Home

Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.7743-A (Savino)/A.8767 (Kavanagh)

Support

SUBJECT:

City and County-level minimum wage

 

DATE:

June 17, 2014

 

The Business Council opposes this legislation that would authorize cities and counties to adopt their own minimum wage, up to 30 percent higher than the applicable state minimum wage. Under this bill, all sixty-two counties (including, presumably, the individual counties that comprise New York City), as well as all sixty-two cities within the state, would be allowed to adopt and modify their own minimum wage.

This legislation is based on the premise that the redistribution rather than creation of wealth can be the basis for long-term economic prosperity. Instead of taking steps to make job creation more expensive, the state needs to focus on making the state's economic climate more competitive, and promote the creation and retention of high wage jobs. This year's budget, as example, improves the state's tax climate for manufacturers and financial sector firms doing business in New York, two high wage sectors whose in-state employment has fallen by more than 150,000 over just the past ten years.

The following illustrates the full impact of this proposal. Under this bill, by 1/1/16 a municipality could set its minimum wage at $11.70 per hour. However, that is not the end of the cost impact on business. Employers are subject to additional federal and state payroll costs, including social security, medicare, unemployment, workers' compensation and disability benefit expenses, which add another 15% to the hourly wage cost, for a total per-hour cost of nearly $13.45/hour. Compared to the “all in” hourly costs based on the state's 2012 minimum wage, this is a wage and benefit cost increase of 66%, or $11,226 per full time position.

  Current Law Maximum Local Min. Wage "All in" Per Hour Cost Annual Cost Incr. per Full time Position*
1/1/14 $8.00 N/A $9.20 $2,282
12/31/14 $8.75 $11.37 $13.07 $4,070
12/31/15 $9.00 $11.70 $13.45 $11,122
Proposed $10.10 $13.13 $15.09 $14,455

*Compared to federal minimum wage of $7.25/hour

Further, this legislation will impact an increasingly large percentage of New York employers. Relatively few workers in New York State about 2 percent of all in-state employees - were paid at only the federal minimum wage of $7.25 prior to the 2013 increase legislation, and we estimated its direct impact on employers at about $400 million/year, and the indirect impact (through “wage compression” of slightly higher wage levels) at about twice that amount. However, Economic Policy Institute data suggests that up to 30 percent of workers could be directly affected by a minimum wage increase to $11.70 per hour, making the direct and indirect impact of this minimum wage bill far higher.

Finally, this bill will increase wage payments and record-keeping more complicated for employers with employees in multiple jurisdictions with differing wage levels. A business would have to keep detailed records not only of which in-state jurisdiction an employee worked, but also how many hours per jurisdiction.

In summary, The Business Council does not believe that increasing state-imposed costs on business is consistent with the state's objectives of growing and keeping good paying jobs.

For these reasons, The Business Council opposes adoption of S.7743-A/A.8767.