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For Release — February 9, 2015

Business Council supports spending control, opposes minimum wage hike in testimony at Legislative Budget Hearing

ALBANY, N.Y.— During testimony today before a joint meeting of the Senate Finance Committee and Assembly Ways and Means Committee, Ken Pokalsky, vice president of The Business Council of New York State delivered testimony in support of continued spending control and in opposition to increasing the state minimum wage.

“The Business Council strongly supports the Executive Budget’s continued commitment to fiscal discipline, said Pokalsky.  “The past four state budgets, as approved by the Senate and Assembly, have significantly improved New York’s fiscal condition, resulting in balanced budgets and projected operating surpluses at a time when about half of the other states in the U.S. are facing budget deficits.”

Pokalsky described the proposal to increase the minimum wage to $10.50 per hour across the state and to $11.50 per hour in New York City as, “the most significant new business cost that would result from the Executive Budget.”

“This may be well-intentioned legislation, but it will have unintended, adverse job impacts,” said Pokalsky.  “It would result in a nearly $4,200 per-job per-year cost increase, on a full time equivalent basis, and nearly a $6,600 per-job per-year cost increase in New York City, when you consider the direct payroll cost increases (20 and 31 percent, respectively), as well as the resultant increases in federal social security and Medicare taxes, and the increased costs of mandated state-level unemployment taxes and workers’ compensation coverage.”

Pokalsky cited a recent study that showed an earlier increase in the state’s minimum wage resulted in a 12.2 percent reduction in jobs for young, low-skilled workers who are among the intended beneficiaries of a minimum wage increase.

“To accommodate these increased costs, business will have limited choices: they can increase prices, divert resources from other purposes, attempt to become even more “efficient,” or purchase less labor, meaning either a reduction in hours or elimination of jobs for some workers, said Pokalsky.

Pokalsky said the Governor’s proposed $1.5 billion economic development program targeting Upstate is timely given that forty of fifty-two upstate counties have yet to see private sector employment return to pre-recession levels, but added The Business Council believes the program should be broadly accessible to significant projects across upstate, and not limited to projects in just three of eight upstate regions.

The Business Council’s testimony also urged a portion of the state’s $5.5 billion windfall be applied to eliminating the 18-A energy surcharge once and for all, and called for reforming Labor Law sections 240 and 241, the so-called Scaffold Law, by adopting a comparative liability standard that Pokalsky said “would be a significant cost-savings for state and private project-related liability coverage, and will help assure the state receives the maximum public benefits from its capital spending.”

The Business Council’s complete testimony is available here.