In addition to job losses in the restaurant sector, minimum wage hikes in New York City may also have claimed 36,000 jobs in professional and business (P&B) services.
P&B services cover essentially everything that might ordinarily happen in the private sector in an office building: management, HR, financial services, office administration, information technology, consulting, legal and professional services, and building related services like security and custodial care.
Historically, the pace of P&B employment increases with a slight exponential curve during the business cycle, that is, the rate of hires gradually increases as the economy continues to grow.
In fact, the growth of employee numbers can be fitted with a very nice exponential curve. On the graph below, we can see a curve fitted to the data from January 2010 to October 2015. The curve carries an R2 of .9965, which is a better fit than a straight line and falls very, very close to the actual data. Doing so, however, shows that employment growth deviates from trend beginning in October 2016, about three quarters of a year after the minimum wage is raised to $10.50 / hour.
And the gap continues to grow as the minimum wage moves up to $13 / hour, which effectively terminates growth in P&B employment after mid-2018. Keep in mind that this includes all P&B employment — investment bankers, lawyers, consultants, hedge fund managers and other highly paid professionals — not just minimum wage P&B employment. The implication: At $13 / hour, the minimum wage is capable of stopping growth in professional and business services employment altogether.
We can compare predicted to actual employment in order to estimate the impact of minimum wage hikes on P&B headcount. As the graph below shows, a 2010-2015 trend line shows no job losses until the fourth quarter of 2016, about 6,300 for that year. The losses grow in 2017, adding another 8,100. The wage rise to $13 / hour seems to do the real damage though, with job losses in 2018 (including Jan. 2019) at just below 22,000. Add it all together, and New York City professional and business job losses — those we would have expected to see less those actually attained — total 36,000 from the point that the minimum wage was raised to $10.50 / hour through Jan. 2019.
These losses are large enough to be visible on a graph without the aid of statistics, and they are large enough to stop growth of professional and business services entirely. Further, the job losses seem to occur with a lag, six to nine months after a given minimum wage increase. If this is the case, then P&B employment may continue to unwind in 2019 and see a difficult stretch in the first half of 2020.