New York’s Competing Minimum Wage Proposals
As budget negotiations continue so do debates over what minimum wage proposal should be included in it.
The Tompkins County Legislature passed a resolution by a margin of eight to six in support of calling on elected officials in Albany to include the New York State Raise the Wage Act in New York's budget that is now nearly a month late. The budget was supposed to pass on April 1, but has been held in limbo as lawmakers argue over issues ranging from health care to bail reform.
The resolution passed by the county legislature supported the state legislature's proposal to raise the minimum wage from $15 an hour to $21.25 an hour incrementally over the next four years before indexing it to inflation. Governor Kathy Hochul has proposed her own minimum wage increase that would also index it to the rate of inflation but the minimum wage would only increase to $16.39 over the next four years.
According to a report by the Economic Policy Institute, the Governors proposal would give an estimated 1.1 million New Yorkers an annual raise of $670 — that’s just an additional $13 a week by 2026. In comparison, the Raise the Wage Act would provide 2.9 million New Yorkers with an annual raise of $3,300 — that’s an additional $63 a week by 2026.
Additionally, under the Governor's proposal the size of the average raise each year is expected to be about 3 percent — which is the level of projected inflation over the next few years. The raises under the Raise the Wage Act would average 12% per year.
According to the National Employment Law project, “The 12% increases proposed in the Raise the Wage Act are in roughly the same range as were those implemented under New York’s 2016 minimum wage legislation, which spanned from 19% to 7% depending on region and industry. The Governor’s proposed increases are much smaller, by contrast.”
Before the legislature passed the resolution, President of the Tompkins County Chamber of Commerce, Jennifer Tavares, asked legislators to gather more information about the impacts that the proposal could have on local businesses.
Tavares said that Ithaca Area Economic Development (IAED) — which describes itself as an economic development organization dedicated to “fostering the growth of business and employment” — recently sent out a survey to local businesses that received responses from 73 employers. According to Tavares, “the survey found that 65% of employers in the county are already paying above $16.61 an hour as their entry level wage.”
She continued saying that “53% of the respondents supported the Governor's version of the minimum wage proposal and only 29% supported the legislative proposals at the state level.” That doesn’t come as a shock due to the fact that the governor's proposal is much easier for the business community to absorb, and the IAED survey was conducted specifically among the local business community.
In contrast, a statewide Siena poll found that the legislative proposal to raise the minimum wage polls ten points higher than the Governor’s proposal. Additionally, the group Raise Up New York has said that roughly 76% of New Yorkers support the legislative proposal.
County Legislator Ann Korman voiced her support for increasing the statewide minimum wage to $21.25 after reminding the legislature of a recent Healthy Communities survey conducted by the Health and Human Services Committee that identified the main needs among the community as affordable health care, affordable housing, affordable food and affordable childcare. Korman said that raising the minimum wage would help residents afford all of the above.
County Legislator Greg Mezzy — who was among the six legislators to vote against the resolution — said “It's not that I'm opposed to raising the wage. I just would like more time to be able to have a discussion to have more data points to understand within our community, what the real impacts may be.”
Mezzy continued saying that the county has an “affordability issue” but that advocates of passing the resolution in support of raising the minimum wage should consider the potential for it to result in cost of living increases that could harm the same communities they are trying to help.
“What can we do to make it more affordable? I don't know. If raising the wage is a way to do that. I think there are a lot of other levers that we can look at within our purview,” said Mezzy.
Similarly to Mezey, County Legislator Mike Sigler said that he “wants to see people make as much money as humanly possible” but that the target of $21.25 doesn’t make sense because “that is significantly higher than what is the living wage here in Tompkins County.”
Legislator Rich John agreed with Sigler saying that the state legislature's proposal “goes far beyond what is a living wage in Tompkins County, and it puts us in a very different position from neighboring states that we compete with.”
However, a study by Drexel University has identified that if the minimum wage kept pace with the average cost of living, it would be more than $20. According to the study, “a true living wage that supports a basic standard of living without food and housing insecurity would be between $20 and $26 or more per hour depending on the state.”
That’s more than the latest local living wage calculation of $16.61 made by Alternatives Federal Credit Union — and it’s much more than New York State's current minimum wage of $15.
Sigler also said that the state legislature's proposed increase would cost the county over $3 million every year and that those cost increases would have to be covered by raising taxes or laying off staff. “You’re either going to cut people or you’re going to raise taxes if this goes through, and that’s just something to keep in mind.”
The six legislators who voted against the resolution all seemed to understand the affordability issues facing their constituents, but worried about the impact that raising wages would have on local businesses.
In contrast to Sigler, Legislator Veronica Pillar said that she understands the concern about increasing costs for businesses but that “a wage increase would be better for businesses because it would give people more money to spend locally.”
The general manager of the GreenStar Food Co-Op, Jeff Bessemer, told the county legislature that “increasing the minimum wage here in the state of New York will benefit all kinds of small businesses, including GreenStar, by giving more of our neighbors and community money to spend.” He continued saying, “The fears that folks have about economies collapsing, local businesses shutting down corporations moving out of town simply have never materialized.”
Additionally, Legislator Pillar said that 74% of Black workers in Tompkins County are earning less than the AFCU’s current calculated living wage of $16.61 an hour.
Legislator Deborah Dawson supported passing the resolution to raise the minimum wage but said that she was concerned about the “benefits cliff” — the number of people who would lose access to means-tested benefits such as SNAP or section eight housing as a result of receiving a higher wage. Previous surveys conducted by the county living wage working group have estimated that 3% of workers would lose access to benefits as a result of increasing the minimum wage.
In response, the Director of the International Labor Relations (ILR) co-lab at Cornell University, Ian Greer said that the number of people negatively impacted by losing benefits decreases as minimum wage increases are higher and happen more rapidly.
According to Greer, “there are a lot fewer households that are affected by benefits cliffs, when you have a rapid minimum wage increase and when you have a slow one, and the reason for that is that as the minimum wage goes up, there are more there's more earned income coming in to households, which compensates for the loss of the value of benefits.”
As a result, it looks like the Governor’s proposal to increase the minimum wage would push more people over the “benefits cliff” that Dawson is worried about.
Regarding the Governor’s proposal Dawson said, “I was hoping that it would be a little more ambitious and a little more generous because it’s just not acceptable to have 40% of Tompkins County workers not earning a living wage.”
Before casting her vote in support of the resolution calling on Albany to pass the Raise the Wage Act, Tompkins County Legislature Chairwoman, Shawna Black said “I personally have found the Governor’s budget laughable and insulting. I think that this effort demonstrates her lack of connection with the people.”