UTICA — As of Dec. 31, the minimum wage for New York state — outside of New York City, Long Island and Westchester — rose from $10.40 an hour to $11.10 an hour.
Advocates of the change champion the prospect of minimum wage employees climbing the economic ladder. Opponents fear for the future of small businesses.
But only time will tell how the recent increase — and others that were planned as part of Gov. Andrew Cuomo's 2016-17 State Budget — will impact businesses in the Mohawk Valley.
Roxanne Mutchler, director of the Small Business Development Center at SUNY Polytechnic Institute, fears one effect will be that fewer or no jobs are added in the future.
“It’s going to be difficult for small business to keep absorbing the increases in minimum wage,” she said. “I think a lot of businesses will probably look at reducing the hours of some of their employees (or) they may not be able to add on more employees.”
The legislation behind the pay increases dictates that the minimum wage rate in various parts of the state will increase by a certain amount of money every year until all workers in the state are making at least $15 an hour.
While businesses employing 11 or more employees in New York City reached $15 this year, the rest of the state’s minimum wage rate won’t reach even $12.50 until 2020.
While Mutchler is worried the plan will hinder small business growth, she doesn’t believe any businesses will necessarily close because of the legislation.
Indeed, businesses mitigate the problem through various means. Some, like PJ Green Inc., a variable printing and mailing firm in Utica, will attempt to absorb the increases by reinvesting in new infrastructure and technology to “be more efficient with a smaller, more effective workforce,” said Rick Green, the company’s vice president.
“When there is a minimum wage increase, it does have a broad effect which causes us to make other wage increases to remain competitive in securing and maintaining a reliable skilled workforce,” he added.
Green said the company does everything they can to absorb the costs without affecting customer spending. At a minimum, they have to maintain their customer base to do that.
But sometimes it does come back to the consumer, and not always as a direct result of the businesses. Take Bite Bakery in Utica, for example — the higher wages aren’t impossible for the bakery to cover, said co-owner Jason Allen-Leonard. The increase does, however, impact distributors that work with the café, which typically have a much larger employee force.
As a result, Allen-Leonard said, their prices are going to rise — in some cases by 5 or 6 percent.
“Sixty cents times 20 hours isn’t going to break (us),” Allen-Leonard added. “But (the consumer) doesn’t realize that the food vendors who employ (thousands) of people, those costs end up getting rolled to us.”
At Bella Regina in Utica, owner Regina Piacentino said she hasn’t seen distributor costs rise yet.
She’s not laying off any employees and hopes to find alternative solutions to retain the restaurant’s profits.
Her priority, she said, is paying her better employees more to retain them — employees like Avery Graziano, who works numerous roles in the restaurant. Graziano already makes more than minimum wage, but thinks the increase is important for those who don't.
"Every day, everything is more expensive, and I think people deserve (a higher minimum wage)," she said. "Everything costs a lot of money and (those costs rise) all the time."
Studies on the effectiveness of a rising minimum wage have shown mixed results. The Associated Press reported that while some employees see their hours cut back, or that other businesses place higher value on experienced workers (in turn making it harder for some minimum wage workers to find a job), some workers do benefit from the change.
The Associated Press cited a series of studies by the University of Washington analyzing the rise of minimum wage in Seattle. In 2016, the city raised the minimum wage to as much as $11 an hour in 2015, then up to $13 in 2016, depending on the employer.
The result was an insignificant effect on employment for the $11-an-hour hike. The $13-an-hour raise, however, caused a “large drop in employment,” the Associated Press found.
Jason and Douglas Allen-Leonard said they understand how, with the increasing cost of living, a higher minimum wage could benefit the workforce. But they said they’ll go into it with an open mind.
“It does impact us, but (we) agree with it 100 percent,” Jason Allen-Leonard added. “I think every year with the cost of living going up that we have to find a common ground … based on what we make.”
Contact reporter Joseph Labernik at 315-792-4995 or follow him on Twitter (@OD_Labernik).