Introduction and key findings

Since the beginning of the 20th century, U.S. states have used minimum-wage laws to help ensure that regular employment provides the means to a decent quality of life. For decades following its enactment in 1938, the federal minimum wage provided this protection for workers across the United States. Yet in recent decades, the buying power of the federal minimum wage has eroded because policymakers have failed to raise it such that its value keeps pace with rising prices. As a result, a parent who works full time and is paid the federal minimum wage does not currently earn enough through work to be above the poverty line (Cooper 2015a). Faced with this inadequate federal standard, lawmakers in many states have adopted higher minimum wages to better reflect state-specific costs of living, and to help alleviate the wage inequality that has grown considerably over the past generation, in part as a result of eroding minimum wages (Mishel 2014).

In July 2015, an executive-appointed New York wage board created to make recommendations related to fast food workers’ pay recommended that the minimum wage for these workers be gradually raised to $15 per hour by 2018 in New York City and by 2021 throughout the rest of the state. In September, the acting state labor commissioner signed an order adopting the wage board’s recommendations for fast food workers. Shortly thereafter, the state’s governor, Andrew Cuomo, called for a legislative increase in the state minimum wage that would raise the wages of all workers in the state to at least $15 per hour. As a first step toward this goal, Gov. Cuomo announced in November his intent to raise the minimum pay of state employees to $15 an hour on a schedule similar to that of the fast food wage order.

This report analyzes the likely effects of a statewide increase in the minimum wage—in terms of the workers who would be affected and the resulting change in their pay—if the increase were implemented along a schedule similar to that of the fast food wage order. In particular, the report analyzes the affected workforce by age, gender, race and ethnicity, education levels, work hours, family status, household composition, and family income.

Key findings include:

• Raising the minimum wage to $15 per hour by 2018 in New York City and by mid-2021 throughout the rest of New York state would directly or indirectly lift wages for 3.2 million workers­­—about 37 percent of all workers in the state.
  • In New York City, the increase would raise the wages of 1.4 million workers, approximately 35 percent of the city’s workforce.
  • Outside of New York City, the increase would lift pay for 1.7 million workers, roughly 38 percent of wage earners elsewhere in the state.
• Over the phase-in period of the increases, affected workers would receive $15.3 billion in additional wages. Once the increase to $15 is reached, the average affected worker would earn roughly $4,800 more in annual pay than she does today (assuming no change in the number of work hours).
• The workers who would benefit from the higher minimum wage do not fit the stereotype of low-wage workers being teenagers from affluent families working part time.
  • A mere 5.2 percent of affected workers are teenagers. Nearly 95 percent are 20 years old or older, and more than three-quarters are 25 or older.
  • The majority of affected workers (52.7 percent) are women.
  • Statewide, roughly half of affected workers are persons of color. However, within New York City, more than three-quarters of affected workers are persons of color, and statewide, workers of color would benefit disproportionately from the increase. More than half of all Hispanic or Latino workers in the state would receive a raise, as would 40.5 percent of all black or African American workers.
  • Of workers who would receive a raise, two-thirds work full time, more than half (52.3 percent) have some college experience, and nearly a third (33.0 percent) have children.
  • Low-income households would benefit disproportionately from the increase. More than a third (37.1 percent) of affected workers come from families either in poverty or “near poverty,” defined as having income less than 200 percent of the poverty line. Over three-fourths of workers in or near poverty would get a raise.
  • The workers who would benefit earn, on average, half of their family’s total income. More than a quarter (27.0 percent) of affected workers are the sole providers of their family’s income.
• Three major industries have more than 400,000 affected workers each: retail trade, restaurants, and the group of human service workers and care providers in the home-based and residential care, social assistance, and child care sectors.

Background

On September 10, 2015, Gov. Andrew Cuomo proposed increasing the New York state minimum wage in several stages to $15 an hour, which would make New York the first state with a statewide $15 minimum wage. This followed a decision by a Cuomo-appointed wage board to recommend a $15 minimum wage for employees of fast food chains.

The wage board’s action was informed by testimony at hearings around the state in which scores of workers, advocates, and experts described the inadequacy of pay in the fast food industry and the damaging effects such low pay has on workers, families, and their communities. Workers described having to work multiple jobs to make ends meet, sacrificing time with family, and struggling to afford rent, food, health care, and other necessities (Karlin 2015). Low pay among fast food workers also forces many of these workers to rely on public assistance programs to supplement their inadequate earnings, with 60 percent of workers in the industry using some form of means-tested government assistance (Allegretto et al. 2013).

