New York By The Numbers: Monthly Economic and Fiscal Outlook


** New York by the Numbers
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** Monthly Economic and Fiscal Outlook
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By NYC Comptroller Brad Lander
Francesco Brindisi, Executive Deputy Comptroller for Budget and Finance
Krista Olson, Deputy Comptroller for Budget
Jonathan Siegel, Chief Economist
Photo Credit: Ryan DeBerardinis/Shutterstock
View in browser ([link removed])


** No. 74 - February 14th, 2023
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** A Message from the Comptroller
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Dear New Yorkers,

The new year got off to a strong start economically, with job growth far higher than expected nationally, and strong in New York City as well. If you’re surprised by this, because you keep hearing about expectations of a recession caused by the Fed raising interest rates, well, economists were surprised too.

Over the past year, the Fed has increased rates at the fastest clip in decades, from near zero to 4.5%, yet growth in many areas remains strong. Inflation measures have softened meaningfully from their peak, but are still well above the Fed’s comfort level – so continued interest-rate increases are expected. Most economists continue to project a mild recession for 2023, but there remains a lot of uncertainty about where things are headed.

The past year’s inflation has eroded purchasing power for many working families, as price increases outstripped wage gains. The minimum wage for New York City reached $15 per hour in 2019, but its purchasing power has declined to $13.38 in inflation-adjusted dollars – leaving many low-income families struggling to afford rising rents, food, child care, and energy costs.

That’s why the Governor and legislators in Albany are considering increases to New York’s minimum wage – including indexing it to inflation, as 18 other states and many cities now do (as a result of which the minimum wage is now $16.99 in San Francisco, $17.29 in Denver, and $18.69 in Seattle).

This month’s spotlight ([link removed]) compares the impacts of two legislative proposals in Albany to raise the wage. Governor Hochul’s proposal would index the current wage to inflation (with a 3% cap and off-ramps that would limit increases in some years). We estimate this proposal would result in a $16.28 minimum wage by 2026, with direct impacts on approximately 14% of NYC workers, for an aggregate increase of $400 million.

The Raise Up NY proposal would raise the minimum wage up to $21.25 by 2026, and then index it to inflation plus labor productivity. We project that this would directly affect more than 26% of NYC workers, with aggregate wage gains of over $6 billion.

Dive into the numbers with us below.

Sincerely,
Brad Lander


** Spotlight:
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** Minimum Wage
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The minimum wage for New York City more than doubled between 2013 and 2020, as a result of State legislation, but its purchasing power has been eroded by the high rate of inflation in the wake of the COVID-19 pandemic. Two different legislative proposals in Albany aim to address the issue.
* As part of the FY24 Executive Budget (Education, Labor and Family Assistance ([link removed]) (ELFA) bill Part S), Governor Hochul proposes that the current minimum wage levels be indexed to inflation, starting in 2024, subject to a 3% cap and off-ramps, depending on economic conditions.
* The Raise Up NY proposal (S3062D/A7503C ([link removed]) ) would first increase the minimum wage between 2024 and 2026, to adjust for the purchasing power decline of recent years, and then index it to inflation plus nonfarm business labor productivity growth starting in 2027. (This is the same indexation currently being used by NYS Division of Budget ([link removed]) to increase the minimum wage in upstate NY until it reaches $15).

The proposals are part of a broader trend: the minimum wage is indexed or set to be indexed to inflation in 18 states and Washington D.C. ([link removed]) With a few exceptions, indexing is based on the Consumer Price Index for all urban consumers (CPI-U) or for urban wage earners and clerical workers (CPI-W) but reference geographies and time periods vary. Many cities also index their minimum wage. Seattle’s ([link removed]) minimum is now $18.69 for most employers and San Francisco’s ([link removed]) is $16.99. Washington D.C. ([link removed]) will raise the minimum from $16.50 to $17 in July. Denver’s
([link removed]) minimum is set at $17.29. Many localities ([link removed]) , particularly in California where the statewide minimum is $15.50, are well above $15.

