On Jan. 1, 2015, Skidmore College implemented a new minimum wage standard, paying its student workers a minimum of $8.75 an hour. This means a whole $1.50 increase from last year’s minimum. This new standard is aligned with New York State’s new minimum wage requirements that came into effect on December 31, 2014.
Before this increase is celebrated, several facts should be taken into account. While the 21 percent increase in wages may seem like a big leap, the truth is that the current minimum wage is far behind inflation rates. In the 1960s, the equivalent minimum wage would have been $9.39, making President Obama’s 2008 minimum wage proposal of increasing it to $9.50 seem not quite so drastic after all. Even at $8.75, the minimum wage is nearly impossible to live on, and represents an annual salary of just over $16,000, excluding taxes. It is a brutal number for those working in areas where the costs of living are extraordinarily high, such as New York City where the average monthly rent is a shocking $3,000. An annual minimum wage salary of $8.75 would not even pay for half of New York City’s average rent costs. Therefore, is it really enough to raise the minimum wage? The new minimum wage still leaves many with barely enough to scrape by.
It seems that New York State governor Andrew M. Cuomo does want to give his citizens more than the bare minimum, and as of Jan. 18, 2015, just a little over two weeks after the implementation of the new minimum wage law, Governor Cuomo announced not one but two new minimum wage proposals. He advocated for an even higher minimum wage of $11.50 in New York City and $10.50 for workers in the rest of New York State. If the state legislature approves of this proposal, New York’s minimum wage will be one of the highest in the country.
The recent rise in New York’s minimum wage was not issued by the federal government; increases or decreases of minimum wage vary by state, and the federal minimum is still $7.25. However, the predicted benefits of New York’s new law may be an incentive for those states not yet implementing similar standards. For example, over one million New Yorkers would benefit from the increase, over 10 percent from New York City. Raising the minimum wage also promotes economic growth, as it gives a significant number of citizens more spending power. The GOP’s much repeated chant that a higher minimum wage will cause major job losses across the country can also be refuted with multiple studies and economy observations done over decades, which all clearly demonstrate that higher minimum wages have little, if any negative effect at all on employment rates. Raising the minimum wage is beneficial to the economy as a whole, and does not hurt labor markets.
What does this mean for Skidmore College students? Of course, it is great to receive competitive wages aligned with the rest of the state. It means more money for late night Spa trips, and for some, whether or not Netflix marathons can stay a reality. However, there seems to be an undercurrent of dissatisfaction from some students—those who already made more than $8.75. In general, those making above minimum wage (which is the majority of workers across the country) have extra qualifications or experience that make them valuable to their employers, and thus justify the demand for higher pay. However, neither New York State nor Skidmore College has any plans at the moment to increase wages for all workers. And this, understandably, is a sore subject for many people.
However, economists have found that when minimum wage is increased, the phenomenon of what is called the Ripple Effect comes into effect, and additional citizens also benefit and receive pay rises. CNN Money used New Jersey’s minimum wage increase last year to demonstrate that while 2.6 million people were directly affected by the increase, 2 million other people who were presumably making above minimum wage were also indirectly affected and benefitted. The Hamilton Project, a non-profit organization, performed an economic analysis that found the benefits of minimum wage affecting near 30 percent of the U.S. workforce. This further indicates that a rise in minimum wage means a rise in wages for all of us. This is because the rise in minimum wage puts pressure on businesses to keep employees by staying competitive and sometimes offering employees an increase in pay to keep social hierarchies in order. This chain reaction continues, creating the Ripple Effect, and ultimately benefits everyone.
Thus, raising the minimum standards of living will likely guarantee a raise in pay for all of us, but for the people already making above minimum wage, it could take time. For those waiting slightly disgruntled for their turn in the Ripple Effect, why not think of this joke about a Russian peasant: “A genie granted a Russian peasant a wish, and it could be anything he wanted. Anything at all! The peasant thought about it, and said to the genie, ‘I know! My neighbour has a cow—‘ and here the genie interrupted, ‘I could give you two cows.’ The peasant shook his head, and told the genie, ‘No, I don’t want a cow. I want you to take away my neighbours cow. That way, it will be fair!’”
Think about those two cows. They could be yours.