OAN Staff Cory Hawkins and Brooke Mallory
2:20 PM – Tuesday, December 30, 2025
On January 1st, New York will raise its minimum wage to $17 an hour in New York City (NYC), Long Island, and Westchester County. As for the rest of the Empire State, the minimum wage will be $16 an hour.
This is the last of the pre-set $0.50 annual increases that were part of a 2023 state budget plan from Governor Kathy Hochul (D-N.Y.) and state lawmakers.
Additionally, starting in 2027, the minimum wage will no longer be set at a fixed dollar amount by the legislature. Instead, it will adjust annually based on the Consumer Price Index (CPI) to keep up with the cost of living, officials added.
Other states raising their minimum wage at the start of the new year include Arizona, California, Colorado, Connecticut, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, Ohio, Rhode Island, South Dakota, Vermont, Virginia and Washington.
Hawaii is set to have the largest dollar increase, rising from $14 to $16 an hour, and Alaska, Florida and Oregon have scheduled increases for later in the year.
Many liberal New York workers have welcomed the news, believing that the increase is essential for keeping pace with the cost of living in one of the nation’s most expensive regions.
However, a growing number of business owners, analysts, and economists warn that the hike could be counterproductive. Local businesses may feel compelled, or simply choose, to raise prices across the board to offset labor costs, inadvertently fueling the same inflation the wage increase was designed to alleviate.
This phenomenon, known as a “Wage-Price Spiral,” suggests that as labor costs rise, businesses pass those expenses directly to consumers, potentially neutralizing any real gain in worker income.
Dean Lyulkin, co-CEO of Cardiff, a leading digital lender for American small businesses, also warned of a “domino effect” triggered by rising entry-level wages. Lyulkin explained that as labor costs climb, businesses often move away from hiring and training inexperienced workers, which ultimately makes it harder for new entrants to gain a foothold in the job market.
“When entry-level labor becomes more expensive, the first thing that disappears is the opportunity to get hired and learn on the job,” he continued. “Large companies in construction and food service can absorb higher labor costs through scale and capital. Small contractors cannot.”
Restaurants face similar pressure, Lyulkin added, especially independents operating on thin margins.
“If an independent steakhouse is already running on margins below 5%, there is simply no room to absorb additional wage pressure. Owners respond by cutting hours, automating where possible and slowing hiring altogether.”
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