The lack of funding is likely to become an issue as the budget moves forward in the Legislature, where some Senate Republicans have expressed concern about the potential effects of a higher minimum wage on businesses and non-profits. Cuomo’s budget does include funding for a phased-in higher minimum wage for state and SUNY workers.
There’s no increase in the amount the state pays for health care services through Medicaid. There’s also nothing budgeted to increase the amount that state pays for services for people with disabilities and other human services through contracts with non-profits.
“We very much support a change in New York for a $15 minimum wage… but our budgets are supported by government funding,” said Allison Sesso, executive director of the New York City-based Human Services Council. “I think it’s a worthwhile investment. Otherwise I know our sector won’t be able to compete for workers.”
Sesso said she’s optimistic the governor and lawmakers will see the need to fund the minimum wage increase not just for social services workers at state-contracted nonprofits, but also in Medicaid-funded positions and those the state funds at the local government level.
Sesso noted the budget did include a small cost-of-living adjustment for workers under state contracts but said the minuscule increase — 0.2 percent — would be barely felt by workers. She said past budgets had not included a full COLA increase for these workers.
The total cost through 2021 for workers at local governments and not-for-profits that rely on state funding would be $1 billion annually, according to a Senate staff analysis of the governor’s budget proposal.
For just state contracts with nonprofit service providers, the increase would cost the state about $300 million when fully phased in, according to an estimate by the nonprofit Fiscal Policy Institute. That’s an increase of about 20 percent from the current $1.5 billion in state contracts for human services and would affect about 50,000 workers.
The cost to the health care sector is estimated to be $3 billion when the increase to $15 an hour is fully implemented. That includes a $570 million cost to hospitals, according to the Healthcare Association of New York State. The association, which represents hospitals and health care systems statewide, plans to push for funding to be included.
Senate budget analysts are also concerned about the lack of funding for the $15 minimum wage.
“Wages and benefits for health care employees are often financed through Medicaid rates and other third-party reimbursement,” the budget staff analysis from the Republican-controlled Senate reads. “Without an identified funding source, the proposal could disproportionately impact the health care sector.”