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Courage Or Chutzpah?

Gov. Andrew Cuomo exiting the subway at Penn Station, New York City
N.Y. Gov. Andrew Cuomo. Photo by Marc A. Hermann, courtesy MTA New York City Transit.

There is a subtle but important distinction between courage and chutzpah. New Yorkers ought to know the difference better than most anyone.

You display courage when you do something difficult at significant personal cost or risk. Chutzpah is when you do something that is expedient for you and costly for someone else, while pretending that you are being courageous.

New York Gov. Andrew Cuomo has been known to display political courage, especially in his first term, when he confronted Albany’s corrupt and profligate public spending practices to hold the line on taxes while bringing in budgets that were atypically on-time and reasonable. He showed similar verve in pushing for same-sex marriage and in facing down the most egregious left-wing demands of New York City Mayor Bill de Blasio after the latter’s election in 2013.

But Cuomo, a Democrat, paid a significant price for this courage in the form of estrangement from his party’s liberal base. His re-election last year was a bit less of a cakewalk than he might have hoped, and the state’s public employees, not to mention their unions, are little better than lukewarm about their nominal boss.

So Cuomo has evidently decided to mend fences with his critics, and to do it in a way that imposes the least possible cost to himself. He recently announced that, through executive fiat, he will raise the pay of all state workers to a minimum of $15 an hour.

But not now, while Cuomo still has three years to serve in his current term, meaning he would have to find ways to pay for his own largesse year after year. Instead, the new wage floor will take effect in New York City in 2018 - Cuomo’s last year in office, assuming he does not seek a third term. It will not arrive in the rest of the state until 2021, near the end of that hypothetical third term.

The state is not a very large employer in the city’s five boroughs. The governor’s office estimates the initial rollout will affect about 1,000 of New York City’s 8.4 million residents. The real impact, both on the state’s finances and on the rest of the state’s economy, will occur when the increase arrives in the upstate capital of Albany, and in the many towns and counties north and west of the capital that rely on sprawling prison and college systems for local jobs in what is otherwise mostly a post-industrial economic desert.

Cuomo’s raise-by-fiat policy will not only affect the janitors, clerks and other low-wage workers he has targeted; it will ripple far and wide through the state’s economy. Those effects will mostly not be good.

If janitors in the state’s prisons suddenly make $3 or $5 an hour more than before, guards will expect similarly generous boosts in pay. So will electricians, drivers and administrators. In governments like New York’s, where unions negotiate against public officials one week and then campaign for or against them the next, taxpayers are about as well-defended as English villages were against Norse raiding parties a millennium ago.

Possibly even worse is the fact that the new wage scale will make the state and its subdivisions the employer of first resort in many communities. Upstate is already bleeding population. As in many parts of the country facing economic struggles, the people who remain are also collectively getting older, which means that despite the lack of economic growth in many places, labor is still actually in limited supply. Now the state, which can siphon taxes from metropolitan New York City to fund its upstate payroll, will be competing more heavily against private employers, who can’t do the same.

Advocates of a higher minimum wage would say this is exactly what they want: By increasing competition for labor, they think they can get local businesses to pay their own workers more too.

Sometimes that will work. More often, it won’t, because the local communities are too poor. Businesses will hire fewer workers, or they will move, or they will close. All of this will happen in varying but significant degrees across much of the state. And eventually, the state’s ability to raise taxes to support its own higher cost structure will reach its limit, especially as the private-sector bleeding spreads downstate.

Call it the Illinois model of public finance.

Cuomo will preen and strut for his audience on the political left, portraying himself as a governor with the courage to stand up for poor workers. But in this case it isn’t courage; it’s chutzpah. Courage would mean he found a way to pay for the change he is taking credit for, at some cost or risk to himself.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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