In this spotlight we compare the two proposals and estimate some of the potential impacts in NYC.


** Background
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New York State’s first general minimum wage law set the universal rate at $1.00 per hour in 1960, and since then, the minimum wage has State legislation as the cost of living grew. In 2012, one hundred NYC fast food workers staged a one day walk-out to kick off the Fight for $15 movement to raise the minimum wage, which had been set at the federal level of $7.25 since 2009. Between 2013 and 2020, New York phased in increases to the minimum wage to reach $15 for all workers in NYC by 2020, as shown in Table S1 below.[1] ([link removed])

As the Comptroller’s office September 2022 Spotlight ([link removed]) showed, this period of minimum wage raises corresponded with a period of strong job and new business growth in sectors characterized by a high number of minimum wage workers, as well as declines in poverty rates among covered workers.


** Table S1. Recent history of minimum wage increases in NYC and recent proposals
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SOURCE: NYS Division of Budget (2022)Report on New York's Minimum Wage Increases Scheduled for 2022 ([link removed] on New York’s Minimum Wage Increases Scheduled for 2022) . Large employers are those with 11 or more employees.

Although indexing the minimum wage to inflation was discussed when the step increases to $15 per hour were adopted in 2016, it was not included in the legislation. As a result, the minimum wage for New York City has remained flat at $15 per hour since 2019, even as inflation has spiked in the wake of the COVID-19 pandemic.

Table S2 shows the decline in the minimum wage’s purchasing power since 2019. Based on our forecast of NY area CPI, we project that its real value (measured in 2019, inflation-adjusted dollars) will drop below $13 this year.


** Table S.2: Inflation-adjusted minimum wage*
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*The Inflation adjustment uses the percentage change in annual average NY CPI-U. (F) denotes forecasted value.
SOURCE: Bureau of Labor Statistics, Office of the NYC Comptroller.


** Legislative proposals
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In New York State, two legislative proposals call for tying the minimum wage to inflation.

The Raise Up NY bill sponsored by Sen. Jessica Ramos (S3062D/A7503C ([link removed]) ) would require the minimum wage to progressively increase to $17.25 in 2024, $19.25 in 2025, and $21.25 in 2026. Subsequently, indexation would be based on the sum of CPI-W for the US (if positive) and labor productivity growth (if positive).

In her FY24 Executive Budget (Education, Labor and Family Assistance ([link removed]) (ELFA) bill Part S), Governor Hochul proposes that the minimum wage be indexed to CPI-W for the Northeast region (CPI-W NE) with the following limitations:[2] ([link removed])
1. Yearly increases would be capped at 3%;
2. Indexation would not take place if:
1. Inflation is negative;
2. First off-ramp rule: the average (seasonally adjusted) NYS unemployment rate in May-July is 0.5 percentage points above the low of the 3-month moving average over the previous 12-months; or
3. Second off-ramp rule: the (seasonally adjusted) NYS total nonfarm payroll in July is below the levels recorded in both January and April of the same year.

(NOTE: Public Health Law Section 3614-F ([link removed]) increased the minimum wage for home care aides[3] ([link removed]) relative to the statewide minimum by $2.00 starting on October 1, 2022, and by an additional $1.00 starting October 1, 2023. The Executive Budget proposal provides that indexation for home care aides’ wages will not start until the statewide minimum wage reaches $18.)

Table S3 projects what the minimum wage increases would be under the two proposals. While the schedule for Raise Up NY is set by legislation, the increases under the Governor’s proposal depends on CPI-W NE and labor market conditions. Table S3 incorporates our forecast of CPI-W NE based on its relationship with national CPI-U. The forecast assumes that after spiking in 2021 and 2022, inflation in the US continues on a downward trend and falls below 3% in 2024. The 3% cap is projected to limit increases below the rate of inflation in 2024 and (marginally) in 2025. While we do not have a forecast of NYS total nonfarm payroll jobs and unemployment rate, it is possible that conditions 2b. and 2c. above could be triggered, lowering indexation to 0%.[4] ([link removed]) It should be noted that the reference period for the calculation of inflation falls in the previous
calendar year.


