Still struggling to recover from spring pandemic shutdowns, now facing the threat of renewed restrictions due to a second wave of COVID infections, the last thing New York’s economy needs is a state-mandated disincentive to put people back to work.
Nonetheless, at the worst possible time, a big potential obstacle to renewed hiring looms just ahead, in the form of scheduled end-of-year increases in the minimum wage for most of the state. Having already risen to $15 in New York City, the hourly minimum is scheduled by law to rise from $13 to $14 (an increase of 7.7 percent) in Long Island and Westchester, and from $11.80 to $12.50 (an increase of 5.9 percent) in the rest of the state. Only six states currently have higher statewide minimums than $11.80, and only two (California and Washington) exceed $13 statewide. The federal minimum wage is $7.25.
The next round of New York increases, which take effect Dec. 31, are not (yet) cast in stone, however. Under the 2016 law aiming ultimately for a $15 statewide minimum, Cuomo’s Division of the Budget (DOB) had the power starting in 2019 to recommend a “temporary suspension or delay” in any scheduled wage hikes, based on its “analysis of the state of the economy in each region, and the effect of the minimum wage increases” already imposed by the law.
Last year’s DOB minimum wage report relied mainly on unemployment data as supposed proof that the minimum wage wasn’t harming employment trends. As noted in this space, that analysis by the normally more credible DOB staff was “remarkably flimsy, misleading and superficial,” ignoring a drop in the labor force that contributed to labor shortages in some sectors. The analysis also ignored establishment payroll data reflecting a slowdown in job growth across much of the state last year.
This year, the data are terrible enough to undercut any happy-face labor market outlook. Consider:
- As of October, New York’s seasonally adjusted statewide unemployment rate of 9.6 percent was statistically unchanged from a month earlier, and nearly two-and-a-half times the rate in October 2019.
- On an unadjusted basis, the October unemployment rate was the highest since 1976, the labor force was the smallest since 1998, the number of employed residents was the lowest since 1996 and the number of unemployed was the highest on record across the entire 44-year period covered by the current data series.
- New York’s private payrolls are still down nearly 12 percent from the level of a year earlier, pointing to a slower recovery rate than any state except Hawaii.
- Unemployment filings have been greatest from sectors with large concentrations of minimum-wage workers—leisure and hospitality (including restaurants) and retail trade.
- DOB’s latest financial plan update predicts that employment in the state won’t return to pre-pandemic levels for “several years.”
- As of November 16, the number of small businesses open in New York was almost 28 percent below the January level, and small business receipts in the state were down more than 39 percent, according to economic tracking data compiled by Harvard University’s Opportunity Insights project.
At a time of negligible inflation and limited pricing power for businesses, a further 5.9 percent to 7.7 percent increase in hourly labor costs could deal a fatal blow to those small employers that have somehow managed to survive the pandemic so far.
In this continuing economic crisis, New Yorkers need jobs, and New York’s surviving small businesses need breathing room. The new data provides all the excuses DOB (read: Cuomo) needs to postpone the next scheduled minimum wage increase.
You may also like
The 411 On New York’s 911 Skim
New York for decades has collected, under various names, a special tax on mobile phones. The tax, which today shows up on customer bills as the “public safety communications surcharge,” devolved from being a fee to pay for 911 services to a general revenue source with 911 services as a near second thought. Since 2009, almost half the surcharges paid by customers for public safety communications—more than $1 billion—have been redirected to New York’s general fund. Read More
Immigrant Enrollment in ‘Emergency Medicaid’ Surges to 480,000
One of the biggest drivers of New York's Medicaid enrollment growth over the past decade has been "emergency Medicaid" for undocumented immigrants, newly released state records show.
Read More
Medicaid’s Missing Million
The Health Department has been either unable or unwilling to document the eligibility status of almost one million Medicaid recipients, raising further concern about the possibility of large-scale over-enrollment. Read More
New York’s Medicaid Spiral Is Worse Than Hochul Admitted
Although Governor Hochul said last week that the current trajectory of Medicaid spending is "not sustainable," the upward trend is even steeper than she and her budget director have acknowledged.
Read More
NY’s Road To Electric School Buses Gets Bumpy
New York in 2022 told school districts they’d be barred from purchasing gasoline- or diesel-powered buses after 2027, and instead have to buy electric buses at more than double the upfront cost.
“The purchase of new electric buses will help grow the market,” officials later pledged, “which will in turn help reduce prices.”
Unfortunately for taxpayers, those reductions aren’t materializing—because state officials put the prices, and future increases, on cruise control. Read More
Hochul Shows a Jarring Lack of Direction on Health Care
Financing and regulating health care delivery is one of the biggest responsibilities of state government, yet Governor Hochul had remarkably little to say on that topic in her State of the State speech on Tuesday.
Read More
Hochul’s Pushing Affordability. It Would Cost A Lot.
Governor Hochul is hammering an “affordability” theme in the leadup to Tuesday's 2025 State of the State address. But her campaign, dubbed "Money In Your Pockets," has so far featured little that would reduce the cost of providing, and therefore buying, goods or services in New York.
Instead, the biggest announced and expected elements reflect Albany's waning interest in growing the state economy—and a greater appetite to redistribute what it produces. Read More
Unions Reprogram NYS To Do Less With More
Governor Hochul on Saturday signed an innocuous-sounding bill to “regulate the use of automated decision-making systems and artificial intelligence techniques by state agencies.” But the “Legislative Oversight of Automated Decision-making in Government,” or LOADinG Act, wasn’t about protecting New York from self-aware computers trying to wipe out humanity. Instead, it was an early Christmas present for the state's public employee unions—and a lump of coal for New Yorkers hoping for more efficient state government. Read More