The Economic Policy Institute’s Family Budget Calculator (Gould, Cooke, and Kimball 2015) shows that in the least expensive area of New York—the Buffalo/Niagara Falls metro area—a single, childless adult working full time, year round, requires an hourly wage of at least $13.48 to achieve a modest but adequate standard of living. Using inflation projections from the New York State Budget Office, by 2021 workers in this region, and in all other areas of the state, will require an hourly wage of $15 or more to be able to afford a modest yet adequate living standard.1 In New York’s metropolitan areas, a single adult will need an hourly wage of $15.72 or more by 2021 to meet her basic needs. Parents who are raising children will need an hourly wage much greater than $15 in 2021, even if both parents are working to support one child.2 The significant gap between current minimum-wage levels and the wages required to achieve a modest yet adequate living standard reflects the extent to which lawmakers have let the minimum wage erode.

Under legislation enacted in 2013, New York’s minimum wage was raised above the current $7.25 federal minimum wage and reached $9.00 on December 31, 2015. At $9.00 an hour, the state minimum wage is still 20.3 percent below its inflation-adjusted value in 1970, when its value (in 2014 dollars) was $11.29 per hour (using national measures of inflation).3 However, adjusting for changes in nationwide prices (inflation) does not reflect the higher cost of living in New York compared with the national average.

To match the 1970 value of the minimum wage accounting both for national price changes and the higher cost of living in New York would require a New York minimum wage of $14.27 in 2016.4 Adjusting that level for projected inflation in New York, as forecast by the State Division of the Budget, would bring the state minimum wage to $15.01 per hour in 2018, effectively the same minimum-wage level and implementation year set by the wage board for fast food workers in New York City.

Another critical benchmark for considering the appropriateness of a $15 minimum wage, and the state economy’s capacity to support it, is the growth in average worker productivity since 1970. Over the past 40 years, average labor productivity—the value of goods and services produced from each hour of work—has grown steadily across the United States, yet real (inflation-adjusted) hourly pay for the vast majority has barely budged (Bivens et al. 2014). This is due, in part, to the falling real value of state and federal minimum wages (Mishel 2014). In New York, had the 1970 state minimum wage of $11.29 in 2014 dollars been raised at the same growth rate as average U.S. labor productivity, it would be $21.40 today. This is not to say that the state minimum wage should be this high, but it does indicate that had lawmakers taken a different path over the past four decades, it could have been this high given growth in workers’ average output per hour.

Critics of raising the minimum wage sometimes argue that measuring changes in the minimum wage against changes in average labor productivity is inappropriate because productivity among low-wage workers has not grown as much as average labor productivity. This criticism misses the point. Rising average labor productivity provides the means for improving living standards for all workers. To observe that improvements in productivity would allow for a minimum wage of over $21 today is to say that had the benefits of productivity improvements been shared more equally, rather than being concentrated among the highest-paid earners and wealthiest households, the lowest-paid workers in our economy could be making over $21 an hour.5 It is a result of policy decisions that they are paid far less.

Finally, in assessing the suitability of a proposed minimum wage, analysts will also often compare the proposed minimum to the median hourly wage of full-time workers, a ratio known as the Kaitz index. (See Cooper, Schmitt, and Mishel 2015 for more information on the Kaitz index and historical Kaitz values of the U.S. minimum wage.) Based upon the American Community Survey (ACS) data used in this study, a minimum wage of $15 in 2021 would equal 58 percent of the projected median wage of full-time workers in New York state, under the conservative assumption that wages at the median grow no faster than projected inflation.6 This would be slightly above the high point of the federal minimum wage in 1968, when it equaled roughly 55 percent of the national median wage of full-time workers (although this difference may not be meaningful, since these estimates are produced using different data sets). Moreover, individual states have had minimum-to-median wage ratios as high as 67 percent, using the earliest available state-level data (Zipperer and Evans 2014). Additionally, a half dozen developed countries have national minimum wages equal to at least 57 percent of their median wage (Cooper 2015b).

