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What has hike in minimum wage done for businesses and the poor?

What has hike in minimum wage done for businesses and the poor?

Jobs aren't disappearing in New York, nor are working poor
What has hike in minimum wage done for businesses and the poor?
Schenectady Mayor Gary McCarthy listens as Jamaica Miles of Citizens Action speaks at a minimum wage rally March 24, 2016.
Photographer: Peter R. Barber

CAPITOL — Another minimum wage increase is coming in six weeks.

New York’s now-annual bump was supposed to help boost the poorest workers out of poverty and was predicted to hurt the companies that employ them. So far, neither seems to be happening.

Advocates for low-wage workers say the 70-cent-per-hour boost that took effect for most upstate New York workers on Jan. 1, 2017, is welcome but is not enough to provide a living wage, and neither will the 70-cent hike that takes effect Jan. 1, 2018.

Business groups say the higher minimum wage is not the straw that will break the camel’s back, but it is part of the larger picture that cools the business climate in New York state.

[4 glimpses of life at minimum wage]

State Department of Labor statistics indicate there has not been an exodus of jobs over the past 10 months:

Unemployment rates statewide have been consistent or — even lower in some places — since the first of the annual wage increases. The rate has ranged between 4.2 percent and 5 percent statewide from January through October 2017, compared with 4.3 percent to 5.3 percent over the same 10 months of 2016.

In raw numbers, the ranks of employed New Yorkers increased by 170,000 from October 2016 to October 2017, to a total of 9.26 million. The ranks of unemployed New Yorkers decreased by 5,900 over that period, to a total of 449,200.

The Business Council of New York State said there are impacts of minimum wage increases that fall short of people losing their jobs, and for that reason, the minimum wage itself is problematic.

“Our basic opposition has not changed and won’t change,” spokesman Zack Hutchins said. “A minimum wage is an unnecessary burden on employers.”

When costs of operation increase without a similar boost in revenue, a business owner has two options, he said: Reduce the number of workers or reduce the number of hours they work.

Hutchins offered as an example a sandwich shop he patronizes: Rather than tell a human being behind the counter what he wants, he pecks his order into a tablet computer mounted to the front of the counter. The proprietor bought a computer instead of hiring a worker.

Rather than imposing a minimum wage, the market should dictate the wage, Hutchins said. He noted that many Capital Region employers set starting wages well above the statutory minimum, due to the strong local economy and shortage of workers here.

“When you artificially put constraints or demands on what employers are supposed to offer ... they can’t employ as many people or invest in their business as much.”

Low wages remain

Activist Jamaica Miles, of Citizen Action, who in early 2016 led rallies advocating for a statewide $15 minimum wage, said there are still plenty of minimum-wage workers in New York, including in the Capital Region, particularly in the food service industry.

“There’s no question that they exist, and that’s just for that specific industry,” she said.

The fight continues, Miles said, because the new minimum wage -- $10.40 an hour for most upstate workers, effective Jan. 1, 2018 — is not enough.

“More is needed, and what we need is $15 and unions now,” she said. “These things wouldn’t happen if we didn’t force them to.”

For years, New York’s minimum wage was the same as the federal minimum, which was $4.25 an hour a quarter century ago and was gradually increased to $7.25, where it has been since July 2009. At the end of 2013, the state began a series of increases that brought the minimum to $9 per hour by Jan. 1, 2016. 

Activists pushing for a $15 minimum hourly wage for all New Yorkers fell well short of their goal in the 2016 legislative season. Instead, they got a complicated menu of phased increases that gradually will bring the minimum wage to $15 per hour — someday. How soon depends on the nature, location and size of the employer, with workers in the more-expensive New York City area getting more money, and sooner. 

Upstate New York doesn’t even have a firm date for when most jobs will get to the $15 minimum; the lowest legal wage is scheduled to increase by 70 cents a year until it hits $12.50 an hour in 2021. After that, the state labor commissioner will decide each year how much to boost it.

