Report outlines public cost of New York’s minimum wage

More than half of workers in New York who earned less than $15 an hour (in 2014 dollars) between 2011 and 2013 received public assistance or had a family member enrolled in safety-net programs, according to a study released today by UC Berkeley’s Center for Labor Research and Education. The annual cost of this support was estimated to be $9.1 billion.

The minimum wage can carry additional costs in terms of safety net support for workers in New York, says a new report.

The minimum wage can carry additional costs in terms of safety net support for workers in New York, says a new report.

“When jobs don’t pay enough, workers turn to public assistance programs in order to meet their own and their families’ basic needs,” reads the report, “The Public Cost of Low Wages in New York,” authored by Labor Center chair Ken Jacobs, along with the center’s Ian Perry and Jenifer MacGillvary.

The study comes at a time of public concern and debate about a shrinking American middle class, stagnating wages and a bifurcated workforce. With little action on the minimum wage expected at the federal level, where the wage remains at $7.25 per hour, the “Fight for $15” movement has been building in individual states and cities.

Over the next several years New York State will raise the minimum wage for fast-food workers to $15 per hour; Gov. Andrew Cuomo is now pushing for legislation to extend this to New York workers in all industries. The governor also recently committed to pay all state government workers $15 an hour.

The Labor Center’s report on the public cost of jobs paying less than $15 per hour in New York echoes the findings of earlier Labor Center research examining the fiscal impacts of low-wage work in the fast-food and retail sectors, including bank tellers and Wal-Mart employees, and in individual states.

Report highlights for the study include:

  • Of all New York workers paid less than $15 an hour, 52 percent received public assistance or had a family member enrolled in a safety net program.
  • Of all New York workers, 32 percent earned less than $15 an hour.
  • Eighteen percent of workers in New York earned less than $15 an hour and had at least one family member, including themselves, receiving public assistance such as food stamps, the Earned Income Tax Credit, Medicaid,or cash assistance programs.
  • Approximately 26 percent of state and local assistance funds in New York went to help low-wage workers.

The researchers looked at public assistance received by workers in specific industries, finding the biggest impact in food services, which had 74 percent of its workforce earning under $15 an hour, and 44 percent of those employees reporting they or a family member received some form of public assistance.
Other industries with particularly high public assistance among their workforces were retail, social assistance (such as childcare and services for the elderly and people with disabilities) and other services such as hairdressers, laundry workers and automotive service technicians, where more than half of the workers earned less than $15 an hour, and about a third received safety net help.

Says Jacobs, “More and more states and cities, particularly those with high costs of living, are deciding they’re not going to wait for federal action on minimum wage. During these debates, it’s important to remember the hidden public costs of low-wage work. This should be part of the discussion.”

RELATED INFORMATION

  • The authors also published a report in 2014 on the public impacts of low wages across the country. It is online.