New York’s Stalling Minimum Wage
New Yorkers want nothing more than to spend their lives in their home state, but for over a third of the state’s workers, like Anthony Ramos, paying the bills each week is a constant struggle.
“I want to stay in Long Island, definitely stay in New York,” Anthony Ramos, 24, a minimum wage worker, said. “But it’s too expensive, I can’t live with the constant fear and stress every week.”
More than 35% of New Yorkers struggle to support themselves while the state implements a progressive minimum wage increase — , decades in the making. These workers typically work the equivalent of a full-time salary of about $31,000 a year, marginally over the federal poverty line.
Ramos rents an apartment in Levittown, New York — America’s first suburb — with four other roommates where they share a living space and groceries. His roommates have two massive St. Bernards that Ramos takes part in caring for. In the driveway, his beat-up Hyundai is packed. In February, he used most of his savings to fix it up because he needs that car to commute to work or anywhere else.
Like many other New Yorkers, Ramos works two minimum wage jobs to make ends meet. In 2020, Ramos earned $30,350, just shy of the national poverty line, and in Nassau County, New York, he earns $9,000 less than the living wage. He said paying the gas, insurance, groceries, and rent each week, is almost impossible on his own.
Ramos asked his employer in January for cash to pay his rent and bills while he struggled working essential jobs during this year’s pandemic. Ramos said he feels that he is not valued properly for his vast experience in minimum wage positions. And relying on unemployment benefits is not an option, because he said he doesn’t want to be a “drain on society.”
“$15 is not enough,” said Dr. Martin Cantor, director of the Long Island Center for SocioEconomic Policy, a fiscally conservative research firm. “No one should work a full week of work and live in poverty.”
New York is infamously expensive compared to other urban areas. As of 2019, New York City ranks as the second most expensive city behind Honolulu, Hawaii. One leading contributor to the area’s high cost of living is the price of housing and rent, along with food and transportation.
Using census data, researchers at HireaHelper found that in New York City more than 32% of their monthly income is spent on rent and other utilities, in contrast with the general rule of spending a maximum of 30% of gross monthly income on rent or housing.
In Washington, The Congressional Budget Office found in its report released on February 8, 2021, that raising the federal minimum wage to $15 would raise over 900,000 workers out of poverty, while over 1.4 million jobs nationwide would be lost as a result. As of December 31, 2020, the state’s minimum wage will increase in Long Island and Westchester to $15, and the rest of the state’s workers earn $12.50.
Cantor, the former Suffolk County Economic Development Commissioner, said, the current state-mandated minimum wage does not keep up with the New York metro area’s skyrocketing cost of living. He said rising rent, housing prices, and taxes make it financially perilous for workers to save money or buy property within the state.
Since the COVID-19 pandemic, the state has deprioritized implementing a more progressive minimum wage policy as they focus on economic recovery.
“Long Island lost over 105,000 jobs this past summer,” Cantor said. “That’s about 8% of Long Island’s jobs, and they’re unlikely to come back.”
New York City lost 631,000 jobs — many of which employ Long Island workers — , are also unlikely to return. As of March 2021, New York City Independent Budget Office reports a slow and fragile recovery, estimating that the city won’t see any of those jobs back until 2025. The United States, as a whole, lost 22.2 million jobs in the early spring of 2020 when the pandemic took hold.
Economists agree that volatile and competitive industries that operate on thin margins, like tourism and retail, are facing the brunt of the pandemic’s effects.
Not only do consumers burden higher prices, but the pandemic’s effect on unemployment has also made it increasingly difficult for companies to pay employees a higher minimum wage. This threatens to place the New York State Legislature in an awkward position, Cantor said, making more progressive minimum wage policy less feasible, considering New York’s unemployment rate at 8.5%, as of March 2021.
Despite the setbacks from the coronavirus, policymakers like State Senator James Sanders Jr, who represents Queens and chairman of the Committee on Banks, are still pushing for more progressive legislation.
“There is always a case to raise the minimum wage,” Sanders Jr. said. “The problem is doing it in a way that sustains our businesses and does not make New York State a less desirable place to form and do business.”
He said the state should proceed with caution as they focus on recovery in sectors like hospitality and leisure, one of the greatest employers of minimum wage workers, ravaged by the pandemic.
Chart: Andre Silva; New York Minimum Wage Timeline, Source: New York Department of Labor
Chart: Andre Silva; Federal Minimum Wage Timeline, Source: Bureau of Labor Statistics
Sanders Jr. said these industries are infamous for their abuse of workers, and more legislation, like standard wages for tipped workers and ensuring workers are not paid below the minimum wage, remain imperative.
“It didn’t matter if I made under the minimum wage on some days and made more on other days, ‘’ said Manuel Ballena, 23, a minimum wage worker from Queens. “I was paid the exact same on every check whether I made more or less.”
