Minimum wage helps the economy

March 31, 2013. Commentary by Thomas V. Murphy on

Taxpayers to subsidize NY’s higher minimum wage

March 27, 2013. In this story, Michael Gormley points out that New York taxpayers will be paying for the new minimum wage tax credit.

Advocates for the working poor fear the credit will prompt employers to replace adults with students. Mauro said Tuesday the credit also would result in the first maximum wage for many employees because employers would lose the credit if they raise wages over the minimum wage.

The credit “flies in the face of sound tax policy, good labor market practice, or common sense,” Mauro said.

New York’s minimum wage tax credit for hiring teen workers criticized from left, right

March 27, 2013. An article points out the faults of the new minimum wage tax credit.

The left-leaning Fiscal Policy Institute, which championed the minimum wage as a boost to the economy and employment, says the tax credit is “ill-conceived and poorly drafted.”

The institute said the tax credit has no cap, doesn’t require employers to disclose how much they receive, and does little to safeguard workers older than 19 who might be fired so employers can hire subsidized teen workers. The credit is also available to multinational corporations such as Wal-mart and McDonald’s, the institute says.

Taxpayers To Shoulder Cost Of Minimum Wage Hike

March 27, 2013. A story about how incentives in the new minimum wage law could backfire.

The Many Problems with New York’s Proposed Minimum Wage Reimbursement Credit

March 25, 2013. This was to have been the year New York caught up with the 19 other states and the District of Columbia with a minimum wage above the $7.25 an hour federal level. Minimum wage legislation that passed the Assembly also would have indexed the minimum wage in future years—as 10 other states do—so that inflation would not steadily erode its purchasing power. However, the agreement reached over the weekend in Albany falls far short. It increases the minimum wage to $8.00 an hour on the last day of 2013, to $8.75 a year later, and to $9.00 an hour on the last day of 2015, but it leaves out indexation and treats tipped workers inadequately.

But the overall minimum wage package is even worse – a lot worse because of an ill conceived and poorly drafted tax break that has been added to the mix.

Despite a complete absence of compelling evidence regarding any need or justification, Albany is poised to enact a “minimum wage reimbursement credit” that flies in the face of sound tax policy, good labor market practice, or common sense. One step forward, four steps backward.

The minimum wage tax credit is part EE in the budget package’s revenue bill (S2609D/A3009D). In the first year (2014) in which the new minimum wage of $8.00 an hour would be in effect, the tax credit would pay employers for all of the increase for any workers between the age of 16 and 19 that they pay at the $8.00 an hour level. In the second year (2015), it would pay employers $1.31 for such teenage workers paid at the $8.75 level, and for the years 2016-2018, it would pay employers $1.35 an hour for such teenage workers paid at the $9.00 an hour level. A very perverse part of the tax credit is that the employer only gets the credit if the employee is paid exactly the minimum wage.

This takes income polarization and policies that deprive workers of fair pay and a decent living to new heights–we’re about to become the first state to make a minimum wage a maximum wage at the same time! Michigan and Wisconsin move over—New York wants to officially discourage pay increases. Think about it—starting in 2016, New York will reward employers up to $2,808 per teenage worker for keeping wages flat for three years ($2,808 is the $1.35 hourly tax credit times 40 hours a week times 52 weeks).

There are numerous other ways the new tax credit merely falls well short in the sound policy and common sense department:

1. While this credit was conceived as a way to limit the impact of the increased minimum wage on small business, the proposed legislation:

  • is available to all employers including giant corporations such as Walmart and McDonalds, and
  • even makes the credit available to Verizon and other public utilities (Article 9 of the Tax Law); banks (Article 32); and insurance companies (Article 33).

2.  Unlike the New York Youth Works tax credit, the new Minimum Wage Reimbursement Credit (MWRC) for employing students between the ages of 16 and 19 at the minimum wage:

  • is open-ended as to cost, whereas the cost of the Youth Works program is capped at $25 million for the first two years, and at $6 million in subsequent years,
  • does not require participating employers to agree to the disclosure of  their participation or disclosure of the magnitude of the credits that they receive,
  • has a much weaker prohibition on the “gaming” of the system to benefit from the credits available.  (The new MWRC’s only safeguard in this regard is that “An employer shall not discharge an employee and hire an eligible employee solely for the purpose of qualifying for this credit.” At the very least, credits should not be available to employers for hiring teenagers for positions previously filled by adults.)

3.  The proponents of this credit argued that it was necessary so that small businesses would not be “forced” by the increased minimum wage to reduce the number of students that they hire for summer and other seasonal jobs; BUT the proposed legislation:

  • gives a credit to businesses that pay the minimum wage to students for jobs for which it previously paid more than the minimum wage,
  • for students employed at the minimum wage rate, would give an employer a credit (ranging from 75 cents to $1.35 an hour) even if students hired in 2013 to fill those same positions were paid more than $7.25 or even $8.00 or $9.00 an hour.