While Gov. Cuomo has not yet released a specific timetable for the proposed phased-in statewide minimum-wage increase to $15, the schedule will likely resemble the fast food minimum-wage increase shown in the left side of Table 1. This report analyzes how raising the state minimum wage—applicable to all industries—to $15 over roughly the same period as the fast food wage order would affect New York workers and their pay. The right side of Table 1 shows the schedule of minimum-wage increases modeled in this report. Note that in the years after the New York City minimum wage has reached $15 per hour, this analysis assumes that the minimum wage would be indexed to inflation such that the state labor department would automatically make adjustments each year to preserve the inflation-adjusted value of the wage floor. This type of automatic indexing is the best way to ensure that the real value of a minimum-wage income does not erode over time. It removes the need for policymakers to repeatedly legislate further increases, and it allows businesses to plan for a small and predictable increase in the wage floor each year. Currently, 15 states and the District of Columbia use automatic inflation indexing.7

Demographic characteristics of affected workers

Raising New York’s minimum wage in stages to $15 by mid-2021 would lift pay directly or indirectly for nearly 3.2 million New York workers, comprising 36.6 percent of workers employed in wage and salaried positions throughout the state.8

Figure A shows the number of workers who would receive a raise as the minimum wage is gradually increased, combining the affected workers in both New York City and elsewhere in the state. In the first step, simulated to occur on April 1, 2016, the minimum is raised from $9.00 to $10.50 in New York City and to $9.75 in the rest of the state, raising pay for 2.06 million workers in the state. This includes 1.6 million workers who would directly benefit—meaning their current pay rate as of January 1, 2016, would be between $9.00 and $9.74 outside of New York City and between $9.00 and $10.49 in New York City. An additional 460,000 workers would indirectly benefit, meaning they would likely receive a raise through spillover or “ripple” effects because their current pay is just above the new minimum wage levels reached on April 1. Raising the minimum wage typically results in wage increases for workers further up the wage ladder because employers want to maintain some progression in their internal pay scales (Wicks-Lim 2006).

With each successive increase, the cumulative number of workers who would benefit grows. By the second step (simulated to occur on December 31, 2016), when the minimum wage reaches $10.75 outside of New York City and $12.00 in New York City, 1.9 million workers would directly receive a raise, and 511,000 would indirectly receive a raise. Thus, the total number of affected workers would rise to 2.4 million in the second step, to 2.7 million in the third step a year later, and so on in the subsequent steps, reaching just under 3.2 million in the final step on July 1, 2021.

Of the 3.2 million New York workers who would benefit from the minimum-wage increase, 1.4 million work in New York City (45.6 percent of the total affected population), and 1.7 million work in the downstate suburbs and upstate (54.4 percent of affected workers throughout the state). Among all New York City workers, 34.8 percent would benefit from the increase. Among workers elsewhere in the state, 38.3 percent would receive a raise. See Appendix Table A1 for details on the number of workers directly and indirectly affected at each step of the minimum-wage phase-in for both city and non-city workers.

Age

The low-wage workers likely to benefit from increasing the minimum wage are often stereotyped as teenagers earning discretionary spending money. Although this would not justify paying them wages significantly lower than those paid to their counterparts a generation ago, this stereotype is false. In fact, as the tendency for young adults to attend college has grown over the years, teenagers account for a relatively small portion of the New York workforce and represent only 5.2 percent of those who would be affected by increasing the minimum wage to $15. Nearly 95 percent of affected workers are at least 20 years old.

Figure B indicates that over three-fifths of those affected are between the ages of 25 and 54. Among affected workers, far more are age 40 or older (40.9 percent) than are under age 25 (23.8 percent).

Gender

Women account for 52.7 percent of workers who would be affected by the minimum-wage increase, slightly higher than their share of the New York workforce. As shown in Figure C, 39.0 percent of New York’s working women would get a pay increase if the state minimum wage were raised to $15 by mid-2021, as would about one-third (34.3 percent) of the state’s working men. About 37 percent of working mothers and 24.3 percent of working fathers would benefit. The affected rates are even higher for single parents: Over 45 percent of single working mothers would get a raise from a $15 state minimum wage, as would 39.3 percent of single working fathers.

Race/ethnicity

When the state is considered as a whole, about half (49.1 percent) of those who would benefit from a minimum-wage increase to $15 are white, non-Hispanic workers, as shown in Figure D. Latino workers of any race make up the next largest share, at just under a quarter (24.6 percent) of the total affected population. Black or African American workers are 15.2 percent of the total, Asians comprise 8.9 percent, and workers of other races or ethnicities make up the remaining 2.2 percent.

