Today the federal minimum wage goes up – to $7.25. The nonpartisan think tank Fiscal Policy Institute reported on the impact this increase will have on New Yorkers:
Federal minimum wage boost affects 123,000 New Yorkers – but only slightly. (PDF, includes charts and tables.) On July 24, an estimated 123,000 New York workers will benefit when the minimum wage rises from the state’s minimum of $7.15 an hour to the new federal minimum of $7.25 an hour. The minimum wage in New York will still lag that in 13 other states and the District of Columbia. And, a full-time worker will still not earn enough to keep a family of three out of poverty.
In other words, only a very small number of New Yorkers will be helped. Given the high cost of living in New York, it’s time to start looking at an increase in the minimum wage.
Increasing the minimum wage is a signature issue for the Working Families Party. Our first major campaign in 2004 was successful, raising wages for many of New York’s most deserving working families.
Full text of the press release from FPI:
Federal minimum wage boost affects 123,000 New Yorkers – but only slightly
The upcoming increase in the federal minimum wage, effective Friday, July 24, will benefit an estimated 123,000 New York workers, according to the Fiscal Policy Institute (FPI). This represents the last of three increases legislated by the U.S. Congress in 2007. While the federal hourly minimum wage will rise from $6.55 to $7.25, New York’s workers will see a much smaller increase, because the state minimum wage was raised to $7.15 in January 2007. Thirteen states and the District of Columbia already have minimum wages above $7.25 and will not be affected by the increase.
Earning $7.25 an hour, a full-time worker will gross $15,080 annually, less than 83 percent of the bare-bones federal poverty line for a family of three ($18,310). And even with the upcoming increase, New York’s minimum wage will still be more than 21 percent below its peak value in 1970, which was $9.23 in today’s dollars. The 10 cents an hour increase for New York’s minimum wage workers amounts to only a 1.4 percent raise, well below the 4 percent general rate of inflation since January 2007 and even further below the nearly 7 percent inflation rise in the New York City metropolitan area.
“Research has shown that workers benefiting from minimum wage increases in New York are disproportionately women, and minimum wage earners on average contribute most of their family’s earnings,” said FPI Research Associate Michele Mattingly. Contrary to stereotype, large numbers of affected workers – often the majority – are adults aged 20 and older.
Citing FPI’s earlier research on New York’s widening income gap, persistent high poverty level, and a troubling gap between growth in wages and growth in productivity, FPI Chief Economist and Deputy Director James Parrott said, “New York needs to restore the purchasing power of its minimum wage to put today’s minimum wage workers on par with their 1970 counterparts and bring them above the poverty line.”
Parrott said that the state minimum wage should be increased in stages to the federal poverty level for a 3-person family, then indexed to cost-of-living increases to assure that minimum wage workers’ earnings are not eroded by inflation. Ten states (Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington) already index their minimum wage levels.
The Fiscal Policy Institute has prepared several reports in recent years on various aspects of the minimum wage issue. FPI’s March 2006 report, “States with Minimum Wages above the Federal Level Have Had Faster Small Business and Retail Job Growth,” was cited by House Labor Committee Chairman George Miller when he introduced House legislation to increase the federal minimum wage in January 2007.
Charts and tables available at http://www.fiscalpolicy.org/minimumwage_01.html:
Figure 1: While New York’s minimum wage was roughly equal to the federal poverty line for a family of three in the 1960s and 1970s, the latest increase leaves a single parent of two working full time unable to make ends meet.
Figure 2: As of July 24, 2009, New York’s minimum wage will be lower than in 13 other states and the District of Columbia.
Figure 3: History of the New York State and U.S. minimum wage levels since 1950.
Note: The estimates of affected workers are drawn from Economic Policy Institute analysis of Current Population Survey data. The estimates include neither the significant number of New York workers who report earning less than $7.15 an hour, nor tipped employees, who are subject to a lower statutory minimum. The estimate of workers projected to receive a raise under the upcoming increase comprises 63,000 workers currently earning between $7.15 and $7.24, and 60,000 workers who will also likely see their wages rise slightly, since it is known that employers typically adjust their pay scales when the minimum wage rises in order to maintain relative pay hierarchies within their businesses.
The Fiscal Policy Institute (FPI) is a nonprofit, nonpartisan education and research organization that focuses on the tax, budget, and economic issues that affect the quality of life and well-being of New York State and New York City residents.
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