ECONOMICS: Just getting by on New York’s minimum wage

Supporters of a minimum wage increase rallied in front of Westgate Plaza in gates late last week. The State Assembly has passed legislation to increase the minimum wage, but the issue is locked up in the Senate. PHOTO BY MAX SEIFERT

BY JEREMY MOULE

Say you’re working 40 hours a week for minimum wage, which in New York is $7.25 an hour. Before taxes, your Social Security contribution, and other deductions, you’re making about $290 a week. That’s $15,080 a year.

Now, consider this: the federal poverty level for a single person is $11,070. For one adult with one child, the level is $15,130. So if you’re making minimum wage, you are at or near the poverty threshold. And critics say that those standards underestimate, often substantially, what it takes for people to be truly self-sufficient and to support themselves and their families.

Across New York — especially in the capital — lawmakers, activists, and even some businesses are pushing for an increase in the minimum wage. The Assembly’s Democratic majority has passed legislation to bump the minimum wage to $8.50 an hour with yearly increases based on inflation. But the Senate seems unlikely to follow.

“We really should not have people who are working full time who are not able to provide the necessities for themselves and their families,” says State Assembly member Harry Bronson, a Rochester Democrat who co-sponsored the Assembly bill.

The minimum wage is supposed to represent an acceptable starting point for worker pay, Bronson says. But whether the current rate meets that minimal threshold is the issue. The minimum wage has increased many times since the end of the 1970’s, but it hasn’t kept pace with the cost of living.

The State Legislature last approved a series of minimum wage increases in 2004, with the last increase boosting the wage to $7.15 an hour. The current minimum, set under federal law, took effect in July 2009. But the average cost of consumer goods and services have increased substantially: $1 in 2012 has the same purchasing power that 82 cents did in 2004.

Yet some state businesses and business groups, along with some Senate Republican leaders, oppose the Assembly’s legislation. They say an increase would be a “job killer” that, in fact, wouldn’t help workers making minimum wage. Senate Majority Leader Dean Skelos has repeatedly said he won’t bring the Assembly legislation to a floor vote. And Skelos countered the legislation with his own proposal: a $1 billion package of business tax cuts.

Asked for comment, Senate Republican Joe Robach, who represents Rochester, didn’t directly address the minimum wage issue.

“One of my top priorities is the economy and job opportunities for all,” he said in an e-mail. “Certainly, I will continue to work with the governor, the Legislature, and my constituents to get the best result. All policies, including wages, will be part of that ongoing dialogue.”

Robach chairs the Senate’s Labor Committee.

Governor Andrew Cuomo has said that a minimum wage increase probably won’t happen this year because of firm Republican opposition.

Some people, including some elected officials, seem to be confused about who minimum wage workers really are.

The Fiscal Policy Institute, a labor-aligned think tank, released a report on the minimum wage bill last month. Part of it focused on who, statistically, makes less than the Assembly-approved rate of $8.50 an hour.

Eighty-four percent of the approximately 880,000 people making less than $8.50 an hour are over age 20, the report says. And approximately 55 percent are women, with blacks and Latinos disproportionately represented among the group. In 2011, about half worked more than 35 hours a week, the report says.

Unshackle Upstate, a pro-business advocacy group, opposes any legislation that would raise the minimum wage.

A memo from the organization says that raising the wage would “serve as a drain on our economy.” It would drive up the cost of products and services for businesses — particularly small businesses, the memo says. And if businesses have to pay employees more but don’t have more money coming in, the companies may have to lay people off or stop hiring, Unshackle’s memo says. Or companies may look for cheaper places to operate their businesses.

“The effect of a mandatory increase in hourly wages will be a decrease in opportunities for entry level employees,” the memo says.

If companies have to pay higher wages, they’ll also have to pay more in Social Security taxes and worker’s compensation. That may cause employers to reduce employee benefits like health care, the memo says.

Supporters of a minimum wage increase say the objections are misguided.

Most of the state’s minimum wage jobs are in the retail, sales and service, and food service industries. Increasing the minimum wage wouldn’t cost those workers their jobs since the industries “serve neighborhood consumer markets not subject to cross-state competition,” says the Fiscal Policy Institute’s report.

Some of those businesses should actually benefit if their workers are paid more, supporters say. Minimum wage earners are likely to spend pay increases on things like food and necessities, they say.

Some businesses do support an increase in the minimum wage. Mega-retailer Costco signed onto a statement of support for the $8.50 minimum wage with inflation indexing. The statement was put together by Business for a Fair Minimum Wage, which is a sub-campaign of Business for Shared Prosperity.

But beyond economic questions, many supporters of an increase advance a simpler justification. It often gets called the moral imperative, and religious leaders, lawmakers, and activists all stress it.

“It’s just the right thing to do,” says Jesse Lenney, an organizer with the local Working Families Party.

3 comments

  1. People just don’t know how to manage their money anymore…cell phones and HD tv are not a necessity. $15,000 is enough is allocated properly. But people are too busy looking for excuses and complaining about how bad their life is on Facebook to manage themselves. Minimum wage should really be for kids…any adult making minimum wage did not prepare themselves to get a better job. It is not societies responsibility to make up for the minorities bad choices. People will survive when forced to…stop bailing them out!!!!!!

  2. You have two choices with a minimum wage: raise it just a tiny bit so it doesn’t affect many people. This helps Progressives and Leftists feel good about themselves, so it’s worth doing. Or, you can raise it enough so that it actually helps some people. Unfortunately, to the extent that you actually cause some people to be paid more, you will also cause some people to become permanently unemployable. Their best effort isn’t worth the minimum wage, so nobody can hire them, so they can’t improve their effort by on-the-job training, so nobody can hire them, so on, damning them to permanent poverty. Sadly, this seems not to make Progressives or Leftists sad, because they routinely ask for these kinds of increases in the minimum wage.

  3. I guess we can assume that, given their view that raising the minimum wage would, “serve as a drain on our economy” and would, “drive up the cost of products and services for businesses” and would force companies to, “lay people off or stop hiring” or , “look for cheaper places to operate their businesses”, Unshackle Upstate must also be in favor of placing a cap on executive compensation?

    It would be interesting to know what Unshaclke Upsatte’s view is of executive comoensation

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