** Table S.3: Minimum wage schedules under the two proposals
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*CPI-W NE forecast above the 3.0% annual cap. The inflation adjustment uses the percentage change in avergae annual NY CPI-U. Because under the Executive Budget propsal the minimum wage is indexed to CPI-W from the previous year, the inflation-adjusted % change is not necessarily zero.
SOURCES: S3062D/A7503C ([link removed]) , SFY24 Executive Budget ELFA Bill ([link removed]) Part S, Office of the NYC Comptroller.

In Chart S1, we show how the two indexation rules behaved historically, starting in 1991. This is the first year where both the unemployment rate and total nonfarm payroll data are available over the reference period to calculate indexation. There are several episodes where the off-ramps in the Executive Budget legislation would have applied and they generally correspond with recessions, with one exception in 1996 based on a decline of seasonally adjusted total nonfarm payroll in July of 1995 (see Table S5 in the technical appendix).

Overall, annual indexation under the Raise Up NY rules averaged 4.6% per year (2.0% from productivity and 2.6% from CPI-W inflation), versus 1.5% under the rules set in the Governor’s proposal.


** Chart S.1
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SOURCE: Bureau of Labor Statistics, Office of the NYC Comptroller.


** Stimulated impacts on the wage distribution
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We simulate potential impacts of the two proposals on the wage distribution and wage income of workers in New York City using both CPS and American Community Survey (ACS) data for 2021. We do this because CPS has better measurement of hourly wages and more recent wage information but a smaller sample size.[5] ([link removed]) We limit ourselves to an estimate of those whose wage may be directly affected by the legislations (the “directly affected”), without behavioral shifts in either labor demand or supply.[6] ([link removed])

Because the Raise Up NY proposal increases the minimum to $21.25 and the increase is faster than the projection of wage growth, the estimate of directly affected workers reaches 1.1 million in 2026, or about one quarter of the total working in NYC. Aggregate wage earnings gains increase by approximately $2b each year (in 2022 dollars) through 2026.

Our analysis of the Governor’s proposal projects the share of directly affected NYC workers at around 14%, with much smaller aggregate wage earnings of approximately $400 million in 2024. Because indexation falls behind the projection of wage growth, the estimates of impact decline over time.


** Table S.4: Simulation of directly affected workers and aggregate change in earnings
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SOURCE: IPUMS-CPS, IPUMS-USA, Office of the NYC Comptroller


** Conclusions
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With prices continuing to rise and the value of minimum wage forecasted to dip below $13 an hour in the coming year (in 2019, inflation-adjusted dollars), legislators are presented with two proposals to raise New York’s minimum wage and indexing it to inflation. Which of the two paths Albany chooses to take will have an impact on hundreds of thousands of New Yorkers. We project that the Raise Up NY proposal would raise the wages of nearly twice as many New York City workers over the next three years as the Governor’s proposal, and by significantly larger amounts.

Prepared by: Francesco Brindisi, Executive Deputy Comptroller. The author is indebted to Dr. Selçuk Eren who worked on an earlier version of the simulation methodology. He also wishes to thank James Parrott for thoughtful comments on an earlier draft.


** Appendix
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To place the minimum wage in NYC in context, we used Current Population Survey (CPS) monthly files to estimate the distribution of hourly wages. To estimate hourly wages, we used monthly Current Population Survey (CPS) data from 2014 to 2022 as available from IPUMS-CPS. The data has county information that allows to separate NYC, Long Island, and Westchester from the rest of NYS. Hourly wages are either reported directly or estimated by dividing usual weekly earnings ([link removed]) by usual work hours (an overview of hours worked variables is available here ([link removed]) ), as in the analysis done by the Congressional Budget Office ([link removed]) .[7] ([link removed]) Chart S2 shows that, based on survey responses, 20% of employees had
hourly wages up to $15 in 2020 and 2021.

