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New Yorkers making less than $15 wage cost government more, says University of California at Berkeley study

Fast food workers converge in downtown Manhattan on

Fast food workers converge in downtown Manhattan on July 22, 2015, ahead of New York State wage board's public meeting about the $15 per hour minimum wage. Photo Credit: Yeong-Ung Yang

ALBANY

A new study found that New Yorkers making less than $15 an hour — the proposed new minimum wage — have qualified for billions of dollars in social services, according to the research by the University of California at Berkeley.

The study, paid for in part by advocates of a higher minimum wage, is scheduled to be released this week. It will be used to spearhead a new effort focused on the potential tax savings of Gov. Andrew M. Cuomo’s proposal to increase the minimum wage to $15 by 2019 in New York City and 2021 statewide. The minimum wage rose to $9 on Dec. 31.

The study found that, from 2011 to 2013, 18 percent of all New York workers earned less than $15 an hour and were either enrolled in or had a family member enrolled in at least one social services program.

Among workers making less than $15 an hour, just over half received social services or had a family member receive public assistance, according to the study.

The study estimates those workers qualified for $9.1 billion in federal, state and local social services. Of that, the cost to state and cost local governments was $2.9 billion.

“When jobs don’t pay enough, workers to turn to public assistance programs in order to meet basic needs,” stated the researchers, who were paid in part by the labor-backed Fiscal Policy Institute in New York. “The cost of low-wage work is widely borne; the benefits of wage increases would be as well.”

The study, however, doesn’t predict the savings to taxpayers if the wage is raised to $15.

E.J. McMahon of the nonpartisan, fiscally conservative Empire Center for Public Policy said the study wrongly assumes most low-wage workers are employed full time and supporting a family. McMahon said most low-wage workers are working part-time to augment household income or are students, and so the large savings in social services cited in the report are unrealistic.

McMahon said a slight majority of low-wage workers are employed part-time, although there is no precise figure. The California study defines a low-wage family as having at least one member earning less than $15 an hour and working at least 10 hours a week, 45 weeks per year.

“Most of those minimum wage people aren’t poor, have not been poor and never will be poor,” McMahon said. But he said the 67 percent wage increase would dramatically increase the cost of child care and other businesses that employ part-time workers, making child care far more expensive.

“You are going to have some savings, but more importantly, you will have a lot more people who are earning enough so they don’t have to rely on social services,” Parrott said, the former director of fiscal analysis in the state comptroller’s office. “There will undoubtedly be some savings and also, in terms of fiscal impact on New York and local governments, low-wage workers with higher wages will be paid more and so will provide more in income taxes, get less of the Earned Income Tax Credit, and spend more and pay more sales taxes.”

One of the researchers, Ken Jacobs, who is chairman of the Berkeley Center for Labor Research, said he didn’t separate full-time from part-time workers in this study. He said, however, that a previous national study of low-wage fast-food workers found half of even the full-time workers or their family members received social services.

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