New York Airports Adopt $19 Minimum Wage

The Service Employees International Union (SEIU) is absolutely beaming this afternoon because the Port Authority of New York and New Jersey announced a plan to raise wages for “baggage handlers, security officers, wheelchair agents, terminal and airplane cleaners and other airport workers” at the area’s 3 major airports under its control.

Forty thousand employees at at New York JFK, New York LaGuardia and Newark will see their pay rise to $19 an hour by 2023. New York workers are starting out at $13, and New Jersey airport workers are now at $10.55. So this is a significant increase.

In fact today’s decision was a staff recommendation that’s expected to be formally adopted by the Port Authority board in June.

Under the proposal, the annual increases would begin Sept. 1. The first one would raise the minimum for workers at Newark Liberty to $12.45 an hour, from the Port Authority’s current minimum wage of $10.45. Workers at the New York airports already are earning at least $13 an hour, which is the state-mandated minimum wage for large employers in the city.

…By Sept. 1, 2019, that imbalance would end with the minimum wage at all three airports increasing to $15.60 an hour. After that, it would rise in three more steps, to $19 an hour on Sept. 1, 2023.


New York JFK

At overcrowded airports it is largely only flights with a strong margin that operate, so there may not be a large impact on air service. If you can raise the minimum wage anywhere it’s at (1) a government-controlled entity, (2) in the New York area, (3) that exercises an important monopoly (airports).

However if airport costs go up and this does wind up affecting the flights offered by airlines (because some flights at the margin might no longer be profitable) that may be both good and necessary since the President walked away from addressing congested air space this year.


New York LaGuardia

Last year’s Seattle city-sponsored research into its own $15 minimum wage found that it resulted in fewer hours worked by affected employees. Political entities, and ones as badly run as the Port Authority of New York New Jersey, may not react this same way. So it will be interesting to watch the effects.

Notably the union credits its political efforts to elect the current Governor of New Jersey as making a difference in pay. Unions are strongest in government and industries under greatest government control.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Replace them with robots, at least they will not steal your stuff! $20 an hour to move a bag and push a wheelchair…yeah that makes sense. I am sure this will not be passed on to us…

  2. $19/hour translates to $40k/year (full time) which is still a pittance anywhere in the country let alone NYC.

    In NYC, $400k/year is firmly middle class with respect to lifestyle.

  3. @Doug – It would have to be done in slow increments. The Scandinavian countries have extremely high pay rates and enjoy exceedingly high standards of living as well. Obviously, this is no coincidence. However, as a business owner, if you doubled my cost of labor over 5 years, I’d almost certainly go out of business within that time frame. If the increase was stretched in time to double over 10-12 years, particularly with any reasonable increase in productivity, it would just bolster the standard of living for everyone without crippling businesses. Of course, getting to $500 an hour would take a long time, but with our economy driven by consumer spending, we’d be moving in the right direction. Props to you for such patriotic and ambitious thinking!

  4. @Christian – You obviously don’t get sarcasm. Doug was pointing out that you can’t create wealth by government mandate. Otherwise we should just raise the minimum wage to $1Million, and we are all magically rich.

    Minimum wages set above the market price for unskilled labor will always result in higher unemployment, hurting those the well-intentioned but misguided leftists are trying to help. If you force businesses (or people) to pay more for any asset, they will demand less of it. If you artificially set the price of an asset above the market clearing price, you will get a surplus. Econ 101.

    Expect layoffs (or at a minimum much less hiring than would otherwise have been expected) at the NYC airports and more investments in automation, as well as higher ticket prices passed on to consumers, which will lead to even less demand and more layoffs if nothing is done to correct the mistake. It is the death spiral of socialism. You elected Dems, so you deserve it. Enjoy, NYC.

  5. @WR – So Sweden and Denmark are in a death spiral of socialism? I’ll have to mention that to my family that live there.

  6. @Christian, there are many huge differences between Scandanavia and the US. A big one is that they don’t have tens of millions able bodied people living on welfare.

  7. @Christian – every liberal brings up Scandinavia as their model society, but policies that might not be too destructive in small, homogeneous countries, with small defense budgets and restricted immigration are not scalable to the rest of the world. Still, these socialist policies result in very low growth, and only don’t descend into chaos because of societal norms due to highly homogeneous population, although the refugee crisis is testing this in some areas. Still, more freedom would undoubtedly result in more economic growth.

