News from the

Fiscal Policy Institute

EMBARGOED UNTIL March 14, 2016 12:01am
Contact:

James Parrott, Deputy Director and Chief Economist

212"721"5624 (o), 917"880"9931 (c)

New York Economists Support a

Statewide $15 Minimum Wage
Recent academic research shows its good for workers, businesses and the economy
More than 75 economists from throughout New York State joined together this week to send a
message to Albany: a phased"in increase in the minimum wage to $15 by 2019 in New York City
and by mid"2021 in the rest of the state is a prudent and much needed policy that would raise the
incomes of struggling low"wage workers and boost their spending power without hurting the
states economy.
The economists statement cites a number of academic authorities in summarizing the case in
support of a $15 minimum wage. The statement notes that an estimated 3.2 million New York
workers, or 37 percent of the states labor force, would benefit, including one"third who are
parents and that are raising over one"third (34.3 percent) of the states children. The statement
cites research on the benefits for child development of higher parental income, concluding that
there would be long"lasting benefits to the state from the proposed minimum wage increase.
The statement is signed by distinguished professors Teresa Ghilarducci, Janet Gornick, David
Howell, and Tom Michl and 75 of their colleagues who are economists or social scientists with
expertise in labor market policies from across the state. The Fiscal Policy Institutes Chief
Economist and Deputy Director, James Parrott, worked with the signers in circulating the
statement.
Costco has raised its starting pay to $13 nationwide, said David Howell of the New School.
This puts in perspective the proposal to raise the New York State minimum wage to $15 by
mid"2021. Working backward from consensus inflation forecasts put the value of $15 in 2021 at
about $13.25 in todays dollars, which is very close to Costcos starting wage that applies in
many low"income states. The case against the $15 minimum wage concerns employment effects,
but economic research has produced no evidence that a five"year phased"in $15 wage will cause
discernible job loss. Well over 3 million New Yorkers will see big boosts in family income,
which among other things will increase local consumer spending (generating jobs) and reduce
health and poverty"related costs for the state and localities (easing budget pressure and saving
taxpayer dollars). The net benefits of a $15 minimum wage in mid"2021 seem overwhelming.
"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

Regarding concerns about the wage increase in upstate areas, Colgate Universitys Tom Michl
stated, Governor Cuomos proposal to increase the New York State minimum wage to $15
more gradually in upstate than in New York City takes account of the differences between the
upstate and city economies. I think that most working families in New York would agree that an
ambitious program to raise the minimum wage is better than a timid program that leaves millions
of New Yorkers suffering unnecessarily low or poverty"level wages. In some upstate regions, as
many as 80% of poor or near"poor workers will benefit from a higher minimum.
Anticipating the claim by some that it would be preferable to increase the Earned Income Tax
Credit (EITC) rather than the minimum wage, New School economist Teresa Ghilarducci stated,
Low wage workers get some relief from taxpayers who fund the EITC. A higher minimum
wage will lessen the burden of low wages that employers are now able to shift to taxpayers.
Ghilarducci also noted that to match the benefit to workers from a $15 minimum wage, the
states EITC would have to be roughly the same as the federal EITC, entailing more than a $2
billion increase in the cost to New York taxpayers.
The economists minimum wage statement cites the work of Michael Reich and colleagues at the
University of California at Berkeley who recently released a new comprehensive report
examining the impact of the proposed $15 minimum wage on businesses and the overall New
York economy. The Berkeley report notes that in the end, the costs of the minimum wage will
be borne by turnover reductions, productivity increases and modest price increaseswithout
adverse employment effects. 1
The economists statement concludes: We believe that a phased"in increase in the New York
State minimum wage to $15 an hour makes sound economic sense: it would be good for the
states workers and their families, good for businesses, and good for the health and sustainability
of the overall state economy.

The full text of the statement with list of signers begins on the next page.

The Fiscal Policy Institute (www.fiscalpolicy.org) is an independent, nonpartisan, nonprofit

research and education organization committed to improving public policies and private
practices to better the economic and social conditions of all New Yorkers.

