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Could New York See a $21.25 Minimum Wage?

Gov. Kathy Hochul seeks to link pay to inflation for automatic future increases, starting at $16.39. But lawmakers and activists to her left want boosts tied to labor productivity.

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Union members rallied on the steps of City Hall to raise the minimum wage to over $20 an hour, Nov. 15, 2022.

Ben Fractenberg/THE CITY

If Gov. Kathy Hochul has her way, New York State’s minimum wage will rise to more than $16.39 between now and 2026 and remain indexed to the rate of inflation or 3%, whichever is less.

If progressive groups and their allies in the legislature have their way, the state’s minimum wage will rise to $21.25 by that year and then be indexed annually to increases in prices and labor productivity.

The difference would mean a lot to Alease Annan, a television producer in Brooklyn who also works the late weeknight shift as a UPS package handler in Maspeth, Queens, to make ends meet. She unloads packages as they arrive in the warehouse for $16.65 an hour. The governor’s approach won’t boost her pay for years; she’d get an immediate increase from the progressive plan.

“Call it a living wage, which I think is true,” 43-year-old Annan. “But it’s always easier to be able to do these things, when you have the money or the salary, to be able to make it easier for you to create those pathways for yourself.”

New York boasted the highest minimum wage in the nation when it raised the minimum wage to $15 an hour, reaching that level in New York City in 2019, two years later in the suburbs, and soon across the rest of the state. But the state did not index the rate to inflation, and now other places have much higher pay floors, sparking a debate in the current legislative session on what to do next.

Two states now exceed New York, with Washington at $15.74 and California at $15.50. Meanwhile, many cities that index their rate to inflation have gone higher, including Seattle ($18.69), Denver ($17.29), Washington, D.C. ($16.10) and Los Angeles ($16.04).

New Jersey and Connecticut are a little over $14 an hour. Massachusetts is at $15.

The governor’s proposal would link the minimum wage to the Consumer Price Index for urban workers, while limiting increases to 3% in any one year.

The formula is designed to ensure a wage increase doesn’t cut into employment, said Justin Henry, a spokesperson for Hochul.

“Governor Hochul’s minimum wage proposal balances the need to help low-wage workers cope with rising costs and inflation with the reality that many New York businesses face the same challenges,” said Henry.

Meanwhile, progressive groups have rallied behind a proposal by Sen. Jessica Ramos (D-Queens) that would increase the wage in New York City by $2.25 next year, reach $21.25 in 2026 and then rise with a labor productivity index. The suburbs and upstate would see smaller increases.

Her bill is cosponsored by 19 colleagues in the 63-member Senate, including Democratic socialist Sens. Julia Salazar and Jabari Brisport of Brooklyn — and Jamaal Bailey of The Bronx, a protege of Assembly speaker Carl Heastie. Assemblymember Latoya Joyner (D-The Bronx) is the Assembly sponsor.

Given the high inflation rate — prices are up a little over 6% over the last 12 months — the governor’s plan is inadequate, says the key sponsor of the progressive proposal.

“Hell yeah, I’m going to continue to fight for my bill,” Ramos added in an interview with THE CITY on Feb. 1, the day Hochul unveiled her budget, dismissing the governor’s plan as worth a miserly $13 a week for workers.

“I think there’s strong support for this from the public, strong support for some of the unions and community groups, and strong support among lawmakers,” said Michael Kink, executive director of the Strong for all Coalition, a coalition of labor unions and progressive community groups, which backs Ramos’ proposal. “And that’s a pretty good position to be in as you head into discussions about a budget.”

Economic Impacts

Hochul’s offering marks the first time in recent history that pro-business groups have been amenable to a wage increase proposal if it is modest.

“We think that the governor’s plan is more manageable, so if that’s what the state wants to go with then we think that’s the best direction,” said Pat Bailey, a spokesperson for the New York State Business Council, a coalition of pro-business and trade groups. “If there’s going to be a wage increase, it’s got to be the governor’s plan. It can’t be a $6 an hour jump.”

A study issued last year by the Economic Policy Institute claimed that 1.4 million New York City workers would see their incomes boosted next year by the Ramos plan, with 500,000 gaining in the suburbs and about 1 million statewide. The EPI numbers include those who are directly affected by the law and those who will see wages increased as employers boost pay for those somewhat above the new minimum.

The increase for the average worker exceeds $3,000 a year and the total increase between now and 2026 would be $9.5 billion, the study says. Progressives assert the increase will not spur further price increases, especially in housing where rent increases have been a major burden on lower-income families.

“Our take is that the chance of the increase feeding into the housing market is unlikely,” said Debipriya Chatterjee, an economist with the Community Service Society, a non-profit focused on economic inequality.

In particular, she defends the linkage of the pay increases to labor productivity.

“Labor productivity is going up because of technology, but workers have not been able to get the fruits of that transformation,” she added.

Conservatives remain convinced any increases hurt the very people they are intended to help.

“The issue hasn’t changed: a higher minimum wage reduces job growth and stifles employment opportunities for unskilled, low-skilled and young workers,” said E.J. McMahon of the Empire Center. He adds, however, that the greatest impact of that is likely to be upstate rather than in New York City.

Henry, the governor’s spokesperson, said Hochul expects to negotiate the terms of the increase with the Legislature.

Albany leaders have been measured in their remarks on the issue. 

Heastie, the Assembly speaker, said earlier this month the conversations about the minimum wage are “at a starting point.” 

Senate Majority leader Andrea Stewart-Cousins said simply that “it would be fair to say there will be some increase” in a January interview with Capitol Press Room.

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