Chart S2
SOURCE: Current Population Survey (IPUMS-CPS) monthly files, Office of the NYC Comptroller

Table S5 below reports the performance of the off-ramp rules in the Executive Budget proposal. The recession periods are taken from the NYS DOL’s Index of Coincident Economic Indicators ([link removed]) . The off-ramp rules coincide with recessionary periods (which are estimated based on composite index that includes labor data) with one exception in 1995.


** Table S.5: Timing of off-ramp triggers in the Executive Budget proposal
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SOURCE: Bureau of Labor Statistics, NYS DOL, Office of the NYC Comptroller.


** Wage simulation.
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The wage simulation was first set up by our previous colleague Dr. Selcuk Eren and subsequently integrated with CPS data, taking inspiration from the Economic Policy Institute’s (EPI) methodology ([link removed]) . We performed multiple imputation of CPS wages into ACS controlling for a common set of explanatory variables including sex, age, marital status, race and ethnicity, educational attainment, industry, occupation, part-time status, geography, and time trends. The treatment of observations with wage below the minimum varies across studies. CBO ([link removed]) does not attribute gains from lifting the minimum wage to this group, under the assumption that the conditions that prevent workers from obtaining the minimum would not change. EPI allows for some measurement error by attributing gains from a higher minimum to everybody with estimated wage within 80% of the minimum. In our analysis, we
exclude very low estimated wages and cap wage gains. When a worker’s estimated baseline hourly wage is above the existing minimum wage but below the scheduled minimum wage, we add the difference to bring the worker to the scheduled minimum wage. For those with wage below the existing minimum wage we add the minimum wage increase. For example, in the case of the Raise Up NY proposal in 2024, a worker with baseline wage of $14.5 receives $2.25, while a worker with baseline wage of $16 receives $1.25. After imputation, directly affected workers are estimated by place of work in ACS. This allows us to use 2022 Current Employment Statistics data and our forecast of payroll employment to project employment based on industry classifications in the survey data. After imputation of 2022 hourly wages, we use our forecast of the overall wage rate growth (net of the securities industry) to trend hourly wages. The estimates in Table S4 are averages of the point estimates across the imputed datasets.
The 2021 ACS reports a significant increase of respondents working from home and a decline of commuting into New York City for work. Depending on the location of their employers, a fraction of respondents working from home would be subject to NYC minimum wage, although the distribution is likely skewed toward higher wages.


** Inflation
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As chart S3 shows, average hourly earnings in NYC have not kept pace with inflation since the end of 2021. This is partly because of composition effects, as service industries more heavily affected by pandemic added jobs and lowered the overall average. However, the data hardly suggests a wage-price spiral.


** Chart S3

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*The inflation adjustment uses the yearly percentage change in the quartely average of NY CPI-U
SOURCE: Bureau of Labor Statistics, NYS DOL, Office of the NYC Comptroller.

The extent to which a higher minimum wage may be passed on to consumers in the form of higher prices is not well-established in empirical studies. A recent analysis focusing on regional CPI indexes[8] ([link removed]) found that a 10% increase in the minimum wage increases CPI by 0.14 percentage point in the first year and 0.11 percentage point in the second year with negligible impacts afterward. Using these estimates, the scheduled Raise up NY increases might add 0.2 percentage points to CPI in 2024, and 0.3 percentage points in 2025 and 2026.