Despite being a smaller share of the total affected population statewide, workers of color would benefit from a minimum-wage increase at significantly higher rates than would white, non-Hispanic workers. The bar chart in Figure D shows the share of each race or ethnic group that would receive a raise if the minimum wage were increased to $15 by mid-2021. As the figure shows, 40.5 percent of all black or African American workers would receive higher pay, as would more than half of all Latino workers. More than a third (37.5 percent) of Asian workers would receive a raise—while 30.9 percent of white, non-Hispanic workers would receive higher pay.

Because the racial and ethnic composition of New York City is different than that of the rest of the state, there are meaningful differences in the composition of the workers likely to be affected by the proposed minimum-wage increase to $15. Among the workforce in New York City, Hispanic workers comprise the largest share of the affected population, at 36.7 percent of workers likely to get a raise. White, non-Hispanic workers make up just less than one quarter (24.0 percent) of the affected workforce. Black or African American workers account for 21.5 percent, and Asians are 15.3 percent of those affected. Demographic breakdowns for the affected populations in the state as a whole, in New York City, and outside New York City can be found in Appendix Tables A2, A3, and A4, respectively.

Education

Many of the workers who would benefit from increasing the New York minimum wage to $15 by 2021 have more education than is commonly acknowledged. As shown in Figure E, more than half of affected workers have at least some college experience, with nearly 10 percent having an associate degree and almost 20 percent holding a bachelor’s degree or higher.

The bar graph in Figure E shows the share of workers at each education level who would receive a raise from increasing the state’s minimum wage to $15 by 2021. Not surprisingly, workers with lower levels of education are far more likely to be affected. Two-thirds (67.0 percent) of workers with less than a high school education would receive a pay increase, as would half (50.8 percent) of all workers with only a high school diploma. Just over one-third (35.4 percent) of those with an associate degree stand to benefit from the higher minimum wage, as do about one in six New York workers with a bachelor’s degree or higher.

Hours of work

Many New York workers who would benefit from a state minimum-wage increase to $15 also work longer hours than is commonly acknowledged; they are not predominantly working part time or in after-school jobs. As shown in the pie chart in Figure F, two-thirds of affected workers work full time, defined as working at least 35 hours per week. Another 24.7 percent work between 20 and 34 hours per week, and only 8.4 percent work less than 20 hours per week.

It is important to note that many individuals who work less than full time are not opting for fewer hours by choice. Some are limited by a lack of available work, while circumstances prevent others from seeking full-time employment, such as the need to care for a family member, or a lack of adequate work supports that might facilitate a full-time schedule (e.g., access to child care, paid leave, or a flexible work schedule). For these workers, an increase in their hourly rate of pay is arguably even more important, as it could provide resources that could enable them to work more hours.

The bar chart in Figure F shows that 30.5 percent of full-time workers in the state are likely to benefit from raising the minimum wage to $15, compared with nearly two-thirds of those working 20­–34 hours per week and more than half of those who work less than 20 hours per week.

Household and family income

The great majority of New York workers who would benefit from increasing the minimum wage come from families of modest means. As shown in Figure G, about 43 percent of affected workers have total household incomes of less than $50,000, and nearly 63 percent have household incomes of less than $75,000. While these levels of household income may seem high relative to a minimum-wage income, overall household incomes of New York workers, including those who commute from other states, tend to be higher than elsewhere in the country. Less than a quarter (24.3 percent) of all New York workers (including those who commute) have total household incomes below $50,000, and only 42 percent have household incomes less than $75,000. This means that workers from the least-well-off households would disproportionately benefit from the wage hike.

Often, minimum-wage opponents say that the minimum wage is “poorly targeted” because some of the workers who would benefit from a minimum-wage hike come from middle-income families. Considering how much of the net job change since the onset of the Great Recession has occurred in low-wage sectors, it is perhaps not surprising that many middle-income families have a low-wage earner.9 Yet the fact that the minimum wage provides protection to workers at all levels of family income is not a failing of the law; rather, it reflects the minimum wage’s role as a labor standard. The minimum wage prevents exploitation of workers, regardless of their socioeconomic background. No worker, regardless of his family income level, should have to work for unacceptably low wages. Moreover, the fact that both low- and middle-income families alike stand to benefit from an increase in the state’s minimum wage underscores that the failure to adequately raise the minimum wage over the past 45 years has hurt both low- and middle-income families.

