Another Mistake for New York State
Starting Jan 1st the great state of New York is going to raise its minimum wage. The wage hike is part of a three year increase finally settling at $7.15 an hour. Starting January first the new law will hike the rate up to $6.75 per hour as compared to the federal minimum wage law of $5.15 per hour. Now you may think this hike would be great for our economy and great for its workers, but it has a very negative effect on both.
For example, let’s say you own a small to medium size company, and in this case let’s say you have 20 employees and they all make minimum wage. You have an hourly salary expense of $103 dollars per hour. At that $103 dollar per hour it provides you with an excellent product, happy customers and employees along with a profit left over for the owners. (Note to liberals, that is how capitalism works) Well starting the first of the year, the new law will force you to pay these same employees $6.75 an hour. Well you do the math and now you are paying out an hourly salary of $135 dollars an hour. That’s a 34% increase in your operating expenses! Not to mention the increased taxes, social security, workers compensation, and so on. As a business owner you now have a choice to make in order to offset these increases in operation expenses. You can either increase the price of your product or service, or cut back on your hourly expenses. If you choose to raise the price of your product or service, you run the risk of pricing yourself out of the market and risk going out of business. If your product or service is in demand, and competition is limited, you simply pass the increase off to customers, in other words, to you! What most companies are forced to do here is trim back hourly expenses. This is very common in larger companies, and when I say larger, I am strictly talking about companies who employee more workers, not dollars. Larger companies have very fixed profit margins, and fixed price structures which are difficult to change. They are now forced to trim operating expenses. Now going back to your company, you are forced to cut back your employees to make up for the minimum wage increase. This means you have to layoff roughly 4-5 employees to get your hourly wages back to wear they were before the wage increase.
Now you have 5 employees out of work!
5 employees paying nothing into the tax system!
5 employees contributing nothing to the economy!
Now take these figures and multiply them across the large state of NY. You end up with more people out of work, less tax revenue, and a strangled economy. There is only one argument for the new minimum wage law, and it is weak at best. How can you expect a family to live off minimum wage? The truth of the matter is that minimum wage was never intended to be a guideline for a livable income. It is simply a benchmark for which an employer has to pay his employee by law, its simple as that! This is another huge mistake the state of NY is making. But what else can you expect from backwards politicians in the assembly, along with a liberal controlled senate. NY continues to fall behind in the job market along with a declining upstate population. High taxes and high unemployment is not the way to model your state.