Given the concentration of minimum wage workers in food services, it stands to reason that the impact on prices would be concentrated in food away from home. Using the same study, CPI in the food away from home category might increase by 0.6 percentage points in 2024 and 2025, and 0.5 percentage points in 2026. However, food away from home accounts for a relatively small share of the NY CPI indexes (4.5% for CPI-U and 6.1% of CPI-W), according to the December 2022 tables ([link removed]) . Other studies concentrating on menu items at fast food restaurants suggest a higher pass-through from wages to prices.[9] ([link removed]) Available data at the state level ([link removed]) shows that 65% of food away from home consumption
is attributable to households at the top 40% of the income distribution suggesting price increases in the food service industry would not significantly fall on the beneficiaries of minimum wage increases.


** The U.S. Economy
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* The Bureau of Labor Statistics reported 517,000 jobs added to U.S. payrolls in January, a stronger than expected expansion. Some of the gain is attributable to unseasonably warm temperatures across the country – but together with other measures of still-high labor demand, the persistence of a hot labor market is indicated.
* U.S. labor markets continue to grow despite the Federal Reserve tightening monetary policy, with unemployment at 3.4% in January – its lowest rate since 1969. The December number of job openings per unemployed worker rose to 1.8, while the quits rate remained at an elevated 2.7%.[10] ([link removed])
* A tight labor market may be expected to portend rapidly escalating wages. But thus far, we haven’t seen it. January’s nominal average hourly wage growth was a mere 0.3% (or an annual rate of 3.7%).
* The Consumer Price Index (CPI) increased in January (0.5%) with year-over-year inflation falling to 6.4%. Per the data from the Bureau of Labor Statistics, the shelter index accounted for nearly 50 percent of the January monthly increase; the index increased by 0.7 percent. The food index and the energy index also increased by 0.5 percent and 2.0 percent, respectively. The Producer Price Index (PPI) and the Personal Consumption Expenditure (PCE) index both declined in December, but show 6.2% and 5.0% growth year-over-year, respectively.
* The Fed raised interest rates by 25 basis points early in February (0.25%) to a range of 4.5-4.75%. Recent statements by the Fed Chairman indicate that rates may rise higher than 5.0% in 2023 if wage growth and inflation figures are not indicative of decelerating prices.
* Treasury yield curves are more sharply inverted than at any time since 1981, with 2-year rates more than 0.8% above 10-year rates. This rare phenomenon is usually interpreted as indicative of market expectations of a high likelihood of impending recession, although economists’ forecasts vary widely. Real gross domestic product (GDP) in the 4^th quarter of 2022 grew by 2.9% according to advanced estimates by the Bureau of Economic Analysis. This rise continues after growth of 3.2% in the 3^rd quarter, with the year 2022 finishing moderately strong after real GDP decreases in its first half.


** NYC Labor Markets
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* New York City added over 20,000 private jobs in December. The 4,021,000 privately employed in the City are 97.9% of the pre-pandemic peak (see Table 1).
* New York City employment in health care and social assistance increased by more than 18,000 jobs in the fourth quarter of 2022, while jobs in food and hospitality grew by over 14,000 in the same period. Together, these two categories accounted for roughly three-fourths of 4^th-quarter growth in private payroll employment, and more than half of the growth seen throughout 2022 (see Chart 1).
* Employment in retail businesses fell in December and remains 13% below its pre-pandemic level (see Chart 2).


** Table 1: Seasonally Adjusted NYC Private Employment, by Industry (‘000s)
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SOURCE: NYS DOL, and NYC Office of the Comptroller and Budget.
Note: Due to revisions to earlier months, numbers may not match to previous monthly newsletters.

* New York City’s seasonally adjusted unemployment rate stayed at 5.8% from October to November (Chart 1).
* Unemployment rates for Black New Yorkers (11.7%) remain above the citywide rate. Small sample sizes for the Current Population Survey make it difficult to interpret short-term unemployment fluctuations for racial and ethnic subgroups.


** Chart 1
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SOURCE: NYS DOL, and NYC Office of the Comptroller and Budget. Due to revisions to earlier months, numbers may not match to previous monthly newsletters.

