The minimum wage of $15 an hour seemed like a lofty goal when labor activists began “fighting for $15” a decade ago. At the time, the minimum wage in New York was $7.25.
But now that Long Island’s minimum wage hit $14 to $15 on Dec. 31 — hyperinflation has swallowed up the increase, leaving many of the area’s full-time workers relying on food stamps to survive.
While low-wage workers have been hit hard by rising costs, middle-class families are also seeing their bills rise without matching the increases with their salaries.
Employers face their own pressures: A rising minimum wage and a record-tight labor market force them to raise wages at all levels to compete for workers, at the same time that inflation and supply chain issues raise other costs.
net effect? Wage increases do not keep pace with price increases. This means that many Long Islanders, already struggling to keep up with the region’s high cost of living, are now finding themselves losing ground to inflation.
For low-wage workers like Dawn Dimasi, simply putting food on the table is a struggle.
“Food, bills, rent and all of that, it doesn’t really go very far.”
— Fajr Dimasi, 38, of Bachoge, who earns $15 an hour as a full-time employee at a home-based childcare company in Lake Ronkonkoma
Dimassi, 38, of Bachoge, earns $15 an hour as a full-time employee At a home childcare company in Lake Ronkonkoma. At 40 hours a week, that equates to $31,200 before taxes.
“He’s a minor,” said Dimasi, a single mother of four, ages 2 to 17.
“Food, bills, rent and all of that, it doesn’t really go very far,” she said. “Fortunately, I actually get help from food vouchers because I can’t afford food with what I make…especially with three older boys and a toddler.”
Eligibility limits for the Supplemental Nutrition Assistance Program (SNAP) in New York State vary based on family size and income. For example, a family of four earning up to $39,756 per year would be eligible for assistance.
Dimassi said she knows that many large employers, such as Target and Amazon, offer higher starting wages.
“Retail is just not a thing for me,” she said. “Everyone told me that working with children is where I belong. I love helping children.”
Dimassi’s boss, Darcel Lyon, who has been providing childcare for more than 30 years, said she’d like to be paid more, but she can’t.
Unlike most other industries that can pass on a portion of the rising cost of goods and wages to consumers, Lyon said she’s stuck in a dilemma: Childcare is already too expensive for many parents, limiting her ability to raise prices. This means, she said, that an increase in employee wages is not currently possible.
“We can only pay them the minimum wage,” Leon said. “We know our employees are valued at over $15 an hour. It’s a very tough industry, especially right now, and COVID hasn’t helped anyone.”
Like many child care workers, home health aides struggle at the bottom of the wage ladder, earning an average of $31,590 a year — just above minimum wage, according to Labor Department estimates.
Kristi, 25, of Bellport, an assistant who asked that her last name not be used for fear of reprisals from her employer, said her low salary forces her and her two-year-old twins to live with her mother. They also use food stamps.
Kristi described the $15.22 you earn per hour as “ridiculous” for the work you do. She has worked as a home health aide and in nursing homes since she finished high school.
“I say it’s ridiculous because I have my two sons,” she said. “Do you expect someone to support them for $400 a week?” This is what you earn after taxes and health insurance premiums.
“It’s not easy,” she said. “I honestly don’t even know how to do it sometimes.”
Who makes the bare minimum?
Few statistics are available on Long Island’s minimum wage. But state and national numbers paint a picture. Most women in New York — 57% — are female, according to a 2019 report from the New York State Department of Budget, and an estimated 40% work in the hospitality or retail industries. Few — just 6% nationwide — are teens, while 80% are 25 or older, according to Bureau of Labor Statistics data.
The reality for them, and for most workers, said Gregory Deveritas, labor economist and professor at Hofstra University, is that increases in their wages hold back inflation, which leads to lower purchasing power.
“The workers need higher wages, and they and their families are facing challenges due to price inflation,” he said.
Devritas said wages across the country have been in a “wage paralysis” for nearly 40 years, describing the current upward pressure on wages caused by the pandemic as a major turning point for workers.
He said, “Employers, on average, have been bargaining on employment for a really long time. Really, on average about 90% of American workers wages have been stagnant. It was only during the boom of the late ’90s and now that we’ve come under some national pressure. Avenue upwards on wages.”
Overall, he said, workers — especially low-wage workers — have emerged from the pandemic demanding higher compensation, better benefits, and greater flexibility.
“It’s total free market economies,” Devritas said. “Employers are subject to market conditions, and if they want the best workers, they have to get a job offer to attract them.”
