No Override: Hiking New York’s Minimum Wage Will Trigger Unintended Consequences
High School Dropouts and African-Americans
Publication Date: December 2004
Topics: Minimum Wage
Albany – Governor Pataki’s veto of the minimum wage should stand, said the Employment Policies Institute today as the New York Senate reconvenes to consider an override of the governor’s veto. Raising the minimum wage would trigger unintended consequences that would directly and negatively affect the very low-income employees legislators believe they are helping.
Decades of research reveal that raising the minimum wage creates employment loss targeted at the most vulnerable employees in the economy. Research from Cornell University, for example, found that groups such as high school dropouts and African-American young adults suffer four times more employment loss from a minimum wage increase than their more educated and non-black counterparts.
A subsequent analysis by Cornell economists of the wage hike Governor Pataki vetoed found that the vast majority of the benefits would not go to families in poverty. Beneficiaries of the proposed hike are far more likely to be earning more than three times the poverty line than they are to be in poverty. In addition, very few of the beneficiaries of the wage hike are actually supporting a family on a single minimum wage income. Over 80 percent of those who would benefit are not the primary earner in their family, do not have children, nor are they single adults.
Recently, New York state was ranked last in “Economic Freedom” rankings by the Pacific Research Institute (in association with Forbes magazine). Important factors in New York’s poor showing were the state’s regulatory and fiscal systems which serve as disincentives for businesses to locate or expand in the state. Clearly, raising the minimum wage would only serve to make the economic climate even that much more damaging.
“Raising the minimum wage in New York will only serve to hurt the low-skill employees legislators believe they would be helping,” said EPI’s director of research Craig Garthwaite. “Governor Pataki realized the negative effects this increase would have on New York’s most vulnerable employees and lawmakers should follow his lead by letting the veto stand.”