A newly approved increase in the state’s minimum wage has many Long Island business groups and owners voicing alarm about its impact on prices and inflation, while a few said the increases don’t go far enough.
Under a provision in the governor’s omnibus budget bill passed late Tuesday, Long Island, New York City and Westchester will see minimum hourly pay rise from $15 an hour now to $16 on Jan. 1, 2024; $16.50 on Jan. 1, 2025; and $17 on Jan. 1, 2026. Following that increase, the minimum will rise with inflation.
Throughout the rest of the state, the new minimum will be phased in to $16 by Jan. 1, 2026 from $14.20 now.
“It is going to definitely have an impact, especially with smaller businesses in the hospitality industry,” said Dorothy Roberts, president of the Long Island Hospitality Association.
WHAT TO KNOW
- Many business groups and owners say the minimum wage increase passed in the state budget comes at a bad time.
- Increased labor costs will force them to raise prices, they say.
- A small coalition of business owners lobbied for a bigger wage increase, saying workers who earn more could spend more.
Roberts, whose group represents hoteliers and restaurant owners on the Island, said since the pandemic, employers have become acutely aware of the value their employees provide and are open to competing for workers on wages and other benefits. Still, she said, money for the increased wages has to come from somewhere.
“For small businesses like restaurant owners, it’s very difficult to keep raising wages without increasing the prices for guests or patrons,” she said.
The increase comes as prices for everyday goods remain elevated and the nation’s Federal Reserve continues to wrestle with inflation’s impact on economic growth.
It also comes less than two years after Long Island’s minimum wage hit $15 an hour at the end of 2021, the result of a multi-year, phased-in increase mandated by the state.
Gov. Kathy Hochul in a statement said the latest increase “is a win for workers and for businesses.” By indexing the minimum wage to inflation, lower wage New Yorkers will be able to “maintain their purchasing power, contribute to the state economy, and support our small business community,” she said.
Labor organizations called the policy a major win for workers.
“This policy will make a historic and permanent impact for all workers, particularly low-wage workers,” said Ryan Stanton, executive director of the Long Island Federation of Labor.
“We know New York’s minimum wage has lagged behind the cost of living increases as prices have risen at the fastest rate in 40 years,” Stanton said.
But members of Long Island’s business community largely oppose the increases.
“It’s got a noble intent, but the people who are going to get squeezed on this are the ones it’s intended to help,” said John Murray III, owner of The Hero Joint, a sandwich shop with locations in Patchogue and Bay Shore, and Kilwins ice cream stores in Patchogue and Huntington.
With businesses like his needing to raise prices in order to meet increased labor costs, Murray said it will be lower income New Yorkers who will bear the brunt of higher-priced goods and services.
Patrick Boyle, executive director of IgniteLI, a trade group for local manufacturers, said the increases couldn’t come at a worse time and will only make a difficult business climate more challenging.
“This is not the time to increase the costs on small businesses,” Boyle said. “Especially while the interest rate is still historically high and the confidence of businesses to grow right now is low.”
Many of the group’s 3,000 local manufacturers rely heavily on an entry-level, minimum wage workforce, he said. With labor costs going up, he said businesses will have no choice but to pass the costs on to customers.
But while many in the business community predict headwinds, other groups said the increases aren't enough.
New York Business for a Fair Minimum Wage, a coalition of around 300 businesses and organizations, had been pushing for a more ambitious increase — to $21.25 by 2026, with cost of living adjustments thereafter.
“I think it should have been increased right away,” said Phil Andrews, president of the Long Island African American Chamber of Commerce and a member of the coalition. “This has been the highest inflationary time we have probably seen in our lifetime. I don’t know how people are buying their groceries.”
Andrews said his support of an even higher minimum stems from the needs of the small businesses he represents, who are hurt by a lack of customers with disposable income.
“Workers have to be making money to spend money and the economy is not going to work if people are holding their dollars back,” he said. “If people stop spending, the stores close down.”