Thursday, November 12, 2015

Nobody wins in the Fight for $15

Last week saw another round of Fight for $15 demonstrations across the state. But now that organizers have claimed victory in the restaurant trade, they’ve set their sights on the rest of the economy, something the Governor Cuomo lists as one of his primary goals for 2016.

It will be an especially damning development for the economy’s wealth creating sectors – manufacturing and farming – and those employed by them. Employers will have to make adjustments to labor costs that will significantly affect their ability to compete with other states and other countries.

New York businesses that grow crops or manufacture goods already have the highest cost burdens in the US. As I’ve indicated numerous times before, my company alone throws away $750,000 a year on state-driven costs for electricity, taxes, workers comp and more that are over and above what our competitors in Ohio, Indiana, and Utah pay.

Were the $15 rate to go through, we would more than double that competitive imbalance because we would be forced to maintain the large gap we currently have against the minimum wage in regard to our starting rate. That substantial increase would have to be implemented across the board, though, because there’s no way that I can tell a long-tenured coworker that the new guy we just hired is worth as just much as someone who’s invested a few years in us and we in him.

When applied to 170 people at 40 hours a week, 52 weeks a year, plus an endless amount of voluntary overtime, we’re not talking chump change. Many of our products have high labor inputs. It takes 5 to 8 people to make most of them. And those are just the direct costs; each of those goods is also moved by a myriad of material handlers, truck drivers, and shippers.

I will have no choice but to pass that on to my customers. What do you think they will say when I come to them with higher costs because direct and indirect labor went up 25 percent? They’ll say “good bye”. Their customers – the big box stores, distributors, etc. – won’t pay higher prices because they know the end consumer won’t and they know someone in Utah or China can make the goods much cheaper.                  

There are only two options for survival: One is to move (which will put 170 New Yorkers out of work) and the other is to use robots which in turn would put 30 people out of job.

Unlike us, farms can’t move (their land is their life) and they can automate only so much (no robot can pick apples and veggies). The New York Farm Bureau says the $15 wage will cost New York farmers $500 million. Those higher costs will force food processers and supermarkets from across the country and around the world to not buy New York produce and dairy. At the same time, the wage increase will cut net income on farms by 25% which will kill countless family farms that are reeling from the most recent collapse in the dairy markets and the constant uncertainty of weather that has dogged Man since he first planted seeds.

The minimum wage increase won’t bring people out of poverty in New York because it will create poverty --- plants and farms will downsize, maybe even shutter, because their ability to compete in the global marketplace will be made even weaker than it is now. No one -- I repeat, no one -- will win in the Fight for $15.

From the 16 November 2015 Greater Niagara Newspapers  

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