However, the current inflation rate exceeds those high wages. Data from the Bureau of Labor Statistics shows that average hourly earnings for American workers rose 5.5% in April from a year ago — a healthy increase in normal times, but well below April’s high 8.3% national inflation rate.
Multiplier effect on wages
On the island, the latest minimum wage rise from $14 to $15 – a 7% increase – has been volatile with a local inflation rate of 6.3%. The raise has been a help to workers earning salaries at this level, and business owners note that the mandatory raise created a ripple effect in the ranks of their organizations.
“It’s clear that as the minimum wage goes up, not only the minimum wage is affected, but everyone earning $17 or $18,” said Mark Wolf, president of Contract Pharmacal Corp., one of Long Island’s largest drugmakers. “So these people should get a raise in their salaries at such a large rate.”
“Before COVID, it was hard to find employees,” Wolf said. “It’s harder today, but I think it got a little easier because I raised wages.”
He declined to reveal the new salary ranges but said, “It has significantly increased my costs.”
Employers say the dearth of job candidates has made raising wages the only way to attract and retain workers. In March, the most recent month for which that data is available, employers posted a record 11.5 million jobs — nearly two positions filled for every unemployed American, according to the Bureau of Labor Statistics.
“When we talk about it with our business owners, we find two main points and two themes. One is [limited] “The talent pool they have access to,” said Shaun Kluch, financial advisor and analyst at Wealth Alliance, a financial and investment advisory firm in Melville.
“Moreover, there are many, many large companies that are raising the minimum wage in addition to the minimum wage set by the government,” Kloch said.
Over the past year, big national employers such as Amazon, Target, Walmart and Bank of America have grabbed headlines over plans to increase workers’ wages. Earlier this year, Target said it would start offering a minimum wage of $15 to $24 in competitive markets like New York. In the fall, Bank of America raised the minimum hourly wage nationwide to $21.
Nine out of 10 employers nationwide said they plan to award base pay increases this year, according to a Payscale survey of more than 5,500 employers from November to January.
But while 76% of companies said they faced labor shortages and challenges to attracting employees last year, only 44% of companies said they plan to raise wages by more than 3%, well below the pace of inflation, according to the survey.
At the same time that the labor market exerts upward pressure on wages, business owners fall into their own inflationary predicament. Only the cost of raw goods has increased, and external factors, such as the Russian invasion of Ukraine and ongoing pandemic supply chain issues, have made it more expensive to do business across the board.
US producer prices rose 11% in April compared to the same month in 2021, according to recent numbers from the Bureau of Labor Statistics.
Employers see increases pay off
For some business owners, the pressure to increase wages while adjusting to higher costs is It means having to rethink their operations, find efficiencies and adjust their pricing.
One restaurant owner said these steps paid off.
John Robertson, owner of the restaurant Sexy Salad in Hauppauge, said the pay hike “was a great thing for my company”. “We are in a much better position and the wage increase was a big part of that.”
“It’s a higher quality workforce now than it was before,” he said.
Before the pandemic, Robertson said, it had more than 25 employees.
Since then, having had to lay off his staff during the worst periods of the pandemic, he has reduced staffing.
“The 15 employees are now getting paid more than ever.”
– John Robertson, owner of Sexy Salad in Hauppauge
“The 15 employees are now being paid more than ever before,” Robertson said. “The majority of them earn 25% more” than they did before the pandemic.
Before the pandemic, he said, workers were earning $12 to $13 an hour and now they earn $16 to $18 an hour. The highest-paid employee has seen hourly wages go from $18 before the pandemic to $25 now.
He said these wage increases meant he had to raise prices. But it’s a trade-off that many of his clients understand, and feel is justified.
“We have absolutely raised prices,” he said. “And customers, they know everything that’s going on and are happy to pay outstanding employees.”
Paying minimum wages to employees has not been an option for years given the competition for hospitality workers in the Hamptons, said Dede Gotthelf, CEO of Southampton Cat Cove LLC, the owner of the inn, at the Southampton Inn.
“Whatever the minimum wage imposed by the government, as an employer and as a company that relies heavily on its human resources to provide the right service to our clients, we do Offer a little more by giving a living wage rather than a minimum wage.”
“We’re somewhere between $17 and $20 for some of our employees every hour,” she said.
Attracting service workers in an area with low-cost housing posed challenges to Gotthelf, But the key was to raise wages.
“We’ve been increasing wages every year, but certainly in the last two years, we’ve needed to keep up and be competitive,” she said.