By Mike Durant
Revitalizing the upstate economy has been a goal for policy makers in New York for decades. Many of the jobs once provided by a booming manufacturing industry are gone from the region. Gone as well are many young people who left in search of better opportunities.
Health care and social assistance providers are now the top employers upstate. There are also service industry jobs in hotels, restaurants, recreation facilities and tourist attractions. And the overwhelming majority of them are created by small businesses trying to scratch out a living where there are fewer customers and higher costs.
To his credit, in his State of the State address Gov. Andrew M. Cuomo made it a priority to revive the upstate economy. Expanding his regional economic development approach and enacting a new targeted marketing campaign highlighting upstate are promising approaches. Unfortunately, they clash with one of his other new priorities.
The governor called for an increase in the minimum wage to $8.75 per hour from $7.25. He pointed out that a full-time worker earning minimum wage in New York makes only $14,000 per year. He ticked off a list of necessities like transportation, car insurance, gas, health care, food and utilities.
You won’t get any argument from small business owners that New York is a tough place to survive. They have to pay the same prices for all of those costly necessities. But they also have to pay workers, and the governor is proposing a 20 percent increase in the cost of labor. That’s big. And it will come down hard on every segment of the upstate economy, from tourism to agri-business.
And, as a matter of course, it will also affect their employees and people who need jobs. Studies by numerous researchers show that unemployment among low-level workers jumped the last time the federal minimum wage was increased. The same thing happened in states where the rate was raised.
Also true is that when the minimum wage is increased, low-level jobs become more attractive to people with higher skills and more experience. Younger candidates often find themselves in competition with better-qualified workers, so they’re boxed out of the labor market. In fact, according to research by the University of San Diego, a large majority of minimum-wage workers are not the primary bread winners in their families and most of them come from middle-class and affluent households.
Cuomo and the advocates for a higher minimum wage are obviously sincere in their intentions. But they are also working against themselves. Small businesses that form the backbone of the upstate economy can’t afford a 20 percent increase in labor costs. And the governor can’t afford to undermine his program with a policy that will destroy jobs as he tries to create more.
Mike Durant is state director for the National Federation of Independent Business.