Minimum wage has been a significant topic of conversation the last 10 months in New York, with supporters echoing over and over that an increase is necessary to create jobs and jumpstart the economy. Well, the supporters are wrong and I hope Governor Cuomo and lawmakers on both sides of the aisle consider the following data as we move into 2013.
Today, NFIB released a new study showing that an increase in the minimum wage would wipe out 22,000 jobs in New York and reduce economic output by $2.5 billion.
“Simply, raising the minimum wage will not create jobs,” said Mike Durant, NFIB New York State Director. “It will affect the smallest businesses that can least afford higher labor costs and they’ll respond by finding ways to reduce or limit the number of jobs they create.”
The research is based on legislation that failed to gain passage this year that would have increased the minimum wage from $7.25 per hour to $8.50 per hour with an automatic annual cost of living adjustment. It is widely speculated that a similar piece of legislation will be reintroduced in January.
“It’s easy for people to focus on the big corporations and assume that they can absorb the additional expense. What they don’t realize is that most of the damage will occur in the small business sector,” said Durant.
According to the report, a jump in the minimum wage to $8.50 per hour, along with unpredictable annual cost of living increases, would eliminate 22,000 jobs over 10 years. Depending on inflation the cost of hiring an entry-level worker in New York would rise between 17 percent and 66 percent by 2022. That’s more than many small businesses can handle.
“Our study estimates that 70 percent of the jobs lost will disappear from small businesses,” said Durant. “It’s already difficult for many of them to survive in the most expensive state in the country and this will push them over the edge.”
Advocates say a wage increase is necessary to reduce income inequality. But it won’t be much help to the people who lose their jobs, or unemployed New Yorkers who’ll have a harder time finding an entry-level job.
“Making New York even more difficult for employers is not the way to help workers,” said Durant. “The last two years has seen a focus on revitalizing New York’s economy and to that end, Lawmakers should focus on mandate relief, spending reforms and long-term tax cuts that make New York more attractive to employers.”
To view the report, visit www.nfib.com/s6413.