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Another Voice: $15 minimum wage would be a retreat from prosperity

By Brian McMahon

When Gov. Andrew M. Cuomo affirmed that “New York has no future as the highest-taxed state in the country,” economic developers, business leaders and taxpayers welcomed the acknowledgment that high taxes and business costs have driven jobs, people and prosperity out of the state for decades.

Unfortunately, the governor’s proposed $15 per hour minimum wage for all occupations would signal the world that the old New York is back.

A $15 per hour minimum wage would be 67 percent higher than the current wage and nearly double the federal minimum wage. And it would be the highest state minimum wage in the country.

All sectors, not just retail and tourism/hospitality, would suffer. For example, nationwide, some 5.3 million manufacturing workers (35 percent) earn wages lower than $15 per hour. Manufacturing still matters in New York, and a new burden would further reduce this sector’s competitiveness, especially for the average New York manufacturer, which employs 24 workers and is family owned.

A recent report by the Empire Center conservatively estimates that a $15 minimum wage would cost New York some 200,000 private-sector jobs. That can only worsen New York’s sustained population losses. The U.S. Census Bureau estimates that upstate New York had nearly 30 percent fewer people ages 25 to 34 in 2010 compared with 1990. Much of this exodus reflects pursuit of more and better jobs in other states. A higher wage mandate will intensify the stampede.

New and young businesses create the most jobs – and they would be hit the hardest. Only 60 percent of all startups – bakeries, breweries, software companies and restaurants alike – make it past the second year. A 67 percent wage hike for entry-level employees would make it more difficult for those businesses to survive to year three. Big-box retailers would likely be able to manage the steep wage increase, but the family-owned hardware store that competes on quality and service would struggle to adjust.

Perhaps no communities dread this idea more than border counties. Pennsylvania ($7.25), New Jersey ($8.38), Connecticut ($9.15), Vermont ($9.15), Ontario ($7.98 in U.S. dollars) and Québec ($7.50 in U.S. dollars) all would enjoy a new competitive advantage, in addition to the advantage they have in taxes, workers’ comp, health care and electric costs.

To be sure, Cuomo has done many innovative things to reverse the decades-old decline of upstate New York. Enactment of a $15 minimum wage, however, would likely put the brakes on this momentum.

Brian McMahon is executive director of the New York State Economic Development Council, an association of public- and private-sector entities that promote economic development and job growth.