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Opposite sides of New York minimum-wage issue stress impact in human terms

Gabriel Tyler, a nursing assistant at a suburban nursing home, sees bigger paychecks in his future.

Mike Deakin, who owns two small manufacturing companies in North Tonawanda, sees lost business.

And farm owner Patrick McCormick, like a lot of business owners, sees fewer workers on his payroll.

Therein lies the rub as the State Legislature was readying to raise the minimum wage in New York State. Granted, the increase to $12.50 in upstate would come gradually, according to sources familiar with the working agreement among lawmakers in Albany. Whatever the amount and timing, a higher minimum wage would look different through the lenses of minimum-wage workers or small-business owners.

“I work almost as much overtime as regular time to maintain a decent standard of living,” said Tyler, a certified nursing assistant who makes $11.72 an hour at Williamsville Suburban Nursing Home.

But the higher pay may take longer to come than advocates had hoped. In the lawmakers’ working agreement with Gov. Andrew M. Cuomo, the current $9-per-hour rate for upstate employees would rise by 70 cents a year until it reaches $12.50 in five years, compared with a $15 minimum wage for New York City in three years.

For some employees, it may not come at all if small-business owners with tight margins respond by reducing their workforces.

And even employees who get the higher hourly wages might lose out in other ways, said Deakin, who owns Val-Kro, an industrial plating company, and Pellets LLC, which manufactures abrasives.

Deakin said that other employers have told him they would consider cutting back on health care contributions, life insurance, holidays and paid vacations to compensate for the higher wages.

Some business owners may feel compelled to make those moves, because the hike in the minimum wage would result in higher employment taxes and workers’ compensation costs, too.

The higher costs would put companies such as Deakin’s at a competitive disadvantage, because most of his business is out of state, where he competes against employers who have lower costs.

“It’s just one more nail in the coffin in terms of our competition with businesses in other states,” Deakin said of the higher minimum wage.

Economists weigh in

In Western New York, an estimated 61,040 people currently earn the minimum wage of $9 an hour, according to the state Department of Labor.

The minimum wage reached its highest purchasing power in 1970. Using the official U.S. Bureau of Labor Statistics inflation calculator, the $1.85 minimum wage that year would be the equivalent in purchasing power of $11.31 an hour today.

A higher wage would improve standards of living for working families, including single mothers who may no longer need a second minimum-wage job to make ends meet, said Frederick G. Floss, an economics professor at SUNY Buffalo State.

It would also reduce taxpayers’ costs for social safety-net programs, he said.

At a recent editorial meeting with The Buffalo News, Cuomo said workers earning the minimum wage still need assistance from the government to get by.

“Those employees are subsidized by our tax dollars,” Cuomo said.

Paying a higher basic wage means that more parents would have more free time to devote to their children, with a greater likelihood of better school performance, Floss said. “They will have more time to take care of their families, which is only good for all of us,” he said.

Floss is among the 77 economists from across New York State – including five others from Buffalo State – who signed a letter of support for a phased-in minimum wage increase to $15.

Such an hourly increase would not be too different from today’s wage scale since it would not fully go into effect for upstate for five years, Floss said.

In five years, there would be a “pause” to give the governor’s Budget Division and the state Labor Department time to assess the state’s economic condition to determine whether the wage can keep rising, according to a State Capitol source.

“We’re not having a big jump overnight, and it really isn’t very much different from what the minimum wage would be in today’s terms because of inflation,” Floss said.

“Raising the minimum wage in all of the research that’s been done shows there is very little chance there will be a loss of jobs in Western New York or New York State, for that matter,” Floss said.

A study released by the University of California, Berkeley concluded that gradually increasing New York’s minimum wage from $9 to $15 an hour would increase wages by an average of 23 percent for nearly 3.2 millions workers by 2021 without a negative effect on overall employment. More than 1 in 3 workers would benefit from a higher wage, with three industries – retail, health care and restaurants – accounting for nearly half of the workers getting increases.

Overall, payroll costs in the state would increase by only 3.2 percent because many businesses already pay over $15 and many workers getting a raise already earn over $9 an hour.

Lower employee turnover would lead to savings in recruitment and retention costs and worker productivity would increase, the study said.

“We looked carefully at both sides of the equation, the effects on businesses and the effects on workers. Businesses will adapt,” Michael Reich, the study’s lead author, said in a Cal-Berkeley news release.

But an Empire Center report, by Douglas Holtz-Eakin and Ben Gitis of the American Action Forum, found that a minimum-wage hike would cost the state at least 200,000 jobs, with disproportionate decreases in upstate.

“A $15-an-hour statewide minimum wage in New York would entail some very big trade-offs, affecting the livelihoods and finances of millions of New Yorkers – some positively, others negatively,” E.J. McMahon, president of the Empire Center for Public Policy, said before the Senate Labor Committee earlier this year. “In a prolonged period of slow economic growth, the loss of any jobs, much less a minimum shortfall of 200,000 jobs, is a risk that you should not be willing to take.

