Businesses critical of $15 wage plan
TRI-COUNTY AREA--As the state pushes to increase the minimum wage to $15 per hour in the coming years, it has many business owners concerned with how it will impact their operations. Gov. Andrew Cuomo issued an executive order last year to give state workers a $15 minimum wage following a plan to increase it for fast food workers. Cuomo has since expanded the plan to increase wages for all workers, public and private. The proposal would be phased in across several years, first in New York City by 2018, then statewide by 2021.
"I believe that if you work hard and work full time, you should not be condemned to live in poverty. Yet millions of families nationwide continue to be left behind by an insufficient minimum wage -- and it's time that changed," Cuomo said. "Today in New York, we are leading by example and creating an economy that is defined by opportunity, not inequality. We are restoring the fairness and economic justice that built the American dream and standing up for what's right."
As it stands right now, the minimum wage in New York State is currently $9 per hour. Locally, however, many business owners and officials are not pleased with the plan. Yates County Chamber of Commerce President and CEO Mike Linehan said while the board has not taken an official stance on the issue, much of their conversation recognizes the negative impact it would have on the local economy. He said this especially includes the tourism and agriculture industries.
"The biggest thing everyone has talked about is the increase in prices to the consumer," Linehan said. "Someone is going to have to eat that additional expense. As we all know in this economy, that gets passed right on to the consumer."
Linehan also highlighted the problems associated with workers who are currently making more than the minimum wage, adding it would stand to reason they would want their wages increased by the same percentage.
"Governor Cuomo is proposing this with his mind set on New York City where there is a much higher cost of living," Linehan said. "I don't think that the governor has really spent time analyzing what it means to the other counties and areas in the state."
Gloria Long of Long's Cards and Books in Penn Yan said there are a lot of high schoolers they hire at their store, adding they often have to teach them from scratch. She added this is what minimum wage is for, noting that it is meant to be a training wage and not a living wage.
"At $15 an hour, we will have to cut back on our staff," Long said. "It will cost jobs."
Doug Martini, owner of Martini's Save-A-Lot in Dundee, also estimates this proposed increase will cost people jobs.
"It is going to hurt a lot of small businesses, that is for sure," Martini said. "What is probably going to happen is a lot of people will have to cut their staff back to try to offset that increase to their payroll. Most small businesses can't afford a big jump like that."
Martini said on one hand it is good that people will get more money, but for business owners it is going to take a hit on their payroll. He added some could choose to increase their prices as well, but noted it would not be his first choice.
Danielle Zeno, wife of Cam's Pizzeria owner John Zeno, said all of their drivers currently make minimum wage, as well as cash tips from their delivery. She estimates with those tips, they make around $20 to $25 per hour. She noted if she would have to pay all the other employees $15 per hour, she would not be able to afford a similar pay increase to their three managers, one who has been there 10 years while the other two have been there for more than 20 years. Zeno noted this would be unfair, as someone who is just hired would come in making the same amount as someone who has been there for 20 years.
Zeno said prices would have to increase somewhat, but added they do not want to price themselves out of business.
"No one wants to pay $30 for a pizza," Zeno said. "Everyone would probably have to go part-time to try and offset the extra cost. Instead of working 30 to 35 hours, it may go down to 15 to 20 hours."
Zeno said she can see some of the benefits of a $15 minimum wage, especially for larger businesses, but for small businesses it is not beneficial.
"Unfortunately, I hate to say it, some people aren't worth $15 an hour," Zeno said. "Some people probably are, [... ] but if I have to pay you $15 an hour, I am going to demand more out of them to earn that $15 an hour."
Mike Clancy of Pinckney's Hardware said the minimum wage increase will have a detrimental impact on his business and will make it not competitive with the large hardware retailers. He noted this is because bigger stores can sustain a price increase because of an economy of scale.
"Small business runs on a very slim staff and a slimmer margin," Clancy said. "It is not like I have people working for me who I don't need working for me."
Clancy anticipates the new minimum wage to eliminate many job opportunities for those in high school as well, which will lead to higher unemployment among teenagers. He said the government keeps thinking more money will add to the economy, but the money has to come from somewhere. Clancy said this means not only a likely reduction in staff, but also an increase in prices.
