By Herbie Rosen
New York Governor Andrew Cuomo recently came out in support of raising the New York state minimum wage to $15 per hour. The Governor’s initiative, the Mario Cuomo Campaign for Economic Justice (named after the late Governor’s father, and former New York Governor), pivots away from his original position of raising the minimum wage to $10.50 an hour. When asked about changing his opinion, Governor Cuomo replied that he is simply trying to give people a living wage.
Since July 2009, $7.25 has been the national minimum wage, while New York’s minimum wage level is currently $8.75. If the Governor’s campaign succeeds, New York would become the first state to adopt a $15 minimum wage. Paul Sonn, General Counsel and Program Director for the National Employment Law Project, believes this move would allow an unprecedented number of struggling workers and their families to take real steps towards financial stability. According to Sonn, some jobs just don’t pay enough anymore. He cites the Economic Policy Institute’s Family Budget Calculator, which predicts that a single person will need over $15 per hour to meet basic living costs by 2021.
At a speaker series sponsored by Fordham Law’s Feerick Center for Social Justice, Sonn explained that the minimum wage fight was truly launched by fast food workers having protests in New York and California. The concern about minimum wage has increased as the median age in low-wage jobs has risen to an average of 35 years. The first strikes by fast-food workers in New York and California snowballed around the country. Public opinion in favor of raising the minimum wage is now trending at 63% nationally and 62% in New York. Many influential economists such as Larry Summers and Robert Rubin have come out in support of the raise.
The proposed minimum wage hike would affect at least three million or approximately 37% of the New York workforce. The minimum wage increase would be phased in for all employees by 2018 in New York City, and 2021 statewide.
Although state lawmakers will not return to Albany until January, Cuomo’s campaign is expected to face stiff opposition in the Senate. However, in May, the Governor used executive powers to convene a wage board under his labor commissioner to examine conditions of minimum wage workers. The Board held several hearings, in which thousands of people testified including workers, their families, union leaders and employers. The Wage Board unanimously recommended to the Labor Commissioner that the minimum wage be raised. The Wage Board allows the Governor to act without approval by the state legislature. Governor Cuomo thus had his Labor Commissioner, Mario J. Musolino approve the raising of minimum wage first, for fast food workers (doing this in part of an effort to urge the legislature to act). The wage hike to $15 an hour will occur over a few years. Fast-food workers apply for this wage hike only if they work for a restaurant chain with at least 30 locations.
However, some economists believe raising the minimum wage for fast-food workers will have unintended consequences for this narrow segment of the economy. The National Restaurant Association’s president described the wage increase as an assault on an industry that has delivered almost 800,000 new jobs to the state of New York. Many believe that any legislated wage hikes force employers to reassess their hiring policies. Restaurant managers may identify those workers who can produce enough to warrant the new costs, and fire those who cannot. To compensate for the lost manpower, companies often either scale back their operations or find machines to do the jobs of the workers they’ve let go. Many fear that business owners would just change their business models to avoid the higher minimum wage, including opening independent stores to avoid the wage requirement.
Others believe Cuomo is just trying to set the agenda for the 2016 state elections, given popular opinion that minimum wage should be raised. Several critics believe the Governor has switched his opinion so that the state Democratic Party can gain more votes.
Nevertheless, polls show that most New York State residents are in favor of the Governor’s plan. In addition to support from several labor unions, the plan is receiving praise from economists, who believe that raising the federal minimum would effectively improve living standards for low-wage-workers. The common consensus is that costs to other groups in society will be modest and absorbed quickly over time. Economic research over the last two decades increasingly suggests that businesses are unlikely to move in response to a minimum wage increase because they need to be near their customers. Dean Baker, an economist for the Economic and Policy Research Center, believes that any economic costs from avoidance of the minimum wage policy would be minor.
The Governor now intends to engineer the larger task of persuading lawmakers to extend the increases to all workers in the state. If he is unsuccessful, the minimum wage hike is still likely to become a reality since the Governor may only simply require the approval of wage board and labor commissioner. The wage board is a fallback if the Congress can not get the legislature to put his campaign into law. Paul Sonn believes it is quite likely that something of this nature will be approved in the Spring, whether through the Wage Board or New York State Legislature.
On the Federal level, Congress seem unlikely to raise the minimum wage anytime soon. Vice President Joe Biden, who was with Cuomo when he announced the “Fight for $15” campaign, said it would have “a profound impact” and cause other governors to consider following suit. But the vice president did not say whether the Obama administration would join in. President Obama is currently pressing Congress to raise the federal minimum wage to $12 an hour, an initiative that Republicans in Washington have strongly opposed. Senators Gillibrand, Sanders, Ellison and others currently support a bill to raise the minimum wage to $15, though Congressional gridlock stands in their way.
Ultimately, the general consensus is that at least something is being done in New York State about minimum wage. Time will tell how high the minimum wage can be raised without having negative economic ramifications within the state.
Update: Governor Cuomo changed his position on New York’s minimum wage. Bebeto Matthews (http://www.timesunion.com/news/article/Governor-orders-up-fast-food-wage-board-6250218.php)
Links from this article
http://www.cnbc.com/2015/09/10/gov-cuomo-is-right-about-15-minimum-wage-commentary.html
http://www.theatlantic.com/business/archive/2015/09/minimum-wage-new-york-15-cuomo/404758
http://www.city-journal.org/2015/eon1013me.html
http://www.huffingtonpost.com/richard-brodsky/16-minimum-wage-cuomo-pou_b_8137290.html
http://www.huffingtonpost.com/richard-brodsky/15-minimum-wage-cuomo-pou_b_8137290.html