Minimum wage to rise; debate on hike continues
Pros, cons of pay increase for hourly employees in workforce
As the Capital Region prepares for another annual, statewide minimum wage increase at the end of the year, debate persists about whether the government raising pay is the best way to improve the lives of low-wage workers.
Advocates for higher wages say minimum wage workers aren’t earning enough to survive. As costs for health care, education and housing continue to rise, real wages have not kept pace.
Opponents of increasing the minimum wage, however, say higher wages will force employers to raise consumer prices, potentially cut workers’ hours or fire employees to offset the higher payroll.
Starting in 2016, the New York minimum wage was set to increase gradually each year until it reaches $15 an hour.
The wage is based on region and in the case of New York City, the size of the employer. At the start of 2019, the minimum wage for the Capital Region and the rest of upstate will increase to $11.10 from the current $10.40. It will reach $12.50 at the start of 2021 and continue to rise by a determined amount each year until it peaks at $15.
In New York City, businesses with more than 10 employees will be required to pay $15 an hour. Smaller businesses in the city will begin paying $13.50 an hour.
The minimum wage on Long Island and Westchester County will increase to $12 an hour in 2019, and increase to $15 by 2021.
“The gradual increases or the step-ups over time that New York has are a way in which we’re minimizing that sort of sticker shock,” Kennedy said.
The University of Washington and the National Bureau of Economic Research conducted a study on the effects of Seattle’s 2015 city-wide minimum wage increase to $13 an hour.
The initial analysis, published June 2017, suggested that the increase would likely lead to workers losing hours and ultimately a greater employment loss than gain.
But, in an update published in October, the team of researchers concluded that, after the increase, Seattle’s minimum wage workers experienced “no significant decline” in their likelihood of being employed, and only saw a modest reduction in hours worked.
The hike, the study found, increased workers’ pretax earnings by an average of $10 a week.
The study showed that the higher wage raised barriers for entry to the workforce for less experienced workers. Additionally, less experienced workers were more likely to have hours cut and see minimal changes to wages.
The “analysis indicates that earnings gains were concentrated among more experienced workers, with the less-experienced half of Seattle’s baseline low-wage workforce showing no significant change,” according to the report.
But businesses that produce goods and services are “undoubtedly going to be impacted because their operating costs are going up,” said Andrew Kennedy, president and CEO of the Center for Economic Growth. “It sort of takes away their profit margin, so there are those anecdotal pieces out there.”
Kennedy also added that higher wages will lead to more consumer spending and ultimately higher tax revenue.
“One of the things we see is that idea of a higher wage will have a positive impact on the economy,” he said.
Mark Eagan, president and CEO of the Capital Region Chamber of Commerce, said that the continuously rising minimum wage could be harmful to business owners, and isn’t necessarily beneficial to low-wage workers, either.
“If you looked and said that we know there’s pockets of poverty,
and in many cases it’s generational, how do you break that cycle? I don’t think the best way is to say ‘OK, let’s pay them an extra 75 cents an hour,’” Eagan said.
Some businesses may streamline operations and reduce staffing at times, he added.
“How can we cover a store with less people? Can we have two people instead of three people or four people?” Eagan said of store owners now paying higher wages.
Eagan suggested pushing younger workers toward apprenticeships and skills-training initiatives to gain experience and be employable in higher-paying industries.
“The real answer is, if we really want to have people make more money, ... programs the government can provide to help raise these people’s skill levels.”
The internet’s role in business is also a complicating factor, Eagan said.
The owner of a service or retail business in New York could be looking to increase online sales to out-of-state customers. But, that employer is likely having to pay employees more than a business in a place like New Mexico, with a $7.50 minimum wage, would.
That means that business in New Mexico could charge lower prices for selling the same product as the New York company.
“It can put a business at a competitive disadvantage,” Eagan said.
Stewart’s Shops, the convenience store chain, typically starts employees at $12, well above the minimum wage.
A spokeswoman said it’s a balance to pay employees a livable wage while maintaining a healthy profit margin.
But the higher pay leads to a reduction in turnover and higher quality work from employees, Erica Komoroske, the spokeswoman, said.
The Service Employees International Union represents 2 million workers in the U.S. and Canada, and backs a $15 minimum wage for industries like home health care, child care and the fast-food industry.
The group also supports unionization, and advocates for “a country that works for all of us, not just the greedy few,” according to SEIU’S slogan.
“You cannot balance your budget on the backs of these workers,” Cara Noel, an SEIU communications director, said. “The people who do the work deserve to be paid a wage that allows them to live in dignity.”
Support for an increase in minimum wage does not exist just in left-leaning states or municipalities. Earlier this month, voters in Arkansas and Missouri also voted to increase minimum wage — up to $11 and $12 hourly, respectively.
And Walmart and Amazon, two of the largest employers in the U.S., also agreed to raise their minimum wage to $11 and $15, showing that the move toward higher pay has gained widespread support.
While some point to anecdotal evidence that smaller business owners would be hurt by the
$15 hourly minimum wage, Paul Sonn, New York policy program director for the National Employment Law Project, said that the evidence from minimum wage increases has shown that the higher pay does not kill small businesses.
A push to implement a federal $15 wage faces criticism that it ignores the high variance in income and cost of living across the country. Opponents argue the income a worker would need to survive in San Francisco is different than what a worker in Midland, Texas, would require, for example.
Sonn, however, said that the rising cost of living will make a $15 federal minimum wage a necessity for workers across the country by around 2024.
“Single workers will need about $15 an hour to afford the basics, and workers on the coasts or with children will need even more,” Sonn said. “We’re not talking about right today, were talking about phased in over a few years.”
While many often associate minimum wage jobs with young workers just joining the labor market, nearly 1 million workers age 25 and older in 2017 had wages at or below the minimum wage, according to the Bureau of Labor Statistics.
Businesses in recent years have adjusted for rising operating costs, but have largely been spared from having to increase employee pay, Sonn said.
“There are tens of millions of adults that spend their careers working in retail, as home health aides, as security guards, and the minimum wage is what sets their pay scale,” Sonn said. “You need to raise the minimum wage to get paychecks growing finally.”
diego.mendoza-moyers@ timesunion.com 518-454-5323 @dmendozamoyers