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Taking sides

New York impacts at Pennsylvania border due to minimum wage

Did an increase in New York’s minimum wage hurt businesses in New York state located near the border with Pennsylvania?

The Federal Reserve Bank of New York says the minimum wage did not hurt job creation in New York. The Empire Center for New York State Policy says it did.

What is certain, according to Empire Center statistics, is that the five-year statistics for comparing Chautauqua County, N.Y., with its Pennsylvania neighbors isn’t flattering.

THE LOCAL STATISTICS

The Federal Reserve Bank of New York analyzed federal job statistics in an effort to quantify if New York’s minimum wage increases from 2013 to 2018 affected employment in counties bordering Pennsylvania. Economists compared employment in two low-wage sectors in 19 border counties of New York and Pennsylvania.

While the two organizations have differing views on what the analysis shows for the entire 19-county region, there is no disputing that Chautauqua County has struggled over the five-year sample period compared to its Pennsylvania counterparts. Chautauqua County lost 6.7% of its jobs in the private sector leisure and hospitality industries over five years while Warren County lost 0.5% and Erie County gained 3%. Cattaraugus County gained 6% in the same sectors while Bradford County grew 0.5%.

THE FEDERAL RESERVE ANALYSIS

The Federal Reserve analysis showed that leisure and hospitality employment followed similar trends in both states following New York’s minimum wage increases.

“By the fourth quarter of 2017, leisure and hospitality employment in both Pennsylvania and New York border counties had increased by 5% over their 2013 (fourth quarter) levels,” the analysis states. “As the minimum wage was raised to levels above $10 per hour, leisure and hospitality employment in New York counties, if anything, increased relative to businesses over the Pennsylvania state line. Concerns of diminished employment growth in New York’s leisure and hospitality industry as a result of the rising minimum wage seem not to have been borne out.”

At the same time, the Federal Reserve analysis showed that there was no visible increase in weekly earnings for employees in the two states for the first two years of New York’s minimum wage increases. That changed in 2016 when New York’s leisure and hospitality wages increased compared to Pennsylvania workers. Wage growth in New York was 18% more than it was in Pennsylvania over the five-year period.

“These trends suggest that the minimum-wage increases had the intended effect of boosting worker pay in low-wage industries, without negatively affecting jobs,” the Federal Reserve analysis states.

The Federal Reserve analysis also looks at job loss and wage growth in the retail trade sector of the economy. Employment trends were similar, the report states, while wages grew faster in New York.

“In gauging the effects of New York’s escalating minimum wage on two sizable low-wage industry sectors, one growing and the other shrinking, we find that it appears to have had a positive effect on average wages but no discernible effect on employment,” the analysis states. “It is possible that there was some negative effect on weekly hours worked, though that would imply an even stronger upward effect on hourly wages. However, longer-term effects, if any, remain to be seen.”

NOT SO FAST?

Empire Center officials say the Federal Reserve analysis may not be what it seems. Center officials say the Federal Reserve analysis includes two casino-related developments that are included in the leisure and hospitality – the February 2018 opening of the Resorts World Casino in Monticello and the 161-room Tioga Downs racetrack’s expansion into a licensed casino with table games in 2017. Empire Center officials also questioned Orange County, which is a heavily populated area that is experiencing a tourism-related boom boosted by New York City.

Including the three New York counties in the analysis showed New York with 9.3% job growth over five years compared to Pennsylvania counties’ 4.5% growth. Removing Orange, Sullivan and Tioga counties from the leisure and hospitality employment analysis slowed New York’s job growth was 2% compared to Pennsylvania’s 4.5% over five years.

“Excluding Orange, Sullivan and Tioga counties from the comparison, 2013-2018 job growth in the two sectors studied by the Fed turns out to have been lower on the New York side than on the Pennsylvania side. To be sure, this doesn’t necessarily prove a negative effect from the minimum wage increase — but it also undermines the claim that the minimum wage had no impact on jobs,” the Empire Center analysis states.

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