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While not rolling out immediately, the state's new wage hike has everyone talking good times or doomsday... Courtesy photo
That New $15 Minimum Wage?
What It Might Mean Locally & Nationally...

REGIONAL – Last week Governor Cuomo raised the minimum wage for state workers to $15 an hour, an increase that will be implemented on the same schedule as the Governor's proposal to lift the minimum statewide in all industries to the same $15 an hour.

To date, no other state has enacted a $15 public sector minimum wage. This groundbreaking action comes as the Governor is pushing to make New York the first state in the nation to implement a $15 minimum wage across all industries, and follows the $15 minimum wage increase for fast food workers approved by the Governor's administration in September of this year.

New York State joins the cities of San Francisco, Seattle and Los Angeles, which have already enacted the $15 an hour minimum.

"I believe that if you work hard and work full time, you should not be condemned to live in poverty. Yet millions of families nationwide continue to be left behind by an insufficient minimum wage — and it's time that changed," said Cuomo. "Today in New York, we are leading by example and creating an economy that is defined by opportunity, not inequality. We are restoring the fairness and economic justice that built the American dream and standing up for what's right. I am proud of what we continue to accomplish, because New Yorkers deserve nothing less."

The Governor's action will affect about 10,000 state employees, about 1,000 of them in New York City. The cost will be about $20 million.

It will not come all at once, but on the same schedule as that enacted for fast food workers in the state (which goes up to $9.75 at the end of this year). It will go up from $9.75 to $10.75 in the first year, and a dollar a year thereafter until 2020 when it will go up just 75¢, and then in the last year, just another 50¢.

The announcement was greeted as every increase in the minimum wage is greeted, with starkly different reactions from the left and right. Democrats in favor, Republicans against, prophecies of doom from right wing economists, congratulations from those left of center.

It came against a background of continued sluggish overall growth in wages. A national 2.5 percent increase in wage levels reported in October was greeted with celebration by the commentariat, and was seen as a welcome break from a complete lack of growth in wages since the economic downturn began in 2007. But even that welcomed 2.5 percent was a far cry from the levels seen in the boom years or before, and in general wages for most Americans have been stagnant for a long time, roughly since the late 1970s. Indeed, over those decades, U.S. workers have seen wage increases siphoned off into employer-provided health care benefits as the cost of American health care has soared.

The minimum wage nationwide is stuck at $7.25 an hour, a level it reached in 2009.

Those opposed to any rise in minimum wages, or indeed, any "minimum" wage whatsoever, claim it will destroy jobs and job creation. Those in favor of increases in the minimum wage note that people earning less than $25,000 a year tend to spend what they earn, and any increase will be spent, thus returning the money to the economy to boost growth, and even job creation.

There are said to be a number of myths involved in these debates. One noted by Joseph Sabia, economics professor at San Diego State University, is that minimum wage workers subsist in a state of poverty.

"In contrast to the myth that a common minimum wage worker is a poor single mother head-of-household struggling to make ends meet, the typical minimum-wage worker is actually a second- or third-earner in their 20s from a non-poor household," Sabia said, noting that he's found that less than 15 percent of minimum wage workers live in poverty.

Minimum wage levels are seen as an important issue in the restaurant business. Studies of the effects of raising the minimum wage in San Francisco over the decade, 2000 to 2010, show temporary downturns in restaurant employment as the wage level rose, followed by renewed upward growth in employee numbers. San Francisco has also mandated paid sick leave and provision for healthcare coverage on businesses, and the graph for job numbers has still zigzagged upward. In 2000, 43,000 people worked in San Francisco restaurants, in 2011, 49,544 did the same.

San Francisco also saw higher prices for fast food evolve in that period, but observers argued over how much was due to wage growth and how much to higher rents in an already expensive city. Also to be factored into this is the usual "churn" of small businesses, which come and go continually. Ken Jacobs, chair of the Berkeley Center for Labor Research and Education, noted "What is important from the research is that you do not see a net decline in employment as a result of the minimum-wage ordinance."

In 2014, Seattle moved to raise its minimum wage, in easy stages, to $15. Right wing critics denounced this move, and the American Enterprise Institute released a report this year claiming that 700 restaurant jobs have been lost in Seattle so far, while the minimum wage there has moved from $9.32 to $10. According to Restaurant Opportunities Center – Seattle, there are 86,000 people employed at various levels in Seattle's restaurant world. Assuming these numbers are real to some degree, that would mean that restaurant employment had taken an 0.8 percent hit from an increase of 68¢ an hour. Looking back to the graphs derived from San Francisco's experience in hiking that city's minimum wage over a decade, this would fit the pattern. A short term decline, soon to be overcome in a steady, zigzagging increase in employment.

So, will raising the minimum wage to $15 an hour crater the economy here and send unemployment soaring? Seems unlikely. Checking on another myth, that claims small business owners can't afford to pay their workers more and don't support an increase in the minimum wage, one finds rhetoric on both sides but a recent poll of small business owners, reported by Small Business Majority, found that 60 percent of them nationwide supported raising the federal minimum wage to $12 an hour by 2020. Half of the poll respondents claimed to pay their employees $12 an hour already.

As with so many of these issues, the cup is either half full or half empty, and the observer's own psychology determines how it is seen.



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