Michael Reich, Sylvia Allegretto, Ken Jacobs and Claire Montialoux, The Effects of a $15 Minimum Wage in New
York State, University of California, Berkeley, Institute for Research on Labor and Employment, Center for Wage
and Employment Dynamics, March 2016, http://irle.berkeley.edu/cwed/briefs/2016"01.pdf

"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

NEW YORK ECONOMISTS IN SUPPORT OF

A PHASEDFIN $15 NEW YORK STATE MINIMUM WAGE
We, the undersigned economists and social scientists, support Gov. Andrew Cuomos proposal
to increase the states minimum wage to $15 an hour by 2019 in New York City, and by mid"
2021 in the rest of the state. We believe this to be a prudent and much needed policy that would
raise the incomes of struggling low"wage workers and boost their spending power without
hurting the states economy.
The current minimum wage of $9.00 in New York does not adequately cover basic living costs
for families who must rely on it. It does not even cover basic expenses for single adults. Cost of
living analysis shows that in 2016, single workers without family responsibilities need between
$13.80 (in Buffalo) and $21.41 (in New York City) just to make ends meet. By 2021, a basic
needs wage for these workers will range between $15.72 and $24.38 respectively. 2 Gov.
Cuomos proposal would help lift many low"wage workers closer to a living wage.
Raising the states minimum wage to $15 an hour would deliver much needed additional income
to an estimated 3.2 million workers, or 37 percent of the states labor force. On average, these
workers would earn $4,800 more in annual pay. 3 Significant portions of these workers (33
percent) are single or married parents raising over one"third (34.3 percent) of the states child
population. Teen workers under 20 years old make up only 5 percent of affected workers. The
typical worker who would benefit from a $15 minimum wage earns half of their households
total income, 4 suggesting the additional income would have a real impact on the economic health
of hundreds of thousands of New York families.
There would be long"lasting benefits to the state, as research shows that additional family
income improves low"income childrens educational outcomes on a variety of measures. 5
The benefits of a $15 minimum wage are not limited to low"wage workers and their families.
Taxpayers would also benefit, as the wage increase could produce significant fiscal savings from
reduced expenditures on safety net programs. Recent analysis shows that more than half (52
percent) of New York workers earning under $15 per hour were enrolledor had a family
member enrolledin one or more of the states major public assistance programs. The cost of
worker participation in safety net programs is significant: each year, New York State and local

National Employment Law Project, How Much Do New Yorks Workers Need? At Least $15 per hour Both
Upstate and Down, January 2016, http://nelp.org/content/uploads/Fact"Sheet"How"Much"New"York"Workers"
Need"15.pdf.
3
David Cooper, Raising the New York State Minimum Wage to $15 by July 2021 Would Lift Wages for 3.2 Million
Workers, Economic Policy Institute, January 5, 2016, http://www.epi.org/publication/raising"new"york"state"
minimum"wage"to"15/.
4
Ibid.
5
Chuck Marr, Chye"Ching Huang, Arloc Sherman, and Brandon Debot, EITC and Child Tax Credit Promote Work,
Reduce Poverty, and Support Childrens Development, Research Finds, Center on Budget and Policy Priorities,
October 1, 2015, http://www.cbpp.org/research/federal"tax/eitc"and"child"tax"credit"promote"work"reduce"poverty"
and"support"childrens.
2

