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Minimum wage hike impacting NY manufacturers more than retailers, polls find

Manufacturers said an average of 20 percent of their workers received a pay boost they wouldn't have received otherwise because of the latest hourly wage increase, while only 9 percent of service-sector firms said the same, the Federal Reserve Bank of New York reported.

Fast-food workers demonstrate in Manhattan on July 22,

Fast-food workers demonstrate in Manhattan on July 22, 2015, ahead of the New York State wage board's public meeting.  Photo Credit: Yeong-Ung Yang

New York State’s rising minimum wage is having a greater impact on factories than on retailers and other service firms, according to polls released Tuesday.

The Federal Reserve Bank of New York found that more than six in 10 manufacturers have changed their decisions about hiring and compensation because of the latest minimum wage increase on Dec. 31. Only four in 10 service firms said they were affected.

The hourly wage went from $10 per hour to $11 on the last day of 2017 in Nassau, Suffolk and Westchester counties. In New York City, the rate climbed to $12 or $13, depending on the employer’s size. In the rest of the state, the rate increased to $10.40.

The minimum wage will increase annually until it reaches $15, under a deal struck by Gov. Andrew M. Cuomo and the state Legislature in 2016. The first increase occurred Dec. 31, 2016, and raised the Long island minimum wage from $9 to $10.

The New York Fed, in a poll of about 100 manufacturers across the state this month, found slightly more were affected by the higher wage rate this year than in 2017. However, for about 100 service firms on Long Island, in New York City and the northern suburbs, also surveyed this month, the number saying they were impacted was 39 percent, down from 49 percent in March 2017.

“New York businesses were also asked what proportion of their workforce, prior to the latest hike, was earning less than the 2018 minimum wage – the average incidence in both surveys was about 6 percent,” the bank said in a statement.

The businesses were asked what proportion of their workforce received a pay boost they wouldn’t have received otherwise because of the hourly wage increase. “The average share was 20 percent among manufacturers and 9 percent among service-sector firms,” the bank said.

On Long Island, the higher minimum wage has had the greatest effect on factories that produce food or drugs, have small staffs or use low-skilled workers on assembly lines, executives and experts told Newsday last fall.

Some manufacturers have taken drastic actions in the wake of the wage hike.

Framerica, a picture-frame manufacturer in Yaphank, canceled $3 million in building plans and equipment purchases. Uncle Wally’s, a Shirley-based muffin maker, won $1 million in tax breaks after threatening to lay off one quarter of its workforce. And Chembio Diagnostics, a medical device company with operations in Medford and Holbrook, said it will shift some production to a plant in Malaysia because of the rising minimum wage.

The impact on manufacturers of increasing the minimum wage wasn’t discussed much in the state Capitol two years ago when lawmakers agreed to Cuomo’s ambitious proposal to hike the hourly rate from $9 to $15 over the next few years. The debate mainly focused on farms, retailers and other service businesses where a majority of employees earn the minimum wage.

Proponents of a wage hike said that raising pay would boost the economy because workers would spend more locally. Opponents said increasing the minimum wage would cost jobs.

Cuomo overcame opposition to the measure by including the wage raise in the 2016-2017 state budget, which had to be adopted in order to fund state operations.

WAGE BOOST EFFECTS

What proportion of your workforce earned less than the new minimum wage?

Manufacturers in New York State: 6%

Retailers and service firms in the metro area: 6%

What proportion of your workforce received a pay boost they wouldn't have received otherwise because the minimum wage went up?

Manufacturers in New York State: 20%

Retailers and service firms in the metropolitan area: 9%

SOURCE: April polls by the Federal Reserve Bank of New York of about 100 manufacturers across the state and about 100 retailers and service firms on Long Island, in New York City and the northern suburbs. 

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