Nevertheless, when looking at family income of the affected workforce (listed in Appendix Table A2), it becomes clear that many of the workers who would benefit from a higher state minimum wage are desperately in need of higher incomes.10 Just less than a quarter of affected workers are either in poverty or have family incomes within 150 percent of the poverty line. In fact, 37.1 percent of affected workers are either in poverty or what experts often describe as “near poverty,” having total family income less than 200 percent of the poverty line. Roughly 18 percent of all New York workers have family incomes that fall into this “near poverty” range, indicating again that the workers with the greatest family need would disproportionately benefit from a higher state minimum wage.

Figure H shows the share of workers grouped by ratio of their family income to the poverty line who would benefit from the higher minimum wage. Three quarters of workers in poverty would get a raise, as would 78.2 percent of workers with family incomes between 101 percent and 200 percent of the poverty line. In contrast, just over 20 percent of workers with family incomes at or above 300 percent of the poverty line would be affected by the policy change.

Family status and children

Many of the New York workers who would benefit from increasing the state minimum wage to $15 are supporting families and children. As shown in the pie chart in Figure I, more than one-third (35.8 percent) of the affected workers are married, and just less than one-third (33.0 percent) of affected workers have children.

The bar chart portion of Figure I shows the share of each group of workers—by their family status—who would benefit from increasing the state minimum wage to $15 by 2021. More than a quarter of all working married parents in New York would get a pay raise. For single parents facing the challenge of raising one or more children on their own and having to juggle the demands of child care and work, low pay only compounds their difficulties. In New York, over 340,000 working single parents—roughly 44 percent of all working single parents in the state—would get a raise if the state minimum wage were increased to $15.

Statewide, 1.3 million children have a working parent who would benefit from a minimum-wage increase to $15 by 2021—equaling 34.3 percent of all children in the state.

Researchers also suspect that the increased share of jobs paying low wages in recent years has contributed to a rising share of young people delaying marriage, postponing having children, and continuing to live with their parents longer into adult life.11 Thus, it is not surprising that many unmarried or childless young adults in their 20s and 30s would benefit from an increase in the minimum wage.

The importance of affected workers’ pay to their total family incomes

Low-wage workers are sometimes characterized as “secondary earners,” suggesting that their work earnings are discretionary or inconsequential to their family’s financial health. The data show that this is not at all the case; the workers who would benefit from increasing the minimum wage to $15 by 2018 in New York City or by 2021 in the rest of the state are often the primary breadwinners for their families. On average, workers who would benefit from increasing the minimum wage to $15 earn 50.3 percent of their family’s total income. Among workers age 25–39—who constitute 35.3 percent of all affected workers—their earnings account for nearly 58 percent of their family’s total income. More than 855,000, or 27.0 percent, of all affected workers are the sole providers of income for their families.

Raising the state minimum wage to $15 would provide a significant boost to the incomes of affected workers. Once the $15 minimum is fully phased-in, affected workers would receive, on average, $4,800 more in annual income (assuming no change in work hours).

10 economic sectors account for nearly three-fourths of affected workers

Table 2 shows the 10 industries in New York that account for the largest numbers of workers who would be affected by increasing the state minimum wage to $15 by 2021. Combined, these 10 sectors account for just over 2.3 million, or 73.1 percent, of the 3.2 million affected workers.

Retail trade and restaurants have long been recognized as the largest employers of low-wage workers likely to be affected by raising the minimum wage. The New York Fast Food Wage Board has already acted to institute a wage order that is expected to raise pay for an estimated 132,000 workers employed by large chain restaurants. The wage order would cover roughly one-third of all restaurant workers projected to be affected by a phased-in $15 minimum wage. (Note that these workers are included in the figures presented here; see endnote 8 for further detail.) Retail has, by far, the greatest number of workers who would be affected by the proposed minimum-wage increase, with over 555,000 workers likely to get a raise, or 57.7 percent of all retail trade workers. Within retail, just over two-thirds of all grocery store workers (not listed in the table) would be affected by raising the minimum wage to $15.

