The state’s new $15-an-hour minimum wage will be a game-changer for Long Island’s low-wage workers, increasing pay for as many as one in three local employees.
But whether it also forces the Island’s small businesses to cut jobs — or even close their doors — amounts to an experiment in how high the minimum wage can rise without harming the workers it is designed to help, some economists warned.
The 67 percent rise from the current $9 minimum, to be phased in over nearly six years, is a key part of the budget agreement reached Thursday between Gov. Andrew M. Cuomo, who pushed for the pay hike, and state legislators.
“Working families need a raise,” Cuomo said Thursday.
Economists debate whether the $15 wage will lead to job losses or provide enough of a spending boost to keep employment steady statewide. But many agree that the large size of the raise makes it difficult to predict its impact.
Modest increases “do not appear to have a negative effect on employment,” said William Lester, a professor at the University of North Carolina at Chapel Hill and co-author of several studies about minimum wage increases, who said he is “cautiously optimistic” that the $15 minimum wage will not lead to job losses.
However, he said, such a large increase is “uncharted territory” since nothing comparable has occurred in the recent past.
For many low-wage workers on the Island, the coming pay raise is cause for celebration.
“Nothing drives me crazier than trying to figure out if I should put food on the table or pay the light bill,” said Shirley Newsome, a Hempstead home health aide and single mother who had her electricity shut off during this winter’s blizzard. With $15 an hour instead of her current $10 hourly wage, Newsome said, “I would be able to meet that light bill every month.”
But some local small business owners said they fear they might need to freeze hiring, lay off workers or even shut down. On Long Island the latest census estimates show 96 percent of businesses employed fewer than 100 people in 2012.
The higher minimum wage “will slow and impede the growth of small business,” said Lou Basso, president of Alcott HR in Farmingdale, which offers benefits and payroll services to small employers with a combined workforce of 6,000, one third of them on Long Island. “Businesses will think twice before adding employees.”
New York isn’t alone in requiring a $15 minimum wage. West Coast cities such as Los Angeles, San Francisco and Seattle have enacted a gradual rise to $15 an hour, and California’s legislature last week approved a measure gradually raising the state’s minimum wage to $15.
On Long Island and in Westchester County the minimum wage will rise from $9 to $15 by Dec. 31, 2021.
In New York City the pay raise will go into effect over three years. Upstate, the minimum wage will rise to $12.50 by 2020, with the potential for further increases.
The federal Bureau of Labor Statistics estimated one quarter of Long Island jobs paid $12.43 an hour or less last year. The agency doesn’t calculate how many jobs paid less than $15 an hour. The Island’s median hourly wage was $20.12 last year, the agency estimated.
James Parrott, chief economist with the Fiscal Policy Institute, estimated that 369,500 workers on Long Island — 34 percent of the workforce — will get a pay increase because of the higher minimum wage, including workers who already make slightly more than $15 and excluding those who would have gotten raises to more than $15 anyway. The average increase would be $4,800 a year, much of which will get spent at local businesses, he said.
Parrott said total employment won’t decline because the raises “will provide a lot of additional consumer spending power, which means increased sales for mainly Main Street businesses.”
But other economists predicted that in stressed industries such as child care, agriculture and independent retail, businesses could be forced to cut payrolls.
Long Island stands to lose at least 22,000 jobs, or 1.6 percent of its total, as the minimum wage rises, according to a study by the conservative-leaning, Washington, D.C.-based American Action Forum and the Albany-based Empire Center for Public Policy. The groups estimated one in four Long Island workers — 338,000 — will earn less than $15 in 2021, and will either get pay raises or lose their jobs.
E.J. McMahon, president of the Empire Center, predicted a sharp increase in the minimum wage will raise prices and “strain some businesses to the breaking point.”
Briana Barr, a teacher at Marks of Excellence Child Care Center in Amityville, stands to benefit from the higher minimum wage. She earns $9 an hour teaching children ages 18 months to 3 years. The 30-year-old Farmingdale resident, who has a 5-year-old son at the center, said she relies on help from family members.
“It’s definitely the love of the kids, not the paycheck, that’s the reason I come to work every day,” Barr said.
A higher wage would enable her to return to college for her bachelor’s degree so she can pursue her dream of becoming a school principal, Barr said.
The 18-year-old center’s owner, Alicia Marks, said her teachers need and deserve higher wages. Many enroll their own children at the center, and their pay is so low they qualify for government child care subsidies.
But, she said, “I have no wiggle room to increase salaries without having to increase the child care” fees.
Raising fees would cause parents to drop out of the workforce or use cheaper, unlicensed care, said Marks, whose center serves 177 children. Many child care centers will need government subsidies or other help to afford the $15 minimum wage, said Marks, who serves on the board of the Child Care Council of Suffolk Inc., a trade group.
The $15 wage sparks fears among farmers, too.
Bob Nolan, a fourth-generation farmer and owner of 30-acre Deer Run Farms in Brookhaven, said he hires about 15 workers during the harvest season, paying about $11.71 an hour.
At a $15 minimum wage, “I’m not going to be able to raise my prices enough to cover my additional costs,” he said. “For the first time in our lives my wife and I talked about moving to Pennsylvania or to New Jersey.”With James T. Madore