Benefits of the state budget

Posted 8/21/12

With the economy on the rebound, Gov. Andrew Cuomo and the state legislature agreed to a new state budget on March 31, which Cuomo called one of the best budgets in years. That might be overstating …

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Benefits of the state budget

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With the economy on the rebound, Gov. Andrew Cuomo and the state legislature agreed to a new state budget on March 31, which Cuomo called one of the best budgets in years. That might be overstating the case a bit, but there is a lot in it that various groups will like.

Minimum wage workers in New York City will probably like the budget because it dictates that they will be paid $15 per hour within three years. Minimum wage employees in areas close to the city, meanwhile, such as Westchester and Long Island, may not like it quite as much, because they won’t achieve the $15 level until six years have elapsed. Minimum wage workers in upstate New York, however, are likely to be jealous of their counterparts in the aforementioned areas because they may not get to $15 at all. After five years, upstaters making the least amount allowable under the law will be entitled only to $12.50 per hour, and if two state agencies then decide the economy can’t handle it, the climb to $15 per hour may be halted.

Cuomo and other Democrats had wanted $15 per hour across the entire state, but Republicans in the House pushed back hard; thus the compromise. This is supposed to be meant to protect small upstate businesses that may not be able to survive the burden of a $15 per hour minimum wage, and it may do that—but it may also make some laborers in counties north of Westchester feel like second-class citizens. It may also prompt them to seek employment in upstate fast food establishments, where the minimum wage is guaranteed to be $15 per hour by 2021.

All of this raises the question whether the proposed increases will have the impact Cuomo was seeking when he joined labor groups in seeking the “Fight for 15” nearly a year ago. The idea is that a person who works in a full-time job should be able to live a decent life. The answer depends in part on the functioning of the economy in the years ahead.

According to the U.S. Department of Labor, the highest spending power of the federal minimum wage was in 1968, when the level was $1.60. But the purchasing power at that time in 2012 dollars was $10.34. In the upstate counties the wage will rise by $.70 through 2020, so given that it will still be somewhat behind the all-time high in terms of purchasing power, it is not likely to reach quite the height of the federal minimum wage in the 1960s. Still, given the recent history of the minimum wage, and its level in other states such as Pennsylvania where it is still $7.25 per hour, for the lowest-level upstate earners this is probably a better outcome than if the legislature had done nothing at all.

The other big item seen as an achievement for Cuomo and the Democrats is that this budget includes a provision for paid family leave. By 2018, all full-time and part-time workers who have been working at a job for at least six months, will be eligible for eight weeks of paid family leave, and the amount of leave time will be increased over four years to 12 weeks of leave, and guarantees that the employee can get his or her job back.

The leave will be paid for through a payroll deduction of up to $.45 per week the first year, with future amounts to be determined on the basis of an analysis of the costs of the program in the previous year. It will cover two thirds of an employee’s salary or wages. The leave will insure that mothers or fathers can leave work to take care of a newborn infant or newly adopted child, or care for an ill or dying relative.

The new law is one that Cuomo had been pushing for at speeches and rallies, but this law, like the minimum wage effort, was opposed by business groups. Unshackle Upstate executive director Greg Biryla wrote, “Rather than taking the opportunity to make New York more business friendly or grow its economy, this budget agreement imposes additional burdens and challenges for employers—especially those in upstate communities.

“This unprecedented minimum wage mandate on employers—in addition to a paid leave program—will ensure that New York’s business climate will remain one of the worst in the nation, even as our tax burden remains among the highest in the nation.”

Mike Durant, New York State director of the National Federation of Independent Businesses wrote, “The announced budget agreement incorporates provisions which will threaten the viability of New York’s small businesses and set our state on a path of complete economic uncertainty. With an agenda filled with false narratives, Gov. Cuomo’s push for the most expansive paid leave mandate and highest minimum wage will put Main Street in fiscal peril.”

According to the United Nation’s Institute of Labor, 98 countries offer paid family leave of 14 weeks or more to care for a new child. Why can’t we?

According to the Department of Labor, the minimum wage was worth at least $10.34 an hour in 1968. Why should it not be worth at least that much today, and adjusted for inflation increases from there?

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