By Edward Krudy

NEW YORK, June 30(Reuters) - When New York and California became the first states to lift the minimum hourly wage towards $15 earlier this year, New York state adopted a two-speed system that makes it a perfect testing ground for both advocates and opponents of government mandated pay hikes.

While California set a state-wide schedule of reaching the $15 level by 2022, New York lawmakers struck an 11th hour compromise that created different timetables for New York City and neighboring counties and the "upstate" regions where incomes are lower and labor markets less robust.

Under the plan minimum wages in the northern and eastern parts of the state would be initially lifted from present $9 to $12.50 by 2021 rather than $15 as in New York City and adjacent areas and only later upstate might gradually catch up, although there is no fixed timetable.

It will be almost six years before $15 and $12.50 minimum wage levels will be reached throughout the state, but other states and advocates of a higher national minimum wage standard will be closely watching how New York state's regions will respond to its two-speed system.

To be sure, some big cities have adopted their own targets - notably San Francisco, Los Angeles and Seattle - but New York is the first big state to experiment with a state-wide two-tier setup.

Governor Andrew Cuomo's administration has estimated that a $15 minimum wage across the state would bring its economy $15.7 billion per year in additional spending by minimum wage earners.

Based on such calculations, a $12.5 minimum wage in upstate New York would bring about $2.6 billion rather than $6 billion to the region, according to Reuters estimates, confirmed by an analysis by economists from the Fiscal Policy Institute and the Rockefeller Institute. (Graphic: http://tmsnrt.rs/1WGO59y)

The governor's office did not respond to a request for comment for this article. When the deal was announced in early April Cuomo said a "calibrated" minimum wage path that was "responsible and a positive for the overall economy" could be an example for the rest of the country.

The FPI's James Parrott, who together with Donald Boyd, director of fiscal studies at the Rockefeller Institute, prepared the analysis for Reuters, said two-speed minimum wage hikes could mean less growth for the upstate economy.

"I'm not sure the proponents of a slower phase in upstate realize the magnitude of the impact," said James Parrott, FPI economist who helped with the analysis.

Republican lawmakers and business lobbies have questioned the Democratic administration's calculations, which did not account for any possible impact on jobs, business investment or public sector budgets.