ALBANY, N.Y. (CBSNewYork/AP) — A new study by economists at the University of California-Berkeley predicts that raising New York state’s minimum wage to $15 would improve the living standards of more than 3 million people, far outweighing what the report calls a “small” drag on employment.
The report estimates that raising the now $9-per-hour wage to $15 would give the average affected worker $4,900 more annually. They concede that higher labor costs could slow job growth and that prices will go up somewhat, but expect those adverse effects to be tempered by benefits including increased spending in local economies, higher productivity and less reliance on government assistance.
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“A restaurant customer may pay 30 cents more for a hamburger, but the restaurant worker will get paid a whole lot more,” said Michael Reich, a Berkeley economist who was one of the report’s authors.
Gov. Andrew Cuomo has proposed gradually raising the minimum wage to $15 by the end of 2018 in New York City and by July 2021 elsewhere in the state. The Legislature is expected to vote on Cuomo’s proposal in the coming weeks. New Jersey has also unveiled a plan to help boost minimum wage to $15 an hour.
Much of the debate so far has been highly polarized, with labor groups predicting the increase will have little impact on business while business owners warn of higher prices, layoffs and increased automation. The Berkeley study, according to Reich, tried to take into account all the effects of a minimum wage hike: increased spending by low-wage workers, less government assistance, higher labor costs for businesses and slower job growth.
While some businesses will cut back on employment or turn to automation to cut costs, the report found, it will be mitigated by increased spending by low-wage workers.
“The key point,” the study concluded, “is that a $15 minimum wage has a very small net effect on employment.”
Cuomo’s plan has received considerable backlash from the National Restaurant Association, as well as local small business owners who say the wage increase would devastate the state’s economy by raising prices and reducing employment.
The National Restaurant Association has also fought the governor on the proposal, on claims that the proposal was unconstitutional when it came to raising minimum wage for those in the fast food industry.
Michael Jubie owns Headless Horseman Hayrides, a popular Hudson River Valley tourism attraction, as well as three other small businesses, said a $15 minimum wage will put him at a competitive disadvantage to attractions in other states.
“We bring in 60,000 people a year,” he said. If he’s forced to raise prices significantly, “they’re going to go somewhere else.”
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