New York Raises Its Minimum Wage (For a Price) and the Fight Continues in Other States

There’s a lot to report on the minimum wage today, but I’ll start with the biggest news: the New York legislature has approved the state’s 2013-2014 budget, which includes a minimum wage increase. Specifically, the minimum wage will rise from $7.25 to $8.00 per hour on December 31, 2013, to $8.75 one year later, and $9.00 on December 31, 2015.

This is good news for minimum wage workers in New York, nearly two-thirds of whom are women. But the phased-in minimum wage increase in the budget is weaker than the increase that the state Assembly passed just a few weeks ago, which would have raised New York’s minimum wage to $9.00 per hour in one step in January 2014, then indexed the wage annually to keep up with inflation. The budget also drops a provision in the Assembly-passed bill that would have raised the minimum cash wage for tipped food service workers from $5.00 to $6.21 per hour, but it does provide a path to an increase for these workers by authorizing the labor commissioner to have a wage board examine the adequacy of New York’s tipped minimum wage, then issue an order to raise the wage.

In New York today, a woman working full time at the minimum wage earns just $14,500 in a year – thousands of dollars below the poverty line for a mom with two kids, in a state where far more than poverty-level wages are needed to meet the high cost of living. The budget measure will raise annual minimum wage earnings to $18,000 by 2016 – a substantial $3,500 boost from today’s levels, but still almost $500 short of lifting a parent with two children out of poverty. And because the budget provision does not include indexing, these modest wage gains will erode as the cost of living rises.

In addition, the budget deal includes an ill-conceived tax credit that subsidizes employers who pay teenage students (ages 16 to 19) the minimum wage. The amount of the tax credit is not capped and it is not targeted in any other way – meaning that large, profitable employers like Wal-Mart are likely to benefit far more from the credit than the small businesses it was ostensibly designed to help. New York taxpayers will foot the bill for this tax break, estimated to cost $45 million annually by 2017.

Nonetheless, the minimum wage increase in New York is a step forward for more than 1.5 million workers who will see higher paychecks in the years ahead. The rest of today’s minimum wage report is also a mixed bag, with a number of positive developments offset by some disappointments:

• In New Mexico, the legislature recently passed a bill to raise the state’s minimum wage from $7.50 to $8.50 per hour – but Governor Susana Martinez vetoed the increase on Friday.
• In Delaware, the Senate passed a bill to raise the state’s minimum wage from $7.25 to $8.25 an hourover two years, which now heads to the House of Representatives. (The increase approved by the Senate is a scaled-back version of the original proposal, which would have raised the minimum wage to $8.75 per hour over two years and then indexed it for inflation.)
• The Maine House of Representatives has approved a bill to raise the state’s minimum wage from $7.50 to 9.00 per hour by 2016, with future increases linked to inflation. The bill faces additional votes in the House and Senate.
• In Connecticut, the Senate Labor Committee approved a bill to raise the state’s minimum wage to $9.75 per hour by January 2015, followed by annual indexing beginning in July 2015.
• The Maryland Senate Finance Committee recently rejected a bill that would have gradually raised the state’s minimum wage to $10.00 per hour, increased the tipped minimum wage from 50 percent to 70 percent of the regular minimum wage, and indexed both wages to keep pace with inflation.

We’ll keep you posted as bills continue to move. Here’s hoping for more steps forward, and fewer steps back.