A large group of workers providing health and human services would also be affected by a statewide increase in the minimum wage. Among these workers are home healthcare workers in the ambulatory care sector, nursing home workers and providers of services to the developmentally disabled in the residential care sector, and child care and other human service providers in the social assistance sector. Most of these low-wage health and human service workers are employed by nonprofits under contract to state and local governments or are funded under a Medicaid-supported program. In total, there are approximately 420,000 New York workers in these three health and human service sectors who would benefit from raising the minimum wage to $15, representing nearly half (48.4 percent) of all workers in these sectors. Among child care workers, who are included in social assistance, over 60 percent would be affected, and if home healthcare workers were broken out of the broader ambulatory sector, their share likely would be over 90 percent since they are among the lowest-paid workers in the state.12

About 20 percent of local government employees would be affected by the higher minimum wage, although this is one of the largest employment sectors in the state. In total, roughly 172,000 local government workers, including those working for school districts, would be affected by the proposed increase.

Other sectors among the 10 largest employers of affected workers include educational services; finance, insurance, and real estate; construction; and transportation and warehousing.

Tables showing the breakdown of affected workers by industry in New York as a whole, in New York City, and in the rest of the state can be found in Appendix Tables A5, A6, and A7, respectively.

Conclusion

Since its inception in the Great Depression, a strong minimum wage has been recognized as a key labor market institution that, if effectively maintained, can provide the foundation for equitable and adequate pay for American workers. However, the failure to regularly and adequately raise the minimum wage over the past five decades is one of several policy failures that have denied a generation of American workers more significant improvement in their quality of life. In fact, the erosion of the minimum wage has left low-wage workers today earning significantly less (in inflation-adjusted terms) than their counterparts 50 years ago.

In the absence of changes at the federal level, state policymakers are taking action into their own hands by updating state labor standards to reflect today’s economy and the needs of workers and their families. Raising the New York minimum wage in several steps to $15 would restore its value to a level that ensures full-time work is a means to escape poverty—and would provide more than a third of New York’s workers with a long-overdue improvement in their standard of living.

About the author

David Cooper is an economic analyst with the Economic Policy Institute. He conducts national and state-level research on a variety of issues, including the minimum wage, employment and unemployment, poverty, and wage and income trends. He also provides support to the Economic Analysis and Research Network (EARN) on data-related inquiries and quantitative analyses. David has been interviewed and cited by numerous local and national media for his research on the minimum wage, poverty, and U.S. economic trends. He holds a Master of Public Policy degree from Georgetown University.

Appendix A: Additional tables and figures

Appendix B: Technical documentation and methodology

EPI’s minimum-wage simulation model relies on 2014 data from the American Community Survey (ACS) published by the U.S. Census Bureau, and harmonized by Ruggles et al. (2015) at the Minnesota Population Center. The ACS is the largest annual survey conducted by the Census Bureau, interviewing more than 2.3 million households throughout the United States. The survey measures a host of demographic, social, and economic characteristics of the U.S. population, and was created to replace the long-form version of the decennial census.

The large size of the ACS sample makes it ideal for studying state and sub-state areas. In addition, because the ACS is the only major public statistical survey containing information on individuals’ place of work—as opposed to simply recording respondents’ place of residence—it is ideal for assessing changes in labor policy. However, the ACS only records workers’ annual income and wages. Therefore, to study the effects of changes in hourly wages, we must first impute hourly wage information for all workers in the sample using their reported annual wage income, usual hours of work per week, and weeks worked in the previous year. One further complication is that the ACS asks respondents to record the number of weeks they worked in the previous 12 months by selecting one of several intervals (e.g., 1–13 weeks, 14–26 weeks, 50–52 weeks, etc.). Thus, in order to impute an hourly wage, we must first construct a discrete value for respondents’ weeks worked in the previous year. To do this, we use the Annual Social and Economic Supplement to the Current Population Survey (CPS-ASEC), which does include information on workers’ discrete weeks worked in the previous calendar year. Using linear regression, we estimate how various demographic, work, and economic variables vary with respondents’ weeks worked per year, utilizing separate regression models for each interval. We then apply the regression coefficients from those models to the ACS data to predict workers’ discrete weeks worked in the previous year.

We estimate respondents’ hourly wage by dividing their annual wage income by their usual hours of work per week, multiplied by their predicted weeks worked in the previous year. This imputation process is not ideal, as imputing hourly wages in this way compounds measurement error in the three variables used to derive hourly wages. Indeed, imputed hourly wages fall below the statutory minimum wage for roughly 10 percent of the ACS worker sample. However, the ACS is the only publicly available data set with the adequate sample size and place of work information needed to conduct this type of analysis.

