March 14, 2016. More than 75 economists from throughout New York State joined together this week to send a message to Albany: a phased-in increase in the minimum wage to $15 by 2019 in New York City and by mid-2021 in the rest of the state is a prudent and much needed policy that would raise the incomes of struggling low-wage workers and boost their spending power without hurting the state’s economy.

The economists’ statement cites a number of academic authorities in summarizing the case in support of a $15 minimum wage. The statement notes that an estimated 3.2 million New York workers, or 37 percent of the state’s labor force, would benefit, including one-third who are parents and that are raising over one-third (34.3 percent) of the state’s children. The statement cites research on the benefits for child development of higher parental income, concluding that “there would be long-lasting benefits to the state” from the proposed minimum wage increase.

The statement is signed by distinguished professors Teresa Ghilarducci, Janet Gornick, David Howell, and Tom Michl and 75 of their colleagues who are economists or social scientists with expertise in labor market policies from across the state. The Fiscal Policy Institute’s Chief Economist and Deputy Director, James Parrott, worked with the signers in circulating the statement.

“Costco has raised its starting pay to $13 nationwide,” said David Howell of the New School. “This puts in perspective the proposal to raise the New York State minimum wage to $15 by mid-2021. Working backward from consensus inflation forecasts put the value of $15 in 2021 at about $13.25 in today’s dollars, which is very close to Costco’s starting wage that applies in many low-income states. The case against the $15 minimum wage concerns employment effects, but economic research has produced no evidence that a five-year phased-in $15 wage will cause discernible job loss. Well over 3 million New Yorkers will see big boosts in family income, which among other things will increase local consumer spending (generating jobs) and reduce health and poverty-related costs for the state and localities (easing budget pressure and saving taxpayer dollars). The net benefits of a $15 minimum wage in mid-2021 seem overwhelming.”

Regarding concerns about the wage increase in upstate areas, Colgate University’s Tom Michl stated, “Governor Cuomo’s proposal to increase the New York State minimum wage to $15 more gradually in upstate than in New York City takes account of the differences between the upstate and city economies. I think that most working families in New York would agree that an ambitious program to raise the minimum wage is better than a timid program that leaves millions of New Yorkers suffering unnecessarily low or poverty-level wages. In some upstate regions, as many as 80% of poor or near-poor workers will benefit from a higher minimum.”

Anticipating the claim by some that it would be preferable to increase the Earned Income Tax Credit (EITC) rather than the minimum wage, New School economist Teresa Ghilarducci stated, “Low wage workers get some relief from taxpayers who fund the EITC. A higher minimum wage will lessen the burden of low wages that employers are now able to shift to taxpayers.” Ghilarducci also noted that to match the benefit to workers from a $15 minimum wage, the state’s EITC would have to be roughly the same as the federal EITC, entailing more than a $2 billion increase in the cost to New York taxpayers.

The economists’ minimum wage statement cites the work of Michael Reich and colleagues at the University of California at Berkeley who recently released a new comprehensive report examining the impact of the proposed $15 minimum wage on businesses and the overall New York economy. The Berkeley report notes that “in the end, the costs of the minimum wage will be borne by turnover reductions, productivity increases and modest price increases…without adverse employment effects.”[1]

The economists’ statement concludes: “We believe that a phased-in increase in the New York State minimum wage to $15 an hour makes sound economic sense: it would be good for the state’s workers and their families, good for businesses, and good for the health and sustainability of the overall state economy.”

The full text of the statement with list of signers follows.

NEW YORK ECONOMISTS IN SUPPORT OF A PHASED-IN $15 NEW YORK STATE MINIMUM WAGE

We, the undersigned economists and social scientists, support Gov. Andrew Cuomo’s proposal to increase the state’s minimum wage to $15 an hour by 2019 in New York City, and by mid-2021 in the rest of the state. We believe this to be a prudent and much needed policy that would raise the incomes of struggling low-wage workers and boost their spending power without hurting the state’s economy.

