Business Advocates, Small Business Owners Gather at the Statehouse to Warn Against Job-Killing Minimum Wage Hikes and the UI Fund Debt Crisis
ALBANY, NY (March 22, 2023) – With progressive legislators in the Capitol pushing bills that will drastically hike the state's minimum wage and lead to significant job losses, reduced worker hours, income reductions, and closures across New York, business groups gathered in the Capitol this afternoon to urge caution and common sense. Earlier, hundreds of small business owners and advocates from across the state met virtually with key lawmakers from both parties to discuss these two critical Main Street issues as part of NFIB’s annual Small Business Day.
S.1978-A and A.2204-A would force the minimum wage to $20 per hour, and as high as $21.25 in parts of the state, placing an additional heavy burden on job creators at a time when they can scarcely afford it. According to a newly released economic study commissioned by NFIB to measure the economic impact of the wage proposal finds that if the legislation becomes law, over the next ten years approximately 128,000 jobs would be lost. Almost 83,000, or 65%, of job losses would be suffered by small businesses with nearly 30% coming at the expense of firms with less than 20 employees. The cumulative real economic output loss, as a result of such minimum wage hikes, by 2033 would exceed $19 billion. Nearly $12 billion, or 60%, of that lost economic output would have been produced by small businesses.
Another recent report from the Federal Reserve Bank of New York found that nearly 40% of manufacturers have increased automation at factories since 2016, the last time New York State statutorily enacted a new wage escalation schedule. The FRBNY also found that automation has increased in about 20% of service firms. Both surveys found that the total number of workers employed, entry-level workers employed, and weekly hours worked had all decreased in both industries.
This ill-advised legislative drive comes on the heels of New York’s complete failure to restore the Unemployment Insurance (UI) Trust Fund, which was depleted by the COVID pandemic and state-mandated business shutdowns and restrictions. Business groups have repeatedly urged lawmakers to use some of the billions of dollars in federal COVID relief funds as intended to replenish the UI fund, now billions in debt to the federal government, as more than 30 states have done. Albany’s absence of leadership has allowed New York's business owners, small and large, to be saddled with the highest possible UI payroll taxes as well as special assessments to repay UI debt they had no decision in causing. This liability includes the record billions of dollars in fraudulent state unemployment payments documented by NYS Comptroller Thomas DiNapoli.
“A 40 percent increase in the minimum wage would have catastrophic effects on small businesses and New York’s economy at large,” said NFIB State Director Ashley Ranslow at today’s press conference. “Nearly 130,000 jobs and billions in economic output would be lost over the next 10 years, with small businesses suffering the most and feeling the disproportionate impact of a minimum wage increase of this magnitude. While other states have fully recovered from the pandemic, New York’s economy is still lagging with high unemployment and fewer jobs. Mandated wage hikes should not even be contemplated, especially as Main Street is still saddled with the highest possible Unemployment Insurance (UI) tax rates, special interest assessments, and higher federal UI taxes. Instead of adding to the financial pressures smothering small businesses, Albany should be pursuing solutions to address the state’s UI debt, provide tax relief to local job creators, and restore New York’s economy.”
Heather Mulligan, President & CEO of The Business Council of New York State, stated: “The real significant impact of a minimum wage increases falls on the smallest employers across the entire state. If lawmakers really want to help the state’s economy, they need to alleviate the many burdens hindering businesses from growing and creating jobs, including upskilling our workforce and minimizing taxes and fees such as the Unemployment Insurance debt.”
Northeast Dairy Producers Association Vice Chair AJ Wormuth stated: “To ensure farmers can continue providing nutritious and local milk and food to families across the state, New York must press pause on additional minimum wage hikes. On our family farm, we’re already paying 30% more for feed, 45% more for electricity, 84% more for gas, fuel, and oil, and 100% more for employee home heating fuel compared to last year. All our vendors can pass their increased costs on to us, yet dairy farmers are unable to do the same because milk prices are set by the Federal Milk Marketing Order, not by farmers. Any additional cost mandates, including a higher minimum wage, will have serious negative consequences on our state’s food security and regional economies, and will jeopardize the future of farming in New York.”
