In 2016, when New York implemented its gradual minimum wage increases up to $15 per hour, it included a so-called safety valve provision. The hikes, scheduled to be implemented over a five year period, could be stopped in upstate New York in case of economic strife.
The plan also set the wage for upstate New York areas to top out at $12.50 per hour at the end of 2020, then the state would use various economic parameters to decide how to move forward to $15 per hour upstate.
Putting aside the recklessness of enacting a policy that requires a “safety valve” in the first place, the option exists. Why is this so relevant now? Coronavirus’ impact on the economy has been severe.
New York is at its highest unemployment rate since the Great Depression – nearly 20%. Like most states, there are businesses that will be unable to recover from the length of the shutdown.
The state lost nearly 1.8 million private-sector jobs in April alone, which the New York Department of Labor reported was the largest unemployment drop on record. The Empire Center has reported the leisure and hospitality job sector alone losing a devastating 68% of its workers.
This is the worst possible time for businesses to absorb further mandatory wage increases, when many can barely afford to stay afloat and are having to lay off employees. During times like these, the more employers must pay employees higher wages, the more employees they must lay off. Some will be pushed out of business. People looking to return to work, or perhaps find part-time opportunities, will see those opportunities curtailed by higher minimum wages.
Governor Cuomo himself has said of the safety valve, “If the economy slows, a national downturn, you have a safety mechanism for the minimum wage increase, which is the perfect design.”
It is safe to say the state’s economy has reached the point where the safety valve needs to be considered.
Upstate New York was already struggling before coronavirus ground the economy to a halt. Further, pulling the safety valve and stopping the increase scheduled to occur by the end of 2020, would also send a message that further increasing the wage upstate to $15 is an absurd proposition.