Higher NYS minimum wage would boost spending, create jobs

Raising New York state’s minimum hourly wage to $21.25, as proposed in the NYS Raise the Wage Act currently before the state Legislature, would help nearly two-thirds of workers earn a living wage, according to data from the Cornell ILR Wage Atlas.

“The cost of living in New York state is going up rapidly, and the scheduled minimum wage increases are not keeping up,” said Ian Greer, director of the ILR Ithaca Co-Lab. “As those numbers get further and further away from each other, more people will make less than a living wage. The result is a lot of pressure on elected officials to have quicker minimum wage increases because the workers themselves are under tremendous financial pressure.”

Cornell impacting New York State

Russell Weaver, director of research at the ILR Buffalo Co-Lab, estimates that the implementation of a $21.25 minimum wage would help 65.4% of workers in New York to begin earning at or above their respective “living wage,” as determined by the MIT Living Wage Calculator. Additionally, the combined increased earnings – $80.59 billion per year – would result in consumer demand and spending growth that could support the creation of more than 75,500 net jobs throughout the state.

The NYS Raise the Wage Act seeks to gradually lift the statewide hourly minimum wage to $21.25 over a period of three years and, after that, attach the wage to annual inflation and labor productivity.

A joint data brief and fact sheet created by Weaver and Greer projects the economic impacts of raising the minimum wage to five different amounts:

  • $17: The minimum hourly wage that will go into effect in 2026;
  • $21.25: The minimum hourly wage targeted in the 2022-23 NYS Raise the Wage Act, reintroduced to the Legislature for the 2023-24 session;
  • $22.12: A wage that adjusts the $21.25 target upward for year-over-year inflation from 2022 to 2023;
  • $25.52: The approximate federal minimum wage if the relationship between productivity and minimum wage was never broken in 1968; and
  • $26.86: The current statewide average MIT “living wage” for a single worker in NYS.

The researchers found that a $17 per hour minimum wage, which goes into effect in 2026, will have the least economic impact because only 26% of the state’s workers earn less than that amount. The aggregate increase in earnings would be roughly $41.43 billion, resulting in just under 39,000 new jobs across the state.

An increase to $26.86 per hour, the current statewide average living wage, would have the greatest economic impact, as more than half of all workers in the state would see an immediate pay raise, resulting in aggregate increased earnings of $152.58 billion.

The growth in consumer spending associated with these higher earnings is expected to support a net gain of roughly 143,000 jobs across the state.

“It’s really important to understand how these possible wage increases affect the economy,” Greer said. “This is what elected officials need to know when they’re making decisions about this topic. What they’re being told by some low-wage employers and business representatives is that these wage increases are going to destroy jobs. And there are indeed some employers with business models that just cannot accommodate these increases.

“But another reality,” he said, “is that it will put a lot of money in workers’ pockets, and they’re going to spend it. So there will be increased spending power, which also matters for businesses.”

Julie Greco is a senior communications specialist at the ILR School.

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