Economic Effects of a New York Minimum Wage Increase: An Econometric Scoring of S6413
The NFIB Research Foundation analyzed the potential economic impact of implementing the changes to New York minimum wage laws contained in S6413 on private sector employment and production. S6413, originally introduced on February 6, 2012 by Senator Jeffrey D. Klein, would:
(a) raise the minimum wage in New York to $8.50 beginning in 2013, and
(b) provide for future increases in the minimum wage dependent upon cost of living adjustments.
Billed as a measure that would help reduce income inequality, the long-run effect of the legislation would be the destruction of jobs and economic production in the state of New York. Depending upon the rate of inflation in future years, enacting legislation containing the essence of S6413 could result in nearly 22,000 lost jobs in New York over a ten-year period and a reduction in real output of $2.5 billion. More than 70% of the lost jobs would be jobs from the small business sector of the economy.
It is widely speculated that a similar piece of legislation will be reintroduced in January 2013. Advocates say a wage increase is necessary to reduce income inequality. But it won’t be much help to the people who lose their jobs, or unemployed New Yorkers who’ll have a harder time finding an entry-level job.