Relates to the minimum wage and makes technical changes to the labor law relating thereto

Summary of specific provisions

Section 1: Amends Labor Law section 651 to require the state,. local governments or political subdivisions thereof, to pay their employees the statutory minimum wage under article nineteen of the Labor Law.

Section 2: This provision makes a conforming change to the definition of "employer" in section 651 to include a state or municipal government or a political subdivision thereof.

Section 3: Amends subdivisions 1, 4 and 5 of Labor Law section 652 to provide that effective January 1, 2013 the statutory minimum wage shall be $8.50 per hour, and for food service workers receiving a minimum cash wage, including those for which employers are authorized to make wage deductions for meals and lodging, $5.86 per hour. It would also require that beginning on January 1, 2014 and annually thereafter on such date, the minimum wage shall be indexed to inflation by the commissioner of the Department of Labor.

Section 4 is the effective date.

Justification

When Congress enacted the Federal Fair Labor Standards Act (FLSA) in 1938 and prescribed a minimum wage, it was intended to ensure that low-wage workers would earn, at the very least, a liveable wage. However, over the years, data has shown that the federal government's actions to preserve this standard against the erosive power of inflation have fallen decades behind.

According to the United States Bureau of Labor Statistics, the nation's effective minimum wage peaked in 1968 at the 2010 dollar equivalent of $9.60. Additionally, if the 1968 minimum wage of $1.50 had been indexed to inflation, it would have had the purchasing power of $10.03 today. By this comparison, it is clear that the current minimum wage of $7.25 is not nearly sufficient to meet the rising costs of food and shelter, let alone provide for healthcare, transportation, child care and other necessities for New Yorkers and their families. The annual income for a NYS full-time minimum wage worker has not exceeded the federal poverty threshold since 1979.

Further, the annual gap between the stated minimum wage and the effective minimum continues to grow steadily.

In 2010, there were over 264,000 people in NYS earning at or below the minimum wage, many of whom reside within the New York City metropolitan area, the area ranked as having the highest cost of living in the nation. Historically, the highest proportion (14%) of workers that earn at or below the federal minimum wage was in service occupations, with nearly half of that number being employed in the leisure and hospitality industry, primarily in restaurants and other food services. With a relative cost of living that far exceeds the national average it is important that the minimum wage standards in this State be reflective of these facts.

The guarantee of a livable wage not only benefits workers and their families, it is also a direct benefit for the State's overall economy as it is widely proven in consumer trends that lower wage earners are more likely to reinvest any disposable income into their local businesses. Currently, there are ten states whose minimum wages are statutorily required to be adjusted annually, to reflect changes in the consumer price index, and three with proposals pending to do so. This safeguard ensures that despite delays in Congressional action to increase the minimum wage under the FLSA, the wage laws in NYS will continue to provide for its residents.

Prior legislative history

New bill.

Fiscal implications for state and local governments

To be determined.

Effective date

Immediate.