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New York State Department of Labor announces $15 minimum wage phase-in as labor shortages drive up wage earnings

The minimum wage will continue to increase in order to reach the overall goal of $15 across New York State.

The New York State Department of Labor announced the state’s $15 minimum wage phase-in will continue, with the next stage taking effect December 31, 2021. The announcement follows a statutorily required report by the Division of the Budget that found evidence of pressure for wages to rise in the midst of a pandemic-driven labor shortage. The minimum wage will rise to $15 per hour on Long Island and in Westchester, matching the $15 hourly minimum already set in New York City. The Director of the Division of Budget, together with the Commissioner of Labor, determined that the minimum wage should rise to $13.20 per hour in the rest of the state based upon economic factors and indices.

“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,” Labor Commissioner Roberta Reardon said. “With today’s action we are continuing the work of building back with equity and justice.”

The report produced by the Division of the Budget is required by the minimum wage statute to review the state of the economy and determine whether increases move forward as scheduled or should be delayed.

DiSanto Propane (Billboard)

For 2021, the statute 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. 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, enabling low-wage workers to continue to afford the same basket of goods and services and then some based on rising productivity.

Key findings from the Division of the Budget’s Minimum Wage Report include:

The low-wage sector was the most severely impacted by the pandemic: 1 million, 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 experienced a combined loss of 31.0 percent of its jobs.

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 attained a historical peak of $71,400 in March 2021, a 15.7% increase from March 2020 and while 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.

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. Moreover, 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.