New York’s $15 minimum wage phase-in will continue with the next stage taking effect on Dec. 31 of this year. The announcement follows a required report by the state Division of the Budget that found “evidence of pressure for wages to rise in the midst of a pandemic-driven labor shortage,” the New York State Department […]
New York’s $15 minimum wage phase-in will continue with the next stage taking effect on Dec. 31 of this year.
The announcement follows a required report by the state Division of the Budget that found “evidence of pressure for wages to rise in the midst of a pandemic-driven labor shortage,” the New York State Department of Labor announced in late September.
The director of the Division of Budget, together with the state commissioner of labor, determined that the minimum wage should rise to $13.20 per hour in most of the state based upon economic factors and indices.
The minimum wage will increase to $15 per hour on Long Island and in Westchester County , matching the $15 hourly minimum already set in New York City.
“Companies, particularly those that employ low-wage workers, are already raising wages and in some cases offering incentives to hire amid a labor-shortage that is showing no sign of abating, and it makes sense to raise the wage floor now and continue supporting New York’s families while providing a predictable path forward for businesses,” New York State Department of Labor Commissioner Roberta Reardon said in a release.
The report produced by the Division of the Budget is required by the state minimum-wage statute to review the state of the economy and determine whether increases move forward as scheduled or should be delayed.
For 2021, the law also requires the director of the Division of Budget evaluate economic factors and determine, with the commissioner of labor, the rate of minimum-wage increases outside of New York City, Long Island, and Westchester County.
As the report describes, the minimum wage in that region is determined to increase based on the consumer-price index for all urban wage earners and clerical workers as well as nonfarm business labor productivity. It enables low-wage workers to continue to afford the same basket of goods and services — and then some — based on rising productivity.
Minimum-wage report findings
The Division of the Budget’s minimum-wage report found that the low-wage sector was the “most severely impacted” by the pandemic. One million lost jobs, or 57.2 percent of the private-sector losses, were in the three industries where minimum-wage workers are most concentrated — retail trade, health care and social assistance, leisure and hospitality.
These sectors represented only 42.5 percent of private employment at the February 2020 pre-COVID peak. In just two months, the low-wage sector had a combined loss of 31 percent of its jobs.
The report also found that results from the Survey of Consumer Expectations, compiled by the Federal Reserve Bank of New York, suggest that the pandemic has caused some workers to reassess the value of their labor.
The survey asks workers the lowest wage they would accept in their chosen line of work, called a reservation wage. Survey results indicate the nationwide reservation wage reached a historical peak of $71,400 in March 2021, a 15.7 percent increase from March 2020. Even though it dipped in July 2021, it remained elevated over a two-year period, indicating “particularly strong growth” in reservation wages among less educated and young workers.
In addition, the report found that the Conference Board Help Wanted Online Index is showing statewide job postings at record highs.
Total job postings for July 2021, the most recent month available, exceeded the March 2020 pre-pandemic peak by 72.4 percent. The shortage of low-skill/low-wage labor appears to be “even more severe.”
July postings specifying a high-school education or vocational training exceed their March 2020 pre-pandemic peak by 95.4 percent. Additionally, postings specifying either a high-school education or vocational training represent 29.9 percent of total postings for July 2021, just below its May 2021 historic high of 31.6 percent.