Minimum Wage Increase

Minimum Wage Increases in 2018 and the Benefits Cliff: What does this mean for practitioners?

Mae Watson Grote, Founder and CEO | Raquel Paulino, Program Associate | The Financial Clinic

(Originally published in NYATEP’s Workforce BUZZ, November 28, 2017)

Great news fellow New Yorkers, the minimum wage in New York State is rising! Effective December 31, the statewide minimum wage will increase to $10.40, with Westchester/Long Island, small employers in New York City (10 employees or less) and large employers in New York City (11 employees or more) increasing to $11.00, $12.00, and $13.00 hourly, respectively.  This exciting development is the next phase in a larger initiative which intends to raise the minimum wage to $15/hour by 2020, an enormous step forward for working poor families and households statewide.

At The Financial Clinic, we envision a nation where every American is financially secure and has a seat at the table of a more inclusive economy.  In order to accomplish this — to truly break the cycles of poverty — we not only enthusiastically support this minimum wage increase, but we also want to take this opportunity to create additional necessary supports that help minimum wage earners maximize their new earnings for lasting financial security.

So, in real-life terms, what does this actually mean?  We have identified two major strategies for maximizing the impact of the minimum wage increase, from both a policy and services perspective:

Policy and Advocacy

The biggest issue that we at the Clinic are concerned about is how the rise in the minimum wage might unintentionally impact the benefits cliff, a term used to describe a situation when public assistance programs phase down (or worse, phase out entirely), unsuspectingly causing a sudden reduction of benefits for families as their household earnings increase.  In many cases that we have seen — perhaps typified best by a study from workforce leader PHI on the subject — even a relatively small increase in household earnings (either from the number of hours worked or a rise in the wages themselves) can trigger a loss of eligibility for certain benefits, effectively decreasing a household’s total income.

We urge workforce organizations across New York State to learn more about the Clinic’s proposed solutions on our policy platform on topic, which recommends implementing a six-month grace period for Supplemental Nutrition Assistance Program (SNAP or food stamps) beneficiaries and their dependents to continue receiving food and nutrition assistance after the income limit is surpassed.  The Clinic believes this proposal should accompany extending health coverage for Medicaid and New York State Essential Plan recipients and their dependents for one year if participants do not receive health coverage from their new employers.

Direct Services

We are working with practitioners statewide to seize the opportunity to coach their customers on how to plan ahead for wage increases.  Public benefits such as SNAP , housing and child care subsidies are affected with wage increases, and absent of policy change on the issue, this information should be communicated clearly, and disseminated effectively to the people it will most assuredly affect.  On the positive side, an increase in minimum wage earnings is also a unique opportunity to build new savings habits!  Our practitioners are using tools such as the Clinic’s, A Minimum Wage Increase Is the Best Time To Save worksheet, which assists customers map out their benefits, revisit goals and prioritize debts. In addition, the Increase in Minimum Wage = Increase in Scams worksheet, helps customers identify ways they may be vulnerable to scams.

For even more tools and resources to support your participants in maximizing the effects of the minimum wage increase, try a free trial of Change Machine today!

Interested in learning more about integrating financial security strategies into workforce development programs?  RSVP here to join us at a Virtual Briefing and learn how addressing financial insecurities supports better workforce outcomes.