Ballena, now living in a multi-family house with his extended family in Ronkonkoma, is one of many young New Yorkers struggling to pay his bills each week and move out of his parent's house. In between jobs, Ballena’s years of serving food in the hospitality industry, earning minimum wage for tipped wage, hasn’t given him much room to save for his future.
Over 95% of New York’s minimum wage workers are over the age of 20, but for younger workers like Ballena, inexperience works against them in the labor market. He worked at an IHOP in Suffolk County. He would work 7–14 hour days on a tipped income — Ballena said he found himself a regular victim of wage theft. Under state law, employers are supposed to compensate tipped workers up to the minimum wage, however, Ballena found that this was common practice among many hospitality and service jobs in New York.
“If you earn $50 in tip on a regular shift, then you’re making minimum wage,” Ballena said. “But you don’t always make $50.”
A 2017 report from the Economic Policy Institute found that employers stole $8 billion from workers in the 10 most populous states, including New York. Wage theft allows workers to be paid effectively less than the minimum wage and allows employers to cheat their workers in all demographic categories.
A 2020 study from the Washington Center for Equitable Growth found that during economic recessions — like the 2008 financial crisis or this global pandemic — , minimum wage violations against workers like wage theft, fluctuated with unemployment. The group anticipates a rise in minimum wage violations to occur in a pandemic recession.
In 2019, Congress introduced the H.R.3712 Wage Theft Prevention and Wage Recovery Act, which intends to amend the Fair Labor Standards Act of 1938 (FLSA), to require employers to make initial and modified disclosures of the terms of their employment, provide such employees with regular pay stubs, and make a final payment to an employee for uncompensated work hours within 14 days of the employee’s termination. This bill has yet to pass the House of Representatives.
State lawmakers passed the Senate bill S2844B, sponsored by Senator Jessica Ramos, a bill to secure the payment of wages for work already performed, and hold corporations and board members liable for wage theft. Governor Cuomo vetoed the bill on January 1st, 2020.
Ballena said he’s unsure how the pandemic will shape his near future. He said going to school is a risky decision. For now, he’s a bartender at a local bar while he does his best to save for the long term.
“I love New York, I want to spend most of my life here,” Ballena said. “ One day I want to buy my own property, but for now the best I can do is live with my family.”
While lawmakers try to crack down on the exploitation of minimum wage and tipped workers, the State Legislature has no plans to create a new target for the minimum like they did almost a decade ago.
“The difficulty of being so far ahead of the nation in terms of the minimum wage means that we’re going to have to do a trade-off,” Sanders Jr. said. “We must understand, a certain amount of businesses will not open in New York.”
Sanders Jr. said there are many ways the state can go about improving workers' conditions without raising the minimum wage. One piece of recent legislation in Congress would mandate that all federal and state contractors must pay their employees a living wage, rather than the minimum wage.
The living wage considers the expenses necessary to live comfortably and save money in an area. Across the New York metro area, minimum wage workers earn significantly less on average than the living wage, meaning workers are unable to keep up with their expenses or save effectively.
Chart: Andre Silva; Source: MIT Calculator
“The extent to which minimum wage equates to a ‘living wage,’ is not and never has been the same thing,” said E.J. McMahon, founder of the Empire Center for Public Policy, a fiscally conservative think tank. “In fact, the purpose of the minimum wage has never been to provide some version of a living wage.”
McMahon said the state can help ensure full-time minimum-wage workers earn sufficiently to support a household — , but that is not the intention of the minimum wage. He said Earned Income Tax Credit, which helps low- to moderate-income workers and families get a tax break, and other forms of substantial income supplements, including SNAP food stamps and healthcare are programs, can help workers support themselves through public services rather than making employers pay their workers higher wages.
“New York is one of the most expensive and unequal places in the nation,” said David Cooper, senior analyst at the Economic Policy Institute and deputy director of the Economic Analysis and Research Network, a nationwide progressive think tank. “We all know that $15 just doesn’t go very far.”
Cooper said that labor standards, like the minimum wage, should account for the New York metro area’s soaring cost of living. Cooper said that although the state’s minimum wage is progressive relative to other states, it may not be enough. Cooper said the capacity of the New York economy can viably pay its workers more than $15 minimum wage.
“The point of the minimum wage is for society to set a standard for how much we think someone in the lowest-paid job should be valued,” said Cooper. “That is a function of the economic capacity as a whole.”
Lawmakers, like Sanders Jr, have another approach for improving living conditions: create policies making it more affordable to live in New York. One policy suggestion Sanders Jr. has is to reindex the Area Median Index (AMI) in New York. The AMI is calculated and released every year by the U.S. Department of Housing and Development (HUD) to represent the combined average household income for the entire New York City metropolitan area.
