JCIDA chief: $15-an-hour proposal could drive ‘handful’ of area businesses out of state

A handful of area businesses “across the gamut of sizes and sectors” say they’d consider moving out of New York if the governor’s $15-an-hour minimum wage proposal materializes, according to the chief of the Jefferson County Industrial Development Agency.

“I’m concerned we would not only lose the ability to attract businesses but the ability to maintain them,” said agency CEO Donald C. Alexander, who discussed the matter Tuesday with JCIDA board members during a loan committee meeting. He plans to soon discuss the matter with the region’s state legislators, including Sen. Patricia A. Ritchie, R-Heuvelton, Assemblywoman Addie J. Russell, D-Theresa, and Assemblyman Kenneth D. Blankenbush, R-Black River.

In the Watertown area, Mr. Alexander said, North American Tapes, New York Air Brake and Timeless Frames are among a handful of companies that would consider abandoning the state because of the wage proposal. He declined to identify other businesses.

If approved, the governor’s proposal would gradually raise the current $9-an-hour minimum wage to $15 in 2019 in New York City and in 2021 for the rest of the state — giving New York the nation’s highest state minimum.

‘Too much’

Jefferson County business owners have told the JCIDA that while they aren’t opposed to a minimum wage increase that would provide workers with a living wage, they’re against Gov. Andrew M. Cuomo’s proposal because they believe it calls for too much too soon, Mr. Alexander said. They’ve contended it would put New York — where businesses are already burdened with high taxes — at even more of a competitive disadvantage when compared with other states, he said. The minimum wage in Pennsylvania, for example, is $7.25 an hour.

“They say a wage increase of 67 percent is too much to accommodate. Many of them would have to raise prices … They are going to have to shed some jobs just to keep their profit margins,” Mr. Alexander said.

Most area manufacturers already pay their employees more than $15 an hour, Mr. Alexander said. But the wage increase would compel them to boost the wages of all workers, he said, ensuring they’re still paid considerably more than the minimum wage. He likened the scenario to a “tide that floats the boats.”

“They’ll want to maintain the disparity between the minimum wage jobs for their entire spectrum,” he said.

The wage increase could be especially difficult for the Convergys call center on Arsenal Street to swallow, Mr. Alexander said. The number of employees climbed to a record-high 900 last December at the center, which provides technical assistance for customers on behalf of national companies. Most of the center’s employees make an entry-level wage of $9.50 an hour. The director of the center, however, has declined to discuss the wage proposal’s potential impact.

But Mr. Alexander said he believes the competitiveness of the center’s contracts with national clients could be jeopardized by the wage increase. “All they would have to do is pull one contract,” he said, “and that would be 300 jobs.”

Manufacturing exodus

North American Tapes and New York Air Brake raised red flags earlier this month about the wage proposal, saying it could drive them out of the state. Owners of North American Tapes said the hockey-tape manufacturer might relocate from the Jefferson County Corporate Park to Ontario, Canada. The company has 40 employees.

Air Brake, which routinely evaluates moving its Starbuck Avenue headquarters out of the state, would be more likely to do so if the governor’s wage proposal materializes, according to President Michael J. Hawthorne. The manufacturer of brake systems for railroad cars and locomotives has five other locations in North America, and it could decide to co-locate its headquarters at one of the sites. Its locations in Texas, North Carolina and Missouri, for example, would be closer to its customer and supply base than New York. The Watertown headquarters has 490 employees.

JCIDA board member Michelle D. Pfaff said Tuesday that her daughter, who works at Air Brake’s service center in Kansas City, Mo., reported that the location could be expanded.

The company could be “looking to do a bigger building out there from where they are now,” Mrs. Pfaff said. “Plus, they got a new warehouse down in the Carolinas.”

Referring to Air Brake as an example, Mr. Alexander said that “these multi-national companies don’t have any allegiance” when it comes to where they set up shop.

Repeated attempts to reach Lisa A. Weber, CEO of Timeless Frames, were not successful. Located in the Jefferson County Corporate Park, the company had 163 employees as of August 2015.

By Ted Booker, Watertown Daily Times