New York’s minimum wage tax credit slammed as poorly designed and wasteful

April 28, 2013. A Post-Standard story looks at New York’s minimum wage tax credit and references an analysis done by FPI.

“It’s utterly unprecedented in the United States,” said Paul Sonn, legal co-director of the National Employment Law Project in Washington, D.C. “We’re not aware of any state that has adopted a tax credit remotely resembling this one, which will have the taxpayer pick up the tab for the cost of the minimum wage increase for a certain category of worker.”

….

Cuomo’s office estimates the cost to taxpayers at $230 million for the first four years of the credit, 2014 to 2017. But a Post-Standard review of statistics from the Census Bureau and the Fiscal Policy Institute show the cost could be more than $440 million.

The higher estimate relies on Fiscal Policy Institute data – drawn from the U.S. Census Bureau — that shows teens work 52 weeks a year, rather than the 35 weeks a year assumed in Cuomo’s estimates. In addition, the higher figures reflect an increase in the number of teens who earn more than $8 but less than $9 an hour who would be available for the credit in succeeding years as the wage and credit rise.

And that doesn’t factor any increase in the numbers of teens that employers may hire instead of adults 20 and older.

“The magnitude of the taxpayer cost depends heavily on how employers react in terms of substituting student teenagers for older workers,” said James Parrott, deputy director of the Fiscal Policy Institute.

Anti-Immigrant Fox Host Dobbs Fails On Basic Immigration Facts

April 22, 2013. Media Matters highlights the errors of Lou Dobbs on immigration.

A 2009 report by the Fiscal Policy Institute found that between 1990 and 2006, “the metropolitan areas with the fastest economic growth were also the areas with the greatest increase in immigrant share of the labor force.”

The Gilded City of New York

April 18, 2013. In a special issue of The Nation that includes over 20 stories about New York City under Mayor Bloomberg, a picture is painted of a two-tiered urbanism. The lead story by The Nation’s editors describes the heightened income polarization in New York City and cites data from various FPI analyses, including Pulling apart: The continuing impact of income polarization in New York State.

Here is New York in 2013: a city of dazzling resurrection and official neglect, remarkable wealth and even more remarkable inequality. Despite the popular narrative of a city reborn—after the fiscal crisis of the ’70s, the crack epidemic of the ’80s, the terrorist attack of 2001, the superstorm of 2012—the extraordinary triumph of New York’s existence is tempered by the outrage of that inequality. Here, one of the country’s poorest congressional districts, primarily in the South Bronx, sits less than a mile from one of its wealthiest, which includes Manhattan’s Upper East Side. And here, a billionaire mayor presides over a homelessness crisis so massive that 50,000 men, women and children sleep in shelters each night. More New Yorkers are homeless these days than at any time since the Great Depression.

The numbers tell the story. Between 2000 and 2010, the median income of the city’s eight wealthiest neighborhoods jumped 55 percent, according to the Fiscal Policy Institute. Meanwhile, as the cushy precincts got even cushier, median income dipped 3 percent in middle-income areas and 0.2 percent in the poorest neighborhoods.

Image: Susie Cagle. Source: Fiscal Policy Institute. High income neighborhoods defined by median family incomes $91,000 and above, low-income neighborhoods defined by median family incomes between $24,000 and $47,000.

New York, of course, has always been a city of striking contrasts, but its wealth gap is growing ever more extreme. The richest 1 percent of New Yorkers claimed almost 39 percent of the city’s income share in 2012—up from 12 percent in 1980. The money pouring in at the top of the income brackets has simply pooled there, without trickling down to the bottom or even the middle. This great pooling has occurred as median wages have fallen, the cost of living has increased, and the poverty rate has risen to 21 percent—as high as it was in 1980. As a result, America’s most iconic city now has the same inequality index as Swaziland.

This isn’t entirely New York’s fault. Over the last three decades, the whole country has experienced similar tectonic shifts, thanks in part to the national economy’s increasing tilt toward finance—a sector that has an outsize presence in New York, which helps explain why the city has not only mirrored but exceeded the nation’s rush toward inequality. “To the extent that New York is the home base for a lot of financial institutions, we have a lot of people who are able to pay themselves very well,” explains James Parrott, chief economist of the Fiscal Policy Institute in New York.

