SC Chamber op-ed on impact of $15 minimum wage

Each year, the Tax Foundation (a leading research organization) issues a report card that ranks every state in the nation based on their “business tax climate.” This report is widely considered to be the preeminent gauge for assessing the best (or worst) environments in which to do business or locate a potential new business. Unsurprisingly, New York State has ranked at or near the bottom of the list for more than a decade – checking in at #49 for 2016.In an attempt to secure the report’s worst overall ranking and galvanize our state’s reputation as being the least favorable to businesses, Albany politicians have set their sights on raising the statewide minimum wage. In fact, they have launched an all-out assault on small businesses in our state by proposing an unprecedented 67% rate increase to $15 per hour. This proposal is not only irresponsible, it is mean-spirited.Consider some of the history in how we arrived at this critical juncture. In March 2013, state leaders announced an agreement to raise the statewide minimum wage from $7.25 (the current Federal minimum wage) to $9.00 per hour – making New York’s minimum wage one of the highest levels in the country. The agreement called for the new wage to be phased in over the course of three years. Elected officials hailed the legislation as a significant achievement and an example of bi-partisan cooperation and compromise.When a handful of fast food workers went on strike in December 2013, opportunistic community organizers were quick to seize control of the situation and proceeded to leverage the plight of those in poverty to further the cause of a national special interest group. Within days, coordinated protests were orchestrated and willing participants were armed with signs that read “Fight for 15.” Bearing a striking resemblance to the Occupy Wall Street movement, outcries of “corporate greed” and “income inequality” dominated the headlines.By 2015, the state’s tipped minimum wage was in the crosshairs and the state Department of Labor eventually acted on a Wage Board’s recommendation to increase the minimum wage for servers and bartenders from $5.00 to $7.50 per hour. The New York Restaurant Association objected to the rate increase saying it would lead to fewer jobs, less hours and ultimately lower pay for thousands of tipped workers.In May 2015 (prior to implementing the last phase of a negotiated $9.00 statewide wage increase) Governor Cuomo used a loophole in state law that allowed him to appoint another three-member Wage Board to recommend an “adequate” minimum wage for the fast food industry. The Wage Board required neither legislative consent nor approval and the three-member panel went on to arbitrarily recommend a $15 rate for the fast food industry. Inexplicably, the Wage Board did not offer explanation for why that particular amount was chosen nor did the panel contain a single representative with any meaningful experience in the restaurant industry — let alone the fast food business. In September 2015, the $15 minimum wage for fast food workers was enacted. Now, advocates for a new statewide $15 minimum wage have once again framed the debate around the notion of “restoring fairness and economic justice.” These arguments seemingly ring hollow in the wake of the processes used to implement the increases for both tipped workers and the fast food industry. They also eschew the principles associated with economies of scale. The implementation of a government mandated, one-size-fits-all approach is inherently unjust and would create an even greater level of inequality between the economies of upstate and downstate.A $15 minimum wage would create significant challenges for our state. It would cost $15.6 billion to fully implement per year. Would any credence be given to such a proposal if it were phrased as a new $15.6 billion tax? Yet, that is precisely the net effect that this initiative would have on hundreds of thousands of businesses across our state.Perhaps nowhere would be more harmed by a $15 minimum wage than in the Finger Lakes Region. Far removed from New York City, there is no mistaking a local small business from some of the multinational corporations that inhabit Manhattan’s giant skyscrapers. In a survey of Seneca County Chamber membership, 86% were opposed to a $15 minimum wage at this time. More than 90% of respondents said they would decrease employment if the $15 level was enacted. Over 80% reported that they would increase prices to cover some of the costs associated with implementation of a $15 minimum wage.Consider the case of local restaurateur Gary Schlegel, who owns one of the most popular restaurants in the area — the Magee Country Diner in Waterloo. Like other restaurants in the area, Magee Diner offers numerous opportunities for teenage students and young adults – particularly in the summer tourism season. “The higher wage would likely force my hand to hire less inexperienced workers (like teens) in favor of more experienced personnel,” Schlegel said. “You will see a much higher unemployment rate in our area for teenagers,” he continued. Jeff Kostick, owner of the Cayuga Lake Creamery in Interlaken has reported his own struggle to cope with a $9.00 minimum wage – let alone an increase to $15. The Creamery, ranked as one of the top ice cream parlors in America by USA Today, employs roughly 35 workers in the peak tourism season. If a $15 minimum wage was enacted, Kostick said he would be facing a deficit of roughly $150,000 per year. “I would have to either sell 40,000 extra ice cream cones, raise prices, reduce staff or all of the above,” said Kostick. He noted that prices would likely escalate from $3.00 to $6.00 for a kiddie cone and to as much as $7.50 for one scoop. “I don’t think we could sustain those types of price increases for long. In short, we would be forced out of business,” Kostick concluded.Complicating the issue even further is the fact that there are an estimated 20,000 unfilled jobs in the Finger Lakes region and the state’s Labor Department estimates there will be an additional 6,600 openings annually through 2020. These jobs are known as middle-skills jobs and do not require a college degree. Companies simply cannot find enough skilled workers for these jobs – whose starting pay ranges from $25,000 to $60,000. Raising the minimum wage does nothing to address this workforce training issue, meaning the skills gap will likely widen even further.Poverty is a real problem facing both our state and local community. It is disingenuous to suggest that simply raising the minimum wage to $15 will pull people out of difficult economic situations. The Federal Reserve Bank of San Francisco concluded as much in saying “…weighing employment losses against wage gains raises the broader question of how the minimum wage affects income equality and poverty.” There are no clear winners in raising the minimum wage to $15. There are, however, plenty of people that stand to be negatively affected in our area should this proposal move forward. The Seneca County Chamber has launched a campaign named “FifteenIsMean to combat this ill-conceived proposal. Signs are being placed in small businesses throughout our community to raise awareness for the consequences of this decision. We have also joined a coalition of more than 50 organizations across the state to oppose the $15 minimum wage. For more information, visit: minimumwagerealitycheck.com or call the Seneca County Chamber at: 315-568-2906. Please take the opportunity to educate yourself on this issue and then contact the New York State Senate to let them know fifteen is mean!

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