Upstate United Executive Director Justin Wilcox stated: “Our elected officials need to spend more time talking with small business owners to understand the current economic reality we’re faced with. As business costs continue to rise, the only option most businesses have is to pass those costs onto consumers. That is the literal definition of inflation. Forcing more cost mandates on employers will intensify the inflation rate and make any kind of recovery that much more difficult. A recent Siena Business Poll found that 85% of respondents said inflation has negatively impacted profitability. When businesses aren’t profitable, both employers and employees lose. If New York wants to support workers, we must support the sustainability of businesses as well, and addressing the state’s unemployment insurance debt is a great place to start. Instead of giving small and family-owned businesses yet another reason to leave the Empire State, we must ease up on the mandates and help our Upstate communities thrive.”
David Fisher, New York Farm Bureau President, stated: "New York needs a business climate that doesn’t overly burden our family farms. This includes the need for lawmakers to pay off the state unemployment insurance debt without saddling businesses with unfair assessment charges. The state minimum wage must also stay at $15. Any increase forces up all wages on the farm, costs that cannot be passed on to consumers because of how food is priced in this country through federal milk pricing formulas and competitive wholesale markets. If it is increased, the alternatives for farms will be to find ways to cut employee hours, move away from labor intensive crops or simply close up shop, something more than 2,000 farms have done since lawmakers passed the last wage hike. Let's push pause on higher mandated labor costs, giving small businesses the time to catch up to the high inflation and protecting our local food system from further demise. New York Farm Bureau believes that by working together with lawmakers, we can find innovative ways to invest in a farm economy that will provide more opportunity for the people we employ, not less.”
Mike Durant, President and CEO of the Food Industry Alliance of NYS, stated: “With the current inflationary impact on grocery prices, exacerbated with the continuing ebb and flow of supply chain concerns, any action that increases costs on employers will have a devastating effect on the retail food industry, consumers and those that sponsor this legislation aim to help. Regrettably, Albany continues to ignore the fact that employers are facing a continuing escalation in fixed costs across the board. New York has failed to adequately address the state’s considerable federal unemployment insurance debt which has dramatically increased state and federal UI taxes and imposed an Interest Assessment Surcharge on employers. Mandating further labor cost increases absent any meaningful action to address amplified costs on employers should be the last action considered.”
Mark Eagan, President and CEO of the Capital Region Chamber, stated: “The current UI Trust Fund debt, as well as the tremendous amount of fraud that has been identified in the UI system, are pressing issues for all New York State employers. This has led to our employers facing the highest possible state UI taxes, an Interest Assessment Surcharge, and increased federal UI taxes. The Governor and the Legislature must take meaningful steps to address this intolerable situation. Any talk of increasing the minimum wage without first address this UI crisis would be irresponsible.”
Leadership Alliance CEO Stacey Duncan stated: “To increase and index minimum wage as well as shift costs to business owners to replenish the state’s Unemployment Insurance Trust Fund will place undue stress on our local businesses who should be focusing on economic recovery and resurgence as we exit the COVID-19 pandemic. We are pleased to see both the Senate and Assembly have taken our concerns into consideration and are working towards a resolution to this debt issue without burdening our small businesses.”
The Grow NY Farms Coalition stated: “Any increase in farm wages will cripple our rural communities and put the security of our state’s food supply and the economic viability of the entire agriculture industry at risk. Forcing additional business mandates will increase costs for family farms that they simply cannot absorb, which will threaten the production of fresh local food that the people of New York want and deserve access to. With inflation and farm inputs still on the rise, now is not the time to double down and increase costs further. Our farms compete with neighboring states and countries that have an easier ability to retain a skilled workforce, a much lower cost of doing business, and no overtime rules. A higher minimum wage will not improve efforts to attract workers to New York farms. It will exacerbate the economic challenges already being felt by the entire agriculture industry and the supportive businesses and partners that farms work with on a daily basis. We urge our state leaders to consider the current economic landscape and uniqueness of critical industries like agriculture before making rushed decisions."