Cold reception for minimum wage bump

The minimum hourly wage on Long Island has climbed from $15 to $16 starting this year thanks to a mandate, brokered by lawmakers in Albany and Gov. Kathy Hochul in last year’s budget deal.

The intent of the minimum wage hike is to help in reducing poverty and financial insecurity for low-wage, working families grappling with inflation and the state’s swelling cost of living.

“The myth is that minimum wage workers are high school kids, working after school at McDonald’s,” said Mary Anne Trasciatti, Director of Labor Studies at Hofstra University. “The truth is there are a number of minimum wage workers who are well beyond high school years. A majority of minimum wage workers are women and some minimum wage workers even have college degrees.”

The wage increase has been met with as much praise from labor advocates and low-wage working families as frustration from local businesses fearing the added financial stress.

“There is hardship for some smaller businesses,” noted Trasciatti. “Especially for those who have to compete with businesses in other states where the minimum wage may be lower like Pennsylvania, for example.”

Some businesses, already strained by lingering inflation and pandemic-induced supply shortages, see the hourly wage uptick as another unforeseen factor eating into their bottom line. This is true in certain sectors like retail, grocery stores, childcare, and restaurants, where minimum-wage workers often make up a large slice of the labor pool.

Freeport resident Frank Montana, owner of local business Montana Brothers Pizzeria & Catering noted that the newest minimum wage mandate doesn’t bode well for either local businesses bottom lines or, he stressed, for customers.

“I got to raise dollar,” said Montana. “So now the tradesperson — the person that makes the pizza — now he’s making X amount. But with the person coming in at a high school that has no experience making $16 the pizza man wants an equal amount raise. So now that has a trickle down effect, and that pushes me to raise my prices.”

Montana went on to point out that the organizations bringing me him his product are also staffed by minimum wage workers.

“So that goes up now,” he said. “So the people bringing in the product raise their prices. So that forces me to raise my prices and when I raise my prices, ultimately it hurts the consumer.”

Montana clarified that he himself was not planning on raising prices, as he knew that doing so was liable — along with the inflation that Americans are already experiencing — to decrease business. But he pointed out that many businesses like supermarkets — staffed by minimum wage workers — would assuredly increase prices, which would hurt average consumers.

“A family that depends on the minimum wage salary,” said Montana. “I fully sympathize with. But in the long run it’s going to hurt. It’s the blue collar that gets the most hurt, and that’s my business. That’s the person that gets hit the most — teachers, electricians, plumbers — they’re not getting a raise in salary. A husband and wife both work… but products keep going up and their children need to go to school and need to get fed and they need to go to the supermarket. But those prices keep going up.”

Ivan Sayles who owned Rachel’s Waterside Grill in Freeport on the Nautical Mile and who runs Set Sayles Hospitality had similar views on the bump. He said “the minimum wage increase is a two pronged fork… everybody knows that everybody’s struggling. So to get a raise right now, is very good, right? On the other hand, a business that has to give a raise has to raise costs. So where does it end? I don’t know the answer, but it certainly doesn’t help.” Sayles, like Montana, also pointed out that higher paid employees would also now need a raise.

Not all business leaders are commiserating over the financial impact of the minimum wage bump, however.

Phil Andrews, President of the Long Island African American Chamber of Commerce, argues the increase, all things considered, signifies good news for employers. He challenged the conventional business wisdom that higher wages would prompt owners to make job cuts and layoffs to absorb higher labor costs.

“For businesses, when you pay your workers higher wages, they usually tend to stay in the job and be more productive. There is less turnover and you retain your workers for longer,” said Andrews, who is a member of the New York Business for a Fair Minimum Wage Coalition. “Businesses need to invest in their workers to be successful. Wages need to be raised so that people can have the means to give back to the economy under a decent standard of living.”

Some labor economists and policy experts also cite emerging research that bucks against the traditional narrative that a paycheck increase for low-wage workers pummels business profits.

When industries as a whole face the same modest price uptick, rather than trim down their staff, they contend, businesses tend to adapt by passing on that price increase to consumers. And that small extra charge is usually done without much customer objection and with little collateral damage in the long haul.

Still not high enough

Many union leaders and labor stakeholders had initially held out hope for a much bigger increase, as high as $21.25, than the one approved in Albany.

The current wage increase is still a far cry from what it needs to be to keep pace with inflation and with Long Island’s growing cost of living, argued Trasciatti. But she admitted that a $21 minimum wage from the get-go of this year might have been too disruptive of a change.

“It’s undeniable that $16, while better than $15, is just not enough to live on Long Island, but there are some smaller businesses where a $21 mandate right away could inflict some serious economic pain,” said Trasciatti.

“The good thing about this plan though is that it ties the hourly minimum wage to the cost of living every year so that won’t require the New York Legislature to act every year to approve a wage increase, which is efficient and long overdue.”

State officials similarly defended their position, saying the current minimum wage bump, which will rise to $17 in 2026 with future bumps tied to an inflation index, gives businesses an adequate grace period to adjust while delivering substantial gains for employees.