Report from the Hill by Dick Brescia, NYPGA Lobbyist

March 9-13, 2015

What the governor is up to

"What is true of the part must be true of the whole"

The Paradox of Thrift, an example of the Fallacy of Composition, is being cleverly and mightily employed by Governor Andrew M. Cuomo to persuade constituents to pester their state representatives to vote to increase the minimum wage from the current $8.75 to a proposed $10.50 statewide and $11.50 in New York City. In total, more than 1.35 million workers will experience an increase in wages statewide, with the majority of benefits going to adults and women. The direct economic value across the state as a result of these higher wages is approximately $3.4 billion.

If you apply the fallacy it should be apparent employers will react to increased costs by firing or hiring fewer workers, unless of course they are protected by CBA's or are in the public sector. Neglected is any mention that some wages are pegged to the minimum wage, so those earning more than the minimum would receive a wage hike, too.

Of course the entire enterprise is political since the governor's rationale contains the that awful word employed by moralists, "should". People should earning a "living wage", "women and adults" will benefit, he says. But, apparently, not young people (or males), since the unemployment rate among 16 to 25 year-olds is twice the general rate and amongst blacks, higher than that. Especially true of black, male teenagers.

Minimum wages are notorious for causing unemployment among the young, especially minorities, unless the governor means to restrict recipients to those protected classes of workers covered by CBA's and whose salaries are already well above the minimum and would go higher.

If the market wage is above the minimum, then increases to any point below the market rate will have no impact except for those workers whose wages are pegged to the minimum plus a wedge, e.g., "6 dollars above minimum" might appear in some CBA's and for all we know affect other payments (transfer type) similarly linked.

According to the governor, 1.35 million people will experience an increase in wages, except of course for those laid off as employers try to recover part of the total cost of $3.4 the governor calls direct economic value across the state as a result of these higher wages.

Oddly enough that is the way markets and business are supposed to work: cost increases make business seek savings elsewhere, fewer workers, lower benefits, substitution of capital for labor.

So what is good for some individuals (part) does not mean the increases will be good for the whole or, in this case New York's economy.

For those interested the governor's statistics and measurements see:

http://www.governor.ny.gov/news/governor-cuomo-details-impact-minimum-wage-increase-new-york-workers-and-economy

Legislative Bills Tracked - January 5 to March 10

In the process of reviewing approximately 10,000 bills introduced only a few matter to the industry. We have dropped all "fracking" bills, now several dozen, since the governor has announced he will not support the practice. These bills persist as "hardy perennials" for which legislators seek credit and praise from an inattentive public.

A few key items are the Empire PERC bill, some LNG siting bills that amend Art. 23 of the Env. Conservation Law which mentions but excludes propane; a local law (Rockland County) setting out the qualifications for membership on the plumbing board- similar boards exist on Long Island and in Putnam County and are used to insert licensure requirements on our companies; and various tax credits for alternate fuels (say "renewables" three times). We routinely report on any trade licensing bills for fear they may go viral.

Feel free to call about any of these: 

Click here to see full list of Bills