The corporate lobbying group fighting a New York state effort to raise the minimum wage has publicly argued that an increase will throw more than a hundred thousand people out of work. But behind closed doors last week, the lobbying group claimed many of its members are already paying their lowest-paid workers more than the state minimum wage.
“I think the message that a lot of small businesses have been trying to send is that… a lot of businesses are paying well above the minimum wage because of the labor shortage right now,” said Ashley Ranslow, the New York state director of the National Federation of Independent Business (NFIB), the lobbying group hosting the call.
The real problem, Ranslow said, is that “everyone wants a raise when the minimum wage goes up,” which creates “a spiraling and compounding effect for small businesses.”
It’s a remarkable admission from one of the main corporate lobbying groups fighting the legislative effort to increase New York’s minimum wage — and directly contradicts her organization’s public line.
“This is so typical — [NFIB is] ‘Chicken Little’ every time there’s a proposal to raise the wage,” said Paul Sonn, state policy director for the National Employment Law Project, which is backing the minimum wage increase. “But even they know the sky isn’t falling. They’re saying the quiet part out loud, admitting that the minimum wage is irrelevant right now, it’s far too low, and would have to be an awful lot higher before it actually starts to have an impact.”
As part of negotiations over the state’s $220 billion budget, New York Gov. Kathy Hochul (D) has pitted herself against Democratic lawmakers and most of the state’s labor unions in opposing an effort to raise the minimum wage to $21.25 an hour and index it to inflation. Hochul has her own proposal to keep the minimum wage at $15 an hour but increase it by up to three percent annually with inflation.
New York is one of a number of states considering minimum wage hikes this spring amid historic inflation and skyrocketing housing costs, after Democrats in Washington, D.C., failed to deliver on their campaign promise to increase the federal minimum wage, which has remained at $7.25 an hour since 2009. Other states including California and Washington and the District of Columbia had minimum wages above $15 an hour take effect at the beginning of this year.
Dark Money Funding
The minimum wage increase in New York is being considered as part of the state’s massive budget, which is negotiated between the legislature and the governor. In New York, the budget is commonly used to pass major legislative priorities, and the governor wields immense power over the process.
All of the state’s major labor unions — including the AFL-CIO, SEIU 1199, and Teamsters — have lined up behind a proposal from state Sen. Jessica Ramos (D) to raise the minimum wage to $21.25 an hour by 2026 and index annual increases to inflation.
The NFIB is one of several corporate lobbying groups registered to lobby on the measure, alongside the Business Council, the Farm Bureau, and local chambers of commerce. While the NFIB describes itself as “the Voice of Small Business,” it has received millions in funding from dark money groups linked to billionaire oil magnate Charles Koch and conservative operative Karl Rove.
The group, which does not publicly disclose its donors, raised $109 million in 2021, according to its most recent tax return.
The NFIB has reported lobbying the New York state senate, assembly, governor, and Department of Labor on the proposed minimum wage increase.
Last Thursday, the NFIB of New York invited state Senate Commerce committee chair Sean Ryan (D), Assembly Small Business committee chair Al Stirpe (D), Senate Minority Leader Robert Ortt (R), and Assembly Minority Leader William Barclay (R) to speak at a virtual lobbying day on the state budget.
The event’s sponsors included a powerful chemical lobbying group, the American Chemistry Council, as well as local chambers of commerce and the health insurance company Highmark.
Ranslow, the NFIB director, cited the group’s study finding that Ramos’s bill would cause 128,000 New Yorkers to lose their jobs over the next decade. NFIB paid $40,000 for the study, per the group’s lobbying filings.
But a separate independent study by University of California, Berkeley economist Michael Reich found that the wage increase would not have noticeable impacts on employment. His study looked at data on a comparable wage increase for New York fast food workers between 2013 and 2018, from $7.25 to $15 an hour, and found that this wage increase did not eliminate jobs.
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Most recent academic studies of minimum wage increases have found they do not have substantial impacts on employment. Reich recently published a paper finding that this is true for small businesses as well as large corporations.
