Frederick Floss (October 12, 2026)
Minimum wage is once again being considered by the NYS Legislature and Governor Kathy Hochul. In 2023, lawmakers tied the NYS’s minimum wage to inflation, but in so doing included a safety valve by providing three “off ramps” allowing the state to freeze minimum wage (Dan Clark, Capitol Confidential Newsletter, September 30, 2026 and New York can’t raise its minimum wage as scheduled. Hochul is pitching a fix – Albany Times Union). If the safety valve goes into effect, NYS’s minimum wage will not increase in January 2026 despite an increase in inflation. One of the safeguards is a recorded loss in jobs over a certain period of time (seasonally adjusted number of jobs in January, April, and July). If the number of jobs is lower in July than in January and April, the law prohibits an increase in the minimum wage. In 2026, the number of jobs declined in April and July from January employment numbers.
Governor Hochul has proposed a change to the law which would set a threshold (0.25% decline) in the monthly rate of employment (ending in July) for a freeze in minimum wage to take effect.
“Federal policies on trade and immigration, and other domestic and global geopolitical issues, are keeping some tourists away,” said state Comptroller Thomas P. DiNapoli, a Democrat who’s also seeking reelection this year (quoted in Clark). Hochul argues a decline in international tourism (not least the loss of Canadian tourists) and loss of international students to universities have been important factors lowering employment.
With the NYS legislature being asked to reconsider the state’s minimum wage law, it seems to be a good time to reflect on the larger issue—is NYS’s minimum wage law at least partially responsible for lower employment?
New York State phased in a $15-per-hour minimum wage beginning in 2016, on different schedules for New York City, Long Island and Westchester County, and the rest of the state, while Pennsylvania’s minimum wage remained at the federal $7.25. Competitive labor market theory predicts that a binding minimum wage reduces employment, whereas monopsony theory predicts that a moderate minimum wage can raise both wages and employment. Governing New York State Through Crisis has posted a study that asks which model better describes New York using a staggered difference-in-differences design (Callaway & Sant’Anna, 2021) with Pennsylvania as the never-treated comparison group. The analysis uses county-level Quarterly Census of Employment and Wages data for 129 counties from 2011 to 2025, with independent checks using Current Population Survey microdata and Occupational Employment and Wage Statistics data. The minimum wage increases raised wages, particularly in hospitality, while estimated effects on total employment were not statistically significant. The one significant hospitality employment estimate, about 121 jobs per county in the rest of the state, is economically very small. A border-county comparison and distributional evidence point to the same conclusion: wages in New York rose in real terms while wages in Pennsylvania stagnated, without a major decline in employment. These findings are more consistent with the monopsony model. Read full analysis here.
Frederick Floss, Ph.D. is Professor of Economics, Finance & Public Administration at SUNY Buffalo State University. He serves as secretary of the City of Buffalo Fiscal Stability Authority.
