The Effects of the New York City Minimum Wage Increases on Earnings, Poverty, and Material Hardship: Evidence from the Poverty Tracker

Over the past 30 years, wage growth at the bottom of the income distribution has stagnated,  and the federal minimum wage has left many full-time workers across the county below the poverty line. While efforts to raise the federal minimum to $15 per hour have not yet found legislative success, states and cities have used local legislation to raise the wage floor in their jurisdictions – and New York City and State were some of first to put in place statutes that would gradually raise the local minimum wage to $15 per hour. To date, there has been extensive debate about whether or not an increase to the minimum wage would actually make people better off. The Poverty Tracker data allows us to examine competing narratives and assess how workers in our sample fared after these wage increases, assessing both the benefits and potential costs. 

Key Findings:

• Counter to claims that the minimum wage increase would be  inefficient and not benefit workers struggling financially, financial hardships were most common among minimum wage workers in New York City compared to other workers.

  Prior to the wage increase, minimum wage workers faced significantly higher rates of poverty and material hardship relative to other workers.

  Workers without a college degree, Black and Latino workers, women, younger workers, and those living in households with children were all overrepresented among workers who likely benefited from the wage increases. More than 80 percent of workers in the sample likely affected by the wage increases were Black or Latino.

• The minimum wage increases contributed to significant increase in annual earnings of affected workers.

  Average annual earnings for those affected by all three wage increases rose by more than 66% between 2016 and 2019 (from $11,900 to $20,600). For comparison, average earnings of lower-wage workers with wages just above $15 per hour (between $16 and $21) remained relatively stable between 2016 and 2019, hovering around $30,000 per year.

• The minimum wage increases were not associated with any reductions in employment among minimum wage workers in the Poverty Tracker sample. 

• As the annual earnings of affected workers rose, their poverty rates fell.

• The minimum wage increases were substantial, but not enough to expect a significant reduction in material hardship.

• Workers affected by the minimum wage increase were significantly less likely to receive SNAP benefits after the wage increases went into effect.