State Legisalture Battles Over Minimum Wage Increase
by Igor Kossov
May 02, 2012
The debate over minimum wages continues to divide the NY State legislature, with the Democrat-controlled assembly led by Speaker Sheldon Silver calling for the state rate to go up to $8.50, from the current $7.25. Republicans in the Senate and some business groups oppose the measure, saying it will hurt jobs and the broader economy.
The assembly held a series of hearings across the state in April, with more to come in May. Pro-labor groups such as the Business and Labor Coalition of New York testified on behalf of the legislation, saying that raising the minimum wage is essential to make sure workers can survive at the present costs of living. Many New Yorkers who make minimum wages came out as well.
"These hearings are an important next step in the process to raise the minimum wage," said Silver in a statement. "It is important for our communities to speak up. Raising the minimum wage fairly rewards low-wage workers, helping those who are striving to help themselves and in the process, giving a boost to local economies."
Similar debates are ongoing in many states around the country, driven by a slow economic recovery. California, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Missouri and New Jersey are all considering increases.
New York’s minimum wage peaked in 1970, when it was $1.85 per hour, a purchasing power equal to about $10.70 today. The state’s minimum wage is 19th from the top in the country. Vermont’s minimum wage is $8.46 per hour and in Massachusetts, it’s $8 per hour.
For the Raise
Analysts at the Fiscal Policy Institute, a liberal-leaning think tank, said that the increase would benefit 880,000 New Yorkers who earn below $8.50 per hour as of 2011, about 10 percent of the state’s workforce, according to FPI research. The institute goes on to say that at $8.50, a person employed full time would earn slightly less than the federal poverty rate for a three-person household.
“Women, blacks and Latinos would be among the main beneficiaries of a higher New York minimum wage since they are disproportionately represented in low-wage jobs,” said James Parrott, deputy director of FPI.
FPI adds that the increase would drive greater consumer purchasing power, increasing demand for goods and services and stimulating the economy. The institute’s testimony cites a study from the MIT journal Review of Economics and Statistics, which found that high minimum wages did not reduce employment across the country.
Assemblyman Keith Wright, chair of the labor committee, co-sponsored the bill and held many of the hearings. The bill has the support of politicians like assemblyman Sam Roberts and Dan Cantor, executive director of the Working Families Party. Mayor Michael Bloomberg also supports the increase.
Governor Andrew Cuomo said that he supports an increase in principle but he has yet to see how it will affect New York State’s economy, which will dictate his decision.
Against the Raise
Many Republican senators and assembly members criticized the bill, skeptical of its merits or fearing job loss. Senate Majority Leader Dean Skelos called it a “job killer” and it “increases all the costs of the job creators.” Other legislators who oppose the bill include State Sens. John DeFrancisco, Tom Libous and Patty Ritchie, as well as Assemblymen Will Barclay and Gary Finch.
Russell Sykes, a senior fellow at Manhattan Institute, a right-leaning think tank, said that raising minimum wage will not help many low-income New Yorkers because many people who earn minimum wage live in households which have other, higher income.
“Higher minimum wage would reduce job opportunities for the very people it's supposed to help, even as the benefits flow mainly to households that aren't poor,” Sykes wrote in an op ed.
Sykes, who worked as deputy commissioner at New York's Office of Temporary and Disability Assistance", said that there are better ways to help New Yorkers, such as Earned Income Tax Credit, a federal and state tax break for poorer families with children. He said that these programs are much more targeted towards actual poor households who need the help.
Parrott responded that EITC and raising the minimum wage are good complementary measures and one should not replace the other.
Still, there are some organizations that think that the $8.50 per hour goal is a step in the right direction but not enough, such as the nonprofit group National Employment Law Project, which testified at similar hearings in New Jersey, in March. According to the group, a minimum wage consistent with 1970 standards would come out to $10.39.
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