Push for $20 Minimum Wage Begins as Inflation Erases Worker Gains
Just years after labor activists persuaded a handful of states to raise their minimum wage to $15 per hour, workers initially thrilled with the pay bump are finding their hard-won gains erased by inflation.
New York City resident Anthony Rivera, 20, who sorts packages at a United Parcel Service facility in Brooklyn, said he had to take a second job at a grocery store after his food costs soared.
“I was sitting at $15 an hour at UPS, and when it came to paying bills and buying groceries, it was starting to become not enough,” he said. “That led me to no other option than to pick up another job.”
New York, California and Massachusetts are among states where pro-labor forces are now pushing proposals that, if approved, would boost minimum wages to $20 or more in the coming years.
Inflation has meant that something that cost $15 in 2012 — when labor activists adopted the “Fight for $15” slogan in a push for wage hikes — would probably cost almost $20 today, according to the U.S. Bureau of Labor Statistics.
But opponents to the wage hikes say they can be detrimental to small businesses, which already took a major hit during the coronavirus pandemic.
Cindy Lee, the owner of a bowling alley in Endicott, New York, said she’s struggling to pay off loans taken out during the pandemic that kept her business afloat.
“All this cost all at once is just going to kill us. I definitely will have to cut corners somewhere with employees if wages are raised,” said Lee, adding that she’d also have to increase prices on bowling, food and liquor.
The federal minimum wage in the United States has stayed at $7.25 per hour since 2009, but states and some localities are free to set higher amounts. Thirty states have chosen to do so.
Over the past decade, labor groups held out $15 as the target that would let low-paid workers sustain themselves within the 40-hour workweek. A growing number of states across the political spectrum have passed legislation that will take their minimum wage above that amount in the next few years, including Florida, Nebraska and Illinois. Eleven states have phased in wage increases of $5 or more within the past decade.
Previous Wage Gains Tempered by Inflation
Yet those gains were almost immediately tempered. Inflation in the United States hit a new 40-year high last summer after prices for basic necessities like gas and food soared. Supply chain issues resulting from the coronavirus pandemic, combined with Russia’s invasion of Ukraine, have disrupted gas and food supplies, sending those prices skyward.
Labor activists are pressing for a new round of wage increases even as the old ones are still being phased in.
A bill in New York would raise the state’s minimum wage to $21.25 by 2026, and then adjust it each year going forward for inflation. Right now, minimum wage workers in New York City get paid $15, while the rest of the state is at $14.20.
In Massachusetts, one bill proposes to raise the wage every year until it hits $20 in 2027, up from $15 now.
And in California, where the minimum wage is currently $15.50 for all workers, legislation signed in September would have set the state on a path to raise wages for fast-food workers to $22 per hour. The law was met with heavy opposition from restaurant industry groups who led a successful effort to force it into a referendum vote in 2024.
Backers of a proposed wage increase in New York say they hope it will pass as part of the state budget, which is expected to be finalized in early April.
“You can’t tell us that after the pandemic, that $15 is going to still be enough for us to keep food on our tables,” said state Sen. Jessica Ramos, a Democrat who represents parts of Queens, said at a rally in Albany. “That’s why we want $21.25, nothing less. The price of everything is going up except for wages.”
In her executive budget proposal, New York Gov. Kathy Hochul, also a Democrat, proposed tying minimum wage increases to inflation, but with a cap on how much wages could rise in any one year.
Barry Nicholson, the owner of four retail businesses in Corning, a city by the Finger Lakes in New York, said a wage increase to $21.25 would be “a smack in the face to small businesses.”
“There is just no way I could handle that,” said Nicholson, who owns two UPS stores, and women’s accessories and modern home furnishings stores. “When you look at retail hospitality, we live and die by a couple of points at the end of the day. We’re not the big corporations everyone talks about.”