Mayor Bloomberg made some pretty good points in his message explaining why he will veto the New York City Council's efforts to impose higher minimum wages on some businesses. Highlights:
Those bills – the so-called living and prevailing wage bills – are a throwback to the era when government viewed the private sector as a cash cow to be milked, rather than a garden to be cultivated.
In those days, government took the private sector for granted. We cannot afford to go back to those days. We cannot take our economy for granted. And I will not sign legislation – no matter how well-intended – that that hurts job creation and taxpayers.
And that's why I will veto both the living and prevailing wage bills. But before I do, I wanted to explain the principles guiding my decision....
Having a City employee, like the Comptroller, tell the private sector what to pay – rather than letting the market tell businesses what is fair and equitable – will lead to all kinds of market distortions that cost taxpayers money.
After all, no owner of a building would sign a lease with the City unless the City pays the additional costs the owner would incur as a result of having to pay the higher, government-mandated wage. So as a practical matter, under this bill, New York City would pay part of the wages of private sector employees.
The living wage bill, when passed, would be even more costly to taxpayers. That bill would require businesses that receive more than $1 million in tax abatements or other incentives from the City to pay all of their workers at least $10 an hour with benefits, or $11.50 an hour without benefits, even though a business across the street, or next door, would not have to pay those higher wages.
In practical terms, that means one of two things: Either those businesses will decide not to proceed with their investment because of the costs, which would kill all the jobs that would have been created – hurting job seekers and taxpayers. Or: City government – meaning the taxpayers – would have to pay for those wage requirements by offering more generous financial benefits...
The Council wants to take revenue from owners and give it to a select group of employees. That's not the way the free market works. The costs would be paid by taxpayers – both in more generous financial packages to the companies, and in lost tax revenue and jobs when the City Council cannot afford more generous packages.
The way to raise wages and salaries is not for government to impose legislative mandates. It is for government to foster broad-based economic growth that gives people opportunities to climb up the economic ladder...
I share the City Council's desire to see people earn higher wages and salaries, but there are no short-cuts. Government cannot bend the laws of the labor market without breaking the bank – and destroying job prospects for people who most need work. Unemployment is still much too high in the city, and these bills will do nothing to help lower it.
In fact, these bills will not only impose harmful conditions on businesses, they will send a signal to the private sector that New York City government may move to adopt even more requirements on wages – and more onerous regulations on their business in the future.
When businesses do not have confidence in what future conditions are likely to be in a given market, they sit on the sidelines. They don't invest. That's what so many companies across the country are doing right now the same thing because they have no idea whether or not, how, or even if Washington is going to grapple with long-term budget deficits, which could have a major impact on interest rates and tax rates....
We cannot take our economic growth for granted. And as soon as we do, as soon as we begin imposing costly conditions on companies to do business here, the smallest entrepreneurs and the biggest companies will decide to build their future elsewhere. They don't have to move out, they can just as they grow make that growth occur elsewhere. It's something you won't see, but the effect will be with us for decades.