"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

governments spend approximately $2.9 billion in public programs. 6 The Earned Income Tax
Credit (EITC) is a complementary policy to a higher minimum wage, it is not a substitute for
raising the wage floor as some have suggested.
Opponents also frequently argue that studies show minimum wage increases lead to job losses or
reduced employment opportunities for low"wage workers because businesses are less willing to
hire workers at the increased wage level. These assertions are based on outdated and flawed
research that overstate job impacts of minimum wage policies. Instead, metastudies (analyses
that survey the minimum wage research field and aggregate findings from many studies) show
that the majority of newer, credible studies come to the opposite conclusion: Policies raising the
wage floor increase the take"home pay of affected workers without hurting employment levels
overall. This is in part explained by the positive effects of higher wages for businesses, which
benefit from reduced levels of turnover, savings from reduced spending in recruiting and training
new workers as a result of the lower turnover, higher morale and productivity, and improved
customer service. 7 Additionally, higher wages can result in increased consumer spending and
increased sales for local businesses.
It is no wonder, then, that more than 200 economists nationwide have endorsed a $15 minimum
wage, stating that this will be an effective means of improving living standards for low"wage
workers and their families and will help stabilize the economy. The costs to other groups in
society will be modest and readily absorbed. 8 This sentiment is echoed by leading economist
and Nobel laureate, Paul Krugman, who, in recent comments at the City University of New
York, cited the new body of research on the minimum wage as one of the most compelling sets
of empirical results Ive ever seen in economics...Theres absolutely no reason to think that a
fifteen dollar minimum wage will be a problem for New York. 9
We recognize that raising New Yorks minimum wage to $15 an hour would entail an increase
that is outside of past experience in New York or elsewhere at the state or federal levels.
However, Gov. Cuomos proposal is a well"designed plan that phases"in the higher wage over
time, and with consideration for the different economies Upstate and in New York City. Outside
of New York City, annual increases would be 10 percent or less, well within the range of most
minimum wage increases. The timeline of the proposed increase will ensure that businesses are
able to absorb the added labor costs through modest increases in prices and productivity, and by
enabling them to incorporate into their revised business plans a slightly larger share of total

Ken Jacobs, Ian Perry and Jenifer MacGillvary, The Public Costs of Low Wages in New York, UC Berkeley Labor
Center, January 2016, http://laborcenter.berkeley.edu/pdf/2016/Public"Cost"of"Low"Wages"in"New"York.pdf.
7 National Employment Law Project, and Fiscal Policy Institute, Fact Checking the Empire Center/American Action
Forum Analysis of New Yorks Proposed $15 Minimum Wage: Flawed Methods Produce Erroneous Results,
November 2015, http://nelp.org/publication/fact"checking"the"empire"centeramerican"action"forum"analysis"of"
new"yorks"proposed"15"minimum"wage"flawed"methods"produce"erroneous"results/.
8
Some of the Nations Leading Economists Support a $15 an Hour Minimum Wage, July 2015,
http://www.budget.senate.gov/democratic/public/_cache/files/89efe4b6"8934"4375"bc96"758fcc791622/minimum"
wage"petition"july"21.pdf.
9
A Conversation between Paul Krugman and Janet Gornick: From the Equality Indicators conference on October
1, 2015, Institute for State and Local Governance, http://equalityindicators.org/media/.
"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

revenues to go towards wages. Business profits per worker have increased twice as fast as wages
in New York since 2001. 10
If Gov. Cuomos proposal is approved, New York would be the first state in the nation to adopt a
$15 wage floor for all workers. However, other jurisdictions precede the Empire State. The small
port city of SeaTac was in fact the first to require a $15 minimum wage for airport and travel
industry workers, followed by San Francisco, Seattle, Los Angeles City and County and others
followed with $15 an hour minimum wage policies for workers in all sectors. 11
A new study by economist Michael Reich and colleagues at the University of California at
Berkeley carefully worked through the likely effects of a phased"in increase to $15 in New York
State, examining the impacts on business operating costs and modeling the implications for
overall consumer demand of higher wages for 37 percent of the states workforce. The
methodology used in the Berkeley study is straightforward and appropriate in modeling the
impacts on businesses and the overall economy. The Berkeley study concludes that the net
employment and economic effects would be very small in relation to the size of New Yorks
economy; the net employment increase would be 3,200 jobs, a fraction of a percent of the states
overall workforce. 12 Businesses would see savings from reduced turnover and improved worker
morale and productivity, and the adverse effects of slight price increases in some industriesstill
well below annual inflationwould be offset by the greater sales resulting from higher wages
for a large number of workers. The tiny net economic impact from an increase over time to $15
is accompanied by a significant improvement in living standards for 3.16 million workers37
percent of the states workforce.
For all of the above reasons, we believe that a phased"in increase in the New York State
minimum wage to $15 an hour makes sound economic sense: it would be good for the states
workers and their families, good for businesses, and good for the health and sustainability of the
overall state economy.
Signed,
(Affiliations are given for identification purposes only.)
Leon J. Battista, Bronx Community College"CUNY
Lourdes Beneria, Cornell University
Howard Botwinick, SUNY Cortland
10
Fiscal Policy Institute, Business profits in New York State have grown much faster than wages since 2001;
minimum wage hike is a good corrective, Data Brief, December 1, 2015. http://bit.ly/1YHIzl8
11
National Employment law Project, $15 Laws and Current Campaigns, http://raisetheminimumwage.org/pages/15"
Laws"Current"Campaigns.
12
Michael Reich, Sylvia Allegretto, Ken Jacobs and Claire Montialoux, The Effects of a $15 Minimum Wage in New
York State, University of California, Berkeley, Institute for Research on Labor and Employment, Center for Wage
and Employment Dynamics, March 2016, http://irle.berkeley.edu/cwed/briefs/2016"01.pdf

