Is New York's Minimum Wage Too Damn Low?
If you've been following recent developments in the capital, you've probably heard that Dems in Albany have been pushing for a $1.25 minimum wage increase -- from $7.25 to $8.50. And most New Yorkers would be OK with this boost.
This change would impact more than 600,000 New Yorkers who are somehow expected to get by on so little money.
Of course, Senate Republicans leader Dean Skelos has argued against the proposal, recently smearing the measure as "a job killer rather than a job promoter."
While data have routinely quashed the link between minimum wage increases and overall unemployment -- and while we can all agree that the wage floor needs to be raised (more on that after the jump) -- we should still pay attention to several other economic considerations.
Here's the deal: a new report suggests that a minimum wage increase would give the Empire State's economy a $600 million boost and "a net creation of 4,800 new jobs."
That report, developed both by the bill's Democratic backers and the non-partisan Economic Policy Institute, also claims that the current minimum wage actively hurts area economies.
Why? Well, the cost of living has increased drastically since 2004. As a Daily News columnist puts it: "Staple food items - like milk, bread and cheese -- have experienced double digit price increases. And since 2007, home heating oil costs have increased 45 percent; the price of gasoline has gone up 43 percent and rent has increased 10 percent in the New York City Metro Area."
What this means is that people who already had very little money to spend now have even less. Another bit of good news: The proposed measure comes packed with language which would up minimum wage annually, as to keep pace with inflation.
But (and there is always a but), we should keep our eyes peeled for potential -- key word, potential -- negative impacts.
As Len Burman wrote in Forbes, claims that raising the minimum wage in a struggling economy, and subsequently weak job market, are a bad idea remain "ambiguous."
However: "States have less leeway to raise wages than the federal government does because states' competitors are nearby. That may not be a problem for fast-food restaurants, but it could be much more significant for firms that produce products and services that compete across state lines."
"New York's seasonally-adjusted unemployment rate was 8.3 percent in January, with pockets of higher unemployment (see map). Youth unemployment was almost 25 percent here in 2011. Given that companies are already suffering from weak demand for products, it is much harder to pass on higher labor costs in the form of higher prices. And the efficiency wage hypothesis seems to me to be a long-run story-i.e., that workers will prove to be more productive at higher wages-but employers still need to be convinced to hire the workers to discern that effect. I think there's a substantial risk that a higher minimum would slow hiring, which would be really unfortunate now."
Yes, disincentivizing hiring is problematic, but it's not certain that this would be the case -- just as it's not certain that firms would be prompted to move their business to neighboring states with lower minimum wages.
What is certain: The minimum wage is too damn low, and needs to be raised because it's just not livable.
Follow Victoria Bekiempis @vicbekiempis.
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