We restrict the ACS sample to individuals age 16 and older, who are currently employed and for whom imputed wage values are greater than $0.93 or less than $185. In all calculations of workers affected by increases in the minimum wage, we exclude all observations with imputed hourly wages less than 50 percent of the statutory minimum wage prior to the simulated increase.

Prior to the simulation in this analysis, we adjust wage values to reflect the increase in New York’s state minimum wage to $9.00, which occurred on December 31, 2015. Observations with imputed hourly wages below $9.00 are increased in proportion to the change in the minimum wage. For example, if an observation has an imputed hourly wage of $8.80 in 2014, when the state minimum wage was $8.75, their hourly wage is adjusted to equal ($8.80/$8.75) x $9.00 = $9.05. In addition, we assume natural nominal wage growth prior to the first increase equal to the rate of nominal average wage growth for workers in the bottom 20 percent of the hourly wage distribution for New York, prorated for the number of months between the midpoint of the sample period and the month prior to the first simulated increase in the state minimum wage.

We also assume population growth between the data period and the proposed first increase. ACS person weights are adjusted by the projected annual New York state population growth rate from 2015 to 2020, as estimated by the Cornell Population Center, of 0.154 percent (Cornell University 2011). This annual growth rate is prorated by the number of months that occur between the midpoint of the data and the month that the first proposed minimum-wage increase would occur.

Having made these adjustments, “directly affected” workers are identified as those workers with hourly wages between 50 percent of the statutory minimum wage prior to the proposed increase, and the proposed minimum wage applicable in the worker’s jurisdiction of work (i.e., within New York City or elsewhere in the state). We identify “indirectly affected” workers as those workers whose wages are greater than or equal to the proposed new minimum wage, but less than 115 percent of the dollar value of the proposed increase—hereafter referred to as the “indirectly affected cutoff.” This cutoff point is chosen to reflect the findings of Dube, Giuliano, and Leonard (2015), which observed minimum-wage spillover or “ripple” effects for workers earning 15 percent above newly implemented minimum wages. For example, for an increase from $9.00 to $9.75, directly affected workers have a wage between $4.50 and $9.74. Indirectly affected workers would be those workers with wages between $9.75, inclusive, and $11.21, exclusive. The indirectly affected cutoff in this case would be $11.21.

After each step, if an individual is predicted to be either directly or indirectly affected, her wage is adjusted to reflect her implied raise. For directly affected workers with hourly wages of at least 90 percent of the statutory minimum wage prior to the simulated increase, their raise is equal to the greater of: 1) the difference between the new minimum wage and their existing wage; or 2) one-quarter of the difference between their existing wage and the indirectly affected cutoff. We allow for these two possibilities because we believe it is likely that workers close to, yet still below, the new minimum wage prior to the increase will receive a larger raise than simply an increase to the new minimum. For example, if a worker was earning $9.70 per hour prior to an increase in the minimum wage from $9.00 to $9.75, it stands to reason that her employer will give her more than a $0.05 raise, particularly if lower-paid colleagues are receiving raises as large as $0.75. For workers earning between 50 percent and 89 percent of the minimum wage prior to the increase, they are given a raise proportional to the increase in the minimum. For example, a worker earning 75 percent of the minimum wage prior to the increase would receive a raise that brought her to 75 percent of the new minimum wage.

For all indirectly affected workers, their raise is modeled as one-fourth of the difference between their existing wage and the indirectly affected cutoff. For example, an indirectly affected worker previously earning $10.00 in the above scenario would receive a raise of 0.25 x ($11.21-$10.00), or $0.30.

Having counted these directly and indirectly affected workers, the program iterates to the next proposed increase. Again, weights are adjusted to reflect the predicted population growth between the first and second increments in the proposed minimum-wage increase. Wage values are again adjusted to reflect natural nominal wage growth; however, all workers who received a raise as a result of the higher minimum wage are given only 50 percent of the assumed natural nominal wage growth applied to all other observations. The same method for identifying directly and indirectly affected workers is applied, and the counts are recorded. The model iterates in this fashion for all remaining steps.