    You, and Europeans in general, are willing to trade economic growth for income parity and “fairness”, a philosophy based purely on envy. I am not. There are costs to implementing your policies, both socially and economically.

  8. @Gary

    The president did not walk away from addressing congested airspace earlier this year. He walked away from privatizing air traffic control.

    Make no mistake, they are not one and the same.

  9. @Christian, thanks for citing the Scandinavian societies despite the negative feedback you’ve received. There will always be some who contend we can’t learn and adapt lessons from other countries, even though rates of poverty, income inequality, opportunity to increase incomes from generation to generation, lifespans, other health indicators, educational achievement and gun violence are much worse than dozens of other nations. Thankfully, you’re not one of them.

    And @Jason, thanks for pointing out that $40K per year is quite a modest income in the NYC area (and hardly the lap of luxury anywhere in the country).

  10. Fine by me so long as tipped employees are exempted. It is ridiculous to pay waiters $100k a year when dishwashers and cooks work harder.
    If minimum rises then prices at EWR will rise and people will consume less. Jobs will then disappear. This is how supply & demand works, even with captive customers. So a few employees will be paid better, and others will have to find new jobs. Or, as in Seattle, they will all work fewer hours.

  11. I queston your data about Seattle. Multiple multiple surveys have found that higher minimum wages benefit the low wage workers. I remind you that near every moral system ever invented tell us that should be our focus–lifting up the poor. I’m surprised I have to remind you.

    And to the Chicago style economic theorists above arguing that there is a labor market with a price that should be paid I point out: the fact that most generated wealth today goes to the very wealthy shows they have distorted this market, and are using their political power to undermine the workers negotiating in that market. Also, even the Chicago school today is embarrassed that they generated such deep poverty and inequality with their policies. That’s not envy, it is fear of becoming homeless and starving.

  12. @Dan there was no effort to privatize air traffic control, the plan was to split the ATO off into a separate non-profit organization with stakeholder board (on which airlines would have a small minority representation) so that the FAA wouldn’t be regulating itself as recomended as a best practice for safety by ICAO.

    It’s also been recommended by myriad government panels for the last 30 years beginning with the Aviation Safety Commission in 1988, extending to Al Gore’s National Performance Review in 1993, Clinton’s Transportation Secretary Peña’s Executive Oversight Committee in 1994, the Clinton Administration’s USATS gov’t corporation legislation in 1995, the Mineta Commission report (1997)…

  13. @SanFranSky – this was an empirical study of the effects of the Seattle policy, paid for by Seattle itself, and carried out by generally liberal researchers. This wasn’t an ideological piece. What is your issue with the specific research done by the University of Washington researchers?

  14. @Gary I object to you cherry-picking one study about the harms of the minimum wage, while ignoring reams of studies that show it works quite well.

    “The research has significant flaws—most glaringly that its data excludes 40% of the Seattle workforce. It also stands in contrast to a massive trove of actually credible studies showing that raising the minimum wage is a boon for working class families and the communities they live in….

    For instance, a team led by Michael Reich, an economics professor at University of California-Berkeley, looked at the impact of the Seattle wage increase on the food industry over the same period and found that wages did in fact go up for restaurant workers, and that employment wasn’t affected. These findings were, they claim, “in line with the lion’s share of results in previous credible minimum wage studies….

    Employers see big benefits, too. Workers stay on the job longer, reducing turnover and training costs. They’re also significantly more productive, according to researchers studying wage increases in the United Kingdom.

    There are big benefits for broader society as well. Poverty goes down, as does reliance on public assistance programs—one of the few things both Democrats and Republicans can agree is a net positive. Also improved are infant health and adult mental health outcomes, including a significant reduction in depression. (At a time when one in six Americans pops an anti-depressant every day, this seems particularly important.)…..

    One of the major limitations of the study, the Economic Policy Institute (EPI) points out, is that the data it analyzed excluded business with multiple locations, such as chain restaurants and big box retailers. So the 40% of employees they left out work at places like McDonald’s, Best Buy, and other stores that rely heavily on the low-wage workers who got the actual boost. That is a highly significant oversight…..

    The UW study also draws what the EPI calls “implausible findings.” Since high-paying jobs went up during the period that low-paying jobs went down, the study implies that the minimum wage hike created better jobs for the rich at the expense of the poor. But this explanation fails to take into account the overall robustness and gentrification of Seattle’s economy—a much more reasonable explanation for the disparity….