Meanwhile, Reich told The Lever, NFIB was correct in the virtual lobbying call to note that minimum wages are falling behind the market rate for entry level jobs. “The bite of the minimum wage (the proportion of workers who would get a raise) has fallen,” Reich said. “But in any case, the weight of the credible research evidence clearly shows that minimum wage increases do not reduce employment.”
“Wage Compensation Is Killing Us”
Both of the Democratic lawmakers who joined the call told the audience that given increased costs of living, the NFIB probably won’t succeed in killing efforts to raise the minimum wage.
Stirpe, the chair of the small business committee, said he didn’t think the legislative bills would pass but that Hochul’s proposal “probably has a pretty good chance.” Action on the minimum wage, he said, “is going to be a difficult one to block completely under the circumstances that everybody is living with right now. It’s just, everything is just so much more expensive.”
His senate colleague, Ryan, a labor ally, took issue with the NFIB’s stance against a minimum wage increase.
“We want to make sure we have a robust small business community,” he said. “But you know, the city of Buffalo has a child poverty rate every year [of] about 50 percent. Of the people who live in poverty in Buffalo, 60 percent of those families have a full-time wage earner in the household.”
Later in the call, Ortt, the senate minority leader, said the minimum wage was not intended to be a living wage anyways.
“A minimum wage job was not intended, more often than not, maybe never, to be a living wage,” he said. “That’s not the point of it. It’s an entry wage, mostly for unskilled labor… A lot of times, someone starts at a minimum wage job. And at some point they graduate to a living wage position.”
Ryan also noted that the supposed small business lobby was fighting legislation that would mostly affect large national and multinational corporations — not small businesses.
“IBM has been in my office telling me they’re a small business,” Ryan lamented, adding: “Remember, in the big bell curve of minimum wage workers, the bulk of them work for national corporations… That’s the bulk of minimum wage workers in New York state. It’s not small shops, it’s not locally-owned pizzerias.”
Ryan questioned whether small businesses were still paying $15 an hour.
“Everything I hear from small businesses that come to me is they can’t find anybody,” he said, pointing out that an Amazon warehouse just opened in the town of Clay in his district and is paying $20 an hour. “So I’m just thinking that even to keep in business and find employees, you sort of have to move with the market.”
Ortt, who is opposing efforts to increase the minimum wage, also made this point. “Most New York companies aren’t paying the minimum wage anyways — they’re paying more because the market is dictating it, because you can’t find enough people to do the jobs that are already out there.”
Over the course of the call, Ranslow repeatedly read messages from the Zoom chat from NFIB’s small business members. “First a comment from Chuck that I think echoes a lot of what we’re hearing from our members,” Ranslow said. “He says, ‘As a small business owner, wage compensation is killing us.’”
When Ranslow argued that raising the minimum wage in New York would make it less competitive with other states, Ryan said, “Tell me what people in Pennsylvania are doing if they are getting paid $7.25 an hour, or whatever their minimum wage is, how are they living? I can’t figure that out. I don't know, maybe somebody can tell me how they’re able to live? I get a lot of people that come into my office telling me that even at $14 or $15 an hour, they're always less than one paycheck away from being homeless.”
Ranslow read another message from the chat which seemed to affirm this point. “Rita and Gary say, ’We pay more than the minimum wage, always have, and our employees are still struggling with inflation and grocery bills. It’s incredibly hard on families and children.’”
Ranslow also cited an NFIB poll which found that 96 percent of their members opposed Ramos’ legislation. “That 96 percent is certainly the highest percentage I have ever seen on a survey in terms of opposition to an issue.”
She urged the small businesses tuned into the call to make their voices heard.
“Here at NFIB we lobby in the halls of Albany, in the Capitol, every single day,” said Ranslow. “Those buildings are full of advocates that are pushing for the minimum wage, that are pushing for all-electric buildings, whatever it may be. To combat that, we need to hear from the small business communities.”