December 1998. Technical analysis by Carolyn Boldiston.

December 8, 1998. New from the Fiscal Policy Institute:

The Fiscal Policy Institute today joined with two national organizations, Jobs with Justice and the National Priorities Project, and state and local organizations throughout the country, in recommending four practical strategies for closing the gap between CEO and worker pay. These groups also highlighted several ways in which federal and state government can assist working families in making ends meet and moving up the economic ladder.

To underscore the need for these practical economic strategies, the Fiscal Policy Institute released a new report, Working Hard, Earning Less: The Story of Job Growth in New York State, which shows that most of the new jobs that are being created in New York State do not pay a livable wage.

According to FPI’s Executive Director, Frank Mauro, “It isn’t that our economy could function effectively without the jobs that are being created. In fact, those jobs are necessary for our economy to deliver the goods and services that consumers and businesses are demanding. The problem is that employers can get people to do an increasing number of necessary jobs for less than a liveable wage because of a number of changes in public policy that have occurred in recent decades at the federal, state and local levels, and the fact that government has failed to respond effectively to a number of major changes in the economy. Deregulation, globalization and the attack on unions have shifted power away from average workers and toward corporations.”

The National Priorities Project and Jobs with Justice have estimated that a New York family of four (two adults and two children) needs to earn $36,583 to meet its basic needs and that a family of three (one adult and two children) needs $33,398. According to the report’s special analysis of New York State data, 70% of jobs in the twenty occupations with the highest projected job growth in New York do not pay a livable wage for a family of four. In fact, 50% of these jobs do not even pay half a livable wage.

The new report also details the vast discrepancy between CEO and worker pay. It would take the median low-wage worker anywhere from 143 years to 812 years to earn what their CEOs make in one year.

The report’s recommendations highlight the following practical strategies for closing the gap between CEO and worker pay:

• The minimum wage should be increased and indexed to inflation or average wages to protect against future deterioration of its value. The referendum passed in Washington State last month which increases the minimum wage to $6.50 per hour over the next 13 months and then indexes it to inflation, is an excellent model for New York and national efforts.
• Living wage ordinances, such as those that have been adopted by Los Angeles and Baltimore, can ensure that companies that receive public tax subsidies, abatements, and contracts pay a living wage to their workers.
• Workers must be guaranteed a process for gaining union representation without management interference and must be provided with better remedies when employers violate organizing rights.
• Federal legislation should be enacted to prohibit the deduction, for corporate income tax purposes, of executive salaries which exceed 25 times the pay of the lowest paid full time worker at the same business.

In addition, federal and state governments can assist families to make ends meet and move up the economic ladder through increased support for health care, child care, public transportation and job training. The federal and state governments need to make workers and their families a major budget priority.

The data for New York State accompany a more extensive national report. Nationwide, fifteen of the twenty occupations with the highest projected job growth are not likely to pay livable wages. Nationally, almost three fourths of these new jobs are in occupations with median wages below a living wage and almost half (46%) are in occupations which pay less than half a livable wage. The national report also includes first hand accounts from working people of their struggles to support their families and achieve a decent standard of living.

November 1998.  A detailed analysis of spending on low-income children’s programs in 13 states by Deborah A. Ellwood of FPI and Kimura Flores and Toby Douglas of the the Urban Institute.

July 13, 1998. By Frank J. Mauro, New York Daily News. One of a pair of point-counterpoint op eds; with ‘pro’ side by Governor George E. Pataki.

May 18, 1998. New from the Fiscal Policy Institute:

Press release

“The minimum wage increases that took effect in 1996 and 1997 did exactly what they were supposed to do: More than a half million New York workers got a raise, with most of the benefits going to low-income families,” said Frank Mauro, executive director of the Fiscal Policy Institute (FPI), a progressive think tank based in Latham, NY, that is supported by labor unions, foundations, religious organizations and a wide range of human service and good government groups.

The federal minimum wage increased from $4.25 per hour to $4.75 on October 1, 1996, and to $5.15 on September 1, 1997. “This 90-cent increase helped hundreds of thousands of New York workers and their families, but we still have a long way to go,” said Mauro.

