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.

 

 

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

SCOTUS Punts To Biden On Potential Challenge to NY’s Taxing of Work-at-Home Nonresidents

The U.S. Supreme Court today kept alive federal litigation that could cost New York a big chunk of the billions of dollars in taxes it collects from nonresidents working for New York-based employers. Read More

NY Post-Pandemic Employment Tide Stopped Rising At Year’s End

New York's post-pandemic employment recovery came to a halt and moved into reverse in December, according to the state's for the final month of COVID-wracked 2020. Private payroll employment in December was 966,000 jobs below the level of the previous Read More

Governor Cuomo’s budget proposal leaves the Medicaid throttle open

Perhaps the most remarkable thing about Governor Cuomo's Medicaid budget is how little it changes the program's spending pattern. In spite of a once-in-century pandemic that rocked the state's health-care system and decimated state revenues, the govern Read More

Emmy-Winning Gov Shows Hollywood More Love

Amid the economic and fiscal fallout of the pandemic, in a proposed FY 2022 budget that would postpone $400 million in scheduled middle-class tax cuts while imposing $1.5 billion in tax-surcharges on millionaire earners, Governor Cuomo is also seeking to Read More

Seeking Bigger Federal Handout, Cuomo Proposes Record Budget

Somewhere within that vast fog bank of a FY 2022 Executive Budget that Governor Cuomo is a structural budget gap, opened during the pandemic recession and temporarily obscured by piles of federal cash that will eventually be gone with the wind. Once a Read More

Amid Cuomo’s Fulminations, New York’s Budget Gap Keeps Shrinking

State tax receipts in the month of December came in $1.4 billion above the latest projection by Governor Cuomo's Division of the Budget (DOB), according to a cash report released late today by state Comptroller Thomas DiNapoli's office. on the numbers Read More

The State’s Vaccine Appointment System Was Not Ready for Prime Time

The two top priorities Governor Cuomo identified in his State of the State speech Monday morning were "Defeat COVID" and "Vaccinate New York." Read More

A Study in Contrasts: Cuomo’s 2011 and 2021 State of the State Messages

State of the State messages by New York governors customarily lay out general goals and priorities, rather than specifics. Even in general terms, however, there is a striking contrast between Governor Cuomo's latest State of the State and his first annual message to the Legislature, which he delivered five days after taking office 10 years ago. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.