* New York City’s seasonally adjusted unemployment rate stayed at 5.8% from October to November (Chart 1).
* Unemployment rates for Black New Yorkers (11.7%) remain above the citywide rate. Small sample sizes for the Current Population Survey make it difficult to interpret short-term unemployment fluctuations for racial and ethnic subgroups.


** Chart 2
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SOURCE: NYS DOL, and NYC Office of the Comptroller and Budget.
Note: Pre-pandemic employment based on February 2020, seasonally adjusted.

* New York City’s seasonally adjusted unemployment rate edged up slightly to 5.9% in December, significantly higher than the U.S. rate of 3.5% in that same month. In the last quarter, the unemployment rate (not seasonally adjusted) for Black New Yorkers remains much higher than for other residents (Chart 3).
* The local ratio of job openings to unemployed workers is much lower than the national average. In New York State (the smallest geographical unit where data are available), there were 1.1 job openings per unemployed worker in November, while nationally that rate is 1.8.


** Chart 3
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SOURCE: IPUMS-CPS, Office of the NYC Comptroller


** Housing & Real Estate
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* Median New York City asking rents held steady at $3,400 in December. Asking rents have been stable for the past half year but remain up 16% from pre-pandemic levels and up 27% from pandemic lows (Chart 4).
* The number of listed apartments available for rent fell by over 3,000 units (11%) from November to December, led by Brooklyn and Queens, which dropped 13% and 10% respectively.


** Chart 4
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SOURCE: Streetseasy.com

* The City’s Department of Homeless Services’ (DHS) shelter census has continued to reach record high levels as asylum seekers continue to arrive in New York City. The average monthly census increased by 5.8% from December to January. To put this increase in perspective, there has not been a December to January census increase above 0.5% in the last six years (Chart 5).
* The census reached a record 71,020 individuals on February 4^th, 2023.
* As of February 12, 2023, the City reports that 21,758 asylum seeking individuals were residing in the DHS shelter system, and an additional 7,381 individuals were residing in one of six Humanitarian Emergency Response and Relief Centers (HERRCs) that the City has established in response to the asylum seeker crisis of the last seven months. 45,600 asylum seekers have passed through the City’s care over this period.


** Chart 5
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SOURCE: NYC DHS, via NYC Open Data

Note: The HERRCs are not included in the above chart.

* New York City closed 4Q-2022 with approximately 123,600,000 square feet of available office space for rent. The total amount of available office space for rent has been largely flat since 2Q-2021 (Chart 4).
* The current average rent is $66.10 per square foot and has similarly plateaued since 2Q-2021.


** Travel and Tourism
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* NYC hotels capped off a strong year of recovery in December 2022 with total room demand hitting 93% of its December 2019 level (Chart 6). Revenue per available room (RevPAR) was $303, 14% higher than December 2019 in nominal terms. Adjusted for inflation, RevPAR was close to its pre-pandemic level.


** Chart 6
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SOURCE: STR via CoStar

* International passenger travel at New York City area airports dropped to 3.2 million in November, a decline of 294,000 from October, and 414,000 lower than November 2019.
* The month-to-month declines are consistent with regular pre-Covid seasonal patterns (October typically sees higher levels of international visitors than November) and overall international visitation is showing a slow but steady recovery pattern (Chart 6).