    That was Fortune: http://fortune.com/2017/06/27/seattle-minimum-wage-study-results-impact-15-dollar-uw/

    Here is Bloomberg: https://www.bloomberg.com/view/articles/2017-07-10/the-overhyped-seattle-minimum-wage-disaster

    Gary, you cited the outlier study presumably because you agrees with its conclusions. Lame. Read all the research, and leave behind the libertarian fanatics who don’t care about reversing the trend to mass poverty.

    Got it?

  15. Finally, of course, the lead author is a fellow at the Manhattan Institute, which you may know is a leading think tank for conservative policies, that calls itself free market. (I call it crony capitalism.) Why would you state he is “liberal”? Surely you meant the American definition of liberal?

    https://evans.uw.edu/profile/vigdor

    The links did not come through in the Fortune article, but it references the 30 or so studies that shown minimum wage increases hurt prior people go read the original studies.

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    Let me know if YouTube other questions.

  16. @SanFranSky it’s not an ‘outlier study’ let go of your ideological blinders. I’ve suggested many times, contrary to what you think you’re reading, that higher minimum wages can be supported at airports because they’re large capital investments that can’t easily be moved and aren’t in most cases subject to nearby competition.

    Whether or not minimum wages ‘work’ (i.e. have only limited employment effects) depends on the amount of the wage and the prevailing conditions of the labor market to which it applies. You may still see a shift in WHO gets the jobs even if the # of jobs or hours worked don’t shrink [wince you may draw more people into the labor pool from surrounding areas with lower prevailing wages, displacing some lesser skilled workers]. But it doesn’t have to be negative employment effects.

    Put another way, a $15 or $19 minimum wage will look very different in San Francisco than it will in Mobile, Alabama where the MEDIAN wage is lower than that!

  17. @gary it is an outlier study if it was produced with poor design, by a “free-market’ activist, and it’s finding are out of lmagreement with 30 other studies. And the larger point is that all the studies show increased minimum wages directly benefit the poor. Your say-so arguing against the overall benefits is supported by no research.

    Noe you are citing Mobile, Alabama in a study about Seattle. Off topic.

  18. market should set wages just like the market should set prices. Plain and simple. Anyone who argues otherwise has a very obtuse understanding of economics.

  19. @SanFranSky you are completely wrong and slandering the authors. The study is a working paper by the National Bureau of Economic Research. At least 4 of the co-authors are left of center academics. They are not ‘free market activists’. and this wasn’t a study paid for by any free market activists either it was commissioned by the city of seattle to take a look at what happened after they raised minimum wages. And there are NOT ’30 other studies’ of the Seattle experience.

    The conclusion of every reputable academic about minimum wages is that it depends at what margin.

  20. @Gary

    Thank you for the detailed clarification of the Bill Shuster (R-A4A as you put it once) proposal. However, that’s got nothing to do with my point that the proposal and addressing congested airspace are far from being one and the same.

    I hate to say this, but as meritorious as these proposals may be, I do not trust this administration and legislature to successfully pull it off.

  21. @Gary please refer to my point about the lead author working for an Ideological organization the Manhattan Institute. How is that slander? Working for an ideological organization shows your ideology, right?

    And follow the Fortune links. There are 30 peer-reviewed articles that say a higher minimum wage helps people; please read them.

  22. As a society we should consider that a corollary of any minimum wage is that of “minimum productivity.”

    Just like in retail stores and fast food restaurants we should expect to see a new wave of automation at airports in the next decade. My hope is it occurs at Immigration and Customs first.

  23. Here is a non-partisan organization find g that Manhattan Institute used loaded messages and research to push a “center-right” agenda.

    https://mediabiasfactcheck.com/manhattan-institute-for-policy-research/

    You may know the Manhattan Institute is right now most famous for Heather MacDonald who pushed the racist ‘Ferguson effect,’ that police brutality protests lead to more crime.

    Other non partisan reviews of the Manhattan Institute debate whether it is neo-con or libertarian. It was famously founded by Reagan’s CIA director.

    I doont trust anyone associated with that institute to fairly judge the minimum wage or the lives of the poor. He would hardly continue working there if his research proved things out of line with these employers (Yes, employers).

    Gary, I really don’t think anti-poverty policy is your bailiwick, and maybe you should avoid it on your travel blog?

  24. Criticisms (‘guilt by association’) of the Manhattan Institute have no bearing on research conducted by six faculty members, one of whom has the loosest of association. There’s simply zero logical force to that claim.

