A $15 Minimum Wage Is Good for Long Island Businesses

Growing numbers of businesses across Long Island are standing with the governor because they recognize that Long Island's workers are also its consumers, and a significant raise for them is exactly what local businesses need to grow and thrive together.
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With Governor Cuomo calling for a $15 minimum wage by mid-2021, the state's business lobbyists are trying to scare local employers that raising the minimum wage will hurt them and force lay-offs. But growing numbers of businesses across Long Island are standing with the Governor because they recognize that Long Island's workers are also its consumers, and a significant raise for them is exactly what local businesses need to grow and thrive together. Too many workers in the NYC region will not be able to afford to live a quality of life without the projected minimum wage increase.

My organization, the Long Island African American Chamber of Commerce (LIAACC) represents hundreds of African-American owned businesses throughout the Long Island and New York City regions. We support the governor's call to gradually increase the state wage up to $15 over five years by mid-2021 - and faster in New York City - because our members know that we cannot have growth and profitability without empowered consumers and a dynamic economy.

Sales growth is what drives business expansion and hiring. And to grow sales, we need consumers with more money in their pockets to spend. That's why the Governor's proposal will help, not hurt our members. With close to 400,000 of the lowest-paid workers on Long Island projected to receive raises averaging $4,800 per year by 2021 - including 40% of all African-American workers -- a $15 minimum wage would provide a long overdue boost in spending and sales, lifting local businesses and enabling them to adjust to the higher costs.

This "virtuous cycle" is especially important for our members operating in Long Island's low-income neighborhoods. For them, a $15 minimum wage increase will create new spending power for virtually all of their customers, allowing them to thrive and grow.

Low wages, on the other hand, can be very costly for employers who face high turnover from workers leaving to seek jobs that pay more. Each time a worker leaves, our members spend time and money recruiting and training a new worker. The cost of replacing a single worker can run into the thousands of dollars - an estimate for the fast food industry, for example, puts the costs at $4,700 per lost worker. The costs can be even greater where high turnover undermines service and product quality, hurting sales.

In fact, turnover is likely to get worse for our members if the $15 minimum wage by mid-2021 isnot approved by Albany this year. That's because employers will need to compete for workers with the fast food industry (for which a $15 wage has already been approved) and so will need to match their pay to retain their staff.

Local businesses also remember how lobbyists made these same predictions of job losses in 2004 and 2013 when the state last raised the minimum wage -- and saw that jobs grew rather than fell after the wage went up. Studies published by Cornell confirmed that the increases did not hurt jobs - disproving claims to the contrary.

Moreover, a new state-of-the-art study by University of California, Berkeley economists released this week should put business owners' minds at ease about Governor Cuomo's $15 proposal. The analysis confirms what they sense: that the spending power unleashed by a significant minimum wage increase offsets the costs to businesses, with the net result being that jobs are likely to grow slightly - by an estimated 3,200 statewide by mid-2021 - not shrink.

The governor's proposal calls for a reasonable phase-in schedule that gives businesses outside of New York City five years to adapt to the higher minimum wage and amounts to a wage increase of 10% or less per year - a modest raise when we factor in greater revenues from increased consumer spending, higher worker retention, and reduced training and turnover costs that result from paying workers a living wage.

Long Island business owners who are nervous about the Governor's proposal can also take comfort in the experience of other jurisdictions raising their minimum wage to $15. Seattle, for example, began phasing in a $15 minimum wage last year, and rather than declining, the city's economy has been marching full steam ahead, growing and adding jobs.

That's why my organization, and other business organizations representing thousands of small businesses across Long Island and the state are weighing in to dispel the myths and support the Governor's call for a $15 wage by mid-2021.

Phil Andrews is president of the Long Island African American Chamber of Commerce.

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