** City Finances
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** Highlights of the Tentative FY 2024 Property Assessment Roll
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* The Department of Finance (DOF) recently released the Tentative Property Assessment Roll for Fiscal Year 2024, with assessment values reflecting real estate activity between January 6, 2022 and January 5, 2023. Property tax liabilities are based on the assessment roll, and owners are given a period to request changes to their tentative assessment before the Final Roll is published in May.
* The roll included a 6.0% increase in the taxable assessed value for Tax Class 1[11] ([link removed]) properties (most residential property of one to three units), the largest increase in the last 10 fiscal years—FY 2014 to FY 2023. The average annual increase for this time period was 3.6%. One driver of the recent increase in taxable assessed values is the increase in the median price for a one-family home sold outside of Manhattan, which increased by 10.2% from 2020 to 2021 and 7.0% from 2021 to 2022.
* Despite the record increase in residential rents for most of 2022[12] ([link removed]) , the total market value of Tax Class 2 properties (rental, condominiums and cooperative buildings) went up only by 0.9%. By law, condominiums and cooperative buildings are valued by using income from comparable rental buildings, so any valuation issues with rental buildings would impact condominiums and cooperative buildings. For calendar year 2022, there appears to be a disconnect between rents and the market values for rental buildings.
* For FY 2022, DOF reduced the total market value for Tax Class 4 properties (all commercial and industrial properties) by 17.4%. Subsequently, the total market value was increased in FY 2023 and FY 2024 by 9.7% and 7.4% respectively but remains lower than the pre-pandemic level used for FY 2021 assessments. The FY 2024 total taxable assessed value, on the other hand, is now higher than its value in FY 2021 for Class 4 properties.
* Confused by the different trends between market values and assessed values, and the fractional assessments behind them? Of course you are. The system is opaque and confusing. Here’s DOF’s explainer ([link removed]) , the NYC Advisory Commission on Property Tax Reform’s Final Report ([link removed]) recommending changes, and the Comptroller’s Office’s proposal for property tax reform ([link removed]) to move forward in Albany this


** Chart 7
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SOURCE: NYC Department of Finance and Office of the NYC Comptroller

* Brooklyn added the most tax lots from FY 2023 to FY 2024 — 1,737. It also added the most in the market value increase — $31.7 billion. Brooklyn has experienced significant construction activity the last several years. The tax lots increase is a strong reflection of continuing construction activities.


** Chart 8
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SOURCE: NYC Department of Finance and Office of the NYC Comptroller

* Although the office market continues to experience an elevated vacancy rate, the market value of Class A office buildings increased by 7.1%. Condo office parcels (16% of total office market value) had the highest percentage increase—8.6% among office buildings.
* The market value of non-condo hotel properties increased by 8.3% while condo hotel properties (26% of total hotel market value) increased by 12.2%.
* Total market values for Manhattan rental buildings decreased by 2.6%, with a 7.6% decrease among 4-10 family properties in the borough. Total market values for Manhattan cooperative buildings decreased by 1%.


** Income Tax Revenues
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* Personal Income Tax (PIT) withholding collections totaled $1.19 billion in January (6.7% above January 2022). After adjusting for estimated collections on base salary, and calendar differences, our tracking estimate of bonus payments continues to indicate a decline of around 20% for this year’s high season for bonuses, measured thus far from early December through early February.
* Estimated tax payments received in January were $494 million, 47.5% below the prior year in January. The January installment is the last of the tax year and can be depressed by capital loss-taking at the end of the year as well as a late adjustment to lower net capital gains realized throughout the tax year. 2022 was the first year since 2009 to end with a lower stock market valuation than it began.


** New York City’s Cash Balances
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* Current cash balances are at a historical high. As of February 2nd, the City’s cash balance stands at $14.6 billion, compared to $7.2 billion at the same time last year. The cash balance includes $1.954 billion in the Revenue Stabilization Fund (RSF), the City’s rainy-day fund. The majority of funds, $1.455 billion, were allocated to the RSF in FY 2022.
* On January 25th, 2023, the City received $1.7 billion in new Pass Through Entity Tax (PTET). The PTET is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income. The PTET is intended to be revenue neutral but currently reflects as an increase against the cash balance at the same time last year.
* The Comptroller’s Office’s review of the City’s cash position during the first quarter of FY 2023 and projections for cash balances through March 31, 2022, are available here ([link removed]) .