“As far as individual New Yorkers are concerned, I would suggest the negative effects will be felt most strongly by the very people this policy is supposed to help: marginal, younger, low-income workers struggling to get or keep a foothold in the economy,” McMahon said. “On a geographic basis, the negative impacts are likely to be disproportionately concentrated in upstate New York.”

‘Less competitive’

The change to $15 would increase business owners’ costs for workforces by more than 60 percent, said Dottie Gallagher-Cohen, president and CEO of the Buffalo Niagara Partnership.

“I think it’s a tremendously popular notion,” she said, referring to the $15 wage. “Everyone wants to hear, ‘Yeah, increase my paycheck 60 percent.’ What we are trying to do is raise awareness of what happens on the back end of that.”

A higher minimum wage would be bad for people in ways they might not think about: higher prices for buyers and fewer jobs in the job market.

The Buffalo Niagara Manufacturers Alliance takes a strong stance against raising the minimum wage, even though starting wages in the industry are typically 30 to 40 percent higher than the minimum wage, according to Peter Coleman, the executive director.

Coleman said raising the minimum wage would create pressure to raise pay for everyone.

“This will make us less competitive in the North American market,” Coleman said. “If you are a manufacturer in the Southern Tier, why wouldn’t you move your workforce or plant capacity to Pennsylvania? Or Canada? This would be catastrophic for our industry because we are competing in a global marketplace.”

Coleman predicted that a $15 minimum wage could have a far-reaching effect on the state’s ability to hold on to companies – and jobs.

“We would love to pay people $50 an hour,” he added. “But it’s unattainable, and so is $15 an hour as a minimum wage.”

Effect on farms

Patrick McCormick’s family runs a farm in Java Center that has been around for seven generations. So they’re used to weathering changes.

But a higher minimum wage would be a blow. The Robbiehill Family Farm would face an additional $270,000 cost in just one year with a $15-an-hour minimum wage, said McCormick, 43, who runs the dairy farm with his father and brother. Ten people work at the farm, which dates from 1854. The dairy farm has about 550 milking cows and 480 young stock, as well as crops such as corn, oats and alfalfa.

“None of my employees are making minimum wage right now,” McCormick said.

He starts workers at $10 an hour, “because I don’t believe it’s a minimum-wage job,” McCormick said.

But the ripple effects of a higher minimum wage would hit Robbiehill.

With a higher minimum wage, McCormick may have to look at automating his farm operations to cut costs on personnel. Even if farms are exempted from the change, he said, he would be affected because he would have a harder time finding people to take the jobs without higher pay.

With automation, he would need fewer workers. “I would probably eliminate my five milkers now,” McCormick said of that scenario. “It would be five jobs lost.”

McCormick employs full- and part-time workers.

Beyond his own farm, McCormick, who is a member of the state board of directors of Farm Bureau, said that other farmers could be affected by the hike in many ways.

For instance, tractor sales and suppliers could be feel the impact, he said. Produce growers might change the crops they raise, he said, since fruits and vegetables that are hand-picked require more labor.

“Anything that’s got to be hand-done, you might think twice about growing,” McCormick said.

On the front lines

Some who work with the developmentally disabled say that a higher minimum wage is generally a good idea, but that agencies would need more help.

The issue is not so much the wage change, but the need for more support for the services they provide to individuals with special needs.

“We are for an increase in the minimum wage,” said Kevin D. Horrigan, associate vice president of public affairs at People Inc., which provides direct services to people.

“But we can’t go out, like the fast-food industry, and automate.

“You need that hands-on, caring approach,” he said.

Some 1,200 people in Western New York are currently waiting for spots in group homes, Horrigan said.

Horrigan said the message to the governor – who has pushed for a higher minimum wage – is along the lines of “Governor, we’re with you – be with us.”

“Our employees deserve more than the minimum,” he said.

Todd P. Hobler, a vice president of Local 1199, Service Employees International Union, represents about 4,000 workers in Western New York’s 41 nursing homes and in hospitals. They deserve a living wage, Hobler said.

“A good number of those jobs are just above the minimum wage, but certainly below $15 an hour. An increase would make a significant difference to our members in their ability to provide for their family and themselves.”

Hobler said higher pay would also bring more stability to the industry by reducing turnover.

“The wage rates are generally low and the work is very difficult,” Hobler said. “If there was a living wage for this very important work, I think everyone would benefit – the workers, the residents and the nursing home itself.”

Tyler, the certified nursing assistant at Williamsville Nursing Home, rises before dawn each workday. He leaves his apartment on Perry Street in Buffalo at 4:30 a.m. to catch the train at 5. He then transfers to a bus at University Station, so he can arrive at work by 6.

Tyler has worked in the nursing home industry for 22 years and makes $11.72 an hour at his physically demanding job.

“There’s a lot of physical lifting involved with patients,” Tyler said.

Tyler received his first raise in six years after he and other workers signed up with Local 1199. Raising the minimum wage would benefit such workers who make more than the current minimum wage, but who still struggle to make ends meet.

“In order for people to maintain a decent standard of living, they have to increase the minimum wage,” Tyler said. “We just had a recession, and the working class carried the recession on their backs. It’s time we got a share of the American pie.”

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