Minimum wage increase comes with a price

In Albany, protesters calling for a higher minimum wage demanded an increase of $7.75 per hour, but only received an additional $1.75, which will be implemented over the next three years. Contributed photo

In Albany, protesters calling for a higher minimum wage demanded an increase of $7.75 per hour, but only received an additional $1.75, which will be implemented over the next three years. Contributed photo


As part of a New York State bill passed in March 2013, the minimum wage will increase by $1.75 an hour in three increments from 2013 to 2015, jumping from $7.25 to $8 on Dec. 31, 2013, then to $8.75 by the end of 2014 and finally to $9 by the end of 2015.

The Fiscal Policy Institute and members of the New York State Minimum Wage Coalition, which includes the Working Families Party, unions and labor allies, say the bill is flawed and does not provide the 40,200 directly affected minimum wage workers in Westchester County with the financial relief they need.

James Parrott, deputy director of the Fiscal Policy Institute as well as its chief economist, said the bill does not keep up with inflation and living expenses; neglects minimum wage, tipped restaurant workers, who will still be working at $5 an hour; and provides “unnecessary” tax credits to large box stores such as Walmart and McDonald’s.

Parrott said the bill gives employers such as Walmart and McDonald’s tax credits if they hire 16 to 19-year-old students at exactly minimum wage, which Parrott explained acts as a “disincentive” to keeping minimum wage adults on the payroll and to hiring non-students.

The bill went into effect on Dec. 31, 2013. The tax credits, which were part of the bill, pay employers the increase in wages of all the 16 to 19-year-old students that are now being paid $8 an hour.

In 2015, the tax credit pays employers $1.31 for each of the described student workers at minimum wage, and that rate jumps to $1.35 from 2016-2018.

According to the Fiscal Policy Institute, the tax credit “will dangle $1,560 to $2,808 out in front of employers for every adult worker they manage to substitute with a student between the ages of 16 and 19.”

Parrott said the only safeguard against replacing adults workers with 16 to 19-year-old students is a provision in the bill that states, “an employer shall not discharge an employee and hire an eligible employee solely for the purpose of qualifying for this credit.”

The tax break, Parrott explained, was designed to help employers respond to the minimum wage increase, but there is no evidence that suggests this tax credit was needed, according to Parrott.

“The minimum wage increase is insufficient and doesn’t provide indexation to keep pace with the rising costs of living,” Parrott said. “It doesn’t include the tipped workers and the passage of the tax break was yet another poorly thought-out tax credit in New York State.”

Ari Kamen, spokesperson for the Working Families Party, which is a labor-based political party that attempts to bring poor, working and middle class issues into public debate and was one of the organizations that pushed for the bill, said the increase was a step in the right direction, but the inclusion of the tax break is an another example of corruption in Albany.

“The Working Families Party and the coalition made progress by raising the minimum wage to $9 [an hour],” Kamen said, “but the pay-to-play culture in Albany prevented us from lifting more New Yorkers into the middle class. Instead of a higher wage, we got millions in tax breaks for Walmart, one of the state’s biggest campaign contributors. New York needs publicly financed elections to root out corruption and make real progress on working
class issues.”

Jack Temple, policy analyst at the National Employment Law Project, said the last time New York State increased its minimum wage was back in 2009, when the federal government increased minimum wage to $7.25 an hour, which only raised the state’s minimum wage by .15 cents an hour.

Temple echoed Kamen’s sentiment, saying this bill is a small victory, but the slow, incremental increases are not enough to make an impact on low-wage workers and inequality.

“This modest pay raise is a step in the right direction,” Temple said, “but a more significant boost in the minimum wage that takes effect sooner will be necessary to make a real dent in the low wages and record inequality that are holding the state’s economy behind.”

Temple said the bill was championed in the state Assembly by Speaker Sheldon Silver, a Democrat, who said this past week he will introduce new legislation that will increase the minimum wage to $9 an hour by 2014, a year ahead of schedule.

But, as Temple explained, the conservative-leaning state Senate, led by majority leader Dean Skelos, a Republican, tried to block the bill in 2012, when it was originally proposed.

When asked if he’d support Silver’s new legislation, Skelos’ spokesperson Scott Reif said, “We have no interest in revisiting the issue at this time.”