** Endnotes
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[1] ([link removed]) Food and service workers in the hospitality industry have a tip allowance ([link removed]) of $5.0 and $2.50, respectively. Starting in 2021, tip allowances were eliminated in other (“miscellaneous”) industries. The minimum wage for home care aides is described in the main text.

[2] ([link removed]) Outside of New York City and Nassau, Suffolk, and Westchester counties, indexation would start the year after the minimum reaches $15.

[3] ([link removed]) The definition of home care aide is available here ([link removed]) .

[4] ([link removed]) This appears to be the case in NYS Department of Budget’s projection ([link removed]) , where the annual unemployment rate increases to 4.8% in 2023 and 5.2% in 2024, from its average of 4.4% in 2022 ([link removed]) .

[5] ([link removed]) A description of the methodology is available in the technical appendix.

[6] ([link removed]) Wage compression would push compensation higher also above the minimum, generating a spillover effect onto “indirectly affected” workers. Given the uncertainty surrounding the simulation exercise, we don’t also make a modeling assumption regarding indirect effects. An alternative set of results for the Raise Up NY proposal (based on a different methodology that is also inclusive of indirect effects) is available from the Economic Policy Institute ([link removed]) . As a modeling choice, EPI assumes that wages between 100% and 115% of the minimum are indirectly affected while CBO stretches the boundary to 150% of the minimum. Spillover effects can be noisy in the
data as documented in Autor D.H., Manning A., Smith C.L. (2016) “The Contribution of the Minimum Wage to US Wage Inequality over Three Decades: A Reassessment ([link removed]) ,” American Economic Journal: Applied Economics, 8(1), January.

[7] ([link removed]) One of the main reasons for observing hourly wages below the minimum is the lower tipped minimum wage. The data are also subject to measurement error as usual work hours tend to overestimate actual hours ([link removed]) (as surveyed in CPS). Measurement errors tend to be more prevalent among employees that are not paid by the hour (see Lemieux T. (2006) “Increasing Residual Wage Inequality: Composition Effects, Noisy Data, or Rising Demand for Skill?” American Economic Review, 96(3), June). A discussion of measurement error in survey responses regarding income and wages can be found in Meyer B.D., Mok, W. K. C., and Sullivan J. X.(2015) “Household Surveys in Crisis,” Journal of Economic Perspectives, 29(4), Fall.

[8] ([link removed]) Cooper D., Luengo-Prado M.J., and Parker J.A. (2020) “The Local Aggregate Effects of Minimum Wage Increases,” Journal of Money, Credit and Banking, 52: 5-35.

[9] ([link removed]) See Dube A., Lindner A. (2021) “City Limits: What Do Local-Area Minimum Wages Do? ([link removed]) ” Journal of Economic Perspectives, 35(1), Winter; Ashenfelter O.C., Jurajda Š. (2022) “Minimum Wages, Wages, and Price Pass-Through: The Case of McDonald’s Restaurants,” Journal of Labor Economics, Vol.40(S1).

[10] ([link removed]) See Bureau of labor statistics JOLTS data ([link removed]) .

[11] ([link removed]) The definitions for the tax classes can be found on the Department of Finance site ([link removed]) .

[12] ([link removed]) Please see for instance the StreetEasy Rent Index ([link removed]) .


** Contributors
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The Comptroller thanks the following members of the Bureau of Budget for their contributions to this newsletter: Jonathan Siegel, Chief Economist; Yaw Owusu-Ansah, Director of Tax Policy and Revenue Analysis; Steve Corson, Senior Research Analyst; Astha Dutta, Economic Data Analyst; Irina Livshits, Chief, Fiscal Analysis Division; Marcia Murphy, Principal Revenue Analyst; Krista Olson, Deputy Comptroller; and Francesco Brindisi, Executive Deputy Comptroller. He also thanks Archer Hutchinson for his ongoing efforts in the design and lay-out.

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