Local farmers react to $15 minimum wage standard

04/08/2016 6:00 AM |

Farm Workers

In a ceremony Monday morning, Gov. Andrew Cuomo — flanked by Democratic legislators and his lieutenant governor — signed a state law that will gradually raise the minimum wage on Long Island to $15 an hour. 

Just before heading to a victory rally, Mr. Cuomo praised the measure as a major accomplishment that will bring “fairness” and “economic justice” to the state’s working-class families, many of whom are paid the state’s current $9.75 minimum wage — a rate many say isn’t nearly enough to live on.

“These policies will not only lift up the current generation of low-wage workers and their families, but ensure fairness for future generations and enable them to climb the ladder of opportunity,” Mr. Cuomo said in a statement. “I am proud to sign these programs into law because they will ensure a stronger, fairer and brighter future for all New Yorkers.”

Karl Novak, general manager at Half Hollow Nursery’s production site off Main Road in Laurel, doesn’t envision nearly as rosy a future.

Mr. Novak, who has weathered both a financial recession and increased environmental regulations, said he now faces rising payroll costs that will be difficult to afford. He and other farmers and growers fear the latest law will create a competitive disadvantage that could drive local farmers out of business.

“There are guys hanging on by a thread right now,” Mr. Novak said. “This minimum wage, despite what the governor says, would be devastating for the agriculture industry … This is just another hurdle that we have to get over and I’m not sure if we’re going to get over this one.”

The minimum wage increase is part of a broader budget deal struck at the 11th hour by Mr. Cuomo and other legislative leaders. Under the law, the minimum wage will increase to $10 at the end of this year and rise by an additional $1 annually until it reaches $15 in 2021.

The governor’s office has estimated that more than 2.3 million people will be affected by the increases. The measure passed the New York Senate nearly unanimously and sailed through the Democrat-controlled Assembly by a vote of 97-38.

State Sen. Kenneth LaValle (R-Port Jefferson), who voted in favor of the budget, could not be reached for comment before press time.

Assemblyman Anthony Palumbo (R-New Suffolk) is among those who opposed the measure. He said the minimum wage increase is tied to larger compromises as part of the budget process, such as increasing spending on environmental protection and giving a tax cut to the middle class.

Mr. Palumbo said he voted against the measure “on principle.”

“I’ve met with the state and local farm bureaus,” he said in an interview Tuesday. “I’ve had several conversations with them. I think it’s going to be a huge burden on them.”

Mr. Palumbo said the minimum wage deal includes a carve-out for upstate employees, whose wages will increase to only $12.50 an hour by 2020. Long Island has not been afforded the same exemption.

“My concern on Long Island is going to a $15 [minimum wage] with or without an impact study,” Mr. Palumbo said.

The governor’s office said the minimum wage law includes a “safety valve.” Starting in 2019, the state’s Division of Budget will analyze each region’s economy annually to determine the measure’s impacts and decide if a temporary suspension of the increase is necessary.

But Robert Carpenter, administrative director for the Long Island Farm Bureau, which lobbies on behalf of farmers, believes that by then the law’s effects may already be too great for local growers.

“The impact is going to be pretty broad and pretty far-reaching,” he said. “I think everybody’s still kind of in a state of shock and disappointment that this happened. We haven’t had real time to digest.”

Suffolk County, once the top-producing county in the state, remains an agricultural powerhouse. Half of all nursery, greenhouse, floriculture and sod product sales in New York originate in Suffolk, according to a 2013 Suffolk County Agriculture Industry study.

Still, Mr. Carpenter is worried that farmers, who already operate on tight margins, will be unable to pay employees $15 an hour.

“For every dollar an hour it goes up, the impact is going to be greater and greater on the farm community,” he said.

Phillip Schmitt and Sons Farm's corn field in Riverhead in 2011. (Credit: Barbaraellen Koch, file)

Phillip Schmitt and Sons Farm’s corn field in Riverhead in 2011. (Credit: Barbaraellen Koch, file)

Riverhead farmer Phil Schmitt, who owns Philip A. Schmitt & Son Farm Inc. on Roanoke Avenue, said his business has already scaled back over the past decade. While Schmitt Farms used to produce 50,000 boxes of spinach per year, it now only fills 2,000 boxes during a strong year, he said. Mr. Schmitt also said he was forced to stop renting farm space for his operation when it became too costly.

He’s unsure how his business will continue with an increased minimum wage.

“It’s just one thing after another after another after another,” he said. “I don’t know how they think we’re supposed to survive … I’m honestly sick and tired of it. This is one of the last straws.”

Mr. Schmitt said he believes the East End’s wholesale vegetable growing industry will be “finished” thanks to the law.

His biggest complaint centers on what he calls unfair disadvantages Long Island farmers will face compared to upstate and out-of-state growers. Farmers in places like Connecticut or Canada will be able to pay workers less, meaning they can sell cheaper products and score wholesale market deals, Mr. Schmitt said.

“One of the problems we have on Long Island is it costs us 40 percent more to open and maintain a store here on Long Island,” Mr. Schmitt said, adding that payroll costs already account for more than half his expenses.

Payroll also comprises a significant portion of Half Hollow Nursery’s expenses, Mr. Novak said. When the minimum wage hits $15 an hour, his payroll expenses will have risen by 60 percent.

“What are we going to do to offset that?” Mr. Novak said. “When you consider the minimum wage in neighboring states, it’s really going to be hard for us to compete with other businesses.”

Mr. Novak suspects farmers may be forced to downsize their operations in order to keep costs down.

“I sympathize with people who are struggling. But I also, from a business management standpoint, have to do what’s best for my business,” he said, noting that it wouldn’t be surprising if the owners of Half Hollow Nursery eventually had to liquidate some of their land assets. “Everything’s on the table at this point because it’s not getting any easier to make a profit in the ag business out here.”

There is, however, one type of grower who likely won’t be hit as hard by the minimum wage increase: winemakers.

Steve Bate, executive director of the Long Island Wine Council, said labor costs will probably rise, but not by much, since wineries normally pay more than $15 an hour for experienced farm labor. Still, a new base pay will push winemakers to raise their employees’ salaries.

“Now there will be increased competition for that farm labor,” Mr. Bate said. “It’s going to have a ratcheting effect on labor out here. It’s going to raise prices around on Long Island … It certainly will add more pressure, but it really depends on the availability of labor.”

Mr. Bate said obtaining more immigrant visas for agricultural work would help alleviate some of the added pressure. The wage’s phased-in schedule will also give time for vineyards and other businesses to adjust.

“There’s going to be a transition period and there will be ways to economize in other areas to keep the margins competitive,” Mr. Bate said. “We’ll have to see.”

Top caption: Farm workers harvesting spinach at Bayview Farm on the Main Road in Aquebogue. (Credit: Barbaraellen Koch, file)

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