By: Laurel Aberle, Sarah Eller, and Mikaela Santos, 2017-2018 Work First Fellows
On September 19, 2017, the New York City Employment and Training Coalition hosted their 2017 Summit for Building Talent Pipelines for Today’s Economy at Henry Street Settlement’s Abrons Art Center. The event brought together scores of workforce developers and business leaders, and three Work First fellows, to discuss the current state of workforce development.
The day’s discussion was opened by its keynote speaker, Jaime Fall, Director of UpSkill America at the Aspen Institute, a nonprofit organization aimed at training workers across the country to enter into higher-paying jobs. Before assuming his current role, Fall served in various workforce development positions with both the federal government and in the State of California under the Schwarzenegger administration.
The morning plenary discussion was moderated by Stacy Woodruff of the Workforce Professionals Training Institute and was paneled by a Senior Fellow at the Workforce Field Building Hub, James Parrott, CEO and Founder of Uncommon Goods, David Bolotsky, and Founder of Ox Verte, Jessie Gould. The discussion was centered on the minimum wage and its implications for both workers and employers.
Per New York State law, the minimum wage in New York City for large employers is set to rise from 13 to 15 dollars per hour by the end of next year. This two dollar jump in the minimum wage is the culmination of an ongoing debate which resulted in drastic, short-term increases begun in 2015, when the minimum wage was as low as 10 dollars and 50 cents per hour. That year, Governor Cuomo publicly announced a plan to bring the statewide minimum wage to 15 dollars per hour, a plan that has since become law for New York City workers.
In many respects, the minimum wage increase has left a positive impact on the city’s workforce. Panel member James Parrott highlighted some of these impacts as he opened up discussion on this much-debated issue. It has been estimated that increases in the minimum wage have lifted 281,000 New York workers out of poverty since 2013. Additionally, over one million New York City residents either have or will experience a near 30 percent income boost as a result of this increase. And this all comes with a historically low inflation rate.
Parrott also expressed optimism with regard to the future impact of the two dollar increase that is to come. He believes that the increase in minimum wage will continue to reduce poverty for working adults and for children as well. He also expects that employers will embrace the minimum wage increase, as workers who are compensated at higher rates tend to be more productive, resulting in larger profits for businesses.
Panel members David Bolotsky and Jessie Gould both expressed mixed feelings with regard to this increase. As CEOs of B Corporations, companies that adhere to heightened environmental, accountability, and hiring standards, Gould and Bolotsky agreed that the City’s workers were deserving of higher wages. It is the policy of both Uncommon Goods and Ox Verte to start most employees at wages at or above 15 dollars per hour, a full two dollars above what is currently required by law. However, they were reluctant to praise this increase in the minimum wage for several reasons.
Bolotsky warned of the potential for companies with warehouses in New York to take their businesses to places with lower minimum wages. Although Uncommon Goods has braced for the impact of the imminent 15 dollar minimum wage, many companies have not and will no longer be able to operate on a large scale in New York City as a result. This will also have the inevitable effect of deterring companies from setting up shop in New York in the future. Bolotsky also expressed concern for the pace at which the minimum wage increase has been phased in, a concern shared by fellow panel member Jessie Gould. A near fifty percent increase in the minimum wage over the course of just three years does not give employers much time to adjust to the increased costs of operating their businesses. Additionally, with some economists forecasting a recession to occur within the next few years, a high minimum wage could lead to dangerously high levels of unemployment in the not-so-distant future.
Gould shared in Bolotsky’s outlook and also pointed to a potential consequence that has largely been overlooked in discussions of the minimum wage increase--that with every increase in the minimum wage, there is a commensurate increase in the wages of those paid just above the minimum. As a B Corp, Ox Verte pays its employees well above the minimum wage; therefore, in the event of a major minimum wage increase, Ox Verte and other B Corps would have to increase the wages of their workers in order to maintain a policy of paying above the minimum. This so-called “trickle up” effect may have the unintended result of causing some companies to abandon efforts to start employees at wages higher than the legal minimum.
Gould also argued that if businesses are required to pay their lowest earners more, they will be more inclined to hire more highly-trained persons, thereby eliminating many job opportunities for untrained workers, new workers, and workers re-entering the workforce. This would result in increased levels of unemployment for individuals already struggling to find work.
At America Works, we serve clients from a wide variety of professional backgrounds, ranging from low-skilled, low-paid workers to high-skilled, high-paid professionals. And while many of our clients may join in the estimated 1.4 million New Yorkers who have benefited from recent upticks in the minimum wage, some will likely encounter added barriers as a result. Additionally, businesses that partner with America Works may scale back initiatives to hire our clients in the face of higher costs of doing business. In order to successfully continue its efforts in placing clients in long-term, meaningful employment, America Works must be prepared to deal with both the positive and negative implications of the 15 dollar minimum wage to come.