"Frankly, $9 an hour is too much right now for a training wage, which is basically what the minimum wage is for," Clancy added.
Several Schuyler County business owners have echoed the same sentiments as those from Yates. Jerlando's Pizza Company owner Bill Tague said he has mixed feelings about the minimum wage increase. He said while at first glance it would be great to have a 60 percent pay increase, he has several concerns with how small businesses will have to try to pay these wages.
"Most people who are advocating for the increase don't realize to pay an employee $15 an hour, the expense to a business is almost $20," Tague said. "In addition to normal employer contributions, worker's compensation is derived from your payroll total. So would this 60 percent increase in minimum wage result in a 60 percent increase in my workers comp premium?"
Historically, Tague said as payrolls increase, so do prices, adding he feels consumer buying power will actually stay the same if not decrease. He expects people will see widespread increases on everything from groceries and restaurant visits to gas.
"What happens to the working class who don't experience a wage increase?" Tague asked. "Their income stays the same and prices go up across the board. What happens to their buying power? Really to be equal, wouldn't a universal percent increase be a more realistic approach? I'm fairly confident in assuming that many agencies won't be able to afford a payroll increase."
Tague also highlighted his concerns with having to increase the pay for those employees who have worked there for several years, noting it is only fair. He added if a business is forced to change their payroll variable, the added expenses are really just passed on to the consumer.
"In reality this is called hyper inflation," Tague said. "What's scary is that it is really devaluing the dollar. When I first started in business in 1997 two slices of pizza were $2.50. Today we are at $5. These are the same two slices today they were 20 years ago, they just cost more to produce today than they did in 1997. Twenty years from now, it's fair to assume two slices will cost $10 for the same two slices."
Gloria Brubaker of Seneca Lodge described it as a "double-edged sword," noting it is wonderful people can earn a living wage, but she does not understand where the difference is going to be coming from.
"Everything is going to have to go up in order to support $15 an hour," Brubaker said. "[...] I don't see where the gain is."
She noted there are some people on public assistance who will often take on some menial jobs to supplement their income. Brubaker said if the minimum wage goes to $15 an hour, they will lose many of those jobs since they do not have enough hours for them to make a living on and keep their assistance. She said it will also impact the teenagers she hires, adding she can't give them that kind of money and keep everything the way it is currently.
"I think it is a great concept, but it is going to be very difficult," Brubaker said.
Brubaker noted in the service industry, having to cut people often results in a worse quality of service. She said this in turn impacts their word of mouth advertising, which also has a detrimental impact on the number of customers they receive.
Liz Stamp of Lakewood Vineyards said while she would like for more people to make a living wage and not live in poverty, Lakewood currently offers its employees benefits beyond the wages employees are paid. She said this makes their cost of employment higher, noting these kinds of things will be harder to do if they have to pay employees like untrained summer interns $15 an hour.
"I think it is kind of short-sighted in our industry when people, no matter how educated they are, they really need work experience," Stamp said. "So the people who come in here with no work experience costing you $15 an hour is going to be a lot. It is not just $15. It is $15, plus all the other employment expenses."
Stamp noted the cost of living in Schuyler County is also different from many other parts of the state. She said the vineyard would like to still be able to employ people year-round and give them the added benefits that can increase their quality of life. As far as pricing goes, Stamp said the wage increase makes it harder to compete with other wineries.
"We are competing with the whole world as a winery," Stamp said. "When we put our wines up on the shelf, people who come in here aren't just comparing us to other wineries up and down the road. They know what they can get wine for in wine shops. People look at that. Then do we just turn into an entertainment industry where basically we just have to increase our tasting fees to cover all of our costs because people aren't purchasing? It is a tough call. [...] It could really change the dynamic of what we do."
Watkins Glen Chamber of Commerce President Rebekah LaMoreaux said while the chamber is currently looking at the issue, they have not issued an official statement on the matter. She said there are still a lot of question marks and mixed thoughts surrounding the issue.