Two additional controls are applied throughout the simulation. First, workers in occupations that customarily receive tips as the majority of their earnings are coded with hourly wage values equal to the applicable subminimum wage for tipped workers, or “tipped minimum wage.” We make this adjustment so that reported changes in wage values reflect changes in the wages required to be paid by employers or tipped staff. See Allegretto and Cooper (2014) for more information on tipped minimum wages, and the occupations that are considered tipped occupations. In New York, the tipped minimum wage is equal to 83 percent of the full minimum wage; thus in all steps, workers in tipped occupations are set to 83 percent of the applicable minimum wage in each step. Second, because state legislatures have no jurisdiction over federal employees, federal government workers are excluded from the directly and indirectly affected groups throughout this analysis. However, federal government employees are included in counts of the total workforce.

Finally, no controls are made in this analysis for workers already scheduled to receive a raise as a result of the fast food wage order or the governor’s executive order to raise wages for state employees. The fast food wage order applies to “chain” fast food restaurants, defined as those with at least 30 locations nationwide. The New York Fast Food Wage board estimated that 62 percent of fast food workers in the state were in chain locations; however, the data used in this study do not allow for us to identify chain versus non-chain employees. With roughly 213,000 fast food workers in the state and an estimated 62 percent in “chain” restaurants, this means that we may be overestimating the population likely to be affected by a statewide minimum-wage increase, independent of the fast food wage order, by roughly 132,000 workers. Additionally, we estimate that roughly 67,000 state employees would likely receive a raise under a statewide minimum-wage increase, independent of the governor’s executive order. Consequently, the results may overstate the total affected workforce resulting from a statewide minimum-wage increase by as much as 199,000 workers, or roughly 6.3 percent of the total.

Endnotes

1. Author’s calculations using New York State Budget Office Projections for the state CPI, 2014–2021, and data from the Economic Policy Institute’s Family Budget Calculator (Gould, Cooke, and Kimball 2015).

2. See Cooper (2015c) or National Employment Law Project (forthcoming 2016).

3. Author’s calculations using the CPI-U-RS

4. Author’s calculations using the CPI-U-RS, Regional Price Parity (RPP) data from Bureau of Economic Analysis (2015), and New York State Budget Office projections for the state CPI 2014–2016. Such an adjustment would not be appropriate if New York prices were equally high, relative to the national average, in 1970. However, data on housing costs from the U.S. Census Bureau indicate that that is very likely not the case. Housing costs are the largest driver of regional price differences. Data from the U.S. Census Bureau show that from 1970 to 2010, median gross rents rose by 78 percent in constant dollars nationally (author’s calculations using data from U.S. Census Bureau 2014 and American FactFinder). However, in New York state, median gross rents rose by 89 percent in constant dollars over the same period, indicating that overall prices in New York have almost certainly grown more rapidly than the national average.

5. One indication of the trend where the average worker has not been benefitting from the growth in the state’s economy is that, from 2001 to 2013, business profits per worker in New York state increased by 61 percent, while labor compensation per worker rose by only 34 percent, about the same as the increase in consumer prices over that period (Fiscal Policy Institute 2015).

6. Author’s analysis of American Community Survey microdata, 2014.

7. For information on all state and local minimum-wage levels, see http://www.epi.org/minimum-wage-tracker/.

8. This figure includes workers in fast food, although most will receive wage increases as a result of the Fast Food Wage Board order. The wage order applies to “chain” fast food restaurants, defined as those with at least 30 locations nationwide. The wage board estimated that 62 percent of fast food workers in the state were in chain locations; however, the data used in this study do not allow for us to identify chain versus non-chain employees. Consequently, we do not control for those workers in fast food who will already receive wage increases. With roughly 213,000 fast food workers in the state and an estimated 62 percent in “chain” restaurants, this means we may be overestimating the population likely to be affected by a statewide minimum-wage increase, independent of the fast food wage order, by roughly 132,000 workers (4 percent of the total affected population). We also do not control for the governor’s executive order raising pay for state employees, as the exact timeframe for these increases has not been specified. An estimated 67,000 state employees would be affected in the proposed increase in this study.

9. Fiscal Policy Institute (2014), 102.

10. Family income measures a smaller unit than household income, as households can contain multiple coresident families.

11. See Dietz (2014) and Jacobsen and Mather (2011). According to the latter, the share of young adults 25–34 who are married fell from 55 percent in 2000 to 46 percent in 2011, and the number living at home rose from 4.7 million in 2007 to 5.9 million in 2011.

12. According to BLS Occupational Employment Statistics, the 90th percentile hourly wage in 2014 was $12.57 among the 81,000 home health care workers within New York’s ambulatory care industry.

References

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