A year ago, Hutchins told The Daily Gazette he expected unwitting violations of the law by employers who could not figure out which provisions applied to them. State officials apparently reached the same conclusion and launched an 11th-hour outreach effort to help employers understand the new wage schedule and pay their workers correctly.

Dining out

Among the sectors most heavily affected by minimum wage laws is the food service industry.

Kevin Dugan, spokesman for the New York State Restaurant Association, said his membership did some cost-cutting to compensate, taking a hard look at food costs and, in some cases, changing menus.

Some restaurants eliminated lunch service, particularly in central New York, he added.

“The concern is that every increase is building on the previous increase without a lot of time in between,” Dugan said.

The association has not heard any anecdotal reports of restaurants closing due to the minimum wage hike, but he has heard about plenty of schedule changes.

“Can we get by without as much staff? Are we really optimizing where we are as a business? That’s what our folks are doing,” he said.

Smaller restaurants are impacted more than larger eateries, Dugan said.

“Mom and pops are the ones that are feeling this the most at the moment. Corporate chains have costs factored in and tools available.”

The minimum wage increase is part of a larger negative business climate in New York, Dugan and other business leaders say. Other factors include high taxes, a stagnant population, a new family leave mandate and now potential new limitations on employee scheduling: The state Department of Labor is working on a rule that would force employers in many cases to pay workers a minimum amount if they are on-call or required to come to work on short notice, or if they are sent home without working a full shift.

“That’s a big concern for our industry, too,” Dugan said of the proposed scheduling rules, noting that restaurants also do catering, sometimes on very short notice for things like funerals or spur-of-the-moment celebrations.

Assemblyman Phil Steck, D-Colonie, a longtime labor attorney and advocate of worker rights, is going a step further than the proposed Department of Labor rule. He has authored legislation that would require employers to pay workers the minimum hourly wage for the middle of their split shifts, if the break between the two parts of the shift is longer than the one hour traditionally allowed for lunch.

People in the middle of that split shift often can’t do much during the break, he said, because they’ve got to be back at work very soon.

“That is time that is not your own,” he said.

A living wage

Steck also thinks the minimum wage — $9.70 or $10.40 — doesn’t go far enough.

“There’s a difference between minimum wage and what’s called a living wage,” he said. 

Much of upstate New York and the nation have been “hollowed out” as jobs with living wages -- enough to maintain a good standard of living -- move to major metropolitan areas, Steck said. Forcing the businesses that remain in the outlying areas to pay a certain minimum wage does not reverse this, he said. Instead, improving the infrastructure of the outlying areas to attract living-wage jobs back to them is the path to revitalization.

“You can’t legislate a living wage, you have to have the economic foundations for it,” he said.

Nonetheless, the minimum wage is a necessary “failsafe” protection for workers at the lowest rung of the job market, Steck said.

“I really think a lot people today that work at that level work at more than one job,” he said.

Historical data indicate that a low-wage economy is a bad economy and that minimum wage increases don’t cause higher unemployment and other problems that opponents typically warn about, Steck said.

“There’s a difference between business and economics,” he said. “Is there a business out there that’s been hurt by the minimum wage increase? I’m sure there is one.”

He and his office, though, have not received a single complaint from any of them.

Steck said non-profits are a different case: They have many low-wage workers, but unlike businesses, they don’t rely on commerce for their revenue. Non-profits, particularly those that provide services, rely heavily on reimbursements set by the government. 

Steck worries that non-profits will be left holding the bag in 2018, if increases in state reimbursements that were supposed to cover the cost of the minimum wage increase fall by the wayside in state budget negotiations.

State tax revenue is lagging, and "this budget year could prove to be very challenging," he said

Mark Eagan, CEO of the Capital Region Chamber, said there aren’t very many minimum-wage jobs left on the Capital Region business scene because unemployment is low and the labor market tight. 

“The market is just sort of pushing the wage,” he said — employers must pay more to attract and retain employees.

“The short answer is, I don’t think it’s going to have a dramatic impact on most,” Eagan said.

“The sector that it’s really impacting the most is the nonprofit sector, especially human services. They couldn’t make a wage go from 10 bucks to 15 bucks.”

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