One of the remarkable -- and depressing things -- about the low-wage economy is how small changes in wages can make a big difference.
If you're a professional, you probably don't even know how much money you make an hour. But low-wage workers know, down to the penny. And what may seem like small change to wealthier people can make a big difference in their spending power -- which, in turn, affects the econony as a whole.
All this was brought home to me in reading an analysis by the National Employment Law Project and the Fiscal Policy Institute of minimum wage proposals in New York State. While some lawmakers want to raise New York's minimum to $9 and index to inflation, others are fighting for $8.75 with no indexing.
That difference sounds like no big deal, right? Wrong. Get a load of the side-by-side comparison of the two proposals:
- $9.00 plus indexing would boost the state’s economy by $1.2 billion in the first year. A weaker deal such as $8.75 without indexing would generate $840 million in new economic activity, $360 million less, by contrast.
- Plus, indexing the minimum each year for the change in the cost of living would also mean an added boost in spending each future year as compared to the $8.75 proposal without indexing.
- $9.00 plus indexing would support the creation of 10,200 full-time jobs, and more in subsequent years. $8.75 without indexing would generate just 7,300 jobs -- 2,900 fewer jobs in the first year.
- A full-time minimum wage worker would earn $520 less in 2014, $936 less in 2015, $1,352 less in 2016, and approximately an additional $400 less each successive year under a weaker deal such as $8.75 without indexing, than under $9.00 with indexing.
We've said here many times that putting more money into the pockets of low-wage workers is the best way to stimulate the economy -- all without costing taxpayers a dime. Demos' report last year on the retail sector by Catherine Ruetschlin showed that giving retail workers a raise of a few thousand dollars a year would have a very positive effect on the economy: "A wage standard at large retailers equivalent to $25,000 per year for full-time, year-round workers would increase GDP between $11.8 and $15.2 billion over the next year."
Weirder still is that anyone who wants to grow New York's economy would back the lower wage.