The minimum wage will increase in 2020 in New York

For the fourth consecutive year, New Yorkers, who receive the minimum wage, expect a pay increase in December. However, rising state spending on medical care and population decline are criticizing politicians. About what to expect in 2020, the newspaper writes. Democrat & Chronicle.

On December 31, 2019, wage increases for New Yorkers will take effect. Overshadowing this news by the Department of State Budget analysis. According to him, annual salary increases had a “negligible” effect on the labor market throughout the state.

Unemployment, the report says, has dropped to the “lowest level in history” since lawmakers approved a bill to introduce a minimum wage in 2016. This $ 15 increase offers hope for lowering poverty and boosting wages for low-income workers.

"A decline in New York's unemployment rate to a record low means that the recent minimum wage increase was absorbed with little influence (if any) on labor demand in all regions of the New York state labor market," it said report.

Critics of the report

However, opponents argue that the report does not take into account the decline in the population of New York and the increase in health care costs due to an increase in the minimum wage. This is partly due to the growing demand for homecare workers and is largely responsible for the state budget deficit of $ 6 billion.

The report also ignores a slower than average job growth in the state, where people quit faster than jobs are created. Such data was provided by the Business Council of the state (Business Council).

On the subject: What taxes do New Yorkers pay

In addition, according to the census, over 1 million people have left New York over the past decade. Although the unemployment rate fell to a historic low last year, most of the state job growth in recent years has been concentrated in New York and its environs, the source said. “If you look at upstate New York, you’ll see that the circumstances are different,” said Ken Pokalsky, vice president of the state business council.

What changes in pay are expected in 2020

Finally, the salary reaches $ 15 / hour, at least in New York, where small workers with 10 or less employees will receive an increase of $ 1 to the current salary of $ 14 / hour.

Large New York employers with 11 or more employees started paying $ 15 / hour last year, as did urban fast food employers.

Lawmakers divided the state into three regions: New York, Long Island, and Westchester County, and the rest of the state to account for various state economies.

So, workers on Long Island and in Westchester will start earning $ 13 / hour. In the rest of the state, wages will rise to $ 11,80 / hour, that is, by $ 1 and 70 cents, respectively.

Rises will continue until the end of 2021, when Long Island and Westchester reach the level of $ 15 / hour. At the end of 2020, the state’s salary level will reach $ 12,50 / hour, after which the state will determine the level of salaries for subsequent years.

Salaries of people working in fast food, as well as wage earners, will increase. For example, among the former outside New York, it will grow from $ 12,75 / hour to $ 13,75 / hour at the end of the year.

Governor Andrew Cuomo, who advocated for this policy, said salary increases allowed more New Yorkers to "live with dignity."

“In New York, we believe in honest pay for honestly (worked. - Ed.) day. And we won’t stop fighting until every hardworking New Yorker is paid the honest salary he deserves, ”Cuomo said.

A “big headache” for business owners

A higher minimum wage is a “big headache” for business owners.

But wage growth has created a “stagnant” environment for the state’s business sector, making it difficult for some employers to recruit staff, said Stacy Duncan, president of the Greater Binghamton Chamber of Commerce. “Although the benefits of the idea of ​​raising wages, in my opinion, the good, unforeseen consequences actually lead to the opposite. It slows down growth, ”said Duncan.

To effectively reduce poverty, Duncan noted, the state must balance the rising costs of business owners by lowering taxes and easing regulatory requirements. “We are increasing costs, but not reducing them elsewhere,” she said. “This is very worrying for our businessmen.”

But proponents of this policy argue that concerns about raising the minimum wage have been consolidated and over the years, after lawmakers approved the increase in the minimum wage in 2016, they have changed.

Mario Cilento, president of AFL-CIO, a working group representing more than 3000 unions in the state, emphasized that the same people who claimed that this policy would lead to mass layoffs now complain that such a policy hinders business expansion.

The situation in the counties of New York

Struggling economies deal with higher minimum wages in New York. However, in counties in the north of the state, new jobs are being created at a slower pace. This indicates that rural communities still feel the consequences of the Great Recession 10 years ago, the newspaper writes.

According to the State Department of Labor, unemployment in New York fell below 4% last year for the first time since the 1970s, but most of the private sector jobs created after the recession are concentrated around New York and its suburbs.

Between 2010 and 2018, an average of 0,7% of jobs were added to communities across the state, while an average of 2,8% of jobs were added downstream in the state over the same period.

At the same time, the loss of population, combined with higher salaries, did not make life easier for businesses that want to create new jobs, the source said. “We believe that for various reasons the obstacles that they (enterprises. - Ed.) collide, should not be exacerbated by a further increase in the minimum wage, ”said Mr. Pokalsky, vice president of the Business Council.

Raising the minimum wage yielded only positive results for the state and its employees, said Freeman Clopott, spokesman for the state budget department. “The results are clear: raising the minimum wage in New York State provides the fair wages that New Yorkers deserve,” Clopott said.

How salary increases affect business

For business owners such as Adam Bans, who had run the Turtle Leaf Cafe near the Chemung River in Elmira for almost five years, annual price increases meant higher prices for his customers. “This is a pretty cool approach, if you think about it,” Bans said.

As a result, Adam noted, he had to raise prices by 3% -5% every year since 2016. Otherwise, he would not have been able to avoid the dismissal of any of his 11 employees or the decline in the quality of the menu. This year, Bunce plans to raise prices again.

New York budget deficit for 2020

In New York, the budget deficit for the next fiscal year will be $ 6 billion.

Salary increases also played a role in the growing state budget deficit, which was ahead of forecasts since 2016 due to the growing demand for homecare workers.

The growth of the Medicaid government program, which a third of New York City health care providers count on, is the main driver behind the $ 6 billion budget deficit that lawmakers will have to fill out when they return to Albany next month.

According to state estimates, only as a result of an increase in the minimum wage this year, he will pay $ 1,5 billion through the Medicaid program. This is significantly higher compared to $ 44 million in 2016 and four times more than the state predicted in 2016, Hammond said.

The increase in expenses has already been taken into account in this year’s budget, according to the State Budget Administration. “Most of the state’s spending to support raising the minimum wage for nursing home and direct care workers serving the most vulnerable New Yorkers is already covered by the state’s financial plan, and any additional costs will be considered part of the fiscal year 2021 budget balancing plan ”, The statement said.

Although raising the minimum wage has played a small role in increasing state spending on the Medicaid program, this issue needs to be addressed for the future, Hammond said. “Medicaid simply does not have the money to pay this extra cost of the minimum wage,” he explained.