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- The minimum wage hike in New York state had no immediate discernible effect on job loss, according to a new report by the Federal Reserve Bank of New York.
- Earnings rose much faster for New York state workers as a result of the wage hike when compared to states that didn’t raise pay.
- The report counters business leaders and economists’ predictions that raising the minimum wage would decrease jobs.
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The US Federal Reserve hasn’t yet found a link between raising the minimum wage and job loss.
Since New York began gradually raising wages from $7.25 in 2009 to $15 by 2021, the hospitality and retail sectors did not lose jobs as a direct result, according to a new report by the Federal Reserve Bank of New York.
The Fed compared retail and hospitality businesses on the New York-Pennsylvania border. Pennsylvania has not raised minimum wages above the federal $7.25. Businesses on this border “share a lot of features that are important determinants of wages and employment, but differ in terms of wage policies as they are located in different states,” the Fed argued.
Earnings rose in both retail and hospitality as a result of minimum wage hikes. New York hospitality workers earned 33% more in 2018 than they did in 2013, while Pennsylvania hospitality workers earned just 15% more. Retail had a weaker upward trend.
The report counters business leaders and economists’ predictions that raising the minimum wage would decrease jobs. Congressional economists said a federal hike would cut 1 million jobs, for instance, and some New York businesses recently told The Wall Street Journal that they struggled to keep up after the wage increase.
Similar research hasn’t yet found an immediate adverse effect on jobs.
After New York City raised its minimum wage to $7.25 in 2013 and $15 this year, the restaurant industry – which employs high numbers of low-wage workers – outperformed the rest of the US in job growth and expansion. The study, by researchers from the New School and the New York think tank National Employment Law Project, found no negative employment effects from the city increasing its minimum wage to $15.
Seattle, too, voted to raise wages to $15 back in 2015. Since then, restaurant jobs in the city have been steadily rising, according to the Federal Reserve.
The Fed warned that in the coming years, businesses might not move to places where the minimum wage has been increased. This could result in possible job losses, though it’s still too early to determine long-term effects.
“As currently scheduled, the phasing in of the higher minimum wage across upstate New York still has a long way to go,” the report states. “We will continue to monitor local trends in both employment and wages – particularly in these lower-wage sectors.”