  25. Here is what the Manhattan Institute says about their fellows:

    According to the Manhattan Institute’s website, the think tank “produces ideas that are both literally and figuratively outside the Beltway. We have cultivated a staff of senior fellows and writers whose provocative books, essays, reviews, interviews, speeches, and op-ed pieces communicate our message and influence the debate.”

    ¡¡¡¡¡¡”Communicate Our Mesaage”!!!!!!

    https://www.desmogblog.com/manhattan-institute-policy-research

  26. @Gary the cost of living here in NYC is out of control and people deserve to earn fair wages. Just imagine how much a monthly metrocard costs ($121.00) and add on to that the monthly AirTrain fees because it’s too damn expensive to park at the airport for employees ($40.00).

    $161/month to get to/from work. If you take the train from Long Island it costs even more.

    Some of you self-entitled folk here really need to give a damn about people who do hourly work on your behalf. Otherwise you won’t be getting your venti lattes and that’ll give you something else to whinge about.

  27. @Christian “…have extremely high pay rates and enjoy exceedingly high standards of living as well. Obviously, this is no coincidence.”

    No coincidence? It’s a synonym.

  28. I always love how people tell us that higher costs will mean more automation. No matter where I am now there is more automation, even where labor is VERY inexpensive. Just because there is self checkout, or self checkin doesn’t mean that cost of labor made people do it. We as a society should not be forcing people who work 40 hours a week to live on food stamps.

  29. Claiming that the Scandinavian countries have high pay rates is quite misleading. Pay for low and un- skilled labor is higher than the US, but pay for skilled labor is much lower. Take for example a software developer in Sweden; the median yearly salary is 59,000 USD (SCB), while in the US it’s close to 100,000 USD. This is before you are slammed with 33 – 55% income tax…
    This is traded for more or less free (but rationed) healthcare, free higher education and lots of other benefits. Sweden and Norway have abundant natural resources which greatly helps to fund their societies.

    Given the high cost of labor, there are fewer jobs for low skilled workers than the US. Technology has helped greatly in reducing the overall need of such jobs.

  30. You can circumvent minimum wage laws by hiring disadvantaged personnel – look at Goodwill. There is no such thing as a “fair” wage.

    Income redistribution however has its merits and it IS worth noting that Scandinavian countries are some of the happiest on Earth.

    Tl;dr – Wages are not equal to income.

  31. Shouldn’t we examine Illinois and California for long term effects of generous retirement programs and similar unsustainable government programs? Or, how about examples of states that are financially sound? Scandanavia, Greece, Venezuela, Argentina and similar success stories have different populations and histories than US.

  32. @Hotelguy – the conclusion from the article “The minimum-wage increases helped people who were already working low-wage jobs, hurt people who weren’t yet working, and had a somewhat negative effect on pay over all.”

    And that’s at a lower wage than New York airports are looking at. And it’s at a time when unemployment is at near-historic lows.

  33. Come on. You strongly defended the original study, which it now turns out was overstated and slanted.

    Here is the conclusion: “For example, one interpretation of the findings is that the Seattle minimum-wage increases helped workers who had languished in low-paying jobs for some time — perhaps parents working full time to support a family — while providing fewer benefits, or even causing harm, to workers like college students who seek part-time jobs for discrete periods to earn spending money or help pay for school.”

    Wages are supposed to rise in periods of low employment, but they have not been, instead with management keeping an ever-larger share of the income. We can all guess why policies favor businesses

    The consensus among economists and the public is that a higher minimum wage helps the poor. And it is only logical that New York, Seattle, and San Francisco pay the highest wages, because they have the highest cost of living.

    As Gandhi said, “A nation’s greatness is measured by how it treats its weakest members.”

  34. @HotelGuy NY: Any ECON 101 course will teach you that a minimum wage, if binding, will reduce employment. The reason is simple: compel someone to pay someone else more than the value of their work and they will decide to end the relationship and pay nothing. Tell whoever told you otherwise that they are an economic illiterate (but the SEIU will love them).

    Ethiopia is one of the poorest countries on earth. Why don’t you immediately impose a$50/hour minimum wage there and consequently (according to your economics) make Ethiopia the richest country on earth?

  35. @HotelGuy NY: “Gandhi said, “A nation’s greatness is measured by how it treats its weakest members.”

    Then he would oppose a minimum wage. It makes the poor worse off and protects labor monopolies like the SEIU.

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