Minimum Wage

Determined To Kill Businesses That Survived Lockdowns, New York Plans Minimum Wage Hike Later This Month

New York's unemployment rate is nearly 10 percent and roughly one-third of small businesses in New York City may have closed forever. Seems like a great time to make it more expensive to employ people, right?


In an apparent effort to finish off the businesses that survived the nightmare that was 2020, New York will go ahead with a planned minimum wage increase at the end of the month.

The New York Department of Labor announced Wednesday that it will move forward with plans to hike the state's minimum wage on December 31. Under the state's phased-in minimum wage increase that started in 2016, businesses in New York City are already required to pay workers a minimum of $15 per hour. On December 31, the minimum wage in Long Island and Westchester County will increase by $1 to $14 per hour, and the minimum wage across the rest of the state will jump from $11.80 to $12.50 per hour.

The Labor Department had considered postponing the minimum wage hikes in light of the COVID-19 pandemic and associated government-mandated shutdowns that have crushed businesses across New York. The unemployment rate in New York state has been above 10 percent nearly every month since March, and as many as one-third of New York City's small businesses may have permanently closed due to the pandemic. With new statewide economic lockdowns announced in recent weeks (and Gov. Andrew Cuomo threatening even more in the near future), those figures are likely to get gloomier before they improve.

Seems like a great time to make it more expensive to employ people, right?

Greg Biryla, New York director of the National Federation of Independent Business (NFIB), told the Rochester Democrat & Chronicle that the Cuomo administration's reasoning for approving the minimum wage hike "defies logic." Even with assistance from the state and federal governments, 39 percent of NFIB members say they could be out of business in the next year.

The infuriating thing is that the state is well aware of the additional burden it is creating—the Cuomo administration just doesn't seem to care. A report commissioned by the labor department to review the potential costs of hiking the state's minimum wage in the middle of a pandemic and economic crisis notes that "COVID-19 has dramatically changed the economic landscape, casting doubt on whether the capacity to absorb minimum wage increases without adverse impact can continue over the near-term."

But the analysts add that "Anecdotally, our research has found examples of job openings upstate offering wages well above $12.50," and conclude that "these examples could be interpreted as evidence that upstate businesses are able to offer the wages necessary to attract the workers they need."

Yes, they discard piles of actual economic data because they found anecdotal evidence that businesses can afford to pay higher wages—and so all must.

F. A. Hayek famously wrote that politicians and bureaucrats will always lack the necessary knowledge to run the economy as well as the market can. That's often true. But here's an example of bureaucrats having all the information necessary to make what should be a very easy decision to postpone a minimum wage hike until the pandemic passes and unemployment falls—and the amount of knowledge doesn't matter as long as Cuomo's administration is determined to ignore reality.