State to increase minimum wage, federal government may follow

New York employers who employ workers in jobs that pay minimum wage will have to gradually increase their wages over the next three years.

The New York State Assembly on March 28 gave final approval to the state-budget proposal after the state Senate had approved the spending plan earlier in the week.

The state budget includes an increase in the minimum wage from $7.25 an hour to $9 an hour over three years, and employers of teenagers in part-time jobs will get a taxpayer-funded subsidy to cover most of the increase.

The minimum wage will gradually increase over the next three years from $7.25 to $8.00 per hour on Dec. 31, 2013; to $8.75 on Dec. 31, 2014; and then to $9.00 per hour on Dec. 31, 2015, according to the office of State Assemblyman Samuel (Sam) Roberts (D, WF–Syracuse).

But one of New York’s two U.S. senators is proposing federal legislation to boost the national minimum wage even more than that.

U.S. Senator Kirsten Gillibrand (D–NY) on March 19 announced a new effort to increase the federal minimum wage from $7.25 an hour to $10.10 an hour over the next three years, with future increases indexed to the rate of inflation.

The nearly 1.8 million New Yorkers earning the minimum wage or just above the rate, representing 20 percent of all workers statewide, is prompting the effort, Gillibrand said in a conference call with reporters.

Gillibrand is pushing for approval of the “Fair Minimum Wage Act of 2013,” a bill of which she is an original co-sponsor.

The senator, hailing from the greater Albany area, is citing information from the Washington, D.C.–based Economic Policy Institute (EPI), which says the bill would boost the incomes of an estimated 1.8 million New York workers and would generate an estimated $3.2 billion in wage increases for New York workers.

EPI calls itself a nonprofit, nonpartisan think tank on its website.

For New Yorkers working their hardest and making the federal minimum wage of $7.25 an hour, it’s getting harder and harder to make ends meet with the rising cost of gas, groceries, rent, and other basic necessities, Gillibrand contends.

“It’s simply unacceptable that in New York, a single parent working 40 hours a week, 52 weeks a year to support a family earns just $290 a week. That’s only $15,000 a year without any time off,” Gillibrand said.

That annual salary for a minimum-wage earning, working poor, family of three is $3,000 below the poverty level on an annual basis, making it difficult to make ends meet and increasing dependency on government-assistance programs, according to Gillibrand’s office.

The Fair Minimum Wage Act of 2013 would boost the minimum wage to $21,000, lifting those working poor families above the poverty line, the Democrat says.

Gillibrand contends that the higher wage would spark new consumer spending at New York businesses.

Beneficiaries

The Democrat’s office broke down by region the number of those who could potentially benefit from the higher wage.

The Central New York region has average of more than 500,000 workers, over 100,000 of which, or 20 percent, would benefit from an increase in the minimum wage.

In the Southern Tier, nearly 55,000 of the region's nearly 240,000 workers, representing about 23 percent of workers, would benefit from such an increase in the minimum wage. In addition, the North Country region has, on average, over 170,000 workers, nearly 38,000 of which would benefit from this increase in minimum wage, representing about 22 percent of workers.

The proposal would increase the minimum wage to $10.10 in three 95-cent increments over a three-year period. The legislation would stipulate indexing the wage to inflation in order to keep up with the rising cost of living.

The purchasing power of the minimum wage is currently at a historic low, Gillibrand said, with the last increase in the federal wage in July 2009. If the minimum wage had kept up with inflation, it would be estimated at more than $10.50 an hour today.

The legislation would also raise the minimum wage for tipped workers for the first time in more than 20 years, raising it to 70 percent of the regular minimum wage.

Adult workers make up a majority, or about 90 percent, of the lowest-wage earners in New York who would benefit from an increase, as opposed to teenagers in after-school and seasonal jobs, according to Gillibrand’s office. Additionally, 54 percent of low-wage New Yorkers who would see increased wages under this proposal are women, including many with children, and about half of whom are minorities, the Democrat said.

“Raising the minimum wage to $10.10 [an hour] would benefit close to 17 million women in America. 17 million women catching up in the economy almost overnight. Millions of families immediately closer to stable ground,” Gillibrand said.

Support and opposition

The Fair Minimum Wage Act of 2013 has “broad” support across the business community, Gillibrand’s office contends. Supporting organizations include The Main Street Alliance, U.S. Women’s Chamber of Commerce, Business for a Fair Minimum Wage, Business for Shared Prosperity, American Sustainable Business Council, and employers like Costco, along with New York–based organizations, including the Greater New York Chamber of Commerce and the New York City–based Business and Labor Coalition of New York (BALCONY).

Other organizations have expressed opposition to the increase in the minimum wage.

The newly approved state budget adds to the cost of doing business by extending assessments on electric, natural gas and steam energy (a total of $1.5 billion), and by increasing the minimum wage, a measure whose impact will be felt by many businesses, with total cost estimates as high as $2 billion per year, Heather Briccetti, president and CEO of The Business Council of New York State, Inc., said in a statement issued March 29.

“Though the budget includes a minimum-wage tax credit for students that mitigates the adverse impact on employers, The Business Council would have preferred a straightforward training wage.  And, while the final agreement on both of these measures is an improvement over the original proposals, they are not consistent with a strategy to promote economic growth and the creation of good-paying jobs.” Briccetti said.

In a statement released March 12, the directors of two business-advocacy groups expressed concern over the potential for a higher minimum wage.

Michael Durant, New York state director of the National Federation of Independent Business, and Brian Sampson, director of Unshackle Upstate, said they believed that such an increase would have “a significant negative impact on small business.”

Contact Reinhardt at ereinhardt@cnybj.com