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Study Claims Boosting Minimum Wage Will Increase Jobs In NY

12:05 AM, Jan 30, 2013   |    comments
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BUFFALO, NY - Gov. Andrew Cuomo has proposed increasing New York's minimum hourly wage by $1.50, from $7.25 to $8.75. Now, a pro-labor group advocating for the wage hike claims this would create 7,300 jobs in the state.

"Based on what we know about how much Gross Domestic Product will rise, we can estimate...how much job growth will occur as well," said Jack Temple, a policy analyst with the National Employment Law Project, which along with Fiscal Policy Institute produced the study upon which its conclusions are based.

The minimum wage increase would boost the yearly salary of a full-time, minimum wage worker by $3,120 to $18,200, and those behind the study estimate it could inject an extra $1 billion into the state's economy.

Proponents of the minimum wage hike theorize that increasing the pay of hundreds of thousands of low wage earners would provide them the means to buy additional goods and services. So much so, that businesses providing those goods and services would hire additional workers to meet the increased demand for them.

"There are a few things wrong with their theory," said Brian Sampson, Executive Director of Unshackle Upstate, a pro business group which has come out against the proposed hike in the minimum wage.

"If a business has to pay more in minimum wage, the cost of their products will be going up," Sampson told WGRZ-TV, adding this could actually diminish the purchasing power of those getting the wage increase.

However, for businesses, he says it goes beyond paying higher salaries.

"You've now introduced higher workers compensation costs, and higher unemployment costs, all of which might lead an employer to reduce jobs," he said. "In those cases, a business owner may just choose to take on more of the work themselves."

"The vast majority of low wage workers throughout the U.S. are actually employed by larger companies, fast food chains like McDonalds or big box stores like Wal-Mart," countered Temple, who doubts you'd see the CEOs of those large companies and others manning the drive-through or running a cash register.

Sampson also suggests raising the minimum wage could have a detrimental effect on the prospects of some workers.

"Do they become disqualified for housing subsidies... for an energy subsidy? Do they become disqualified from food stamps, or New York State funded health insurance? You could almost be creating a disincentive for them to stay employed...because that increase in the minimum wage could disqualify them. It's almost not worth the money they may get for it."

"The increase (in wage) proposed is not actually a significant enough increase to effect the eligibility for most programs," said Temple, who says increasing the minimum wage would also likely mean wage hikes for low income workers who make slightly more than minimum wage.

Here again, though, Sampson sees a problem for business concerns.

"If you raise minimum wage to $8.75 an hour, what happens to the people in that company now that are in the $9 or $10 per hour range? If I'm a person making $9 per hour, I'm walking down to the boss' office knocking on the door and saying I'm only a quarter above minimum... where I was (previously) $1.75."

Sampson says raising the earned income tax credit would be favorable to raising the minimum wage and more beneficial to the working poor, who could keep more of their money, without the job losses or consumer price increases he believes would come as a result of of the minimum wage hike.

"That's a much better approach to help families try and bring themselves out of poverty...an increase in the earned income tax credit would go directly to the families (that need) support, where increasing the minimum wage becomes more a detriment to other people," he said.

Temple agrees with the need to extend the earned income tax credit, but believes it must be accompanied by an increase in the minimum wage.

"The problem with just raising the earned income tax credit is that we just end providing a taxpayer subsidy to employers to keep their wages low, because we allow major low wage employers to continue paying low wages and rely on the taxpayers to pick up the difference," he said.

In the end, Sampson figures that despite the protest of business groups like his, New York will probably end up raising the minimum wage. "When you look at the political reality there are enough votes in the Assembly right now, there are probably enough votes in the Senate and if it went to the Governor, he'd probably sign it," he said.

Click on the video player to watch our story from 2 On Your Side Reporter Dave McKinley and Photojournalist Norm Fisher from Eden. Follow Dave on Twitter: @DaveMcKinley2

WGRZ-TV, wgrz.com

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