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Should minimum wage increases be tied to inflation?

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There is a push by New Yorkers to help families hurt the most by soaring inflation, but some are questioning if it is the right move.

Gov. Kathy Hochul wants to pay workers making minimum wage more as costs continue to rise. She is pitching a plan to lawmakers to tie the minimum wage to inflation.

Last week at the start of the new year, the minimum wage in New York increased by another dollar, bringing it up to $14.20 an hour here in Central New York. The minimum wage for home care aides locally also went up a dollar to $16.20 an hour.

The governor says we have to do more to put money back into New Yorkers' pockets while the cost of living continues to rise. Now she has a plan to help workers make ends meet.

Hochul was given a standing ovation from many state lawmakers during her State of the State address from Albany on Monday, getting support for her new plan. "The average monthly cost of goods and energy for low-income households has jumped by more than 13 percent in just two years and they were barely making it before," Hochul said.

We have all watched as soaring inflation has made life more expensive. We are all paying more for everything from gas to groceries. But it is the low wage workers, the governor says, who were hit the hardest. Those people already on the margins, many women and people of color, she says, who are being pushed to the breaking point.

I am proposing a plan to peg the minimum wage to inflation. If costs go up, so will wages." Gov. Hochul

State Assembly Minority leader Will Barclay is pushing back on the plan, saying at a time when many people are leaving the state, we cannot afford to make the cost of business even higher. However, he says, he would be open to the idea of raising the minimum wage. "I don't necessarily think it's a bad thing to tie it to some sort of economic indicator," he said. "The problem is when you tie it to inflation, that can be a self-fulfilling prophecy whereas inflation goes up, wages go up. The increase in wages will cause more inflation. So it's kind of an endless cycle."

Dr. Chandan Jha teaches finance at LeMoyne College. He thinks the governor's plan is a good idea, saying the poorest people are hit the hardest by inflation. "When they are hit by the inflation, for them a 5 percent or 10 percent increase in prices of the goods that they are consuming, it's a big effect for them," he said.

Dr. Jha says businesses, even smaller ones, can absorb higher costs more than people with low wages who are just barely getting by. "When inflation rises, they are also able to sell their products at a higher price even if they are mom-and-pop stores. And so they should be able to withstand that increase because it's an economy-wide phenomenon," he said.

If lawmakers support her plan, the governor says the state will make increases predictable for employers and create flexibility if we deal with a recession. But she calls it a matter of fairness and social justice, saying the change will give nearly 900,000 minimum wage workers a lifeline.

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Assembly Minority Leader Barclay thinks it may be a better idea to tie it to personal income. He also wants to reinstate the suspension of the gas tax and extend more sales tax relief to help New Yorkers struggling to get by.

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