James Parrott, PhD, Deputy Director and Chief Economist of the Fiscal Policy Institute and an Adjunct Professor in the Public Policy Program at Hunter College contributed to the report, “The Effects of a $15 Minimum Wage in New York State” which was published in March by the Center on Wage and Employment Dynamics and the Institute for Research on Labor and Employment University of California, Berkeley. The introduction to the report follows along with a link to the entire brief, after the jump:
“Governor Andrew Cuomo of New York has proposed economy-wide minimum wages of $15 in New York City by 2019 and in the balance of the state by mid-2021. In this prospective study, we assess the impact of the proposal on workers, businesses, and consumers to estimate the net effect of the policy proposal on employment over the phase-in period.
Critics of minimum wage increases often cite factors that will reduce employment, such as automation or reduced sales, as firms raise prices to recoup their increased costs. Advocates often argue that better-paid workers are less likely to quit and will be more productive, and that a minimum wage increase positively affects jobs and economic output as workers can increase their consumer spending. Here we take into account all of these often competing factors to assess the net effects of the policy.
Our analysis applies a new structural labor market model that we created specifically to analyze the effects of a $15 minimum wage. We take into account how workers, businesses, and consumers are affected and respond to such a policy and we integrate these responses in a unified manner. In doing so, we draw upon modern economic analyses of labor and product markets. As we explain in the report, the main effects of minimum wages are made up of substitution, scale, and income effects. The figure below provides a guide to the structure of our model.”
Additionally, Dr. Parrott prepared a briefing of NYC Mayor Bill deBlasio’s FY 2017 Preliminary budget, in which he highlighted the following:
- Strong economic and tax growth used to further a different set of budget and policy priorities than predecessors: reinvesting in human services; committing new resources to address housing and homelessness; continuing and different investments in public safety; and changing employment and wage policies to aid workers.
- Cautious budgeting in the face of economic uncertainty: Outyear gaps have been reduced; City has a significant budget reserve cushion; new focus on budget savings and greater efficiencies promised in Executive Budget.
- Budget and tax cap proposals from Albany pose new risks for NYC: These risks have risen to a new level that departs from a 40-year history of City-State financial partnership.
- Still to be addressed: The City hasn’t yet focused on reforming local taxes to make them less regressive, especially residential property taxes.