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Hochul’s call to index New York’s minimum wage to inflation doesn’t go far enough

AP Photo/Hans Pennink
New York Gov. Kathy Hochul delivers her State of the State address in the Assembly Chamber at the state Capitol in Albany on Jan. 10, 2023.

The New York State Legislature is set to weigh a “Raise the Wage” bill, sponsored by Sen. Jessica Ramos in the Senate and Assembly member Latoya Joyner, which would increase the state’s minimum wage and index it to inflation and worker productivity within five years. The bill would gradually elevate the state’s minimum wage to $21.25 by 2027, after which the downstate (New York City plus Nassau, Suffolk and Westchester counties) and upstate (remainder of New York) rates would change annually — but separately, in light of meaningful geographic differences in costs of living — to keep pace with rising prices and worker productivity.  

Indexing the minimum wage to productivity is neither new nor radical. Prior to 1968, minimum wage was closely coupled with productivity, such that — as society produced more goods and services — adjustments to the minimum wage ensured that workers earning at that level could share in the increased output that their labor created. After 1968, that relationship not only was severed; it changed directions. The real, inflation-adjusted minimum wage has been losing value for decades, while worker productivity has continued to climb. If the pre-1968 connection between these phenomena had remained intact, the federal minimum wage would have been $23 per hour in 2021 — which, after accounting for the “inflation surge” that occurred between 2021 and 2022, translates to about $25 per hour today. 

In her State of the State address this month, Gov. Kathy Hochul expressed support for a weaker variant of “Raise the Wage” that would increase the state’s minimum wage annually to account for price inflation. Whereas this development is a welcome sign that Albany is getting serious about improving standards of living for the large fraction of New York workers who earn sub-living wages and struggle to meet their daily household needs, simply tying the existing state minimum wages to inflation does not go far enough to address the state’s growing cost-of-living concerns.  

According to the new Cornell ILR Wage Atlas, fewer than half of New Yorkers earn a living wage, or one that would allow them to comfortably afford typical living expenditures (housing, food, transportation, child care, etc.) based on where they live and the number of adults and children present in their homes. Small yearly increases to the current minimum wage will do little to change that reality. 

Looking at the latest Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and available CPI projections, if a proposal like the one backed by Hochul were to go into effect immediately (for 2024), the current downstate ($15 per hour) and upstate ($14.20 per hour) minimum wages might reach only about $16.27 and $15.41, respectively, by 2027. Those figures are less than the living wage for a typical worker in New York, regardless of where the worker lives.  

Under the Hochul-endorsed proposal, wages for roughly 2 million New York residents could increase, but only one in 20 such persons (or slightly more than 100,000 employees) would be added to the tally of New York workers who earn at or above the living wage for their geographical and household circumstances. Crucially, though, all workers for whom this situation would apply live upstate: zero workers in NYC or its surroundings would go from not earning a living wage to earning one under the measure Hochul supports. 

By contrast, the Cornell ILR Wage Atlas suggests that the $21.25 rate targeted for 2027 by the Ramos/Joyner bill would amount to a living wage for a typical worker almost everywhere north and west of Poughkeepsie, about 80 miles due north of Manhattan. Nearly 3.2 million employees across the state could see pay raises with a $21.25 minimum wage, and those increases would result in almost 500,000 more New Yorkers earning a living wage. Thus, the Raise the Wage legislation would boost pay for an additional 1.15 million New Yorkers above and beyond the changes Hochul called for, and it would increase the number of employees in the state who earn a living wage by a factor of nearly fivefold that of the analogous estimate associated with the governor’s favored proposal. 

In total, the Ramos/Joyner bill would increase the probability that a New Yorker earns their location- and household-specific living wage by 6 percentage points, compared to a mere 1 percentage point uptick under the Hochul-backed measure. And, unlike the latter proposal, downstate residents would be included in these benefits: More than 214,000 workers who live in New York City and its surrounding counties could find themselves earning living wages under a $21.25 minimum. The same could be said for an additional 280,000-plus upstate workers, illustrating how the impacts of the Ramos/Joyner legislation would be broadly and relatively evenly distributed between NYC and the rest of the state. Indeed, of the more than 3 million workers who could see pay increases under “Raise the Wage,” the downstate-upstate split is around 58 to 42 percent.  

As state lawmakers in Albany settle into the legislative session prepared to confront growing concerns over cost of living, they must consider the evident advantages the Ramos/Joyner bill has over the governor’s annual inflation adjustment proposal with respect to increasing income for New York’s low-wage workers. At the same time, the legislature ought to acknowledge that even the Ramos/Joyner proposal can be strengthened. For example, unlike its federal counterpart, the New York “Raise the Wage” bill retains a two-tiered minimum wage system that allows tipped employees to be paid sub-minimum hourly rates. Recognizing such a system as a key source of economic inequality, the federal bill introduced to Congress last session aims to do away with this distinction so that minimum wage laws apply across the board.  

The bottom line is that, with both the legislature and the governor looking to raise New York’s minimum wage, it seems that some action on this matter will be coming down the pike. If that action is not well-designed and connected to the reality of low wage work in the state — the reality of where workers live and how well their earnings cover their typical household expenditures — then any changes to New York’s minimum wage laws are unlikely to alter the landscapes of economic inequality in the Empire State.  

On that note, the Cornell ILR Wage Atlas data are telling: Merely indexing existing minimum wages to inflation does not go far enough. Instead, consistent with the preferences of roughly 71 percent of adults across the state, prior to indexing, the legislature and governor must raise the wage to a level closer to what a living wage would be for most New Yorkers. From there, the wage should be tied to both inflation and worker productivity. The Ramos/Joyner bill offers a solid framework and starting point for pursuing these ends. 

Russell Weaver, Ph.D., is a geographer and director of research at the Cornell University ILR Buffalo Co-Lab. Follow him on Twitter @RustBeltGeo.

Tags Kathy Hochul Kathy Hochul Minimum wage New York state Raise the Wage Act

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