By Jill Nagy
Generally, local employers “were aware but not
happy” about the increase in New York state’s minimum
wage that took effect Dec. 31, with further
increases scheduled for December 2014 and 2015,
according to Wayne Dubiac of Priority One Payroll
in Ballston Spa.
The minimum is now $8 per hour. It is scheduled
to increase to $8.75 an hour at the end of 2014 and
to $9 an hour at the end of 2015. At $9 per hour,
a full-time employee will gross approximately
$18,700 per year.
It is good for employees, Dubiac said of the wage
increase, but for some employers, “it will have a
dramatic impact on their bottom line.”
The increase is expected to have a ripple effect, causing employees who were previously receiving a little more than minimum wage to press for an increase to maintain the differential, he said.
The manager of another payroll service sees some of her clients taking a creative approach to the change. One employer, who routinely pays bonuses and commissions to minimum wage employees, will reduce those payments somewhat to allow for the increased base pay. Others expect to increase prices and pass along the wage increase to their customers.
Dubiac pointed out that most clients actually pay far more than minimum wage and, therefore, will not be directly affected. Restaurant employees, especially waitstaff members, who depend on tips and can legally receive salaries below the minimum wage, are expected to see no real impact either since, in most cases, their combined salary and tips already exceed the new minimum wage, one of them noted.
Mechanically, the change was not difficult, a simple adjustment in the computer program that prepares payrolls and paychecks. However, one payroll manager noted, it was “kind of a pain in the neck” to have the change come, for most employers, in the middle of a pay period.
Dubiac predicted that the increase in the state minimum wage will lead to a decrease in the employment of students for part-time and summer jobs. Many of those employers, however, may qualify for a tax credit if they employ students at the minimum wage.
Dubiac acknowledged the availability of that new tax credit, but said that an employer will have to wait at least a year to receive the credit but has to pay the increased wage right away.
“The minimum wage is not supposed to support a family,” argued one of the payroll managers,.”It is a starting salary for young and inexperienced entry-level employees.” Still, she sees a potential impact on service businesses, such as landscapers, pizza and sandwich shops, and the like. “If somebody is on the edge, profit-wise, the impact can be significant,” she said.
“The best advice is planning” not only for this year’s increase but also for the further increases down the road, said Dubiac.
“Know how much it will cost to have an employee,” he said, adding that employers should “make sure they are following the rules.”