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The wrong example

Saying that “today in New York, we are leading by example,” Gov. Andrew Cuomo on Tuesday announced he would increase the minimum wage for state workers to $15 an hour.

Roughly 10,000 state employees would benefit from Mr. Cuomo’s action, but his real target is much larger: The governor wants the same minimum wage of $15 an hour for all workers—public and private alike—across the state.

There’s a problem with Mr. Cuomo’s example, though. It’s not the fact he’s acting unilaterally, asserting executive authority. The state constitution gives the governor fairly broad powers in this regard.

Nor is it the cost, which his administration estimates at $21 million a year in 2021, when the wage hike is fully phased in. The true cost could be higher—the Empire Center for Public Policy has estimated the impact for the executive branch alone at $25 million annually—but in a state budget of some $150 billion, even $50 million would be a rounding error.

The real problem is the message Mr. Cuomo’s example is meant to send to New York’s private sector: If I can do it, so can you.

In fact, there are big differences between a hike for state employees and one for all workers statewide. An obvious one is scale; raising the state’s minimum wage to $15 would affect an estimated 3.1 million workers. While many workers would take home more pay, a recent study conducted for the Empire Center estimates that 200,000 to nearly 600,000 people (including perhaps 44,000 in the Finger Lakes region) could lose their jobs if the statewide minimum wage rises to $15 an hour.

Why is that? Because unlike the state government, private employers do not have taxing authority. They also must be competitive to survive and grow. Faced with a mandated increase in labor costs, they would try even harder to automate or otherwise get by with fewer employees.

We’ve argued before there are other, better ways—such as an enhanced earned income tax credit—to boost the earnings of low-income workers. It’s too bad Mr. Cuomo has chosen not to champion them.

11/13/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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