How to help NYC’s working class now

An obvious fact that many observers are just coming to realize in analyses of Mayor de Blasio’s legacy should come as no surprise: Raising the minimum wage had a remarkable impact on lifting the incomes of low-paid New York City workers. The gradual increase in the New York City wage floor from 2014-19 boosted the incomes of the bottom half by an historic degree, clearly establishing that state and local actions can move the needle on income inequality.

New York’s pandemic unemployment crisis signals that local action is again needed to preserve those exemplary gains.

In 2013, the minimum wage in New York City was the federal $7.25 an hour. State actions increased the hourly wage floor in stages, reaching $15 for fast-food workers and workers at large employers at the end of 2018. Raising the wage floor to $15 benefited 1.4 million workers locally, 35% of the total. The city instituted an after-expense $15 minimum pay standard for 100,000 independent contractor Uber and Lyft drivers in February 2019, the first such gig worker pay standard anywhere.

The result of these local actions: Wages rose for workers in the bottom half by 28-40% between 2014-19, with wages rising fastest for the lowest paid. Coupled with sustained job growth pushing the city’s unemployment rate below 4% for two years prior to the pandemic, something unprecedented happened. The share of total wages paid in the city going to the bottom half rose while the share paid to the richest 10% fell between 2014-19, according to income tax data, the most definitive measure of income trends.

Granted, the highly paid 10% had a share that was nearly five times that of the lowest-paid half, but the lowest paid city workers had never gained such ground during an economic expansion, when the highest-paid enjoy steady raises and big bonuses.

Moreover, the sustained wage gains for New York City’s bottom half meant that between 2014 and 2019, median family incomes rose faster than at any time since the 1960s, and families of color shared in those historic gains. In fact, the wage gains for the city’s predominantly service- and blue-collar workers were substantial enough to mean that the share of total incomes received by the bottom half in New York City inched up from 6% in 2014 to 8% percent in 2019, while the share going to the richest 10% slipped from 65% to 62%.

Rising low wages together with large job gains pushed down the federal poverty rate in the city by nearly five percentage points to 16% and cut child poverty by a quarter over five years.

A handful of other states and cities also raised their minimum wages to $15 (or higher) in recent years, but not enough workers around the country saw wage gains to significantly increase the bottom half’s share of total wages or all incomes for the U.S. overall. National figures show slight increases 2014-19 for the bottom half while shares going to the richest 10% held steady.

New York’s track record on the minimum wage prepandemic clearly shows that bold actions close to home can lift living standards for hundreds of thousands of workers and that steady wage gains for the majority of workers can make a meaningful dent in income inequality. By the way, it also shows that gradually raising the wage floor is fully compatible with continued job growth.

Decisive local and state economic policy action is now needed to counter New York’s pandemic-induced unemployment crisis. Both New York City and New York State have pandemic jobs deficits more than three times greater than the nation overall. In Washington, the economic policy focus is either stalled or looking past the pandemic. At this point, New York State has 785,000 fewer jobs than it did 20 months ago, with the city accounting for a little over half that number.

The pandemic’s economic effects have been fundamentally lopsided, with the brunt of the economic carnage borne by the low-paid workers who had benefited so greatly from the previous years of solid wage and job growth. Indeed, those historic gains are now at risk of being obliterated unless state and local policymakers rise to the occasion and recognize that an active labor market response is needed. Once the current COVID surge subsides, aggressive action is needed to connect dislocated workers with promising job openings, and provide additional skills training or education where necessary so that these workers can “build back better” careers.

Failure to recognize the historic challenge of the current crisis could mean not only squandering the progress achieved in the years before the pandemic, but consigning tens of thousands of Black and Hispanic workers to years of double-digit unemployment — the antithesis of the gains achieved during the 2014-19 period.