The current minimum wage of $9.00 in New York does not adequately cover basic living costs for families who must rely on it. It does not even cover basic expenses for single adults. Cost of living analysis shows that in 2016, single workers without family responsibilities need between $13.80 (in Buffalo) and $21.41 (in New York City) just to make ends meet. By 2021, a basic needs wage for these workers will range between $15.72 and $24.38 respectively.^[2] Gov. Cuomo’s proposal would help lift many low-wage workers closer to a living wage.

Raising the state’s minimum wage to $15 an hour would deliver much needed additional income to an estimated 3.2 million workers, or 37 percent of the state’s labor force. On average, these workers would earn $4,800 more in annual pay. ^[3] Significant portions of these workers (33 percent) are single or married parents raising over one-third (34.3 percent) of the state’s child population. Teen workers under 20 years old make up only 5 percent of affected workers. The typical worker who would benefit from a $15 minimum wage earns half of their households’ total income,^[4] suggesting the additional income would have a real impact on the economic health of hundreds of thousands of New York families.

There would be long-lasting benefits to the state, as research shows that additional family income improves low-income children’s educational outcomes on a variety of measures.^[5]

The benefits of a $15 minimum wage are not limited to low-wage workers and their families. Taxpayers would also benefit, as the wage increase could produce significant fiscal savings from reduced expenditures on safety net programs. Recent analysis shows that more than half (52 percent) of New York workers earning under $15 per hour were enrolled—or had a family member enrolled—in one or more of the state’s major public assistance programs. The cost of worker participation in safety net programs is significant: each year, New York State and local governments spend approximately $2.9 billion in public programs.^[6] The Earned Income Tax Credit (EITC) is a complementary policy to a higher minimum wage, it is not a substitute for raising the wage floor as some have suggested.

Opponents also frequently argue that studies show minimum wage increases lead to job losses or reduced employment opportunities for low-wage workers because businesses are less willing to hire workers at the increased wage level. These assertions are based on outdated and flawed research that overstate job impacts of minimum wage policies. Instead, “metastudies” (analyses that survey the minimum wage research field and aggregate findings from many studies) show that the majority of newer, credible studies come to the opposite conclusion: Policies raising the wage floor increase the take-home pay of affected workers without hurting employment levels overall. This is in part explained by the positive effects of higher wages for businesses, which benefit from reduced levels of turnover, savings from reduced spending in recruiting and training new workers as a result of the lower turnover, higher morale and productivity, and improved customer service.^[7] Additionally, higher wages can result in increased consumer spending and increased sales for local businesses.

It is no wonder, then, that more than 200 economists nationwide have endorsed a $15 minimum wage, stating that this “will be an effective means of improving living standards for low-wage workers and their families and will help stabilize the economy. The costs to other groups in society will be modest and readily absorbed.”^[8] This sentiment is echoed by leading economist and Nobel laureate, Paul Krugman, who, in recent comments at the City University of New York, cited the new body of research on the minimum wage as “one of the most compelling sets of empirical results I’ve ever seen in economics…There’s absolutely no reason to think that a fifteen dollar minimum wage will be a problem for New York.”^[9]

We recognize that raising New York’s minimum wage to $15 an hour would entail an increase that is outside of past experience in New York or elsewhere at the state or federal levels. However, Gov. Cuomo’s proposal is a well-designed plan that phases-in the higher wage over time, and with consideration for the different economies Upstate and in New York City. Outside of New York City, annual increases would be 10 percent or less, well within the range of most minimum wage increases. The timeline of the proposed increase will ensure that businesses are able to absorb the added labor costs through modest increases in prices and productivity, and by enabling them to incorporate into their revised business plans a slightly larger share of total revenues to go towards wages. Business profits per worker have increased twice as fast as wages in New York since 2001.^[10]