4.  The bill creates an incentive to hire students between the ages of 16 and 19 rather than older individuals or non-students. Although 90 percent of the lowest-wage New York workers are 20 years of age or older, this new tax credit will dangle $1,560 to $2,808 out in front of employers  for every adult worker they manage to substitute with a student between the ages of 16 and 19.

Legislation like this new tax credit is proof there are worse things than a late budget.

NYPD Issues Memo Ordering Cops to Run Criminal Checks on Domestic Abuse Victims

March 18, 2013. Colorlines magazine reports a disturbing New York City Police Department policy of investigating the victims of domestic violence. One very real concern:

“They would not report a crime because they would fear getting locked up. It would empower the perpetrator, and there’s going to be more domestic violence as a consequence, and you’re endangering children,” Chinitz told the Post.

The Fiscal Policy Institute estimates there are about 535,000 unauthorized immigrants living in New York City and the new directive could impact this group especially hard. Abusers often use their partners’ immigration status as a tool of control, according to a Georgetown Journal on Poverty Law and Policy report published in 2000. The new NYPD directive could further prevent immigrant women and men from reporting their abusers due to fear of deportation.

State Aids Immigrants with Free Service Centers

March 18, 2013. The New York World writes about the Office for New Americans.

“The idea that that much money could provide services to 4 million immigrants in New York state of course doesn’t make sense,” said David Kallick, a senior fellow at the Fiscal Policy Institute, an economic research organization that has studied the welfare of New York’s immigrants. Nonetheless, Kallick called the Office for New Americans “very much the right idea,” saying it would supplement existing services.

Revised NYS and NYC unemployment rates eliminate the mid-2012 spike and clear up what had been a confused picture

March 18, 2013. Earlier this month the NYS Department of Labor released its annual revisions to the employment and unemployment data. As noted in an earlier blog entry, New York’s private payroll employment growth was revised upward and government employment was revised to show the loss of 59,000 state and local government jobs between December 2010 and December 2012.

In the revised unemployment data for 2011 and 2012 released by the Department of Labor, the unemployment trend replaces what had been a confusing spike in the unemployment rates for NYS to show a more smoothed out picture.

The pre-benchmark and post-benchmark picture is very similar for NYC, although the unemployment rate is higher for NYC.

While it is not unusual in a recovery to see a month or two where the unemployment moves higher as more people resume looking for work as the hiring situation improves. This adds to the labor force count, and if the labor force grows faster than employment in the household series, the unemployment rate would rise. Payroll employment numbers are from a monthly survey of businesses while the labor force and unemployment data are based on a monthly survey of households by the Census Bureau in conjunction with the U.S. Bureau of Labor Statistics.

However, in the middle of 2012, the pre-benchmarked NYS and NYC unemployment numbers were showing a fairly steady increase in the unemployment rate that pushed it about 1% higher than the level from the spring of 2011. This was puzzling to economists since NYS and NYC payroll job growth was steady and on a par with the nation during this period. However, as would be expected, the national unemployment rate was showing a steady downward trend while unemployment was reported as rising in NYS and NYC.

We had noted this anomalous situation in our The State of Working NewYork 2012 edition, and reviewed the data in more detail and with comparisons to the trends in other large states in a presentation prepared in the late fall.

The revised labor market data for NYS and NYC show more labor force growth in both 2011 and 2012 and with considerably higher household employment growth in both years. The revised data show unemployment falling fairly steadily in both NYS and NYC for the last several months of 2012.

Peralta Pushes for DREAM Act

March 15, 2013. Assemblymember Jose Peralta talks with Karen DeWitt on WMHT’s New York Now about the New York State DREAM Act, citing the Fiscal Policy Institute’s analysis of the costs and benefits.

How Immigrants Forestall Death of More Than 1 in 3 U.S. Counties

March 15, 2013. The National Journal reports on how immigration has offset a decline in the U.S.-born population.

Without immigrants, many metropolitan regions would have declined; beyond the obvious destinations, namely New York and Chicago (respectively the largest and third-largest), immigrants shored up Detroit, Pittsburgh, and St. Louis.

“Immigrants are innovators, entrepreneurs,” said Michigan Gov. Rick Snyder at a recent immigration conference, according to an Associated Press Report. “They’re making things happen.”

A July 2012 report by the Fiscal Policy Institute indicated that immigrants own 18 percent of small businesses in the U.S., up from 12 percent in 20 years.

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