COLONIE, N.Y. — Leo Butera is not denying it: New York's new minimum wage will take a bite out of his bottom line.
In fact, the co-owner for the Capital Region's three Smashburger restaurants has already increased his employees' wages to the new level — so he knows the pain that the pay raise can bring.
"If you look at last week, we used about 2,000 hours of labor," he says. "So if you raise every worker from $8.75 to $9.75 and that's $100,000 a year."
It is no small sum for Butera, or the thousands of other fast food restaurant owners in New York who must pay the new wage beginning at midnight Thursday. Thanks to a decision from New York's latest wage board, convened by Governor Andrew Cuomo, all qualifying upstate fast food chains are now required to pay their workers $9.75 per hour.
It is one of three separate raises taking place Thursday morning. The state's standard minimum wage for all workers will tick up from $8.75 to $9.75. Plus, the wage for tipped earners like waiters and bartenders will rise 50 percent, from $5 to $7.50 per hour — before tips. And that's just the minimum.
"We already pay a lot of our workers more than the minimum," says Butera, standing inside his original Colonie restaurant on Wednesday. "So let's say you were making $9.75 already? If I raise a brand-new person to $9.75, then I have to give you a raise, too — otherwise it wouldn't be fair."
It is one of many the complaints now being realized across New York, and it is creating havoc at the New York State Restaurant Association, where government affairs coordinator Jay Holland only received the new regulations three days ago. He has frantically been trying to explain those new rules to the Association's members. Holland says the tipped worker wage hike is causing a number of restaurants to lay off workers, or even close their doors.
"If a restaurant has only so much money labor costs, and the wait staff who are making the most money are getting a 50 percent raise," Holland says, "that leaves fewer resources for those in the back of the house, like cooks and dishwashers."
The Association has sent a letter to the governor's office and the state legislature on Tuesday, asking for a wage freeze in the tipped worker population as the state's restaurant owners try to sort out the new pay scale. So far, there has been no reply.
Meanwhile, other businesses are following suit: Stewart's Shops and the Hoffman's Car Wash chain both said they are already paying their Capital Region employees more than $9 per hour. However, both said on Wednesday that they plan to raise pay above the new fast food threshold, in order to retain and attract the best workers.
Leo Butera, who is opening a fourth Smashburger in Clifton Park next spring, says he is forced to pass the new costs onto the consumer: each bill at Smashbugrer is roughly 30 to 40 cents higher now because of the wage hike. When New York eventually raises the fast food minimum wage to $15 per hour, Butera says his customers' bills will have risen by as much as $2.
But Butera, believing in the power of positivity, says he will likely benefit from having to pay the higher wages.
"If I'm paying a little bit more than some other businesses at $9.75, then maybe I can get a better employee who will take care of my guests," he says. "That's the positive side of it. You have to reach a little bit to find it, but that's the positive side."