Minimum Wage Hike a Key Ingredient for Economic Recovery in New York

Thanks to one of our marvelous members and supporters, Jeff Furman, for this excellent opinion piece that appeared in the Huffington Post recently. Jeff serves as the Chair of the Board of Directors of the Ben and Jerry’s Ice Cream.
With working families in New York still struggling to make ends meet in this sluggish economic recovery, Albany lawmakers should consider a full range of policies to create jobs and boost economic growth when the new legislative session begins in January. For the sake of New York’s lowest-paid workers — and for the countless businesses across the state whose sales are shrinking because too many consumers cannot afford basic expenses — raising New York’s minimum wage must be the very first order of business.

Earlier this year, the New York State Assembly approved a bill that would raise the state’s minimum wage from $7.25 per hour to $8.50, with annual cost of living adjustments in future years. I remember thinking that this proposal sounded quite modest given the high cost of living in the state — yet the State Senate failed to act on this bill, insisting that a minimum wage hike would actually hurt businesses.

Thankfully, Senator Jeff Klein — who will share power with Senator Dean Skelos to lead the new coalition government in the State Senate — has signaled that the Senate will not repeat its mistake from this year and will finally vote on raising New York’s minimum wage in the new session. I am encouraged by this promise — but, given the risk that minimum wage opponents will raise the same litany of claims about the supposed threat that higher wages pose for businesses in the state, I feel compelled to set the record straight about how raising the minimum wage will boost New York’s economy and benefit workers and businesses alike.

For the past 25 years, Ben and Jerry’s has proven that fair wages play a central role in a profitable business strategy. Each of our full time Vermont employees are paid, at minimum, a living wage of $15.97 per hour, plus health insurance, and we adjust this wage each year to make sure that it keeps up with the rising cost of living. Our $15.97 living wage is more than double the current $7.25 minimum wage in New York.

Our decision to pay a living wage to our employees is motivated by our commitment to a simple idea we call “linked prosperity.” We believe that our business should devote itself to making ice cream, making money, and making a difference in the lives of our employees and the communities where we do business at the same time. Our record makes quite clear that a business model of linked prosperity can work: By paying our workers a living wage, we spare our employees from the struggle of trying to make it on wages that don’t even cover basic expenses, or having to balance two jobs just to pay their bills — and, in return, our company is spared the cost of high employee turnover. Instead, with fair wages and good company morale, our bottom line is boosted by greater worker commitment.

Not surprisingly, the research shows that, if passed, a minimum wage increase could deliver the same positive economic boost to New York’s economy that Ben and Jerry’s living wage policy has delivered to our company. If the state’s minimum wage were raised to $8.50 per hour, roughly 1 million workers would receive a pay bump, generating over $600 million in new consumer spending, according to a report by the nonpartisan Fiscal Policy Institute.

The bill passed by the Assembly earlier this year would also protect the purchasing power of the minimum wage by indexing it to automatically rise each year with the cost of living. Ten states — including Ben and Jerry’s home state of Vermont — currently index their minimum wages to rise with the real cost of living and have benefited considerably as a result: by removing the minimum wage from the unpredictable nature of the political process, businesses gain more certainty over their payrolls each year and workers do not see their paychecks eroded by spikes in the cost of living. Given the partisan gridlock that stalled Assembly’s proposal to raise the minimum wage earlier this year, it is crucial that New York begin indexing the minimum wage to ensure that it keeps pace with the cost of living.

Many companies stress the importance of “teamwork” as a vital practice for the success of their business — and yet, far too many businesses hesitate to ensure that the values of collaboration and reciprocity are reflected in their pay scales as well. This is a mistake for individual businesses and the economy more generally. It is almost impossible for low-paid workers to feel that their efforts are being rewarded when they must struggle to make ends meet with their poverty-level wages.

For workers, businesses and New York’s economy as whole, raising the minimum wage is an urgent priority. Next year, raising the minimum wage must become an urgent priority for the New York State Senate as well.