Damage assessment: businesses weigh impact of planned minimum wage increase

| The Daily News (Batavia)

GENESEO — EJ McMahon called it “one of he most sweeping and heedlessly risky … steps the state government has ever taken in terms of its impact on the economy.”

McMahon, president of the Albany-based Empire Center, a public policy think tank, was describing Gov. Andrew’s Cuomo’s plan to raise New York’s minimum wage from its current $9 an hour to $15 an hour by 2021.

If such a proposal were to pass the state’s legislature, McMahon said the results would be catastrophic.

Speaking to a crowd of GLOW region chamber of commerce members at the Valley Oak Event Center in Geneseo Friday morning, McMahon said a $15 minimum wage would lead to the creation of 200,000 fewer new jobs by 2021, drive up the wages of workers currently making around $15, and place a burden on small business owners that could force them out of business.

“Since it started under FDR in the 1930s, adjusting to 2015 dollars, the average minimum wage over the last 50 years in New York, has been $8.36,” McMahon said. “The highest minimum wage in the state’s history was in 1970 when for one year it was $11.35. So historically, this is really out of line with the norm. This is a step beyond.”

Under Cuomo’s current plan, New York City’s minimum wage would ramp up to the $15 threshold by the end of 2018. In upstate, the $15 minimum wouldn’t be fully implemented until July of 2021.

“The argument (from advocates of the $15 minimum wage) is ‘well, we’re phasing it in,’” said McMahon. “My reaction to that is you’re basically saying ‘I’m not going to cut your head off, I’m going to strangle you slowly.”

The $15 proposal has provoked controversy ever since Cuomo announced the push for it for workers statewide at his State of the State address in January.

Assemblyman Bill Nojay (R-Pittsford) has strenuously opposed the $15 proposal, calling it “a disaster.”

“Instead of helping lower- and middle-income workers, the governor’s proposal would result in more businesses moving out of state and not-for-profits having to slash services,” said Nojay in a statement. “There is an hourly wage below the minimum wage: it’s zero. That’s what happens when you lose your job because state government makes it impossible to operate.”

The issue’s a significant concern for owner Sandy Pirdy of Creekside Fabrics, Quilts and Yarns of Arcade.

Her business currently has two full-time and one part-time employee, working about 90 total hours per week.

Are they worth it? Definitely yes, in each and every instance.

But there’s also realities Pirdy’s business — like any other — needs to address, including benefits, her downtown location, and the price she offers to consumers.

“People still want Main Street businesses, but what is the penalty?” she asked. “It’s going to be higher costs of goods.”

Pirdy said the company that handles her payroll calculated the impact of a $15 minimum wage on Creekside. She said it would cost her business an additional $700 weekly, in a highly-competitive environment.

Even though businesses with fewer than 50 employees wouldn’t feel as great an impact, they’d still be affected regardless, she said. They would need to consider reducing staff, scaling operations down, or increasing prices — none of which is appealing, and which carry obvious disadvantages.

Pridy’s business thrives on customer service, which could be impacted if she had to cut back on employees due to the cost.

She found the presentation very well-done and the information valuable.

“This $15 is not going to help small businesses,” she said. “Large businesses have huge corporate pockets. It’s very much going to be a hardship to the small businesses.”

Ralph Parker, who owns the Livonia Inn on Commercial Street in Livonia, has 13 employees, 12 of whose wages would be affected by a $15 minimum wage.

“I think it would put the crimp on our business,” said Parker, a 36-year veteran of the restaurant industry. “It means you’re going to have to raise your prices and hopefully not lower your service.”

Parker said a $15 minimum wage, with all the uncertainty controversy that surrounds what effect it would have, is akin to making a rule before knowing what its consequences would be.

“I’m from the old school where you pay people according to their capabilities but this, I can’t get my hands around it,” he said. “This seems like a juggernaut that everyone’s jumping on board because they’re afraid not to… I think people are going to get destroyed.”

Bob Webb, owner of Livonia’s Star Pest Control, said he has three part time employees whose wages would be affected if $15 an hour comes to pass.

“I probably would weather it,” he said. “It just makes it tougher to make my bottom line so I can pay my bills,” said Webb, whose been in the pest control business more than 60 years. “The government shouldn’t be deciding wages. It should be employer and employee — that’s it.”

Ken Pokalsky, vice president of the Business Council of New York, said he doesn’t think a $15 minimum wage will end up being approved by the state’s legislature. Instead, he sees a compromise being reached, somewhere in the middle.

“I can see them saying ‘It’s not going to be $9 and hour forever, were going to take several additional steps up to maybe where neighboring states are at $11 an hour and then tie it to the CPI (consumer price index),’” said Pokalsky. “I can see that for upstate. I can see that as a compromise.”

McMahon, on the other hand, said the vigor with which Cuomo’s gone after his push for $15 and the adamancy with which he’s maintained his $15 or nothing position, is cause for concern.

“This is a matter of right and wrong, good and evil and the governor says it relentlessly – there is no room for compromise, none,” he said. “I would not normally say this but look and review what the governor is saying and the tone in which it’s said. Then you tell me if you see chances for compromise.”