By Sarah Bishop
After partisan gridlock prevented Albany lawmakers from taking action last spring to raise New York’s minimum wage, Gov. Andrew M. Cuomo and the Legislature have taken commendable steps to break the political stalemate and pass a minimum wage increase this year. The governor has proposed an increase to $8.75 per hour, and the Legislature should act immediately to pass this proposal, along with cost-of-living adjustments for future years to protect the value of the minimum wage.
As an advocate for locally owned businesses in Buffalo, I hear all the time from entrepreneurs who are holding back on new hiring because of low sales revenue and weak customer spending in the post-recession recovery. Raising the minimum wage would put more money in the pockets of low-paid workers who often have no choice but to spend their increased earnings on basic needs. As these workers shop at local businesses, the state’s economy will benefit from an overall increase in economic activity.
According to the nonpartisan Fiscal Policy Institute, more than 1 million workers in the state would stand to benefit from raising the minimum wage to $8.75, and this increase would generate more than $600 million in new consumer spending. This minimum wage increase is expected to support the creation of more than 5,000 new full-time jobs as businesses expand to meet the new consumer demand.
Despite these findings, some critics have claimed that raising the minimum wage would only burden small businesses in the state. In reality, however, the small businesses that I know are already committed to paying fair wages – it’s often the large, national retail and fast-food chains that pay low wages to make profits while keeping prices low.
Economic research makes clear that employers can readily adjust to paying higher wages without reducing employment, due in large part to the fact that pay raises boost employee productivity and reduce turnover, as workers are spared from having to balance two jobs in order to make ends meet.
In addition to following the governor’s call to raise the minimum wage, the Legislature should also index the minimum wage to rise automatically to keep pace with the cost of living. Annual cost-of-living adjustments will protect the purchasing power of the minimum wage while giving businesses greater predictability over their payrolls.
New York’s minimum wage has lagged behind the cost of living for the past several decades – in fact, if it had simply kept pace with inflation since the 1970s, New York’s minimum wage would equal $10.70 per hour today.
In order to preserve an economy where work provides a path out of poverty, Albany lawmakers should act now to raise the state’s minimum wage to $8.75 per hour and index it to rise with inflation in future years.
Sarah Bishop is the executive director of Buffalo First!