The AMI in New York City includes Putnam, Westchester, and Rockland county in its index, skewing the area median higher by counting more affluent areas with poor neighborhoods in New York City.
Chart: Andre Silva; Source: DataCommons, Census.org
Sanders Jr. said that readjusting the AMI to exclude suburban areas like Rockland County or Westchester County, would better represent the true AMI of New York City, allowing subsidized housing to be better distributed throughout the city.
“New York is a supermajority Democratic state. We should be pushing for more progressive policies,” Danny Hopkins, spokesperson for the Long Island Progressive’s Coalition, said.
Advocacy groups, like the coalition, are organizing to lobby the State Legislature to pass the Invest in Our New York Act, a package of six bills that would raise $50 billion to the state budget annually by taxing wealthy income earners with a progressive income tax, heirs tax, and capital gains tax.
Hopkins also said his organization has worked to also push for a higher federal minimum wage, which ultimately did not pass in the Senate. He said this is “shameful” because the $15 target federal minimum wage would be fully implemented by 2025 — , where $15 nationally will likely be too little too late, as it could be in New York.
Hopkins claims the state of New York has been perpetually behind the needs of the working class for decades. He said that the working class, people of color, and other marginalized communities were hit the hardest by the effects of the pandemic.
“I’m not a tax increase economist, but it’s time to tax the billionaires,” Cantor, the former Suffolk County Economic Development Commissioner, said. “I’m disgusted by the likes of Jeff Bezos; no one should be that filthy rich.”
Cantor said billionaires like Michael Bloomberg and Jeff Bezos should pay more in taxes rather than spending hundreds of millions of dollars on political campaigns. He said that to pay for necessary social spending, we should draw from the wealthiest in our society.
“The only problem is that they’ll just leave New York,” Cantor said.
Cooper, with the Economic Policy Institute, said there are several tools lawmakers can use to make a more equitable minimum wage. One such includes indexing the minimum wage. Cooper said this policy can have benefits to minimum wage workers trying to maintain their standard of living each year. Indexing the minimum wage would effectively tie the minimum wage to another metric like inflation or median wages, he said.
In the most recent draft of the federal minimum wage bill that did not pass, Congress considered adding a median wage index for minimum wage workers. This policy adjusts the minimum wage by the same percentage of the economy overall in a given area. That could, in theory, preserve standards of living and prevent growth in income inequality.
Another viable option, Cooper said, would be indexing the minimum wage to prices or inflation. This could ensure minimum wage workers would still afford the same lifestyle they need to buy each year.
Cantor said indexing the minimum wage can be a great tool but it comes with risks, like allowing the state to index the minimum wage indefinitely. Cantor said the benefit of indexing the minimum wage to inflation is minimal, as inflation tends to stay under 2%.
“You see there is the labor side, and I understand labor, they believe they produce the goods and services and so are entitled to a greater slice of the shares,” Cantor said. “ But the other side of the coin is the ability of marginal businesses to be able to afford to pay the minimum wage.”
Cantor said small businesses are not able to compete with large corporations or big businesses that can write off a higher minimum wage as an expense. He said increasing the minimum wage would push smaller businesses out of an affordable labor market.
A common argument against raising the minimum wage is that it leads to a loss in jobs. But economists say that is not so clear-cut. For example, a minimum wage too high might incentivize corporations to automate their workforce, or cut jobs to maximize profits, while a minimum wage too low, as seen over the last few decades, exploits workers.
In 2019, the Center for New York City Affairs at The New School and the National Employment Law Project found that after five years of minimum wage increases in New York City, the pre-pandemic restaurant industry was thriving. They found that New York City’s restaurant industry outpaced national growth in employment, annual wages, and the number of restaurants established. This industry had the highest proportion of workers affected by the minimum wage and maintained faster job growth than the private sector since the state minimum wage rose in phases from $7.25 an hour at the end of 2013 to $15.00 at the end of 2018.
Another 2019 report generated by the Federal Reserve Bank of New York, compared wages and hours in adjacent New York and Pennsylvania counties, in the retail and hospitality sectors separately from 2010 to 2018, a period of significant growth in the minimum wage. They found that average weekly earnings grew in New York without a loss in employment, specifically in these two sectors dominated by minimum wage labor.
Ballena and Ramos both said they feel that the state and federal governments are always behind the needs of New Yorkers. Without a new target minimum wage policy, they said they fear they won't be able to afford to live in their home state any longer.
Ultimately the state’s minimum wage policy appears to be perpetually behind the needs of New Yorkers. While the ramifications of enacting a new minimum wage policy remain ambiguous, the state continues this pattern by not passing a new policy.
