After more than a year of partisan gridlock, Gov. Andrew Cuomo is pushing the way to raise New York's minimum wage — to $8.75 per hour.
The governor, along with Assembly Speaker Sheldon Silver and Senate coalition leader Jeffrey Klein, should be commended for recognizing the urgent need to raise the wages of the state's lowest-paid workers, which have stagnated while the cost of living soars.
But the truth is, the governor's proposal to boost the minimum wage to $8.75 is just a start. New York's working families really need far more.
Phasing the minimum wage up to $10 or more brings it far closer to what it really costs to live, even in the some of the least expensive parts of the state. And unless the minimum wage is indexed to rise automatically with inflation each year, it will immediately begin losing value as the cost of living continues to rise.
It's not realistic to think that a worker anywhere in the state can live on $8.75 per hour, or just $18,200 per year. Even a single working person without any dependents living in a region like the Capital Region needs to earn more than $10 per hour to cover basic living costs, according to the New York Self Sufficiency Standard, a comprehensive measure of cost-of-living thresholds.
Several lower cost-of-living states with larger rural areas than New York — such as Washington State and Oregon — already have minimum wages that are higher than $8.75. Their governors report that these higher minimum wages, together with annual cost of living adjustments, are promoting economic growth in their states. Despite what some critics claim, a higher wage floor in Washington and Oregon has not caused employers to relocate jobs, even though several neighboring states have substantially lower minimum wages.
New York's minimum wage remains decades out of date. Since 1980 alone, there have been two nine-year stretches when New York's minimum wage remained frozen and low-income workers waited for the legislature to act.
If New York's minimum wage had simply kept pace with inflation since the late 1970s, it would be roughly $10.70 per hour today.
Ten other states have already adopted indexing, which stops the minimum wage from falling in real value each year. Given the state Legislature's erratic track record in tackling the minimum wage, annual inflation indexing is essential. Crain's New York Businesses and Bloomberg News have both called for that, with Crain's calling it "logical" and saying that it "would erase the pressure on lawmakers to keep returning to the issue."
But even with indexing, $8.75 is simply too low for New York. U.S. senators Chuck Schumer and Kirsten Gillibrand and much of New York's congressional delegation have introduced legislation to raise the national minimum wage to $9.80 per hour — and increase it each year after that to keep with inflation. The congressional delegation's proposal is much closer to what New York's working families really need.
Contrary to what opponents claim, the most rigorous economic research makes it clear that businesses can readily adjust to higher minimum wage rates, and that such boosts do not cost jobs. A 2010 study examined 250 pairs of bordering U.S. counties with differing minimum wages and found that higher rates did not reduce employment or slow job growth.
Between 1980 and 2007, income for the top 1 percent in New York rose more than 500 percent, while income for the bottom 50 percent of households fell nearly 13 percent, according to the Fiscal Policy Institute. The governor's proposal to raise the minimum wage to $8.75 will help alleviate this rising inequality. The Legislature should act immediately to pass this increase and index it to rise with inflation in future years.
Given the range of obstacles facing the state's lowest-paid workers, passing this minimum wage increase is the best way to provide them with a real path to self-sufficiency. New York's workers are counting on their state government to make the right choice.
Camille Rivera is executive director of United NY.