New York’s Minimum Wage Increase Schedule
With coronavirus pandemic fears subsiding, a movement to raise the minimum wage is getting fresh momentum. Many state and local rates are increasing, including tipped wages.
Some states are following the lead of President Joe Biden and other Democratic leaders and pushing for a $15 per hour rate. Others are adjusting their minimum wage based on cost of living changes or through legislation passed by voters.
1. New York City
Unlike many other states, New York’s plan would index future increases to both price changes and labor productivity. According to EPI, this makes it the first state to do so.
In the city, this means that the Raise Up NY proposal could boost wages for more than 1.4 million workers by 2024. That number would rise to more than 1 million in the suburbs and a little more than 1 million across the state.
These numbers include both those directly impacted by the hike and those that will gain indirectly as their employers adjust wage ladders. The increase will also boost the wages of those slightly above the minimum, which may help reduce inflation pressures.
Despite these benefits, the state’s proposal does have some exceptions. These include minimum wage exemptions for employees with special accommodations, such as tipped employees and allowances for meals, uniforms, and housing. These exceptions are intended to ensure that the indexed minimum wage won’t hurt job growth, and that the wage increase doesn’t encourage firms to raise prices.
2. New York State
As a part of the state budget deal enacted on May 3, 2023, New York’s minimum wage will increase for the next three years, then be indexed to inflation in the following year. Annual rates will be capped at 15%, and will only increase above that rate in the event of a negative CPI-W for the Northeast region or when the statewide unemployment rate increases by one-half percentage point.
We estimate that these Raise Up NY increases would lift wages for more than two million New York workers through 2026. They would disproportionately benefit women and people of color, reducing the gender and racial wage gaps in NYC, Nassau, Suffolk, and Westchester counties, and the rest of the state.
The increased minimum wage will likely add to the cost of running a business. However, evidence indicates that price increases from a higher minimum wage are passed on to consumers only modestly. Seyfarth’s analysis of regional CPI indexes suggests that food away from home prices would only increase by about 0.14 percent in 2024 and 0.11 percent in 2025.
3. California
Under California law, local governments may set a minimum wage that is higher than the state rate. Many cities and counties have enacted ordinances that require employers to pay employees working in their jurisdictions a higher minimum wage. Employers that fail to pay city and/or municipal minimum wages risk running afoul of important California wage and hour laws, including the requirement to provide itemized paystubs and maintain accurate time and payroll records.
Additionally, a ballot initiative has qualified for the November 2024 ballot to increase the statewide minimum wage to $18 per hour and index it annually for inflation. Given these trends, Jackson Lewis encourages clients to review their nonexempt employee classifications, ensure that they are paying workers the proper minimum wage rates, and audit their payroll processing company. The firm also recommends reviewing the minimum salary required to qualify for the executive, administrative, professional and computer exemptions under state law, which are tied to the state minimum wage rate and do not change based on local requirements.
4. Washington
A handful of states and Washington, D.C., have a minimum wage higher than the federal minimum. In 19 of those states, the minimum wage is also indexed for inflation each year.
In the District, voters approved Initiative 82 last November, which will phase out the city’s tip credit by raising the tipped minimum wage until it is equal to the regular minimum wage in 2027. That increase will have an impact on restaurants’ labor costs.
For Gina Schaefer, who owns 13 Ace Hardware stores in the Maryland-Virginia-District of Columbia metro area, increasing the minimum wage is a good thing. “Employing workers at insufficient rates of pay erodes the economy, threatens the health and safety of people who work, and injures the local business community,” she tells CNBC Make It. “Increasing the minimum wage helps businesses thrive and gives our employees a more secure standard of living.” The District’s tipped minimum wage is set to increase by $6, effective May 1. Annual increases are tied to the calendar-year increase in the local Consumer Price Index for Metropolitan Statistical Area (CPI-MSA).