Minimum wage hits $16. Why Valley Stream businesses have mixed feelings.

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. Kath 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 Takeaway

• Long Island's minimum hourly wage has risen from $15 to $16 in the state's effort to address poverty and financial instability among low-wage workers.
• Debates ensue regarding the sufficiency of the wage increase, with some advocating for higher rates this year to align with living costs, while others support the gradual adjustments linked to inflation as a pragmatic approach.
• Business leaders express concern over weathering increased labor costs while others say the wage increase can lead to lower turn-over rates and higher productivity. 

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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.

Valley Stream resident T.J. Anand, a certified public accountant and local business owner, noted that the newest minimum wage mandate doesn’t bode well for his business clients.

“I have clients who have employees on minimum wage and they are at a point where it’s going to be hard to keep their business running and get employees when they have to pay such a high minimum wage,” said Anand. “A lot of my clients hire factory workers and less educated workers who are typically hired for cheap, low-skill work.”

Anand said the increase in labor costs may push businesses to make decisions like having more of their employees work overtime instead of hiring more full-time staff.

But other small brick-and-mortar businesses, like Little Sugar Shop, in Valley Stream, say the wage bump hasn’t impacted their finances to a noticeable extent. Instead, for the cake shop’s owner, Vyancka Kilimet, her problems lie elsewhere. Her business has yet to fully recover from the financial aftershocks of the pandemic combined with the economy’s rising food costs.

“The minimum wage isn’t affecting my business. What’s affecting it is the cost of everything else,” said Kilimet. “The electricity bill is super high. The cost of raw materials has in some cases tripled in their usual price since the pandemic. Every week that I place an order, the prices are higher and higher, so unfortunately, I have to pass it on to the customer.”

Lost profits? Fewer jobs?

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 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.

Have an opinion on this article? Send an email to jlasso@liherald.com.