"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

(Affiliations are given for identification purposes only.)

John Chasse, SUNY Brockport
Jaspal S. Chatha, Lehman College"CUNY
Howard Chernick, Hunter College"CUNY
Kimberly Christensen, Sarah Lawrence College
Polly Cleveland, Columbia University
Hector Cordero"Guzman, Baruch College"CUNY
Susan Davis, Buffalo State College
Gregory DeFreitas, Hofstra University
Geert Dhondt, John Jay College
Thomas Dublin, SUNY Binghamton
Debra Dwyer, Stony Brook University"SUNY
Maria Figueroa, ILR School, Cornell University
Bruce Fisher, Buffalo State College
Lou Jean Fleron, Partnership for the Public Good, Buffalo
Fred Floss, Buffalo State College
Robert J. Foster, University of Rochester
Irwin Garfinkel, Columbia University
Arlene Geiger, John Jay College
Teresa Ghilarducci, New School University
William Goldsmith, Cornell University
Janet Gornick, CUNY Graduate Center
Lois Gray, ILR School, Cornell University
Josh Greenstein, Hobart and William Smith Colleges
Christopher Gunn, Hobart and William Smith Colleges
Robert Guttmann, Hofstra University
Michelle Holder, John Jay College"CUNY

"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

(Affiliations are given for identification purposes only.)

David Howell, New School University
Tae"Hee Jo, Buffalo State College
Yehuda Klein, Brooklyn College"CUNY
Timothy Koechlin, Vassar College
Brent Kramer, John Jay College"CUNY
Laurence Krause, College at Old Westbury"SUNY
Joelle LeClaire, Buffalo State College
Henry Levin, Columbia University
Mark Levinson, Workers United
Oren Levin"Waldman, Metropolitan College of NY
Stephanie Luce, CUNY School of Professional Studies
Jeff Madrick, The Century Foundation
Laurence Malone, Hartwick College
Arindam Mandal, Siena College
Jay Mandle, Colgate University
J.W. Mason, John Jay College
Stanley Masters, Binghamton University"SUNY
Rick McGahey, former Ex. Dir., Congressional Joint Economic Committee
Martin Melkonian, Hofstra University
Thomas Michl, Colgate University
William Milberg, New School University
John Mollenkopf, CUNY Graduate Center
Thomas Muench, Stony Brook University"SUNY
Jawied Nawabi, Bronx Community College"CUNY
Michael Nuwer, SUNY Potsdam
Aaron Pacitti, Siena College

"more"

FPI Release: New York Economists In Support of a Statewide $15 Minimum Wage

(Affiliations are given for identification purposes only.)

Andreas Duus Pape, Binghamton University"SUNY
James Parrott, Fiscal Policy Institute and Hunter College"CUNY
Paddy Quick, St. Francis College
Henry Saffer, CUNY Graduate Center
John Sarich, Cooper Union
Ted Schmidt, Buffalo State College
Elliott Sclar, Columbia University
Richard Shirey, Siena College
Harold Stolper, Community Service Society of New York City and Columbia University
William K. Tabb, Queens College and CUNY Graduate Center
Scott Trees, Siena College
Shyama Venkateswar, Hunter College"CUNY
Eric Verhoogen, Columbia University
William Waller, Hobart and William Smith Colleges
David Weiman, Barnard College
Benjamin C. Wilson, SUNY Cortland
Edward Wolff, New York University
Max Wolff, New School University
Andrew Wyler"David, Purchase College"SUNY
June M. Zaccone, Hofstra University
Paul Zarembka, University at Buffalo"UNY
Michael Zweig, SUNY Stony Brook

####