New York State lost roughly 31,000 jobs this year through July, according to revised Bureau of Labor Statistics data. While Governor Kathy Hochul’s office suggests that the decline is nominal, it’s enough to trigger a provision in the state’s minimum-wage law that would freeze the wage for next year because of rising unemployment.
The freeze may surprise New York workers hoping for another wage hike, but it exposes the pitfalls of a mandated minimum wage. Hochul has promised to dismantle this off-ramp provision, part of a broader shift in minimum-wage laws that’s seen proposals to keep wages rising no matter what the economic conditions.
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Over a decade ago, New York began moving down a path of wage hikes, some set legislatively and others administratively. Starting in 2013, former governor Andrew Cuomo set a fixed schedule of state minimum wage increases over three years. New York Senate Democrats, led by Senator Andrea Stewart-Cousins, were disappointed by that legislation because it did not link the mandated wage floors to inflation.
The wage was slated to be stuck at $9 in 2016 without further action, so Cuomo helped craft a two-tiered framework. The “downstate” tier included New York City, Nassau, Suffolk, and Westchester; the rest of the state constituted the “upstate” tier. The 2016 law aimed to boost the minimum wage to $15 for both tiers.
Governor Hochul built upon that framework in her FY 2024 budget, which added an immediate wage hike of one dollar per tier followed by 50-cent increases in 2025 and 2026. The legislation tied the minimum wage to inflation, but it also added a condition-dependent off-ramp, conceding that the minimum wage can worsen inflation or rising unemployment.
Hochul has promised a fix, however, telling operators that they need to be prepared for the wage hike anyway, despite the job losses. The Governor’s Program bill describes the new approach, which will compare job changes over three-, six-, and 12-month periods and then determine the median rate. It would also require the median of those measures to show a loss of 0.25 percent of jobs to trigger the freeze. Under the current law, any job decline is enough. The bill labels this current approach “too sensitive” and justifies the changes as a way to “achieve the law’s intended purpose.”
The proposal will likely guarantee a minimum wage hike every year. If we apply Hochul’s rule change to the current job loss numbers, New York would have to lose about 150,000 jobs in a six-month period before freezing the wage. To put that in perspective, it would take an event on the order of the Great Recession to reach that threshold. When it created the off-ramp, the state implicitly conceded that minimum wage hikes can cause job loss. Now that the provision has been triggered, it’s looking to keep increasing the wage anyway.
New York’s strategy is not unique. Washington State pioneered tethering mandated minimum wages to inflation in 1998 with Initiative 688. Opponents argued that doing so would lead to a never-ending stream of increases without consideration of future economic conditions.
That’s essentially what’s happened: since 2001, the state’s minimum wage has risen with inflation nearly every year, with voters and cities piling on more increases. Seattle’s next minimum-wage hike will take effect next January 1 and increase the wage by 84 cents, to $22.14. Washington is slated for a 3.5 percent increase, bringing the state’s wage to $17.73.
Recent job losses in Washington are sobering. The Puget Sound Regional Council, measuring job numbers in King, Pierce, Snohomish, and Kitsap Counties, reported 13,000 lost jobs from 2024 to 2025. In that same period, the Downtown Seattle Association reported more than 18,000 jobs lost. Unemployment has also climbed year over year alongside the annual wage hikes.
New York and Washington’s minimum-wage mechanisms produce the same situation: mandated minimum-wage hikes amid unfavorable economic conditions. New York’s experience is a reminder of the risks of demanding a $15, $25, or even $30 minimum wage. A similar wage-hike mechanism is being proposed at the federal level. The Living Wage For All Act, introduced in April by Rep. Delia Ramirez (D-Ill.), proposes an immediate federal minimum-wage hike from $7.25 to $12, then a gradual climb to $25 by 2031 for large employers and by 2038 for everyone else.
The Living Wage For All Act uses the same playbook as New York and Washington, albeit tying minimum wages to the median wage, rather than inflation. According to the Congressional Research Service, median wages increase if low-wage industries experience a downturn and workers lose jobs. The result is another feedback loop—low-wage workers lose jobs, driving the median wage higher, hiking the minimum wage, and in turn causing more job loss.
The federal proposal mirrors Washington’s and New York’s wrongheaded approach. Businesses and workers will pay the price.