Governor Kathy Hochul wants to tie New York’s minimum wage to inflation. A move that many say would make minimum wage inflation-proof moving forward, if given final approval by the legislature.
The plan, which was unveiled as part of the State of the State, would index the state’s minimum wage to the Consumer Price Index for Wage Earners for the Northeast Region, which is the best regional measure of inflation. This proposal is expected to benefit hundreds of thousands of minimum wage workers throughout the state.
“Our commonsense plan to peg the minimum wage to inflation will not only put more money into the pockets of hundreds of thousands of hardworking New Yorkers, it will also provide predictability for employers and spur more spending in local economies and businesses,” Governor Hochul said.
The proposal would increase the state’s minimum wage by the growth in the year-over-year Consumer Price Index for Wage Earners in the Northeast Region. To ensure that no single-year increase would threaten employment, annual increases would be capped. Additionally, the proposal would also allow for an “off-ramp” in the event of certain economic or budget conditions.
The Governor also announced a new set of initiatives that will modernize and streamline the state’s workforce development infrastructure to ensure that New Yorkers have the skills they need to succeed in today’s economy and help rebuild a modern public sector workforce.
Indexing the minimum wage to inflation will help to maintain the purchasing power of workers’ wages from year to year. It will particularly benefit women and people of color who make up a disproportionate share of minimum wage workers.
Seventeen other states currently tie their minimum wage to inflation or some other economic formula or are slated to do so, including three states which have minimum wages at or above $15 in 2023. Economic research shows that raising the minimum wage can lead to reductions in poverty, reduced social assistance spending, stimulative spending, improved worker productivity, and have other benefits.
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