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Making sense of a few cents' raise; Silver's proposal is a very big deal for workers, employers

The proposal in Albany to raise the minimum wage to $8.50 is music to the ears of Teresa Biersbach.

"If they increased it, that would be great for a lot of people," said the Depew mother of four, who currently makes $7.25 an hour working at the Salvation Army store on Transit Road.

Biersbach, 45, had been a stay-at-home mother for 21 years but returned to the work force a year-and-a-half ago to "help make ends meet." Any hike in the minimum wage would help with a child's braces, "the mortgage, car payment and just catching up with bills and everything else," she said.

But the proposal Monday by Assembly Speaker Sheldon Silver, D-Manhattan, to raise the minimum wage in January 2013 and automatically peg annual increases to inflation beginning in 2014 struck a sour note with Larry Santora, the owner of the Picasso's Pizza chain.

Santora, who employs 180 workers at his five local restaurants, said a higher minimum wage would mean higher prices for consumers.

"Nobody will be making more money," he said. "It's a loss because everything will go up. Everything will cost more. Only the government benefits through taxes."

Silver, however, said the $8.50 minimum wage is both "reasonable" and "not shocking" to businesses. "Economic argument aside, this is ultimately a matter of human dignity. No one who works hard and follows the rules should be poor and bereft of hope," he said.

The Legislature's top Democrat said a parent with two children working 35 hours per week and making minimum wage earns about $13,200 -- $4,000 below the federal poverty rate.

Supporters also said the higher rate must be linked with annual inflation rate indexing to keep the minimum wage level predictable to both workers and employers. "Indexation will allow the lowest-wage workers in this state to never again have to suffer through the ravages of inflation," said Mario Cilento, president of the state AFL-CIO.

Business groups denounced the Silver plan, saying it would cost the state jobs by driving up payroll costs at a time when the economy is struggling.

"We think it would be a sure-fire way to stifle job creation as New York struggles to emerge from the recession," said James Calvin, president of the New York Association of Convenience Stores.

"When you drive up the cost of an entry-level position, it makes it harder to justify that position," Calvin said. In addition, a higher minimum wage would have a ripple effect that would push up the hourly pay of other workers at the bottom end of the pay scale, further adding to payroll costs, he said.

"That would be devastating," said Michael F. Newman, the executive vice president of Noco Energy, which oversees the Noco Express Shops chain. He said a higher minimum wage would mean fewer part-time positions and less flexibility for both employers and the workers who fill those jobs.

"It misses the whole point about what that introductory wage is meant for," said Newman, who estimated that about 40 percent of the workers at Noco Express Shops earn minimum wage. "These are part-time people who are looking for extra work."

A small-business advocacy group, the National Federation of Independent Business, had a similar reaction. "The proposal is based on good intentions, but it's going to have a very damaging effect on the people whom its advocates want to help," said Mike Durant, the group's state director.

"The way to improve our state's economy and the lives of all New Yorkers is to create more private-sector jobs," said Heather Briccetti, president and chief executive officer of the Business Council of New York State.

"Raising the minimum wage would only hurt New York's small businesses, farms and not-for-profits that are struggling to make their current payrolls, and reduce job opportunities in this difficult economy," she said.

Gov. Andrew M. Cuomo and Senate Republicans did not rule the Silver plan in or out.

"The governor has been supportive of previous proposals to raise the minimum wage, and we will be reviewing the proposal through the legislative session," said Cuomo spokesman Matthew Wing.

"Senate Republicans will continue to promote policies that encourage job growth and make New York a more business-friendly state, just as we did last year partnering with Gov. Cuomo," said Scott Reif, a spokesman for Senate Majority Leader Dean Skelos.

New York's minimum wage was last increased in July 2009, when it rose by 10 cents to the current $7.25 per hour.

Supporters of a higher minimum wage note that rising prices have eroded the purchasing power of the minimum wage. If the minimum wage had kept up with inflation since that 2009 increase, it would be $7.60 today.

In fact, the purchasing power of the minimum wage has varied widely since the 1970s. At its peak in 1970, the minimum wage had the purchasing power of $10.70 in today's dollars, or 48 percent more than the current minimum wage. But the purchasing power of the minimum wage also had dropped as low as the equivalent of just over $6 as recently as five years ago.

Silver's proposal would boost New York's minimum wage even though the federally mandated minimum would remain at $7.25. Eighteen other states currently have minimum wages that are higher than $7.25, ranging from $7.40 an hour in Michigan and Rhode Island to $9.04 in Washington.

President Obama has been unable to push through an increase in the national minimum wage to $9.50 per hour that would index it to inflation.

About one of every 14 New York workers currently earns less than $8 an hour, according to an analysis by the Fiscal Policy Institute, an Albany-based think tank that is calling for a higher minimum wage.

The minimum wage affects far more than teenagers working part-time jobs. More than four of every five workers earning less than $8 an hour are at least 20 years old. Half of the workers earning below $8 an hour work a minimum of 35 hours a week, the Fiscal Policy Institute analysis found. Nearly half of all minimum wage jobs in New York are retail and food services positions.

"I think they should raise it," said Zac Metzger, 22, a Clarence resident and college student who makes minimum wage working part time at the Picasso's on Transit Road.

"It'll be more money in my pocket," said Metzger, who lives at home but pays for his car and phone. He said his paycheck covers his monthly expenses, but little else. "At the end of the month, there's nothing left for me to go to the bar or hang out."

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