As a result of legislation passed in 2013, New York’s state’s minimum wage was raised this year from $7.25 per hour to $8, and will continue to go up in phases to $9 by 2016. This is better than the federal minimum, which is still stuck at $7.25 an hour, but still not nearly enough to lift workers out of poverty, especially in New York City, where housing and other costs are so high. If the state doesn’t want to go beyond $9 per hour, it should at least allow local governments to do so if they want. The sky won’t fall.
One argument against such a laissez-faire approach is that the state should have a uniform minimum wage so all businesses can operate under one set of rules. Using the same logic, the federal government should set the minimum wage and the states should have no say in the matter.
But the feds allow the states to go higher, and 25 of them have now set minimum wage rates above the federal minimum of $7.25 an hour. That’s because they recognize $7.25 is way too low.
And in a number of those states, including California and Washington, individual cities have been exceeding the state wage floor.
One of those is San Francisco, which in January 2013 raised its minimum wage to $10.55 per hour, the highest in the nation, and where there will likely be a referendum in November to raise it to $15 per hour in 2016.
Driving these increases is the growing income inequality in this country, with the top 1 percent getting richer and the rest, particularly low-wage workers in the retail and fast-food industries (where most of the job growth has been), falling further and further behind. Other forces are the high rents and overall cost of living in places like San Francisco.
And the fact that low-wage workers no longer tend to be teenagers, as in the past. More and more are adults, with high school diplomas and even some college, who are trying to support families on the meager salaries they make.
There are conflicting studies on what higher wage minimums do in terms of consumer prices, lost jobs, etc. The evidence suggests that modest minimum wage increases have led to price increases in some, though not all, cases — but not price spikes. And San Francisco since 2004, when it first started raising its minimum wage, has had a lower unemployment rate than California as a whole.
Higher minimum wages can help the overall local economy by putting more spending money in the pockets of workers. They can save taxpayers money by reducing food stamp, housing subsidy and other safety net expenditures.
And businesses’ higher labor costs may at least be partially offset by greater retention, less need for training and higher productivity, as the higher wages attract better workers.
If not for pressure from states raising their minimum wage rates, the federal minimum might still be $5.35 an hour, where it was in 2007. Similarly, San Francisco’s higher minimum wage has led other Bay Area cities, including San Jose, Santa Clara and Richmond, to adopt their own.
New York City Mayor Bill de Blasio wants to establish a higher minimum wage for New York City, but that would require approval from Gov. Cuomo and the Legislature. Cuomo has rejected the idea, arguing that to let local governments have different minimum wage rates would create chaos and invite cannibalization.
But that hasn’t happened across the country, as the federal government has let the states set their own minimum wages. Nor has it happened in California, Washington and other states that have allowed the locals to set their own.
New York state should, too.