If Gov. Cuomo’s proposal is approved, New York would be the first state in the nation to adopt a $15 wage floor for all workers. However, other jurisdictions precede the Empire State. The small port city of SeaTac was in fact the first to require a $15 minimum wage for airport and travel industry workers, followed by San Francisco, Seattle, Los Angeles City and County and others followed with $15 an hour minimum wage policies for workers in all sectors.^[11]

A new study by economist Michael Reich and colleagues at the University of California at Berkeley carefully worked through the likely effects of a phased-in increase to $15 in New York State, examining the impacts on business operating costs and modeling the implications for overall consumer demand of higher wages for 37 percent of the state’s workforce. The methodology used in the Berkeley study is straightforward and appropriate in modeling the impacts on businesses and the overall economy. The Berkeley study concludes that the net employment and economic effects would be very small in relation to the size of New York’s economy; the net employment increase would be 3,200 jobs, a fraction of a percent of the state’s overall workforce.^[12] Businesses would see savings from reduced turnover and improved worker morale and productivity, and the adverse effects of slight price increases in some industries—still well below annual inflation—would be offset by the greater sales resulting from higher wages for a large number of workers. The tiny net economic impact from an increase over time to $15 is accompanied by a significant improvement in living standards for 3.16 million workers—37 percent of the state’s workforce.

For all of the above reasons, we believe that a phased-in increase in the New York State minimum wage to $15 an hour makes sound economic sense: it would be good for the state’s workers and their families, good for businesses, and good for the health and sustainability of the overall state economy.

 

Signed,

(Affiliations are given for identification purposes only.)

Leon J. Battista, Bronx Community College-CUNY

Lourdes Beneria, Cornell University

Howard Botwinick, SUNY Cortland

John Chasse, SUNY Brockport

Jaspal S. Chatha, Lehman College-CUNY

Howard Chernick, Hunter College-CUNY

Kimberly Christensen, Sarah Lawrence College

Polly Cleveland, Columbia University

Hector Cordero-Guzman, Baruch College-CUNY

Susan Davis, Buffalo State College

Gregory DeFreitas, Hofstra University

Geert Dhondt, John Jay College

Thomas Dublin, SUNY Binghamton

Debra Dwyer, Stony Brook University-SUNY

Maria Figueroa, ILR School, Cornell University

Bruce Fisher, Buffalo State College

Lou Jean Fleron, Partnership for the Public Good, Buffalo

Fred Floss, Buffalo State College

Robert J. Foster, University of Rochester

Irwin Garfinkel, Columbia University

Arlene Geiger, John Jay College

Teresa Ghilarducci, New School University

William Goldsmith, Cornell University

Janet Gornick, CUNY Graduate Center

Lois Gray, ILR School, Cornell University

Josh Greenstein, Hobart and William Smith Colleges

Christopher Gunn, Hobart and William Smith Colleges

Robert Guttmann, Hofstra University

Michelle Holder, John Jay College-CUNY

David Howell, New School University

Tae-Hee Jo, Buffalo State College

Yehuda Klein, Brooklyn College-CUNY

Timothy Koechlin, Vassar College

Brent Kramer, John Jay College-CUNY

Laurence Krause, College at Old Westbury-SUNY

Joelle LeClaire, Buffalo State College

Henry Levin, Columbia University

Mark Levinson, Workers United

Oren Levin-Waldman, Metropolitan College of NY

Stephanie Luce, CUNY School of Professional Studies

Jeff Madrick, The Century Foundation

Laurence Malone, Hartwick College

Arindam Mandal, Siena College

Jay Mandle, Colgate University

J.W. Mason, John Jay College

Stanley Masters, Binghamton University-SUNY

Rick McGahey, former Ex. Dir., Congressional Joint Economic Committee

Martin Melkonian, Hofstra University

Thomas Michl, Colgate University

William Milberg, New School University

John Mollenkopf, CUNY Graduate Center

Thomas Muench, Stony Brook University-SUNY

Jawied Nawabi, Bronx Community College-CUNY

Michael Nuwer, SUNY Potsdam

Aaron Pacitti, Siena College

Andreas Duus Pape, Binghamton University-SUNY

James Parrott, Fiscal Policy Institute and Hunter College-CUNY

Paddy Quick, St. Francis College

Henry Saffer, CUNY Graduate Center

John Sarich, Cooper Union

Ted Schmidt, Buffalo State College

Elliott Sclar, Columbia University

Richard Shirey, Siena College

Harold Stolper, Community Service Society of New York City and Columbia University

