If an increase in New York’s minimum wage is inevitable then it ought to get done without some of the spin that is showing up in the current deal. The governor and legislative leaders need to explain why this is a good idea.
As recently reported, New York is setting itself up to be the first state in the country to have taxpayers and not employers cover the higher payroll costs associated with raising the minimum wage to $8 for teenagers between 16 and 19 years old. If the teens are currently earning $8 an hour, the state will pay the 75-cents-per-hour difference beginning Jan. 1.
If that’s not enough, the state will continue covering a partial share of the increase, up to $1.35 per hour per eligible employee, when the wage reaches $9 per hour in January 2016, and through 2018.
Minimum wages are meant to be increased periodically. That shouldn’t be as controversial as it appears to be, especially in the State Senate. But dragging government into the mix is a strange approach and is likely to produce significant unintended consequences. Skepticism is warranted.
If this really is the way to get Republicans to buy into a minimum wage increase, it is sloppy and illogical. If this is a mechanism designed to shield employers, then lawmakers should consider lowering the amount of the increase and taking taxpayers off the hook.
An employer will get tax credits for seasonal employees, ages 16 to 19, who are still in school. That employer would have a lot of motivation to keep a younger work force. No one other than a teen fitting into the undefined category of “student” would qualify for the subsidy which, by all accounts, would add up considerably. For a teen working full time, the annual subsidy could be worth as much as $2,800 per worker by 2016. The comment by Paul Sonn seems plausible: “a quid quo pro without a policy justification for it.” Sonn is legal co-director of the National Employment Law Project in Washington, an advocacy group for low-income workers.
The fact that the subsidy will get paid only if the employer pays the exact minimum wage at the time is an obvious disincentive for giving teens performance raises. So, the irony here is that teens in “school,” whatever the definition, will likely have a better chance of getting hired over mom or dad – or grandpa or grandma, for that matter – but will be stuck at the minimum unless an employer decides to forfeit the credit. Such circular logic can only come out of politically charged circumstances.
Which leads to the mystery surrounding the cost of the measure, approved in closed-door negotiations between Gov. Andrew M. Cuomo and legislative leaders. No one apparently knows what the costs will be, not even the State Senate, which may have cooked up the idea in the first place. Granted, a spokesman for co-leader Dean Skelos said there would be no cost to the state until 2015, when the credit will be worth about $24 million to businesses, and then grow to $45 million by the following year. But the Cuomo administration estimates about 250,000 student youth workers, with about 30 percent earning the minimum wage or less, puts the cost of the five-year program at about $201 million. Administration officials say that will be reduced if the federal government raises the national minimum wage during the period.
One can only hope.