The New York City Economic Tracker: January 8, 2024

The New York City Economy Tracker is a joint project between Investopedia and NY1, using publicly available data to evaluate the economic health of the city across a variety of metrics.

For the week of January 8, 2024, we’re looking at New York City’s latest minimum wage increase, and how inflation has decreased the buying power of those earning minimum wage across the state.

NYC’s Minimum Wage is Second Highest in the Nation

As of January 1st, 2024, workers who earn minimum wage in NYC—as well as surrounding Westchester, Nassau, and Suffolk counties—saw their hourly pay rate rise to $16 per hour.This was the first increase since the minimum wage in the city hit $15 per hour in 2019. With the new increase, New York City now has the second highest minimum wage pay rate of the five largest cities, just behind Los Angeles’ $16.78 per hour. 

NYC has a minimum wage slightly above Chicago’s at $15.80 per hour, and substantially above Phoenix’s at $14.35 per hour, and Houston’s rate of $7.25 per hour, which has remained at the federal minimum since 2009.

Inflation Has Eaten Away at NYC’s Minimum Wage

Although the minimum wage in NYC is high compared to other big cities across the country, rising inflation over the past few years has eaten into the real purchasing power of workers’ earnings. Since the minimum wage hasn’t changed since 2019, average inflation rates in NYC over the past few years have decreased the real minimum wage, or purchasing power, of workers in the city.

Because minimum wage has not kept up with inflation, workers making the minimum wage of $15 per hour in 2019 in NYC who still made the minimum wage in 2023 had their buying power decline 14.3%.

According to data from the BLS Quarterly Census of Employment and Wages, there are a handful of industries in New York City that have average wages below $17 per hour where a sizable proportion of workers at or near the minimum wage are employed. These industries include restaurants, supermarkets and other grocery retailers, department stores, and shoe retailers. Workers and employers in these industries would be most impacted by additional increases in NYC’s minimum wage.

Two Different Plans to Keep Raising NYC’s Minimum Wage

New York City and state officials have plans to make further increases to minimum wage over the next few years, to keep better pace with inflation.

New York State Senator Jessica Ramos introduced a bill called Rise Up NY, which would progressively raise the minimum wage in NYC every year until reaching $21.25 in 2026. Subsequently, the minimum wage would be indexed to only the sum of inflation and labor productivity growth.

New York Governor Hochul’s Executive Budget for 2024 included the Education, Labor and Family Assistance bill that would also tie increases in the NYC minimum wage to inflation. However, it would be capped at 3% annual increases and would have exceptions for certain unemployment rate and payroll employment total benchmarks.

These exceptions, along with omitting the initial annual raises from 2024 to 2025 present in the Raise Up NY bill, project that Governor Hochul’s proposal to raise the minimum wage would only hit $16.28 per hour by 2026. As of writing, the bill in the 2024 executive budget was adopted, although debate in the New York State government over the future of minimum wage is still ongoing.