A report from the Empire Center for Public Policy indicates that New York could lose a minimum of 200,000 jobs with the enactment of a statewide $15 minimum wage hike.
Worse, the 200,000 estimate seems a rather rosy outlook considering the more likely estimate hovers around half a million jobs.
Via the New York Post:
While a statewide minimum of $15 would be enormous by historical standards, the governor and other advocates frame it as win-win — good for the economy in general and for low-wage workers in particular.
In reality, most economic research points in precisely the opposite direction. Low-wage, low-skill workers actually have the most to lose in the “fight for $15.”
Enacting a statewide, all-industry $15 minimum would cost New York at least 200,000 jobs — including 95,600 in New York City, with proportionately larger employment decreases in upstate regions. That’s the key finding of a research paper to be released today by my organization, the Empire Center for Public Policy, and the Washington, DC-based American Action Forum.
Co-authors Douglas Holtz-Eakin and Ben Gitis drew from three different research models to estimate the impact of Cuomo’s proposal. The projected 200,000-job loss is actually their lowball estimate, based on the methodology used in a recent study by the Congressional Budget Office (CBO), of which Holtz-Eakin is a former director. The two other minimum-wage impact models cited in the research paper say the employment impact could be even larger — resulting in somewhere between 432,200 and 588,000 fewer jobs.
Previous studies show that the $15 minimum wage hike in the fast food industry would not only cost jobs but that food prices would see hikes of up to 22%. It would also cost state and local governments potentially hundreds of millions of dollars.
Small-business owners have long warned that minimum wage hikes will suppress job creation, will lead to fewer hours for current employees, and will result in an increase in costs for consumers.
Academic studies confirm the accuracy of this criticism of minimum wage hikes. In 1995, University of California-Irvine economics professor David Neumark and Federal Reserve governor William Wascher analyzed payroll records of fast-food restaurants in New Jersey counties and neighboring counties across the state line with Pennsylvania, to determine what, if any, effect New Jersey’s 1994 minimum-wage increase had on entry-level employment trends.
They found confirmation of the common wisdom that increasing the cost of entry-level labor results in increased unemployment and forces entry-level workers — often, the young or ethnic minorities — to seek employment in other geographic areas with fewer market distortions.
This ad from EPI also shows the predictable consequence of a $15 minimum wage for fast-food restaurants: Touch-screen ordering systems that replace employees.
In short, somebody has to pay for a minimum wage hike that’s nearly twice as high as the current rate.
Cross-posted at the Mental Recession