Testimony of the Office New York City Comptroller Brad Lander before the Labor, Finance, and Ways and Means Committees

Thank you to the members of the Labor, Finance, and Ways and Means Committees for the opportunity to submit written testimony regarding Governor Hochul’s proposed budget and the proposed minimum wage increase. My name is Claudia Henriquez, Director of Workers’ Rights at the Office of New York City Comptroller Brad Lander. Comptroller Lander supports raising and indexing New York’s minimum wage as well as local enforcement of minimum wage laws, as set forth in Sen. Ramos’ Raise Up NY Act (S3062D/A7503C), which should be incorporated into the Governor’s budget. This testimony and the attached report, Economic Spotlight on the Minimum Wage, highlight why the provisions of the Raise Up NY Act are so critical. 

Minimum Wage 

Our office was pleased to hear Governor Hochul announce in her State of the State the administration’s commitment to automatically increasing New York’s minimum wage to keep up with inflation after each region reaches $15 per hour. However, if New York City’s minimum wage had been indexed to inflation when it reached $15 in 2019, today the minimum wage in the City would be $21.25. To rectify this gap, we must first raise New York’s minimum wage and then index the new wage to inflation. 

All of us here have felt the strain of inflation, which over the past year has reached a 40-year high. This has been felt even more profoundly by low-wage workers. The value of the state’s current minimum wage has dropped by 15%, forcing many low-income New Yorkers to spend significantly more on food, housing, transportation, and healthcare. The $15 hourly minimum wage is now forecast to drop in value to under the equivalent of $13 per hour in 2019 dollars. 

Once a national leader and among the first to raise the minimum wage to $15 an hour, New York has fallen behind its peers in requiring a livable minimum wage. More than 50 cities and two states have raised their minimum wage past $15 per hour.  Eighteen states, Washington, D.C., and many other localities around the country index their minimum wage to inflation to protect the paychecks of minimum-wage workers from this loss of purchasing power. As costs for necessities continue to soar and low-income New Yorkers struggle with housing and food insecurity, it is imperative that the State pass the Raise Up NY Act in this year’s budget. This would not only raise New York City’s minimum wage to $21.25 by 2026, but would also index wages each year after to meet rising costs. 

The Governor’s proposal, in its current form, would not protect workers against inflation going forward, because it would cap future inflation-based increases at just 3% per year. In the last two years, inflation averaged 7.5% and 6.5%, and 2022-2023 inflation is projected at close to 6%. A capped 3% inflation adjustment means that from the very first year, the Governor’s proposal will fail to protect the already eroded minimum wage from falling even further behind inflation, and would result in only a meager 45 cent raise. 

The Governor’s proposal would also suspend annual minimum wage increases altogether if the unemployment rate increases by 0.5% or if there is any decline in total employment in the state, if it results in the July employment level being less than in April and January of the same year. Unemployment can increase even while the economy is faring well but may be slowing, and there are often individual months where total employment declines even in the midst of an expansion period. Under the Governor’s proposal, the minimum wage would be frozen during those years. 

There is broad popular support for increasing the minimum wage. According to a Data for Progress poll, 80% of New Yorkers statewide support raising the minimum wage – including 65% of Republicans and large majorities in every region of the state. More than three-quarters of New Yorkers support automatically increasing the minimum wage each year to account for the rising costs of living.  

Under the Raise Up NY Act, earnings would increase for 2.9 million workers statewide by an average of $3,307 per year, as the wage phases up to $21.25 by 2026. Seventy percent of the workers who would benefit from this raise statewide are Black, Latinx or Asian. 55% are women. 95% are adults 20 or over. 1 in 4 are parents supporting young children. 

