Albany pols are peddling flawed minimum wage and rent control proposals. Here’s the lowdown:
Gov. Kathy Hochul proposes to peg the minimum wage—which is presently $15 an hour in New York City and $14.15 upstate—to inflation. The extremists in her party prefer to increase it to at least $20 an hour.
If either get their way, the very people they hope to help will be hurt.
When encumbered with increased payroll costs, small business owners always lay off hourly workers. The hardest hit: teenagers working part time or in entry-level jobs.
Democrats fail to grasp that neighborhood entrepreneurs who survived the ill-advised COVID shutdown are still struggling.
Let’s not forget that during the pandemic over 10,000 small businesses permanently shut their doors on Long Island. This, in turn, led to a commercial real estate crisis— storefront vacancies hit 50%.
Empty stores cause real estate values to decline and property tax revenues to drop.
In New York City, Mayor Eric Adams proposed budget projects commercial real estate taxes will be down at least $1 billion. Experts expect that number to grow.
Imposing a $20 minimum wage will push up unemployment, force more businesses to close and escalate vacancy rates.
Another ludicrous Democratic Socialist proposal: universal rent control that would place in New York City, for example, over 2 million more apartments under the thumb of government bureaucrats.
Back in 1943, the federal government put New York under war-time rent controls. That interference in the real estate market was to be a temporary measure.
In 1950 Federal controls were lifted, but New York—unlike all other major cities—kept controls in place.
“As a result,” housing expert William Tucker reported “[New York] City essentially missed the post-war boom in housing construction.
Not only did rent control discourage investment in new multi-family housing projects, it also encouraged landlords to defer maintenance and led many to just walk away from unprofitable properties.
In the 1970s, more thab 250,000 apartments were abandoned in New York City. Tucker observed that “in no other city except New York has housing been lost during a shortage.” By 1993, the largest owner of rundown buildings was the city.
Rent control has also discouraged tenants from moving because they do not want to give up their below-market rents. New York University’s Furman Center has determined “that rent-regulated tenants remain in their units three times as long as those in non-regulated units.”
Yet, despite the awful history of rent control, Socialist Democrats continue to pursue anti-apartment ownership legislation.
In 2019, they passed the Housing Stability and Tenant Protection Act that limited the ability of landlords to raise rents to recover the cost of building repairs and increases in property taxes and heating fuel costs.
Three years after that law took effect there were about 60,000 vacant rent-stabilized apartments in New York City. And more than half of them were “under or awaiting renovation.”
Most of those renovations are years in the making because landlords can’t afford to make the repairs.
Another unintended consequence of the 2019 Protection Act: Many apartment buildings are defined by creditors as “underwater” because rental income is not enough to cover mortgage payments and operating costs.
To make matters worse a so-called “eviction prevention” bill has been introduced in the state Legislature. Buried in the document is language that would subject market-rate apartment buildings to rent control.
Under the plan The Wall Street Journal has reported, rent “would be effectively capped at 3% or 1.5 times the Consumer Price Index in the region, whichever is higher. If landlords raise rent above this rate, they couldn’t evict tenants who refuse to pay.”
If this becomes law, landlords will defer maintenance and eventually walk away from buildings.
A coalition of homeowner associations has called the legislation, “an ideologically driven pursuit by far-left socialists that does nothing to address the housing supply shortage and would, in fact, make an apartment impossibly expensive for new renters.”
Imposing proven unsound minimum wage and rent control regulations will only exasperate New York’s woes. Hopefully, cooler heads prevail in Albany and these dangerous proposals are bottled up.