In New York state, 250,000 workers will get a small boost in their paycheck beginning today, as the minimum wage increases from $7.15 to $7.25 an hour, according to the state Department of Labor.
Most New York employers pay more than minimum wage already, according to DOL spokeswoman Jean Genovese.
The latest Current Population Survey, covering July 2008 to June 2009, shows that of New York’s 250,000 minimum wage earners, only 50,000 were actually getting paid $7.15 an hour — the remainder got a total of $7.15 through a combination of a lower hourly wage and tips, meals or lodging.
While businesses in the Capital Region already pay workers more than the minimum wage, some say a ripple effect will occur that will eventually increase payroll costs as their employees seek raises of their own.
Scarborough Tavern co-owner Patrice Else has watched the minimum wage gradually increase since opening her Rotterdam business in 1982.
Else said there’s more to today’s increase in the minimum wage than just a dime, even though her employees — even the dishwashers — earn more.
“I anticipate they’re going to think, ‘Gee, I should get a raise,’ ” Else said. “It looks like you have to pay everyone a little bit more.
“The increase just doesn’t happen with the paycheck — with that person getting 10 cents more an hour,” Else said. “It ripples right through to your payroll taxes and those gross wages . . . It goes beyond that 10 cents an hour.”
New York’s minimum wage has actually been higher than the national minimum, which was $6.55 per hour until today.
Those advocating for increases in the minimum wage argue that a higher wage will give people a better quality of life. Many of those advocates say $7.25 isn’t enough.
Miranda Magagnini, co-CEO of IceStone, a Brooklyn-based manufacturer of sustainable durable surfaces, is one of those advocates as part of the group “Businesses For A Fair Minimum Wage,” a project of the public policy network of business professionals called “Business for Shared Prosperity.”
“We pay living wages at IceStone plus medical benefits because we do not believe folks can ‘live’ on minimum wage — especially without health insurance,” Magagnini said in a statement. “A raise in the minimum is a move in the right direction, but $7.25 an hour is $2.75 lower than it should be.”
At $7.25 an hour for 40 hours a week and 52 weeks a year, a full-time worker would earn $15,080 annually.
But the average work week nationally is only 33 hours, for which a minimum-wage employee would make $12,441 a year. The poverty threshold set by the U.S. government stands at $10,830 for one person and $22,050 for a family of four. Advocates argue that even a worker earning $22,050 a year would have trouble feeding a family of four, because that income would eliminate eligibility for certain assistance programs.
Else said the burden of the greater good shouldn’t always be put on the backs of small businesses, which are seeing the cost of doing business steadily rise in New York.
“I don’t particularly like it, but what can I do about it?” Else said.
Chuck Steiner, president and CEO of the Chamber of Schenectady County, said many New York employers have historically met or exceeded the federal minimum wage in advance of mandates.
“So many employers have had to go above the minimum wage to get the productive worker they desire,” Steiner said.
But as the minimum wage rises, across-the-board increases in payroll costs may occur as a by-product, Steiner said, separate from determining compensation based on a person’s skills, education, experience and performance, because the minimum wage rate is regarded as a benchmark.
The result is that some businesses may look at their total personnel cost and reduce their employees’ hours, Steiner said, in consideration of rising operating and overhead expenses.
Increasing payroll costs add to the cumulative effects of the business climate — rising property taxes, regulatory fees, and material costs — that all contribute to the challenges for small businesses, which are more likely to have limited access to capital and cash flow issues, Steiner said.
“It’s something we here at the Chamber are consistently talking to our legislators about,” Steiner said. “We try to address the business climate issue.”
Steiner said the minimum wage increase also comes at a bad time for businesses that have had to cut back payrolls through furloughs and layoffs because of the recession.
Being able to offer higher wages to retain employees before the recession has given way to a new environment, in which some higher-quality employees are working for less money due to there being more people looking for jobs than there are jobs actually available.
“There’s more supply than demand,” Steiner said.
Service and retail industries that are more prone to high turnover, like restaurants, often have to offer more than the minimum wage to have a stable work environment.
Guy Sementilli, proprietor of Scotti’s Restaurant and Pizzeria in Schenectady, said that’s why it was necessary to pay his 15 employees more than the minimum wage.
“It’s so hard to find good help and when you do find help you want to take care of them so they won’t go somewhere else and find another job,” Sementilli said.
Steiner said it’s more costly for businesses to recruit employees than to retain them.
Some larger employers in the area, like The Great Escape, agree.
“To stay competitive and bring in the quality kind of people to produce the great experience that we want we have to stay competitive in the market,” said Becky Valenti, public relations manager for The Great Escape, which employs 1,500 seasonal workers during the summer for its theme park in Queensbury.
She would not disclose the pay scale but said it started above minimum wage and ranges upward depending on the employee and the job.