Opinion: Debunking minimum wage myths

Opinion: Debunking minimum wage myths

Opinion: Debunking minimum wage myths
September 21, 2015

Ever since the state Wage Board approved a $15-an-hour minimum wage for fast food workers, followed by Gov. Andrew Cuomo’s push for the same rate for all workers, conservatives, business groups and right-wing pundits have been warning of the dire consequences that would arise from this act.

Businesses will close, they say. Jobs will disappear; prices will skyrocket. In short, they proclaim, chaos will ensue.

Putting these apocalyptic predictions aside, let’s look at the facts, and pick apart some of the “Big Myths” about raising the minimum wage.

Big Myth No. 1 – Raising the minimum wage so dramatically and so quickly will severely hurt businesses.

The truth is that the new fast food wage will not increase overnight, but, instead, be phased in over several years. The minimum wage in New York City will not hit $15 until late 2018 – and not until 2021 for the rest of the state. That gives businesses plenty of time to adjust, while at the same time reducing turnover at the lowest pay levels.

Big Myth No. 2 - $15 an hour is simply too high of an increase.

While that wage is well above the current minimum of $8.75, it still won’t be enough to stave off inflation over the next few years, according to the Economic Policy Institute’s Family Calculator – or make up for decades of wage stagnation.

The EPI calculator reports that people in low-cost regions of the state like Buffalo and Rochester will need more than $15 an hour to meet basic living costs by 2021. In higher-cost regions such as Long Island, it will take $22 an hour for a single worker and even more for a worker with a family. A $15 minimum wage will greatly improve the lives of some 3 million workers – 1.25 million in the city and 1.7 million in the rest of the state – but it is not a windfall by any means.

Big Myth No. 3 – A higher minimum wage will result in layoffs, job cuts and higher prices for consumers.

The 13 states, as well as the District of Columbia, that have raised the minimum wage since 2012 have increased total jobs faster than the 37 states that have not. A recent Purdue University study found that the fast food industry, for example, could accommodate the $15 minimum wage through reduced turnover and marginal price increases. The cost of a Big Mac would cost a mere 17 cents more with the wage hike – still eminently affordable. 

Big Myth No. 4 – A higher minimum wage will cost state and local governments more money in personnel costs and the cost of hiring contractors.

In reality, a higher minimum wage would significantly reduce spending on various forms of public assistance like Medicaid and food stamps. It also would increase the amount of payroll and individual income tax revenue the government receives.

No, gradually raising the state’s minimum wage to $15 does not portend Armageddon for business in New York. Rather, it is a practical way to pull millions of hard-working people out of poverty, create stability in the workforce, reduce the cost of public assistance and pump untold millions of dollars back into the economy.

It is time to move past the distortions and hysteria and get to work making New York state great for all.


Hector Figueroa is president of 32BJ of the Service Employees International Union.

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Hector Figueroa