As part of New York state’s 2016-17 state budget, Gov. Andrew Cuomo signed a bill that promises an increase in minimum wage from $9 to $15 per hour in New York City and its surrounding areas by 2021. On April 4, California Gov. Jerry Brown also announced that state will raise its minimum wage to $15 per hour by 2022.

To find out what impact raising minimum wage might have, The Daily Orange interviewed Alfonso Flores-Lagunes, a professor of economics who specializes in labor economics. Flores-Lagunes is also a fellow at the Institute for the Study of Labor, which is an international organization that researches the labor market and its related policies.

The Daily Orange: How will the increase in minimum wage affect California and New York’s economies? 

Alfonso Flores-Lagunes: The effects of raising minimum wage is a fairly controversial subject because the most credible studies that have been produced find very different results. In terms of the effects of minimum wage on employment, some of the studies find that there is potentially no effect on employment, which is what most people against minimum wage focus on. Some studies find positive or no effects, and other studies find very small but negative effects on employment. You have those studies being cited by both proponents and people against raising minimum wage.

Something important to keep in mind in the case of California and New York is that the minimum wage increase is going to be phased in over a relatively long period of time so based on that, my assessment is that there is not going to be any big effect on employment. That is not to say there won’t be people who lose their jobs, but we aren’t talking about effects on every single person who receives minimum wage.

The D.O.: Is this good or bad for the economy in the long run? 

A.F.L.: Usually, the short-term effect would be larger than the long-term effect. What that means is probably in the long-term, there might not be any effect at all. Over time, inflation goes up — even though it has been very low inflation in the last few years — over time it goes up a little bit and that eats up some of the gain from the increase in minimum wage. Also, the economic agent of the workers and the firm adapt over time — they have more time to make adjustments.

The D.O: Could higher wages result in less jobs and more unemployment?

A.F.L.: Nothing dramatic, I don’t think there is going to be any effect, definitely not at the state level but there might be some region that is more affected than others, and usually it will depend on the characteristics of the economic activity in the different regions. Overall, I think that the effects are going to be minimal.

The D.O.: Do you think other states will follow?

A.F.L.: Yes, I think so. You hear President (Barack) Obama talking about raising the minimum wage and he has proposed this probably two or three different times, but Congress has not acted or taken up any discussion about this. With states like California and New York, and perhaps over time other states following suit, my guess is that the federal minimum wage will also have to be adjusted upwards. Probably not at the level of these two states, but adjusted up a little.

The D.O.: Do you think the areas with the increase in minimum wage will see an influx of people trying to get jobs there?

A.F.L.: My sense is that it’s not going to be a big deal because people act not only on things that already happened, but also based on expectation, and I would say that the expectation is that the minimum wage will increase in other states as well and if people realize that — especially since it’s costly to move to New York City, for example — then it will not be worth their move to take advantage of the higher minimum wage if in a few months or a year there will be adjustment upwards where they live.

Published on April 11, 2016 at 10:20 pm

Contact Caroline: cbarthol@syr.edu