Last fall, our office released a report that detailed the economic impact of raising the minimum wage from $7.25 an hour in 2013 to $15 by 2019. We found that the higher minimum wage coincided with a period of strong job growth, increased average wages, and a reduction in poverty rates. While the opponents of raising the minimum wage often claim that an increase in wages would reduce the total number of jobs in the economy, the data says otherwise: between 2013 and 2019, private employment in New York City grew by 18%, compared to an average of 14% in twelve U.S. cities that did not increase the minimum wage, and 12% in the U.S. overall. The majority of these jobs were in the food services and retail sectors.  

During the same period, the median household incomes of minimum-wage households1 increased by 50%, much faster than the median household incomes of New Yorkers in non-minimum wage sectors (30%) and of workers across the rest of the nation in minimum-wage industries (24%), demonstrating the positive impact that minimum-wage increases can have on household finances. The poverty rate among minimum-wage households in NYC declined by 7%, compared to 4% in parts of the country that did not have such wage increases. During this period, the share of rent burdened minimum-wage households2 in New York City also declined from 58% to 53%, with the decline being driven by those who were spending more than 50% or more of their income on rent. 

When minimum wage workers do not earn enough money to meet their basic needs, they often turn to public assistance programs. A 2016 report examining the public costs of low wages in New York found that 52% of workers earning less than $15 per hour in New York were enrolled, or had a family member enrolled, in one or more of our major public assistance programs, such as Medicaid, Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and the Earned Income Tax Credit (EITC), costing our state and local governments $2.9 billion.  By boosting wage income, New York save on tax credits that the City provides to low-income households.  

In the Economic Spotlight on the Minimum Wage released by our office last month, and attached to this testimony, we found that Raise Up NY will directly increase the wages of 1.1 million workers in NYC by 2026, or about one quarter of the total working in NYC. Aggregate wage earnings gains increase by approximately $2 billion each year (in 2022 dollars) through 2026. Our office’s analysis of the Governor’s proposal projects the share of directly affected NYC workers at around 14%, with much smaller aggregate wage earnings of approximately $400 million in 2024. Because indexation falls behind the projection of wage growth, the estimates of impact in the Governor’s proposal decline over time.  

With prices continuing to rise and the value of minimum wage in decline, legislators are presented with two proposals to raise New York’s minimum wage and indexing it to inflation. This will have an impact on hundreds of thousands of New Yorkers. We project that the Raise Up NY Act would raise the wages of nearly twice as many New York City workers over the next three years as the Governor’s proposal, and by significantly larger amounts.  

Enforcement 

The second critical element of the Raise Up NY Act is a provision for local enforcement of the minimum wage.  Currently compliance with the minimum wage is enforced by the New York State Department of Labor. Alternatively, a worker who has been cheated out of wages can find an attorney to represent them in a private lawsuit. Unfortunately, these resources are simply not enough to address the enforcement needs of New York State. 

According to a 2019 Make the Road New York report, Coming Up Short: The State Of Wage Theft Enforcement In New York, NYSDOL has insufficient resources to manage growing caseloads. Average caseloads doubled from 2008-2019 to approximately 142 cases per investigator. The backlog of open cases increased by 76 percent over the same period. 

Raise Up NY would give two New York City Agencies – the Office of the Comptroller, and the Department of Consumer and Worker Protection – the authority to concurrently enforce the minimum wage alongside the NYDOL in New York City.  These agencies already enforce local labor protections and have staff that are trained to identify and address labor and employment violations.  

The NYC Comptroller is empowered by state law to enforce local prevailing wage requirements, and the Bureau of Labor Law within the NYC Comptroller’s Office also investigates complaints of wage and labor violations by city contractors and financial assistance recipients.  While conducting prevailing wage investigations, the Comptroller’s office is in a position identify additional Labor Law violations, including minimum wage. Giving the Comptroller of the City of New York the authority to locally enforce these laws will greatly expand enforcement capacity and help safeguard worker rights and will allow the City to concentrate and deploy resources in a way that more effectively addresses the problem of employer misconduct.  

For these reasons, we ask that the Raise Up NY Act be included in the Governor’s budget. 

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