William K. Tabb, Queens College and CUNY Graduate Center

Scott Trees, Siena College

Shyama Venkateswar, Hunter College-CUNY

Eric Verhoogen, Columbia University

William Waller, Hobart and William Smith Colleges

David Weiman, Barnard College

Benjamin C. Wilson, SUNY Cortland

Edward Wolff, New York University

Max Wolff, New School University

Andrew Wyler-David, Purchase College-SUNY

June M. Zaccone, Hofstra University

Paul Zarembka, University at Buffalo-UNY

Michael Zweig, SUNY Stony Brook

PDF of Release

[1] Michael Reich, Sylvia Allegretto, Ken Jacobs and Claire Montialoux, The Effects of a $15 Minimum Wage in New York State, University of California, Berkeley, Institute for Research on Labor and Employment, Center for Wage and Employment Dynamics, March 2016, http://irle.berkeley.edu/cwed/briefs/2016-01.pdf

[2] National Employment Law Project, How Much Do New York’s Workers Need? At Least $15 per hour – Both Upstate and Down, January 2016, http://nelp.org/content/uploads/Fact-Sheet-How-Much-New-York-Workers-Need-15.pdf.

[3] David Cooper, Raising the New York State Minimum Wage to $15 by July 2021 Would Lift Wages for 3.2 Million Workers, Economic Policy Institute, January 5, 2016, http://www.epi.org/publication/raising-new-york-state-minimum-wage-to-15/.

[4] Ibid.

[5] Chuck Marr, Chye-Ching Huang, Arloc Sherman, and Brandon Debot, EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds, Center on Budget and Policy Priorities, October 1, 2015, http://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens.

[6] Ken Jacobs, Ian Perry and Jenifer MacGillvary, The Public Costs of Low Wages in New York, UC Berkeley Labor Center, January 2016, http://laborcenter.berkeley.edu/pdf/2016/Public-Cost-of-Low-Wages-in-New-York.pdf.

[7] National Employment Law Project, and Fiscal Policy Institute, Fact Checking the Empire Center/American Action Forum Analysis of New York’s Proposed $15 Minimum Wage: Flawed Methods Produce Erroneous Results, November 2015, http://nelp.org/publication/fact-checking-the-empire-centeramerican-action-forum-analysis-of-new-yorks-proposed-15-minimum-wage-flawed-methods-produce-erroneous-results/.

[8] Some of the Nation’s Leading Economists Support a $15 an Hour Minimum Wage, July 2015, http://www.budget.senate.gov/democratic/public/_cache/files/89efe4b6-8934-4375-bc96-758fcc791622/minimum-wage-petition-july-21.pdf.

[9] A Conversation between Paul Krugman and Janet Gornick: From the Equality Indicators conference on October 1, 2015, Institute for State and Local Governance, http://equalityindicators.org/media/.

[10] Fiscal Policy Institute, Business profits in New York State have grown much faster than wages since 2001; minimum wage hike is a good corrective, Data Brief, December 1, 2015. http://bit.ly/1YHIzl8

[11] National Employment law Project, $15 Laws and Current Campaigns, http://raisetheminimumwage.org/pages/15-Laws-Current-Campaigns.

[12] Michael Reich, Sylvia Allegretto, Ken Jacobs and Claire Montialoux, The Effects of a $15 Minimum Wage in New York State, University of California, Berkeley, Institute for Research on Labor and Employment, Center for Wage and Employment Dynamics, March 2016, http://irle.berkeley.edu/cwed/briefs/2016-01.pdf