Rampant Inflation Has Eroded New York City’s ‘Bold’ $15 Minimum Wage Hike

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Nearly four years after New York City’s minimum wage hit $15 per hour, that same wage is now worth just $13 per hour adjusted for inflation, The New York Times reported Monday.

That decline can be attributed to a roughly 15% dive in purchasing power per dollar in the city compared to late 2018, the NYT reported, citing James Parrot, director of economic and fiscal policies at the Center for New York City Affairs at The New School. The city’s minimum wage is set by the state’s legislative branch, and attempts to tie or adjust the minimum wage to inflation have been stonewalled by business interests. (RELATED: Prices Stay Sky-High In October As Inflation Continues To Run Hot)

“The $15 minimum wage was a bold, significant step in getting closer to a living wage,” Paul K. Sonn, state policy program director at the National Employment Law Project, told the NYT. Despite this, inflation is causing that wage to “fall far, far behind,” as inflation remains at near 40-year highs.

Businesses, however, oppose the hikes on the grounds that inflation is already hammering their costs, Vice President Ken Pokalsky of the Business Council of New York State told the NYT. More hikes would harm industries that rely on low-wage jobs and are still recovering from the pandemic, potentially incentivizing the automation of those jobs, Pokalsky said.

“Something’s got to give,” he told the outlet.

Several other wage measures in the state are tied to inflation, including the minimum wage in some suburban and upstate communities, which the state tied to inflation due to a lower cost of living, according to the NYT. Rideshare apps, such as Lyft and Uber, are obligated to pay drivers a minimum rate that is tied to inflation and subject to regular review.

Hours after the NYT report, Democratic State Sen. Jessica Ramos of District 13 tweeted that she intended to reintroduce legislation that would raise the city’s minimum wage to $21.25 per hour by 2026 and tie it to inflation.

“Our minimum wage has fallen out of phase with the cost of living,” Ramos told the NYT. “It’s not fair to leave New Yorkers behind.”

Raising the federal minimum wage incrementally from its current rate of $7.25 to $15 per hour by 2027 and tying it to inflation would result in roughly 750,000 fewer jobs per week in the country and roughly 300,000 fewer people in poverty, according to projections by the Congressional Budget Office. The inflationary pressure of a national $15 per hour minimum wage would disproportionately increase prices at small businesses, which are less able to absorb costs, while large companies would raise prices less because of pressure by global or national competitors, according to a study by the Heritage Foundation.

“We look forward to working with our colleagues in Albany this legislative session to seriously consider raising the minimum wage while also recognizing that still-struggling small businesses may need financial help if they’ll be asked to pay workers more,” a spokesman for Democratic Mayor Eric Adams told the NYT. Adams previously characterized a 5.3% raise for rideshare drivers as being “about respect,” and providing drivers with “a fair and decent wage.”

Through October, the price of food in the New York, Newark and Jersey City area rose 8.6% on an annual basis, with the cost of groceries rising 10.4%, according to the Bureau of Labor Statistics. The cost of shelter was up 4.1% on an annual basis in October, growing 1.1% on a monthly basis compared to September.

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