April 13, 2016

Dear Fellow Business Leader:

As owner and CEO of a 450+ employee, �high-tech� manufacturing company, I join my colleagues across New York State in expressing deep concern with Albany�s passing of a $92 billion, 2016-17 Budget Agreement containing the $15 Minimum Wage bill.

While hailed as a �victory� for some 2.3 million New Yorkers, Governor Cuomo has again artfully dodged exposing the severe consequences this state-imposed cost burden will have on New York State� s employers and taxpayers. As history demonstrates, government-imposed minimum wage programs serve more to drive-up unemployment, drive-out business to other states and/or foreign countries, and significantly undermine the ability of manufacturers to retain talented employees, than what it does to help the employee and economy.

According to a 2013 Bureau of Labor Statistics report, a $1 increase in the minimum wage was associated with a 1.48 percentage point increase in the unemployment rate, a 0.18% decrease in the net job growth rate, a 4.67% increase in the teen unemployment rate, and a 4.01% decrease in the teenage net job growth rate. Even the 2014 Congressional Budget Office (CBO) projected that nationally, a wage increase to only $10.10 would reduce total employment by about 500,000 workers.

One doesn�t need to be a statistician or a leading economist to understand the basic laws of �supply and demand.� When the price of labor increases, the corresponding product price increase reduces demand, and thus, lessens the need for employees. Usually, lower-skilled workers are the first to feel that impact.

Further, as labor costs escalate, the justification for automation (assuming business owners have the capital and desire to do so,) or more inexpensively, outsource labor to lower cost regions to more business-friendly states, or even China or Mexico, becomes more significant. The so-called �victory� does little more than set up some 2.3 million employees for even more fierce competition with other workers and with automation.

In addition to the minimum wage adjustment, the newly-signed legislation also includes a �12 week paid family leave policy� provision that will all but cripple any attempt by New York State employers to effectively schedule the production, vacation and personal time benefits they currently provide. Unlike governmental public-sector operations, the private-sector employer understands that if work isn�t completed, or if quality products are not delivered on time, they lose customers, revenues and the ability to stay in business.

But don�t just take my word for it; the New York State Business Council has publicly stated that it too is �discouraged that the budget deal includes the most expansive Paid Family Leave law in the nation, while leaving out meaningful business cost reductions, such as workers� compensation reform, and targeted small business tax cuts.�

Contrary to the State�s rhetoric that New York is leading in job growth, attracting high-tech jobs, and providing New Yorkers with a whole host of new �victories,� the reality remains that their proposed �middle-class tax reductions� do absolutely nothing for those people who may be losing their jobs.

We in the manufacturing community are NOT opposed to employees making more money or enjoying more benefits. In fact, we believe just the opposite; we want to remain and grow in New York State, and we want the compensation packages we offer our valued employees to expand. We want to keep them.

In reality, the only �victory� Albany can honestly claim is that they won for themselves. They�ve succeed in ignoring the State taxpayers� call to regulate their own spending, and to reform their own wasteful practices by instead passing along their obligation to do so to New York�s business and manufacturing owners.

Their logic is simple, but it�s also transparent; increasing the minimum wage does not cost government a dime.

Sincerely,

Frank Giotto
CEO Giotto Enterprises

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