But, Parrott adds, the stewards of New York City—its mayor, legislators and other influencers—could have made choices to counter this trend: “New York City’s government is significant enough in its breadth…that the policy tools exist and the wherewithal exists to do something at the margins to lessen inequality.” The choices, however, that might have corrected some of the skew—within education, economic development, labor rights, poverty policy, budgeting—have largely been ignored in favor of creating a very different model of metropolis.

Image: Susie Cagle. Source: Fiscal Policy Institute, based on Pilketty and Saez’s top 1% income share for the US and FPI analysis of NYS Department of Tax and Finance and Division of the Budget data for NYS and NYC top 1% income share, 2010-2012 projected.

In “Bloomberg by the Numbers, Aileen Brown cites several pieces of FPI research on the increase in business tax expenditures, the decline in city funding for human services, the decline in median wages, and other measures of well-being in NYC.

In “Interactive Map: Bloomberg’s New York”, graphic artist Susie Cagle also draws heavily on FPI research.

Barriers to Entry: The Increasing Challenges Faced by Young Adults in the New York City Labor Market

May 2, 2013, Manhattan. JobsFirstNYC is pleased to share a new report with the field – Barriers to Entry: The Increasing Challenges Faced by Young Adults in the New York City Labor Market. This report takes an in-depth look at both the supply and demand dimensions of the job market faced by New York City’s 18-24 out-of-school/work population. The report also considers the key characteristics of young people who are out-of-school and out-of-work, including their demographics, where they live, their skills, and barriers they face connecting to employment opportunities. This analysis considers both the ‘supply’ and ‘demand’ aspects of this particular issue in a single study.  The report was co-authored by James Parrott, Deputy Director and Chief Economist, Fiscal Policy Institute, and Lazar Treschan, Director of Youth Policy, Community Service Society. We hope you will join us for a discussion about the report findings and their implications.

Date: May 2, 2013

Time: 9-11 a.m.

Location: New York Times Building, 620 Eight Avenue, 15th Floor. Due  to security protocols at the New York Times Building, RSVP’s for this  event are required.

The Latino Coalition champions for Hispanic small businesses

April 12, 2013. A story in VOXXI highlights the impact of Latino entrepreneurs in the new economy.  

In 2010, 27.9 million small businesses employed less than 500 people while only 18,500 firms had 500 employees or more, according to the Small Business Administration (SBA). Moreover, they represent 99.7 percent of U.S. employer firms and create 64 percent of net new private-sector jobs with an impact on over 44 percent of the total U.S. private payroll.

Sharing the impact in the new economy, Latino entrepreneurs make up 28 percent of small business owners, according to a new study by the Fiscal Policy Institute, and it is the fastest growing trend among all new businesses.

Number of millionaires in NY rebounded in 2010

April 12, 2013. In an Ithaca Journal story by Joe Spector, he reports that the number of New York millionaires is increasing again.

The number of millionaires in New York bounced back in 2010 after falling off in 2009, state records show.

The number of millionaires in New York reached nearly 33,000 in 2010, up 19 percent compared to 2009. Overall, the number of people with taxable incomes above $200,000 returned to the level in 2008, a review of records from the state Department of Taxation and Finance by Gannett’s Albany Bureau showed.

“The long-term trend has been to greater income inequality, more growth at the top,” said Frank Mauro, executive director of the Fiscal Policy Institute, a labor-backed think tank near Albany.

Walmart and other large, low-wage employers will benefit financially from New York’s new Minimum Wage Reimbursement Credit.

April 5, 2013. Unless disclosure requirements are clarified, we’ll probably never know exactly how much Walmart and other large, low-wage employers receive in government subsidies under New York’s new Minimum Wage Reimbursement Credit (MWRC). But based on the best data available, we estimate that Walmart is likely to receive MWRC subsidies of between $53 million and $85 million over the next five years.