At its current level, the minimum wage remains at only 82% of its 1979 value when adjusted for inflation. “A much higher minimum wage is necessary if we are to close the ever widening wage gap that characterizes our national and state economies,” said Kathy McCormack, associate director of New Yorkers for Fiscal Fairness.

Brian O’Shaughnessy, coordinator of the New York State Labor-Religion Coalition, said that only by paying a fair wage to those who do society’s hardest, least desirable jobs can we reestablish an economy where working people share in the nation’s prosperity. “Payment of a just wage is a moral issue, and we wish to bring that dimension into this debate,” he said.

At a press conference held today at the Legislative Office Building in Albany, Mauro released the results of an analysis completed at FPI’s request by Jared Bernstein, a prominent labor economist with the Washington-based Economic Policy Institute. This analysis effectively disproves the phony claims that the beneficiaries of increasing the minimum are mostly teenagers from wealthy and middle-income families. The Economic Policy Institute analysis specifically shows that:

• The 1996-97 minimum-wage increase of $0.90 raised the wages of 550,000 working New Yorkers, about 72% of whom were adults.
• About half of the New York workers who benefited from the minimum wage increase worked full-time, and another 30% worked between 20 and 34 hours per week.

These findings were consistent with the results nationally as reported by Bernstein and his colleague John Schmitt in a new Economic Policy report entitled Making Work Pay: The Impact of the 1996-97 Minimum Wage Increase. This new study is the most comprehensive analysis to date of the 1996-97 minimum-wage increase. It demonstrates conclusively that the wage hike has raised earnings among low-wage workers without causing job loss. Among the major findings of Making Work Pay:

• The average minimum-wage worker provides more than half of his or her household’s weekly earnings.
• The two-stage increase disproportionately benefited low-income working families. Households in the bottom 20% of the income distribution (average income: $15,728) receive only 5% of total family income in the U.S., but received 35% of the benefits of the minimum-wage increase.
• Four different tests of the combined increase’s impact on employment – applied to a large number of demographic groups whose wages are sensitive to the minimum wage – failed to find job loss associated with the 1996-97 increase.

Bernstein and Schmitt used data from the U.S. government’s monthly Current Population Survey for the period from October 1996 through February 1998 to evaluate the impact of the increase on the wages, incomes and job opportunities of low-wage workers and their families. Bernstein used the same data to compute the impact on New York workers, the results of which were released today by the Fiscal Policy Institute.

According to Bernstein and Schmitt, the study’s empirical conclusion that strong wage gains occurred without a negative impact on employment conflicts with traditional economic theory that a minimum-wage hike costs jobs. They find, however, that models incorporating a variety of factors such as the costs of recruiting, training and motivating low-wage workers, more accurately reflect the character of the low-wage labor market. These models, designed over the last decade, better explain the dynamics of the low-wage labor market, they write.

“Our evaluation shows that moderate increases in the minimum wage serve to reconnect the economic fortunes low-wage workers to the growing U.S. economy,” Bernstein said.

Bernstein will be in Albany on Tuesday, June 2, to speak at the conference “Does Work End Poverty?” sponsored jointly by the Fiscal Policy Institute, the New York State Career Options Institute, SENSES, New Yorkers for Fiscal Fairness, the New York State AFL-CIO and a number of other labor, research and advocacy organizations. Bernstein will be speaking at 8:30 a.m. in the Campus Center Ballroom on the campus of the University at Albany, SUNY. The conference begins Monday evening, June 1, with a presentation by noted author and commentator Barbara Ehrenreich and ends June 3 with a lunchtime presentation by Mark Hoover, Deputy Commissioner of the New York City Human Resources Administration. For a complete conference program and registration information, contact Claudia Friedetzky at the New York State Career Options Institute at 518-786-6424.

March 29, 1998. Counterpoint: “Only businesses would benefit from the changes,” by Frank J. Mauro, Times Union. One of a pair of op eds, with the opposite point of view taken by Daniel B. Walsh of the Business Council.