Obviously this is a very hot topic and is helping to gather a great deal of attention for Bernie, Hillary, and our own Gov. Cuomo. Of course as an employer I run the risk of being very self-serving in my opposition to this, but here it is. Only individuals who have never written a pay check and who have lived off the government for most of their lives could possibly think this is a good idea.
Presidential candidates claim they will bring more jobs back to America but they must certainly understand that our labor costs are what is helping to drive jobs out of the US. We are losing jobs to Mexico, not because businesses like the climate, it’s because of the cost of labor. Hey here’s a good idea. Since we are not even close to being competitive with Mexico in labor cost, let’s nearly double our current wage and see how that works. Or let’s convince a new service company to move to or start up in New York State because the resources here are so much better than PA or Vermont. Yes their labor cost and property taxes may be 50% higher but they will come to NYS because ....... Actually I couldn’t think of anything that a new company would like better in New York State than any other state they could possibly choose.
And of course, it’s not just the per hour labor cost, it’s the tremendous burden that the cost of health care has placed on employers and employees that add to an employer’s dismay. Not to mention the unbelievable regulations that employers must endure add to the gap between us and the rest of the world.
But … let’s just focus on the minimum wage issue. First, I never thought of minimum wage as a living wage, it was a wage to get you started with some type of job. For me it was working in an ice cream stand, for others it was McDonalds, or Burger King. But… as wage cost increased, many of those jobs disappeared and were replaced by self-services at the same places. Go get your own soda, order at a kiosk, etc. When you raise the labor cost, non-government jobs will continue to disappear. For an employer of any size business there is too much incentive not to hire employees, rather than to hire them.
If you run a book store and your labor cost raises dramatically, or even a little, you have a choice. Raise the cost of your books and gifts, or reduce your payroll. As it is now they can’t normally compete with Amazon so an extra two bucks a book will basically eliminate these businesses all together. This problem affects all retailers as you can already buy most anything you want via the internet so when the local convenience factor is erased by the increased cost of the products they sell and a reduction in the quality of service that can be provided, they will close their doors. And… nothing will go in its place. Look around, nothing will go in its place.
Yes, but you can’t order a hamburger for lunch on the internet! Well yes you can and soon you probably will as you will order your burger on your cell phone and pay for it prior to your arrival. Just pick up your order at the drive up window or at a counter, which is now minimally staffed, as the work force was reduced by 20% since you, as a customer, will not pay a buck more for a burger. Maybe soon you will be go into a restaurant, pick up a slab of meat and go to the communal fire pit, beer in hand, and roast away. Could be fun and it will definitely save on labor cost.
As an example of how out of touch our state legislature is, when they are started to realize that this wage increase will probably kill agricultural business in the state they suggested a carve out where those in the ag business can keep a lower wage scale. Yea that’s brilliant. Farmers now have a tremendous problem getting US born employees to work on the farms, so we are going to make it even more attractive by paying them 5 dollars less per hour for the fun of working in a barn.
Of course state employees are thrilled about the increase as these government public sector jobs will be the first to see an increase in their wages, and of course these jobs never go away. This means that the private sector will be competing with local and state governments for employees. While the private sector jobs leave the state, or the country, New York State residents will be left paying much higher government costs within their communities, resulting in higher pension costs, higher property taxes, and a much higher unemployment rate.
Take my business for example, the most recognizable to the general public being The Evening Sun and the Pennysaver. A $15 minimum wage is only the beginning. To this you must add other employee costs and benefits driving the cost to well over $35,000 per entry level employee. We then have to review this wage level in relationship to our long term employees who are certainly worth a lot more than that new person we just hired so your total labor cost become unrealistic.
And how do I handle this, do I raise the cost of the Evening Sun to $2 per copy when the paper doesn’t really make any money as it is? Will I sell more at $2 than we do now at 75 cents? Do I dramatically raise my Pennysaver ad rates to local advertisers who are facing the exact same labor cost issues that we are? Almost any increase in my cost to them usually results in their cutting back their ad budgets as they are barely holding on as well.
But … I’m not trying to make this a self-serving piece about us and I sincerely understand that you don’t care about what we do or how much money we do, or don’t, make. But local businesses employ local residents like you and your neighbors. Unless you as customers are willing and eager to absorb significant increases in what you need to purchase, we all have a problem. Either we can make it or we can’t, and if we don’t maybe we deserve to go out of business. But please try to put yourself in the place of any employer in this town, or this state, who understands that this dramatic increase will force companies to either go out of business, move to another state, or reduce their labor force by as much automation as they can. And when you look around our local communities, know that most of those laid off will never become reasonably employed in this state again.
Yes, the good news is that Bernie, Hillary, and Andrew will get you that $15 an hour wage, and by theory you will have more money to spend. But the bad news is, you might also be unemployed.
Richard Snyder is President of Snyder Communications and “Every once in a while” he will share his views and comments.