New Yorkers will ring in the New Year with another bump in the minimum wage, as hourly pay rises to $17 across New York City, Westchester and Long Island on Jan. 1, while the rest of the state will see the minimum climb to $16 an hour, the New York Post reports.
Eighteen states around the country will also increase their minimum wages at the start of the New Year. Those bumps range from a minimal $10.85 hourly wage in Montana to a high of $17.13 in Washington.
New York's latest 50-cent hike is the third straight annual increase under a long-term plan agreed to by Gov. Kathy Hochul and state lawmakers.
This year, on Jan. 1, 2025, the minimum wage went up from $16 to $16.50 in New York, Westchester and Long Island and from $15 to $15.50 elsewhere in New York state.
Supporters say the stepwise increases are essential to keep wages in line with living costs in one of the nation’s most expensive regions.
Nonetheless, business owners and analysts warn that the rising floor is beginning to pinch companies that are above minimum wage but not richly profitable themselves.
For many small and mid-sized businesses, payroll costs are rapidly catching up with revenue — particularly in industries like hospitality, retail and construction that already operate on thin margins. Higher mandated wages can force employers to rethink staffing levels, slow hiring, raise prices or invest in automation to offset the added labor costs.
“Higher minimum wages tend to help older, more experienced workers supplement income,” said Dean Lyulkin, CEO of small-business lender Cardiff. But he added that “for younger workers, the real challenge is not pay — it’s access.”
Lyulkin noted that when entry-level labor becomes more expensive, opportunities to hire and train inexperienced workers shrink, making it harder for them to get a foothold in the job market.
Small contractors, who often bid months in advance on projects, can find their margins squeezed immediately by rising labor costs — a burden corporate competitors are better equipped to absorb.
Independent restaurants are facing similar pressure. With profit margins often below 5%, any increase in labor costs can force owners to cut hours, delay hiring, raise menu prices, or adopt self-service and automation technologies just to stay afloat.
The timing of the increases — amid a slowing labor market and rapid advances in AI and workplace automation — compounds the challenge. Employers are becoming more cautious about new hires, not more generous, Lyulkin said.
The wage hikes are part of a broader trend.
At least two dozen states nationwide are scheduled to raise their minimum wage levels in 2026, affecting millions of workers, even as debates continue about balancing cost-of-living protection with the health of small and mid-sized employers.
The bottom line: The steady march of raises — in New York, from $15 in 2023 to $17 in 2026 — is a win for workers’ paychecks but is also reshaping how businesses manage labor, hiring and the bottom line.
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