Minimum Wage Hike Predicted On Headlines, Bad Math

Gov. Andrew Cuomo’s recent claim that raising the minimum wage to $15 per hour will create billions of dollars of “spending power” is a warped analysis rooted in politics, not policy. Gov. Cuomo continues to ignore the reality that an excessive increase in the minimum wage will kill jobs, hurt small businesses and have a negative effect on exactly the New Yorkers it is meant to help. The governor and Assembly Majority should be focused on fixing the state’s perennially abysmal tax and business climate, not raising the state’s minimum wage yet again.
 
THE NUMBERS DON’T ADD UP
 
Earlier this week, the governor released statistics indicating pushing the minimum wage to $15 per hour will generate $15.7 billion in statewide “economic activity,” and $1.06 billion in the Finger Lakes Region. False. While employees may spend more with higher earnings, employers are going to see their costs skyrocket. Employers that would have otherwise been buying equipment, expanding operations or hiring new employees will be forced to put those plans on hold.
 
Further, the Empire Center and the American Action Forum estimate job losses as high as 38,400 in the Finger Lakes Region and 588,000 statewide due to employers being forced to make ends meet with layoffs. Unemployed residents will be hard-pressed to generate much economic activity.
 
Gov. Cuomo cited the Economic Policy Institute’s “Open Letter to President Obama” in support of his proposed minimum wage increase to $15 per hour; however the letter to the president is in support of a $10.10 federal minimum wage and a number of the economists who signed the letter are in fact opposed to a $15 per hour minimum wage.
 
A survey of U.S. economists by the Employment Policy Institute found that many economists foresee trouble with a $15 per hour minimum wage: 

  • A majority expected a negative impact on youth and adult employment and job availability;
  • A majority of the surveyed economists, 71 percent, believe the Earned Income Tax Credit, for which I have advocated, is an efficient way to address the income needs of poor families;
  • Further, 67 percent of the surveyed economists said a $15 per hour minimum wage would have a negative effect on small businesses; and
  • 80 percent of the surveyed economists said with a $15 per hour minimum wage, employers would hire entry-level employees with greater skills. 

Gov. Cuomo cited the difficulty a single mother with two children has living off the current minimum wage, which amounts to $18,720 per year. While a $15 per hour minimum wage will increase her salary by about $12,000 per year, the governor neglects to mention the reality that the same family could stand to lose nearly $40,000 in Supplemental Nutritional Assistance Program, Medicaid, Temporary Assistance for Needy Families and cash benefits. Under the governor’s plan, this family would be worse off than they are today.
 
A PLAN DESTINED TO FAIL
 
We all can agree that our job as legislators is to ensure a safe and prosperous life for those in the communities we represent. Cherry picking statistics that bolster the case for this ill-advised policy may be useful for generating soundbites, but does little to actually improve the quality of life for New Yorkers. I have worked hard to push solutions that make the cost of living in New York more affordable, to reduce taxes and unnecessary regulations, and create jobs. The bottom line is that raising the minimum wage is going to drive up wages across the board, kill jobs and small businesses and increase poverty. The best way to create a naturally strong and sustainable economy that will empower all New Yorkers is to improve the overall business climate.
 
What do you think? I want to hear from you. Send me your feedback, suggestions and ideas regarding this or any other issue facing New York State. You can always contact my district office at (315) 781-2030, email me at kolbb@assembly.state.ny.us, find me by searching for Assemblyman Brian Kolb on Facebook, and follow me on Twitter.
 

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