On May 6, 2023, Governor Kathy Hochul announced an plan to continue to increase New York State’s minimum wage for three years and then tie future increases to inflation. The plan is part of the FY 2024 budget agreement and is set to help low-wage New Yorkers keep up with the rising cost of living.
The minimum wage in New York State is set to increase on January 1, 2024, to $16 in New York City and the counties of Nassau, Suffolk, and Westchester (from $15 currently), and to $15 in all other parts of the state (currently at $14.20). The minimum wage will then increase by an additional $0.50 in each of the years 2025 and 2026. After 2026, the State’s minimum wage will increase at a rate determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the Northeast Region, the considered to be the most accurate regional measure of inflation.
The plan to tie future minimum wage increases to inflation is an important step towards maintaining the purchasing power of workers’ wages from year to year. Indexing the minimum wage to inflation will ensure that workers’ wages keep up with the rising cost of living, which is especially important for low-wage workers who are often the most vulnerable to economic challenges.
In addition to indexing the minimum wage to inflation, an “off-ramp” is available in the event of certain economic or budget conditions. This provision ensures that the minimum wage can be adjusted to accommodate unforeseen economic conditions that might arise.
Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.