Minimum wage increase has Long Island business groups worried about prices, inflation

Many business groups and owners in Long Island are expressing concerns about the impact of the approved increase in the state's minimum wage on prices and inflation, while some argue that the increase is insufficient.

As a result of a clause included in the governor's all-encompassing budget bill which was approved on Tuesday evening, the minimum hourly pay in Long Island, New York City, and Westchester will increase from its current rate of $15 an hour to $16 on the first of January 2024, $16.50 on the first of January 2025, and $17 on the first of January 2026; once this raise is implemented, the minimum wage will continue to increase in accordance with inflation.

The minimum wage in the rest of the state will gradually increase from the current rate of $14.20 to $16 by January 1, 2026.

Dorothy Roberts, president of the Long Island Hospitality Association, stated that the impact is certain, particularly for smaller enterprises operating in the hospitality sector.

According to Roberts, the representative of Island's hoteliers and restaurant owners, employers have acknowledged the importance of their workers since the pandemic and are willing to offer competitive wages and benefits to attract them. However, she also pointed out that the funds for these higher wages must come from a source., she postulated that funding for these augmented wages must be sourced from an appropriate funding mechanism.

"It becomes a challenge for small businesses such as restaurants to continually increase employee salaries without raising menu prices for their customers," she stated.

The rise is occurring while the costs of common items stay high and the country's Federal Reserve is still dealing with the consequences of inflation on the economy's progression.

Less than two years after a state-mandated phased-in increase, Long Island's minimum wage reached $15 an hour by the end of 2021.

In a statement, Gov. Kathy Hochul expressed that the recent hike is beneficial for both employees and companies. According to her, by linking the minimum wage to inflation, individuals with lower incomes in New York will be able to retain their buying influence, promote the state's economic growth, and endorse small businesses.

According to labor organizations, the policy represents a significant victory for employees.

According to Ryan Stanton, who is the executive director of the Long Island Federation of Labor, this policy will have a lasting and significant effect on all workers, especially those who receive low wages.

Stanton stated that the cost of living in New York has rapidly increased over the past 40 years, while the minimum wage has failed to keep up.

However, the majority of the business community in Long Island is against the proposed elevations.

John Murray III, who owns The Hero Joint sandwich shops and Kilwins ice cream stores in Patchogue and Huntington, expressed that although the intention behind this may be noble, it may ultimately harm the very individuals it aims to assist.

Murray claimed that the burden of pricey commodities and amenities due to elevated labor expenses will fall on less affluent citizens of New York.

The timing of the increases couldn't be worse and they will only add more difficulty to an already challenging business climate, according to Patrick Boyle, who is the executive director of IgniteLI, a local manufacturers' trade group.

Boyle stated that it would not be appropriate to raise expenses for small enterprises, particularly during a period of historically high interest rates and low business confidence in growth.

He stated that a large portion of the group's 3,000 local manufacturers heavily depend on an entry-level, minimum wage labor force. As labor expenses increase, businesses will be obliged to transfer the costs to their customers.

Although some segments of the business world anticipate challenges, alternative factions argue that the augmentations are insufficient.

A group called New York Business for a Fair Minimum Wage, which consists of approximately 300 businesses and organizations, had been advocating for a bolder raise, reaching $21.25 by 2026, followed by adjustments for the cost of living.

Phil Andrews, who is the president of the Long Island African American Chamber of Commerce and a member of the coalition, stated that he believes the increase should have been implemented immediately. He mentioned that this is the most significant period of inflation he has witnessed, and he is unsure how people can afford to purchase their groceries.

Andrews mentioned that his advocacy for an increased minimum wage is based on his small business constituents' requirements. They are adversely affected by the shortage of consumers who have additional cash to spend.

According to him, for the economy to function properly, employees must earn income to be able to contribute to consumer spending, and withholding money would hinder this process. The closure of stores is an inevitable consequence if people reduce their spending.

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