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Another Voice: Focus on pay levels misses the broader problem

Heather C. Briccetti

Gov. Andrew M. Cuomo’s current wage board is only addressing fast-food workers, but it is being watched carefully and with great concern by all employers in New York. Why?

First, this unilateral action by the governor is without precedent. The state’s nearly 90-year-old wage board statute has never been used to set a minimum wage above that set by the State Legislature. We see the Legislature as the proper venue for this type of policy making. In fact, the Legislature has taken action to raise the wage eight times since 1991. A three-step increase to $9 per hour was adopted in 2013, and when fully phased in at the end of 2015 New York’s minimum wage will be higher than all but four states.

Second, despite its narrow focus, most expect this wage board’s work to serve as the template for future efforts. Under state labor law, this unilateral authority can be applied to any industry or any occupation. Realistically, the wage set by the labor commissioner at the end of the current process will be seen by advocates as the starting point for a broader mandate. 

Third, this will be expensive for employers. Cuomo’s earlier proposal for a minimum wage of $10.50 upstate and $11.50 downstate had an aggregate $3.2 billion price tag. But advocates are pressing hard for $15, encouraged by legislation in several West Coast cities. At $9 per hour, it will be a cost increase of $4,100 per full-time equivalent position, compared to the federal wage, once federal withholdings and workers’ compensation premiums are added to the salary increase. Going to $10.50 is a $7,500 per year increase, and the “Fight for 15” standard, if successful, would be a whopping $18,000 per job/per year increase.

Fourth, the wage board could actually reduce opportunities for young, low-skilled workers. In sectors with tight profit margins, including food service, these increased labor costs may be offset by fewer positions or fewer hours, increased automation or shuttering businesses.

Finally, this focus on wage mandates misses the broader problem plaguing much of upstate New York – the lack of meaningful economic opportunity.

Advocates are focused on mandating higher wages in low-wage sectors, rather than considering reforms that make New York more attractive to investments in manufacturing, energy, technology, construction and finance.

Additionally increasing the minimum wage, especially in soft labor markets, is bad economic policy that addresses the symptoms rather than the cause of reduced economic opportunity. Instead of making low-skill, entry-level jobs more expensive, we should be making the state’s economic climate more competitive, and help residents gain the skills necessary to move to more demanding, higher-paying jobs.

Heather C. Briccetti is president and CEO of the Business Council of New York State.