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Think tank calls for hike in NY minimum wage

By Tom Wanamaker

ALBANY — An economic think tank says that New York state must boost its hourly minimum wage to workers’ buying power on pace with the federal minimum wage.

A bill sponsored by Assembly Speaker Sheldon Silver, D-Manhattan, during this year’s legislative session would have been a strong step in the right direction, according to the Fiscal Policy Institute, but it was never brought to the floor for a vote, and a companion bill was never introduced in the state Senate.

“The Assembly bill would go a long way toward restoring the purchasing power of the minimum wage,” said James Parrott, deputy director of FPI, whose report “Restoring the Purchasing Power of New York’s Minimum Wage” was released July 10.

“The Assembly language effectively targets the state’s low-wage workers,” Parrott said. “Potentially affected workers contribute an average of 58 percent of their family’s income, and 45 percent of these workers are the sole providers for families with children.”

The bill, A.9168-A, would have boosted the state’s minimum wage in three steps. The current minimum wage of $7.15 per hour would rise to $7.75 in January 2009, followed by increases to $8 in January 2010 and to $8.25 the following year. Subsequent raises would be tied to the Consumer Price Index.

An increase in the state minimum wage would directly benefit some 283,000 workers, 64 percent of whom are women and 77 percent of whom are adults. Forty-eight percent work full time, while 31 percent work between 20 and 34 hours per week the report said.

The federal minimum wage rose from $5.15 to $5.85 in July 2007. In the report, FPI says that Thursday’s federal minimum wage increase to $6.55 per hour will have “little effect” in New York, but the scheduled July 2009 federal raise to $7.25 per hour “will boost paychecks of minimum wage earners in New York.”

Yet this modest increase over the current state wage of $7.15 “falls far short of the minimum wage’s historic purchasing power,” FPI said.

The report says that the purchasing power of the state’s minimum wage peaked in 1970; since then, inflation diminished that power to the point that it is now 16 percent less than in 1970.

And while the report calls the Assembly bill “a step in the right direction,” it advocates steeper increases.

“Raising the wage floor to $9.50 by 2011, and then indexing it for inflation, would put the state’s minimum wage workers back on par with their 1970 counterparts,” the report said. “By raising the minimum wage to only $8.25 in 2011, the Assembly bill would leave the minimum wage at 13 percent less than its peak value.”

Such an increase would directly benefit 695,000 workers, while 507,000 others would see their paychecks increase due to “ripple effects,” the report said.

In the end, FPI said that boosting the minimum wage would help both workers and employers without causing labor market problems.

“Raising the state minimum wage in three steps to $7.15 represented a 39 percent increase over the previous level of $5.15,” the report concluded. “Reaching a target wage of $9.50 through three staggered increases would involve a smaller percentage increase of 33 percent over the current minimum. Moderate increases such as these have not been shown to be disruptive to the labor market.”

The complete report is available online at: www.fiscalpolicy.org.

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