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July 23, 2004

Governor Pataki vetoes the Legislature's minimum wage increase

Governor Pataki announced he has vetoed a bill passed by the Legislature that would increase the minimum wage in New York from $5.15 to $7.15 an hour.

'New York has to continue fighting for every job and we cannot unilaterally put this state at a competitive disadvantage," the Governor wrote in his veto message. "This legislation would be particularly detrimental to upstate New York, which has been working hard to increase its competitiveness."

Business Council President Daniel B. Walsh urged the Governor, in a July 23 letter, to veto the proposed increase because it would hurt many lower-income workers in the state and further damage the business climate.

“We believe, as you have said, that the best way to help working men and women is to make it possible for New York employers to keep and create good jobs,” the letter said.

Governor Pataki echoed that sentiment in his veto message, issued July 29.

"All of us want to assist hardworking, lower income New Yorkers," the Governor said. "I can think of nothing more compassionate than giving someone a new job opportunity, or working to protect someone from losing their existing job."

The Governor urged New York's Congressional delegation to consider a minimum-wage increase at the federal level, limited to full-time workers.

"I look forward to working with the Legislature to further identify ways in which New York can enhance its economic competitiveness," he said.

Walsh praised the Governor's veto of the minimum-wage increase.

"Governor Pataki's action will save jobs that otherwise would have been lost. We need to find ways to add jobs, rather than make jobs more costly.

"In much of downstate, the entry-wage level is far above the minimum wage," Walsh added. "In Upstate New York, where the economy is most challenged, this increase would have added costs and eliminated jobs."

In his earlier letter to the Governor, Walsh said that a higher minimum wage would result in elimination of Food Stamps and other benefits for thousands of working families. Low-income workers who managed to retain a job would benefit far less than the bill's supporters argue, he said.

“Only one state among the other 49 has a mandated wage higher than the $7.15 imposed by this legislation,” the letter said. “In 37 states, the minimum wage is $5.15, fully $2 an hour lower. If this bill becomes law, employers will be forced to pay higher Social Security taxes, workers’ compensation premiums and other expenses, because those are based on wage levels.”

Business costs in New York are already out of line with the competition and our state and local governments impose the heaviest tax burden in the nation, the letter said. “Government policies play a role in the high cost of energy, workers compensation and regulation as well,” the letter said. “Employers truly wonder whether government in New York will ever consider reducing costs on business, instead of constantly driving them higher.”

An analysis of the legislation would find that New York will lose jobs, Walsh's recommending a veto letter said.

“It’s clear to us that many employers will respond to a mandated wage increase of 39 percent by reducing the number of jobs, the hours employees work each week, or both,” the letter said. “Those with the least skill and experience - disproportionately, minority women and men - are most likely to lose entry-level and training opportunities that could prepare them for higher-paying careers.”

The Fiscal Policy Institute, a union-funded think tank that supports a higher mandated wage, predicts that the legislation will “encourage more efficient business practices,” the letter said.

“All too true - and any manager can tell you that the quickest route to greater efficiency is getting the same work done with fewer employees,” the letter continued.

New York has only raised the minimum wage above the federal level twice in recent history, in 1967 and 1970, the letter noted. Those increases were among many of the actions by state government that made our business climate uncompetitive and hurt working New Yorkers.