BUSINESS
10/01/2014 03:20 pm ET Updated Oct 01, 2014

Who Will NYC's New Living Wage Policy Benefit Most?

New York City's new wage hike is much-needed relief in a city beset by skyrocketing living costs and mounting income inequality. But for many families -- especially those with multiple children -- the raise still won't get them a living wage.

New York Mayor Bill de Blasio signed an executive order on Tuesday raising wages for an estimated 18,000 employees. The raise applies to employees who work on economic development projects that get at least $1 million in subsidies from the city. These workers will earn $13.13 per hour if they don't receive benefits and $11.50 if they do.

The raise will boost childless single people and couples above a living wage. It will help people with one child achieve roughly the living-wage threshold. But larger families -- especially those with single parents -- will still fall far below living-wage levels, according to cost-of-living calculations by MIT researchers, as you can see from the chart below.

The living-wage numbers in the chart are based on the cost of living in Manhattan in New York County, one of the most expensive places in the country. "Poverty wage" is defined by MIT as the level someone needs to earn to reach the federal poverty line, which is $23,850 for a family of four. "Living wage" encompasses the costs of local childcare, medical insurance, rent and other essentials. To get the fairest comparison, we compared these wage levels to wages under de Blasio's plan for people who don't get benefits such as health insurance. Theoretically, because the city's raise for these people is higher, it should get them closer to a living wage. It doesn't always:

It's also worth noting that for couples to earn as much as is shown in the graphs, both adults would need to work full-time jobs.

The New York State legislature and Governor Andrew Cuomo are currently considering a plan that would boost wages to $10.10 per hour, up from its current statewide level of $8.00 per hour (this wage is scheduled to go up to $8.75 on December 31). The proposed plan would also let municipalities raise the wage up to 30 percent above the state wage floor, so New York City could set its own minimum at $13.13 per hour.

“We cannot continue to allow rampant and growing income inequality,” Mr. de Blasio told The New York Times. “Every tool counts. If we reach 18,000 families with this tool and get them to a decent standard of living, that’s a game-changer for those families.”

CONVERSATIONS