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Local employers discuss a possible minimum wage hike

December 16, 2012
By AMANDA MAY METZGER , The Leader Herald

With what's been called a "coalition governance" structure shaping up in the state Senate as the Independent Democratic Conference and the Republican Conference join forces, some senators say a minimum wage hike for the state will come up for a vote early next session, which convenes in January.

Earlier this month, Sen. Jeffrey Klein, D-Morris Park, - who lead the Independent Democratic Conference - told The Associated Press he expects the minimum wage hike will be approved.

Sen. Hugh Farley, R-Niskayuna, told The Leader-Herald if the hike does pass, it needs to accompany tax relief for small businesses.

Article Photos

Alpin Haus head ski technician Jeff Krempa works on a set of Nordica Fire Arrow high performance snow skis in the ski shop as Matt Nasadoski, a ski technician, works in the the background on another set of skis at the ski center on Route 30 in Amsterdam on Friday. Alpin Haus owner Andy Heck said the possible minimum wage hike won’t necessarily directly affect his company — deemed one of the best places to work in the region — but it does concern him. (The Leader-Herald/Bill Trojan)

"I think it could happen this next session," Farley said. "I don't think anybody [in the Senate] is terribly opposed to it. Consequently, I think what you're going to have to see is some sort of reaching out in the form of a tax abatement or incentives for small businesses to go along with the minimum wage increase."

But Farley said he hasn't seen a final piece of legislation before the senate yet. In May, the state Assembly passed a bill that would raise the minimum wage from $7.25 to $8.50 in 2013 and begin indexation of wages based on inflation in 2014. Food service workers receiving tips would have a minimum wage set at $5.86 and also be indexed annually to inflation according to the Consumer Price Index.

For a 40-hour week employee, the current minimum wage equals a $15,080 annual salary before taxes. The wage boost would increase that by $2,600.

Fact Box

Minimum Wage

The following information from the National Federation of Independent Business website,, shows the minimum wage increases from 1972 to present day in this state.

1972: $1.85

1976: $2.30

1979: $2.90

1980: $3.10

1981: $3.35

1991: $3.80

1992: $4.25

2001: $5.15

2005: $6.00

2006: $6.75

2007: $7.15

2010: $7.25

"I don't commit myself to a piece of legislation that doesn't exist, but I could be in favor of it if it's something that satisfies both sides," Farley said. "[The tax incentives] would have to be something that small businesses would be anxious to have. There's a lot of things they like and want, and that's where jobs are created. We don't want to kill jobs. We want to create jobs."

Many business advocacy groups - The Business Council, Retail Council of New York state and the state Association of Convenience Stores - opposed the measure.

The Greater New York Chamber of Commerce, which serves the New York City area, has said many of its members favor the increase. One argument seen in news outlets: Increasing the minimum wage would decrease the number of working poor who rely on government assistance.

Fulton Montgomery Regional Chamber of Commerce Interim President Mark Kilmer said local chamber members have expressed concerns, and the chamber will likely formally poll its more than 1,000 members soon on the issue.

Kilmer noted economic interests upstate differ from downstate, and the closer to Manhattan companies are located, the higher their wages range as the cost of living near the city increases.

"They were supporting it in their geographic area [downstate] where it's not going to affect anything," he said. "There is an argument for both sides."

If small businesses can't afford the increase, they may simply hire fewer people, and with fewer jobs available more people may end up using public assistance than before, he said.

"[Many] of the arguments I've heard from business owners is that the minimum wage was never meant to be a living wage. It's a starting wage. When the argument is made that you can't support a family [on it] - in this sense, I think that's what progression in your employment status would do for you," Kilmer said.

Kilmer researched the issue for his "President's Corner" section of the chamber's August newsletter.

"Proponents state that a raise in the rate would create $600 million in economic activity and 4,800 new jobs. Opponents claim that the raise would be a job killer forcing small business to lay off workers and postpone hiring of new employees," he wrote.

