New Analysis: Average Family Income of NY Wage Hike Beneficiary Above $53,000 Per Year
Research Suggests Proposed Minimum Wage Increase Will Not Reduce State Poverty Rates
Publication Date: April 2012
Topics: Minimum Wage
WASHINGTON – Today, the Employment Policies Institute (EPI) released a new analysis assessing the impact on poverty of Assembly Speaker Sheldon Silver’s proposed minimum wage increase (A.9148). The bill would raise New York’s minimum wage from $7.25 to $8.50 per hour and index the wage to rise with inflation in subsequent years. Public hearings on the bill are scheduled April 23rd in Manhattan, April 24th in Syracuse and May 11th in Buffalo.
According to EPI’s analysis of Census Bureau data, if the state minimum wage were increased to $8.50 per hour, the average family income of an affected employee would be $53,788 per year. Sixty percent of the beneficiaries of the proposed wage hike are either living at home with family (e.g. a parent or relative) or have a spouse that also works. Only 8.5 percent are single parents with children.
Nearly 30 percent of the beneficiaries of a proposed wage increase to $8.50/hour are young people age 21 and under.
The full analysis is available here: http://www.minimumwage.com/wp-content/uploads/2012/04/NY_PolicyBrief_Final.pdf
“Past economic research has clearly shown that raising the minimum wage is a poor way to reduce poverty, and this latest proposal in New York is no exception,” said Michael Saltsman, research fellow at EPI. “The data show that affected minimum wage earners are often living in families with incomes far above the poverty line.”
Twenty-eight states (including New York) raised their minimum wage between 2003 and 2007, with the stated goal of reducing poverty. However, research from economists at Cornell University and American University found no associated reduction in poverty.
To explain this finding, the authors cited poor targeting to low-income families and a reduction in demand for less-experienced employees following the wage hike.
In a study appearing this month in Industrial and Labor Relations Review, researchers from Cornell University, San Diego State University, and the University of Oregon find that New York’s last legislated wage hike was associated with a greater than 20 percent decline in employment of less-educated 16-to-29 year olds.
“New York’s supplement to the federal Earned Income Tax Credit is better-targeted at families in poverty and will not result in loss of employment or hours,” Saltsman concluded. “Lawmakers should focus on evaluating and tweaking this existing policy instead of resorting to a poorly-targeted minimum wage hike that makes it more difficult for low-skilled job applicants to get hired.”