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Raising The Minimum Wage Is Essential

March 14, 2013
By Senator Brad Hoylman

As President Obama so pointedly said in his recent State of the Union address, “corporate profits have rocketed to all-time highs, but for more than a decade, wages and incomes have barely budged.” The growing chasm between the rich and the poor has created a lopsided economy, and it's patently unsustainable.

Unless we act now to increase the purchasing power of average Americans, our country will fall behind others that rely more heavily on exports than their own people to drive their economies.

The minimum wage is our government's most targeted tool in the fight against the growth of income disparities. Raising it and, crucially, indexing it to inflation, will provided meaningful help to our struggling working families while boosting our economy.

Here in New York, Governor Cuomo has proposed increasing the minimum wage to $8.75 per hour from $7.25 to help address the growing gap between the rich and poor in our state. While I appreciate his support for a long-overdue increase, working families will not see a lasting benefit if we fail to index future increases to inflation.

I believe it is important to legislate for the future, and this indexing would do just that. Previous increases, all of them subject to political debate rather than economic data, have failed to keep pace with the cost of living, and with no good reason.

According to U.S. Bureau of Labor Statistics data, the current minimum wage has fallen behind that of 1968 in real dollars by $3.34, or nearly $7,000 in gross annual income for a full-time worker.

The annual income of a full-time worker earning New York State’s minimum wage — approximately $15,000 — is below the federal poverty level for a household of two.

A comprehensive Center for Economic and Policy Research review of recent research found no statistically and economically meaningful employment losses associated with minimum wage increases. On the contrary, these increases correlated to reduced employee turnover and higher productivity.

  • A report from the Federal Reserve Bank of Chicago found that every $1 minimum wage hike boosts consumer spending by households with a minimum wage worker by approximately $2,800 over the following year.
  • A poll conducted by Siena College last year found that a decisive bipartisan majority of New Yorkers –79% — support an increase in the State’s minimum wage.
  • New York has one of the largest disparities among the 50 states between the average wage and the minimum wage. As of May 2011, the average hourly wage rate for all employees on private payrolls in the state was $27; the city’s was $31.
  • On March 5, the New York State Assembly passed legislation to raise the minimum wage to $9 per hour with future increases indexed to inflation.

Regrettably, some members of the State Senate have used the President’s call for action as an excuse for inaction. They have argued in recent weeks that New York State should not increase its own minimum wage at all, and instead should wait and see what the federal government passes. I disagree.

I believe we must follow President Obama’s lead and heed New York State Senate Minority Leader Andrea Stewart-Cousins’ call for an increase in the minimum wage that is indexed to inflation now.

Another essential tool for lifting wages and promoting financial stability for individuals and families is unionization. As you know, labor unions negotiate living wages and benefits and provide training and apprenticeship programs that grow our middle class and provide real opportunities for working people.

As I write, there is a swelling movement to unionize fast food workers in New York City. Just as the growth of the national economy has left behind average Americans, low-wage fast food workers have not seen any benefits from the record profits made by the large chains that employ them. Average hourly pay for fast food workers is the lowest of any occupation in the city, and the average work week nationally is only 24 hours. Their resulting net income is below federal poverty guidelines for individuals, and well below that of families, though many work more than one job.

Remember: We are talking about working people. Of course, we are also talking about a large and growing share of our city's workforce — and its income tax base. Right now, our government is subsidizing fast food chains and many other large corporations by providing cash assistance, food stamps and public health insurance to underpaid workers. The benefits of union wages for fast food workers would ripple throughout the region.

Franchisees and, more importantly, the corporations with which they are affiliated, would have to get used to a new way of doing business. However, I highly doubt that chains like McDonald's, Pizza Hut and KFC would abandon the lucrative New York Metro market. Layoffs would also be limited, as franchisees — squeezed tightly by their corporate masters — tend to operate with as few employees as possible.

If we are to make a full recovery from the Great Recession — as a city, as a state, and as a country — we will have to rebuild our economy with structural changes that ensure shared prosperity. While New York has excellent representation in Congress, we cannot count on the federal government to increase the minimum wage and index it to inflation; we must do so here in New York now. We also need to stand with organized labor across New York State and fight to ensure the rights and opportunities that union membership provides to exploited workers like those in the fast food industry.

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