Tunnel vision minimum wage increase will cause economic upheaval

You may have seen the news recently in regard to an increase in the minimum wage for workers at certain fast food franchises in New York State. While employees who appear ready to earn more are celebrating, there are a number of problems associated with the change that are cause for alarm.

First, we need to examine the process used to institute this minimum wage increase because it is a complete deviation from the normal practice. A three-member wage board, unilaterally created by the governor, made the recommendation to hike the minimum wage. This completely circumvents the state legislature which has always determined the minimum wage in the past.

In 2013, for example, the senate joined with the assembly and the governor to implement a phased-in minimum wage increase. The minimum hourly wage went from $7.25 to $8.00 on December 31, 2013, then to $8.75 on December 31, 2014. One final increase will take effect at the end of this year when the rate will rise to $9.00 per hour on December 31, 2015.

By raising the wage through this incremental strategy, business owners have been able to plan ahead. For many small business owners the wage increase represents a major adjustment and it is important that they are able to take the higher expense into account.

The plan did not come without serious thought and input from all sectors, including business owners who create jobs. It only makes sense that they would be consulted and asked to weigh in on such a major economic policy.

All together, by the end of this year, New York State’s minimum wage will have risen from $5.15 in 2004 to $9.00 – an increase of 75 percent. As a comparison, over the same period of time, inflation has increased by 27.6 percent.

Now, before the final stage of the minimum wage increase approved through the proper channels in 2013 even takes effect, another hike has been throw at employers. This is poor economic policy and fails to allow us to determine the full impact of the wage increases that have just occurred and are still scheduled – on both employers and employees.

Along with jumping the gun on the timing of the increase, this most recent action takes the extraordinary step of singling out a specific industry - fast food - for a higher minimum wage. What about retail store clerks, child care workers, construction laborers? I expect these groups, and countless others to be calling for their own minimum wage increase as well. An unfortunate precedent is being set with this policy.

Many economists also say that a steep increase in the minimum wage can lead to job losses and major cost shifts, hurting the very people the increase is purported to help. Since the enactment of a federal minimum wage in 1938, most studies have reached that same conclusion. In addition, with New York taking this step alone, we could be at a regional disadvantage when competing for employers and jobs with neighboring states.

is a portion of what Unshackle Upstate, a leading business advocacy group, had to say about the Fast Food Wage Board’s recommendations: “New York State needs an economic environment that supports job creation to lift low-income people out of poverty, not significant new wage mandates that will give employers yet another reason to leave New York for economic opportunities elsewhere. The Fast Food Wage Board’s final recommendations set a dangerous precedent that should alarm every employer in New York State.”

I have focused my attention on making New York State a more attractive place for employers and in turn, the creation of good paying jobs that will benefit individuals and families. That means cutting taxes, getting rid of unnecessary government regulations, and creating a pro-job growth environment to help bring new entrepreneurs to our state and assist existing business owners who want to expand. The action by the governor’s wage board comes up well short on all fronts.

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