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Despite inflation that has pushed up prices in the New York area by 4% in the last year, low-wage workers won’t see an expected increase in the city’s $17 an hour minimum wage on Jan. 1 because of a quirk in the 2023 state law that indexed the minimum wage to the consumer price index.

The blow to those workers comes as the city’s economy falters. Data released last week by city Comptroller Mark Levine shows that the city has lost private sector jobs over the past 12 months.

Together, the inflation and employment numbers put in sharp relief the city’s increasingly unequal K-shaped economy . While Wall Street continues to boom on artificial intelligence deals that support luxury consumer spending, housing, and city and state tax revenues , many more New Yorkers are losing economic ground.

The quirk that precludes an increase on Jan. 7 is a result of Gov. Kathy Hochul’s insistence, during negotiations over the 2023 law that increased the minimum wage and tied it to inflation, that annual hikes would be suspended in the event of an economic downturn.

But the actual yardstick — that July seasonally adjusted private employment in the state was less than both January and April — is so technical that the pause will take effect despite the fact the state is likely to end the year with an increase in jobs.

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The governor is aware of the problem and is expected to propose changes in January to require a much steeper decline in employment to prevent an increase. But the change, if approved by the Legislature, would not affect 2027.

“New Yorkers are already grappling with higher prices on everything from gas to groceries thanks to inflation driven by Donald Trump’s misguided policies,” Hochul said in a statement to The City Reporter. “This change is good for workers and businesses, ensuring that those hardest hit by Trump’s affordability crisis keep pace with the cost of living, maintain their purchasing power, contribute to the state economy, and support our small business community.”

The lack of a minimum wage increase will be particularly difficult for lower-wage workers. Workers in the lowest quintile saw wages increase only 1% adjusted for inflation in 2024 and 2025. No increase will mean their wages will decline in real terms.

The quirk also means the city will fall behind other large cities and states controlled by Democrats.

For example, on Jan. 1 workers in Seattle will be paid at least $22.14 and Denver will reach $19.78, notes James Parrott, an economist and senior advisor to the Center for New York City Affairs at the New School.

“The Connecticut statewide minimum wage of $17.48 will exceed NYC's $17 minimum wage on Jan. 1, probably for the first time ever,” Parrott said in an email. “If there was any doubt, New York City needs the authority to set its own minimum since Albany's ridiculous 2023 minimum wage law has built-in brakes preventing an adjustment even though inflation is rising.”

During last year’s campaign, Mayor Zohran Mamdani endorsed a $30 an hour minimum wage to be achieved by 2030 but he hasn’t made any specific proposals since taking office. Deputy Mayor for Economic Justice Julie Su told The City Reporter in an interview earlier this year that it was uncertain if the city could act on its own. Meanwhile, the latest job numbers are raising concerns about the health of the city’s economy — especially for young people entering the workforce. “We have a problem in the job market,” said Comptroller Levine. “It is not a simple narrative because unemployment filings are stable because we are seeing relatively few layoffs.”

“But young people are hitting the wall ,” he added. “You have kids coming out of college and who have done everything we asked of them, they can’t find a job and they can’t find a place to live.”