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Buying power increases upstate

Say what you want about the Buffalo Niagara region, but it’s no New York City.

But when Gov. Andrew M. Cuomo last week proposed raising the state’s minimum wage to $15 an hour for all workers, he treated slower-growing, lower cost upstate New York the same as pricey downstate.

That’s a big mistake.

“For someone who has prided himself on recognizing the difference between the upstate and downstate economies, this is shocking,” said Dottie Gallagher-Cohen, the president of the Buffalo Niagara Partnership. “To look at the difference between the upstate and downstate economies and treat them as if they’re at parity is just the theater of the absurd.”

If Cuomo succeeds – and he faces an uphill fight getting the state Senate to agree to a big hike in the minimum wage – it would be great news for workers on the lowest end of the wage scale in the Buffalo Niagara region. Workers currently earning the state’s minimum of $8.75 an hour would get a 71 percent raise phased in over six years.

If inflation runs at 2 percent a year, a job that currently pays $13.30 would be a minimum wage job in 2021.

As the minimum wage rises, it would send out ripples, forcing employers who pay even a few dollars more than $15 an hour to increase their wages. Critics say that would cost jobs and make New York less competitive with the rest of the country.

“Policies that might work in Manhattan destroy jobs upstate,” said Greg Biryla, executive director of Unshackle Upstate.

It would push the minimum wage to a level where its purchasing power is far greater than it has been at any time since 1962, when the state stopped setting minimum wages based on individual industries and adopted a statewide benchmark.

There’s no question that the state’s minimum wage, which is far more lucrative than the nationwide minimum of $7.25 an hour, isn’t a comfortable living wage, and it’s purchasing power has eroded over time because increases haven’t kept pace with inflation.

Cuomo said the minimum wage, which amounts to $18,200 a year for a full-time worker, should be more of a living wage. “$18,000 just does not cut it,” he said.

Cuomo also argued that a higher minimum wage will stimulate the economy because lower-wage workers will spend every penny of their pay raise.

Cuomo’s proposal for a statewide increase in the minimum wage has the same shortcomings as his administrative push that raised the minimum only for fast-food workers to $15 an hour.

But for upstate, $15 an hour goes way too far, treating Buffalo and Syracuse the same as New York City and ignoring the far lower cost of living across upstate New York. It costs almost 30 percent less to live in the Buffalo Niagara region than it does to live in New York City, according to data from the federal Bureau of Labor Statistics.

So while it’s hard to make ends meet on a minimum wage job, it goes a lot further in the Buffalo Niagara region than it does downstate. Or in Seattle or Los Angeles, two other cities that are boosting their minimum wages to $15 an hour.

If you adjust the current $8.75 minimum wage to reflect that prices in the Buffalo Niagara region are about 6 percent less than the national average, you’ll find that the minimum wage here has the purchasing power of about $9.33 an hour. In New York City, where prices are about 22 percent higher than the national average, the purchasing power of the minimum wage is just $7.15 an hour.

Because wages are higher in New York City, the gap between the minimum wage and the median hourly wage also is wider. In New York City, a minimum wage worker earns 60 percent less than the median; in Buffalo it’s 48 percent lower.

Cuomo’s proposal also would push the purchasing power of state’s minimum wage into a whole new level.

If you take into account inflation since 1962, when the state first raised its minimum wage to $1.15 from $1, the purchasing power of the minimum wage was $9.09 in today’s dollars.

Over the past 53 years, the purchasing power of the state’s minimum wage has fluctuated, falling to just $6.45 an hour in 1989 and it stayed below the equivalent of $8 until 2006.

Under the three-step program approved in 2013 that will increase the minimum wage to $9 an hour at the end of this year, the state’s baseline hourly wage has recovered most – but not all – of its purchasing power. It is now is about 4 percent less than it was in 1962.

Cuomo has said getting the State Legislature to raise the minimum wage was a “nonstarter,” but his successful push to raise the fast-food minimum may strengthen his hand. If he formed an administrative panel to raise the fast-food minimum, he could do the same for other targeted low-wage jobs, like health care or day care workers.

email: drobinson@buffnews.com