Op-Ed By David Bolotsky
Albany Times Union, Jan 21, 2013
Gov. Andrew Cuomo has demonstrated his commitment to a sustainable economic recovery in New York by calling for an increase in the state minimum wage, from an inadequate rate of $7.25 per hour to $8.75. New York's minimum wage has not changed since 2007, and the governor's leadership will hopefully break the political gridlock.
As a business owner, my greatest hope is that the governor and the Legislature decide to index the minimum wage to rise automatically with the cost of living each year. This will preserve the purchasing power of New York's lowest-paid workers and give businesses a more predictable figure to manage, rather than the periodic spikes in wages we now experience when lawmakers pass an overdue increase.
This move will also help taxpayers. We are all subsidizing businesses that employ $7.25 minimum wage workers who then turn to government assistance like food stamps and Medicaid. An $8.75 minimum wage adjusted for inflation would mean that business owners would rightly pay more and taxpayers would pay less.
I know of many small business owners who, like me, already pay their employees much more than the minimum wage, and who regularly update their pay scales based on the rising cost of living. The lowest wage for seasonal warehouse workers at my company, UncommonGoods, in Brooklyn is $11, up from $10 in 2011 and $8.50 in 2007. Full-time workers earn more.
By paying entry-level wages that workers can live on, we experience lower employee turnover and see higher productivity and customer satisfaction.
Small business owners expect costs to rise each year — whether it's utilities, insurance, rent or other expenses. We know that our employees must deal with rising prices as well, and so we adjust our pay scales upward accordingly.
In fact, raising New York's minimum wage would benefit businesses across the state by generating a boost in consumer spending as low-paid workers typically have no choice but to spend their increased earnings immediately on basic expenses.
And nothing is more important to job creation than consumer demand. Indexing the minimum wage to rise automatically each year would preserve these consumer spending levels over time.
Yet powerful corporate lobbyists continue to insist that the minimum wage remain stagnant each year even as the prices of basic goods rise. They argue that small businesses cannot afford a higher minimum wage, even though the vast majority of low-wage workers are employed by larger companies with over 100 employees, not small mom and pop shops.
Moreover, the largest employers of low-wage workers — think national retail and fast food chains like Walmart, McDonald's and Target — are earning strong profits and can well afford a higher minimum wage. They should follow the example of large companies like Costco, which pays a starting wage of $11 an hour and endorsed the minimum wage increase that passed the state Assembly last year and died in the Senate.
If New York's minimum wage had simply kept pace with inflation since 1970, it would equal $10.70 per hour today. If businesses in New York could afford to pay the equivalent of $10.70 per hour in 1970, surely they can afford to pay at least $8.75 per hour today.
Ten states across the country currently index their minimum wage to rise with inflation: Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington. It's time for New York to follow suit.
David Bolotsky is the founder and CEO of UncommonGoods, an online and catalog retail business based in Brooklyn.
Copyright 2013 David Bolotsky