A proposal to enact a $15 minimum wage in New York could cost the state upwards of half a million jobs, according to a report released Thursday.
The report,”Higher Pay, Fewer Jobs” was released by the Empire Center for Public Policy and the American Action Forum. It addresses a Sept. 10 proposal by Democratic Gov. Andrew Cuomo to raise the state minimum wage to $15 an hour. If passed by local lawmakers, it would phase in gradually eventually hitting $15 throughout the state by 2021.
“Supporters of a minimum wage generally echo Governor Cuomo’s view that such a policy is needed to lift workers out of poverty,” the report notes. “However, the potential employment consequences of mandating a minimum wage hike call the merits of this policy into question.”
Center President Edmund J. McMahon has previously warned against the proposal. During a panel discussion Monday hosted by the Center for New York City Affairs, he argued a $15 minimum wage would have a disproportionately negative impact on certain industries. He asserted large corporation are far more likely to absorb the higher cost of labor.
“When a state government increases the minimum hourly pay for private-sector workers, it effectively increases the per-hour cost of low-wage labor,” the report reads. “While many labor advocates assume that employers will absorb a state-mandated increase in labor costs through a reduction in profits, the evidence suggests that the vast majority of low-wage workers are in industries with thin profit margins, such as retailers and restaurants.”
The report calculated the estimated job loss in two ways. It first compared the potential impact of both a $12 or to $15 minimum wage on low-wage workers. After that, the report looked at how the two wage increases may impact different regions in the state.
“Overall, we estimate that if the minimum wage rose to $12 per hour, low-wage employment in New York would be 76,600 to 290,400 lower than under current law,” the report warns. “We estimate that 200,000 to 588,800 fewer low-wage jobs would exist in 2021 (2018 in New York City) if New York policymakers increased the state minimum wage to $15 per hour.”
If true, businesses would have few options to offset the added cost of labor. They could increase prices or hire less workers. In some cases, the businesses may have to close. Seattle became the first to pass a $15 minimum wage back in June 2014. Some businesses within the city have already reported problems because of the increase.
The proposal has prompted adamant reactions from both sides of the issue. While critics warn of job-loss and economic stress, supporters say the $15 minimum wage will help the poor by allowing them to more easily afford basic necessities. The increased spending would then in turn stimulate economic activity.
On the other side, the union-backed group Fight for $15 has led much of the effort in support. It has used rallies and media campaigns both in the state and nationally. The group is highly influenced and funded by the Service Employees International Union (SEIU). SEIU Local 1199 has launched a television spot in July supporting the statewide increase.
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