's available just to be able to maintain. Gas has gone up. Food has gone up. Rent has gone up. Tuition has gone up. Day care has gone up. The MTA is about to raise the fare. But, wages have stayed the same. That's unsustainable. We need to raise the minimum wage now, then index it to inflation so we never fall behind again. We urge Governor Hochul and the State Legislature to pass the Raise the Wage Act."
"The Governor's proposal for adjustments to our minimum wage does not reflect the seriousness of our affordability crisis. With her plan, minimum wage workers would only get $13 more a week – that barely buys you lunch in New York City. We have to do better, we have to raise the wage and then index it to keep pace," said State Senator Jessica Ramos.
The Raise the Wage Act would have a similar impact to New York's historic 2016 $15 minimum wage legislation-which raised pay for 1 in 3 workers by more than $4,000 a year once fully phased in. Recent independent academic studies show that New York's $15 minimum wage raised pay significantly without hurting job growth -- both downstate and up. To that end, the Institute of Research on Labor and Employment at the University of California, Berkeley released a report today (attached) analyzing the effects of New York's $15 fast food minimum wage. Unlike the general minimum wage, which has been inching up to $15 upstate, the upstate fast food industry has been covered by a $15 minimum wage since 2021. Since fast food is one of the lowest paying, most labor-intensive occupations, any job losses associated with a higher minimum wage would be evident in that industry. However, the new UC Berkeley study finds that both upstate and down, New York's fast food industry grew at least as fast or faster than in other states that didn't raise the minimum wage. The fact that the state-wide $15 fast food minimum wage did not hurt job growth indicates that a $21.25 state-wide wage by 2026 is unlikely to do so. Moreover, the Berkely study finds that if the $15 fast food minimum wage had been updated for inflation since it hit $15, it would be over $20 by 2026.
"A careful study of the effects of New York's minimum wage increases from $7.25 to $15 indicates that raising the minimum wage to $21.25 will not cause job loss. And a $21.25 minimum wage would restore the purchasing power of the $15 minimum wage," said Professor Michael Reich, Chair at Center on Wage and Employment Dynamics, University of California at Berkeley.
Columbia University's Poverty Tracker recently looked at the effects of the $15 minimum wage increase in New York City, and found similar positive results for workers. The wage increase led to higher annual earnings and declining poverty rates for workers making the minimum wage, and did not result in any job loss. Workers directly affected by the minimum wage increase were also less likely to receive SNAP benefits - roughly 16% of workers on SNAP no longer received SNAP benefits after the wage increase. Despite these positive effects, the Poverty Tracker concludes that because $15 was not indexed to rising costs, New York's current minimum wage no longer holds enough value to significantly reduce hardship of workers making a minimum wage.
"The Poverty Tracker captured experiences of minimum wage workers in New York City across all years when the city's minimum wage rose. This rich, longitudinal data shows that the wage increase to $15 per hour contributed to significant declines in poverty among these New Yorkers and did not lead them to lose employment or work hours. But as we've seen at the federal level, the purchasing power of the minimum wage erodes substantially when it's not pegged to inflation; therefore, it's hard to expect that the effects we identified will hold if the value of the state's minimum wage continues to fall," said Sophie Collyer, Research Director at the Center on Poverty and Social Policy at Columbia University.
"The Governor's wage proposal would reverse New York's legacy of leadership represented by the Fight for $15. It's far less generous than the package that the Republican-controlled State Senate approved in 2016. And the fact that corporate lobbyists like the Business Council of New York State – which vehemently fought the $15 minimum wage -- are endorsing the Governor's proposal out of the gate should tell you all you need to know about how meager it is," said Paul Sonn, State Policy Director at the National Employment Law Project.
"We support raising and indexing New York's minimum wage because it makes good business sense. Local businesses depend on local customers who make enough to buy what they are selling – from food and clothes to haircuts and car repairs. Minimum wage increases don't stay in workers' pockets. They go right back into the economy – boosting communities as workers and their families can afford to spend more at local businesses. Wage increases also pay off in lower employee turnover, increased productivity, and better customer service – which keeps customers coming back," said Holly Sklar, CEO of Business for a Fair Minimum Wage.
Raise Up NY is a coalition of workers, labor, community, and businesses-including ALIGN-NY, Business for a Fair Minimum Wage, Caring Majority, Churches United for Fair Housing, Citizen Action of New York, Columbia County Sanctuary Movement, Community Voices Heard, Construction and General Building Laborers' Local 79, CWA D1, For the Many, Hand in Hand: The Domestic Employers Network, Hotel and Gaming Trades Council, Human Services Council, Indivisible Nation Brooklyn, Jews for Racial and Economic Justice, Legal Aid New York, Legal Momentum, The Women's Legal Defense and Education Fund, Long Island Jobs with Justice, Make the Road NY, National Employment Law Project, New York Communities for Change, Partnership for the Public Good Retail Action Project, RWDSU, SEIU 32BJ, 1199SEIU, Strong Economy for All Coalition, Sunnyside Community Services, Teamsters Joint Council 16, Teamsters Local 804, Tompkins County Worker Center, UAW Region 9, UAW Region 9A, Western New York Council on Occupational Safety and Health (WNYCOSH), Workers Center of Central New York, Worker Justice Center of New York, and Workers United - that backs legislation, which would raise New York State's minimum wage and ensure there are annual minimum wage increases so that it won't fall behind ever again.