New York’s new MWRC will provide employers a tax credit for the hours worked by students between the ages of 16 and 19 who are paid at exactly the minimum wage. As our earlier explanation and assessment of this truly perverse measure explains, it would pay employers 75 cents an hour for each such student employed at the minimum wage of $8 an hour in 2014, $1.31 an hour for each such student paid $8.75 an hour in 2015, and $1.35 an hour for each such student paid $9 an hour in 2016, 2017 and 2018. Employers would get these credits even if the jobs involved had been previously filled by adults or non-student teenagers, and even if the jobs involved had been filled at higher wage rates in 2013. The resulting “bonus” for employers who hire one or more students in place of a full-time adult worker would be substantial, rising as high as $2,808 a year per worker. ($2,808 is the $1.35 tax credit times 40 hours a week times 52 weeks.)

Even though there’s no compelling evidence that a moderate minimum wage increase harms any business, the new MWRC has been made available to all employers, even the largest ones. Large employers of low-wage workers, such as Walmart, will reap the greatest windfalls from this credit.

Walmart has over a hundred stores in New York State and employs an estimated 28,500 workers. Government data for New York indicate that for discount retailers like Walmart, teenagers who are in school account, on average, for 11.3% of their workforces, and that these teenagers work an average of 18.7 hours per week, or 972 hours on an annual basis. Thus, if Walmart followed the broader employment pattern in the state, and if it paid all its teenage student workers at exactly the minimum wage, it would get a subsidy of $19 million over the next five years.

But a large multinational corporation like Walmart knows a thing or two about extracting subsidies from state and local taxpayers. By one estimate, Wal-mart has gotten $1.2 billion in subsidies from state and local taxpayers around the United States. So there is every reason to believe that they will seek to maximize what they can get from this new pot of taxpayer largesse.

About 18% of the teenagers that discount retailers employ are not students. Businesses like Walmart might start hiring just student teenagers because non-student teenagers wouldn’t generate a dime in MWRC subsidies. And they might also decide to hire student teenagers in place of adults. The legislation establishing the MWRC says an employer “shall not discharge an employee and hire an eligible employee solely for the purpose of qualifying for this credit,” $2,800 per year per full time equivalent position might tempt a large company to gradually replace adults and non-student teenagers in ways that stay on the right side of the law.

If a large employer like Walmart managed to hire 10% fewer adults and hire more teenaged students in their place, the five-year taxpayer subsidy would jump to $53 million. Hiring 20% fewer adults and more teenaged students in their place would boost the potential subsidy to $85 million over five years.

New York State’s new MWRC requires close scrutiny, not only because it is a huge new tax break for businesses, but because it could have adverse effects on the employability of struggling adult workers and because it incentivizes keeping wages right at the minimum. Public disclosure of how much individual companies receive under the new MWRC is essential if New York is to effectively evaluate the MWRC’s fiscal and economic impact.  New York’s much more accountable Youth Works tax credit already requires participating employers to agree to the disclosure of their participation and disclosure of the credits that they receive. Albany needs to require such disclosure under all business tax credits including the new Minimum Wage Reimbursement Credit.

Experts address immigration reforms

April 4, 2013. The Setonian covers a forum on immigration reform with the Mayor Chris Bollwage of Elizabeth, NJ, Assemblyman Michael Patrick Carroll of Morris County, International Litigation Counsel Eric Blinderman, and FPI’s David Dyssegaard Kallick. Anthony DePalma moderated.

Federal tax credits for working families need to be protected and strengthened as part of tax reform efforts

April 10, 2013. With policymakers in Washington calling for federal tax reform, the Fiscal Policy Institute said it is essential that members of Congress consider the beneficial long-term impacts of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) as well as these credits’ short-run benefits. In emphasizing the importance of making the current temporary enhancements of these credits permanent, FPI pointed to a new report from the Center on Budget and Policy Priorities that pulls together and examines the body of research available on the impacts of the EITC and similar income-boosting measures with a particular emphasis on recent research that shows that the EITC’s benefits for children extend into adulthood.  Press Release>>>

Garza: The economic case for immigration reform

April 3, 2013. In an opinion piece, Antonio O. Garza makes the economic case for immigration reform.

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