Effects of proposed New York minimum wage increase

New York: Single increase to $8.50, modeled for July 2012
Size of increase  $1.25
Total Estimated Workers1  7,900,000
Directly affected2  609,000
Indirectly affected3  473,000
Total Affected  1,082,000
Total Affected as % of Workers 13.7%
Increased wages for directly & indirectly affected4  $950,612,000
Average Individual Increase in Annual Income  $880
GDP Impact5  $601,738,000
Jobs Impact – Full-time employment growth6  5,230
Jobs Impact – Payroll Jobs growth  4,740

Notes: Annual Population growth: NY: 0.71%, (state projected average annual rate from 2000 to 2020, according to Census). No assumed wage growth from 2011 wage values.

1 Total estimated workers is estimated from the CPS respondents for whom either a valid hourly wage is reported or one can be imputed from weekly earnings and average weekly hours. Consequently, this estimate tends to understate the size of the full state workforce.

2 Directly Affected workers will see their wages rise as the new minimum wage rate will exceed their current hourly pay.

3 Indirectly affected workers currently have a wage rate just above the new minimum wage (between the new minimum wage and the new minimum wage plus the dollar amount of the increase in the 2012 minimum wage). They will receive a raise as employer pay scales are adjusted upward to reflect the new minimum wage.

4 Increased wages: Annual amount of increased wages for directly and indirectly affected workers, assuming they work 52 weeks a year.

5 GDP and job stimulus figures utilize a national model to estimate the GDP impact of workers' increased earnings. Thus the total state stimulus may be lower than this amount because workers in each state will not necessarily spend all of their increased earnings in-state. However, we can assume that most of the increased earnings will be spent in-state, and thus most of the jobs created will be in-state. Jobs numbers assume full-time employment requires $115,000 in additional GDP and payroll employment requires an additional $127,000 in GDP.

6 The increased economic activity from these additional wages adds not just jobs but also hours for people who already have jobs (work hours for people with jobs also dropped in the downturn). Full-time employment takes that into account, by essentially taking the number of total hours added (including both hours from new jobs and more hours for people who already have jobs) and dividing by 40, to get full-time-equivalent jobs added. Simply counting new payroll jobs misses all the added hours for people with jobs.

Job impact estimation methods can be found in: Bivens, Josh L. 2011. Method memo on estimating the jobs impact of various policy changes. Washington, D.C.: Economic Policy Institute.

Source: EPI Analysis of 2011 Current Population Survey, Outgoing Rotation Group

View the underlying data on epi.org.