Wage hikes appear in line with times

At the start of the new year, the minimum wage in New York was increased. In New York City and Nassau, Suffolk, and Westchester Counties the minimum wage is now $16 per hour and in the rest of the state it is now $15 per hour. Beginning in 2027 the state minimum wage will be tied to the Consumer Price Index.

As of the beginning of 2024, 25 states in addition to New York, increased the amount of their minimum wage.Thirteen states continue to adhere to the federal minimum wage of $7.25 per hour and Alabama, Louisiana, Mississippi, South Carolina, and Tennessee have no minimum wage requirement at all.

Legislation has been proposed by Sen. Bernie Sanders to increase the federal minimum wage from the current $7.25 to $17 an hour by 2029. According to the non-partisan Congressional Budget Office this legislation would lead to the loss of 700,000 jobs with a 33% chance that job losses could exceed 1.4 million workers. Those lost jobs would impact low-income workers the hardest. While the minimum wage was never meant to support a family or allow for middle class lifestyle, they do provide an entry to the labor force and their loss would create a barrier to that entry.

The Congressional Budget Office report goes on to state that job losses caused by an increase in the federal minimum wage could also lead to additional spending on programs like unemployment insurance. In addition, spending on federal healthcare programs would also increase by as much as $27 billion and in total the federal deficit could increase by as much as $59 billion.

Currently inflation caused by excessive spending in the last three years by the Biden administration has caused the average worker to lose nearly $5,600 in purchasing power. An increase in the federal minimum wage would also lead to higher prices that would further erode that purchasing power of low wage workers.

Inflation caused by excessive government spending has led the Federal Reserve to increase interest rates to combat that inflation and, in the process, has put the dream of home ownership beyond that of many workers who make far more than the minimum wage. The Budget Office indicates that an increase in the federal minimum wage would lead to a slight rise in interest rates. Unfortunately, even small increases in interest rates still adversely affect large loans like those for mortgages and auto loans.

Rachel Greszler, a Senior Research Fellow at the Heritage Foundation pointed out that historically rising wages are a positive because they allow workers to gain experience and education that makes them more productive. Now after three years of “Bidenomics” all Americans need a pay raise. However, as she points out “Government imposed wage increases don’t create new income; they only redistribute it.”

In my own case I got my first summer job in the summer of 1962. It was at a local drive-in theater where I did a little of everything. I did all of the above for $1 an hour, which was the minimum wage in 1962. Of course, a dollar went a lot further in 1962. It could buy two to three gallons of gas and you really got change back for your dollar at McDonalds in those days.

I was curious about how much that $1 an hour minimum wage in 1962 would have in purchasing power in 2024 and found that it would have $9.96 purchasing power in 2024 and that the $1.25 an hour minimum wage, I was paid in 1964, 1965, and 1966 as a summer bank teller had the same buying power as $12.01 in 2024. In 1968 the minimum wage was increased to $1.60 an hour equal to $14.50 today and just short of the current rate.

I thus found that while increasing the New York minimum wage to $15 might seem excessive, it really is not far out of line with its past history.

Looking to the future, it’s imperative that we find better ways to improve the plight of low wage workers. Government at the state and federal level need to take a hard look at regulations that increase business expenses, depress wages, limit employment, and raise prices. On the state level New York overregulates everything, but especially business and frankly seems to have a very adversarial relationship with business.

Governments at the state and federal levels should investigate ways public monies can fund low cost education and apprenticeship programs and incentivize private business to do the same to prepare new workers to enter the job market and for low wage workers to advance to better jobs.

Thomas Kirkpatrick Sr. is a Silver Creek resident. Send comments to editorial@observertoday.com