The impact

Lexington Center is the largest employer in Fulton County with just under 1,600 employees. To bring in additional revenue, the organization recently added six houses in Albany County, which added about 200 employees. Many of those positions are part time, said Division Director of Community and Business Development at Lexington Center Wally Hart.

Over the last two years Lexington has weathered about $5 million in funding cuts. The impact of a raise in the minimum wage would be the same in the non-profit sector, Hart noted, though Lexington can't compensate for increases to stay in business by increasing the cost of a product.

"We do have some jobs that start at minimum wage. It will [have] an impact on us," Hart said.

The question, he said, is if minimum wage increases from $7.25 to $8.50, "what about those people who are making $8.50 now?"

"There are ramifications all the way up our payroll. It affects almost everyone who works for us," Hart said.

If salaries increase, company costs for benefits increase as well for payroll associated taxes.

"If people are receiving any kind of pension or retirement package based on their salary- depending on whether they are eligible - company costs for those benefits would increase.

With the recent funding cuts, Lexington hasn't had to lay off workers. But some open positions remain unfilled, Hart said.

"We've tried not to lay off people because of costs. And our staff has done a great job finding [ways] to save money so they can get through the cuts. It didn't all come at once, but it's been significant. It's a real cut," he said.

About 10 percent of the state's workforce -850,000 workers - would receive the wage raise, according to Kilmer's article.

In spring news reports, Costco voiced its support for the raise.

Gov. Andrew Cuomo said in the fall he would not approve a pay raise for state lawmakers - the first increase since 1999- without approval of a minimum wage hike.

In an op-ed that appeared in the Albany Times Union Cuomo listed the matter in his "litmus test" of 10 issues for his support.

Advocacy voices

Earlier this month, the National Federation of Independent Business Research Foundation said in a report if the 17 percent wage increase passes, economic output in the state would decline by $2.5 billion and nearly 22,000 jobs would be lost over the next decade. More than 70 percent of the jobs lost would be from small businesses, the report said.

"Simply, raising the minimum wage will not create jobs," said Mike Durant, NFIB New York state director in a news release. "It will affect the smallest businesses that can least afford higher labor costs and they'll respond by finding ways to reduce or limit the number of jobs they create."

The state's minimum wage was increased in 2009 when the federal level increased to $7.25. It is lower than 18 other states. State lawmakers last approved a minimum wage boost eight years ago.

Another study by economists Richard Burkhauser of Cornell University, Joseph Sabia of San Diego State University and Benjamin Hansen of the University of Oregon examined the state's job market between 2004 and 2006 after the last minimum wage increase - of $1.60 - to $6.75 per hour.

According to a piece in Long Island's Newsday in June by E.J. McMahon, senior fellow at the Manhattan Institute of the Empire Center for New York State Policy, employment fell by more than 20 percent for people ages 16 to 29 who did not have high school diplomas, according to the study by the three economists.

Alpin Haus was rated one of the area's best places to work in 2012 by the Albany Business Review.

Owner Andy Heck said the measure could hurt the number of part-time jobs or entry level work available in the overall economy.

"As we look at it, we don't really have anybody [working] at minimum wage, so it's not really that it will have an effect on our overall business. What I think is that it hurts some of the restaurants or fast food [companies] that hire part-time people, especially the youth," Heck said. "Especially for the young people- that's what I worry about. We always have some kids working. The minimum wage is a great way to start kids [in a job]...I can see why adults definitely need to earn higher than minimum wage."

Unshackle Upstate issued a memorandum in opposition to the act to amend the labor law.

"Our organization is concerned that if Albany raises the state's minimum wage, it will be doing further damage to the already struggling upstate economy A higher minimum wage will adversely impact businesses, especially small businesses because it drives up the cost of products and services they provide," the memo on the group's website said.

It went on to say arguments that increasing the minimum wage will boost the economy are just "wishful thinking" and that increasing the wage would force employers to either lay off current employees or not hire for open positions. The higher wages could also mean higher costs for employers in the form of workers compensation and Social Security taxes as well as force employers to reduce what they pay for employee benefits.



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