Two state agencies have determined that the minimum wage in most New York counties, including all of upstate, should increase to $13.20 an hour by the end of the year.

The minimum wage is $12.50 an hour in areas outside of New York City, Long Island and Westchester County. After reaching $12.50 an hour at the end of 2020, state law requires the Division of Budget, working with the Department of Labor, to examine whether there should be additional increases.

The minimum wage hike from $12.50 to $13.20 an hour, which will take effect on Dec. 31, is “based on the Consumer Price Index for all urban wage earners and clerical workers as well as nonfarm business labor productivity, enabling low-wage workers to continue to afford the same basket of goods and services and then some based on rising productivity,” according to the Department of Labor.

A report released by the Division of Budget found that low-wage workers were most affected by the pandemic. One million jobs were lost in industries — health care, retail trade, and social assistance, leisure and hospitality — where there are higher numbers of minimum wage earners.

The report also cites the results of a survey compiled by the Federal Reserve Bank of New York that found workers reassessed the value of their work during the pandemic. The nationwide reservation wage — the lowest wage workers would accept for their work — reached a high of $71,400 in March, a 15.7% increase in one year.

Many employers across New York and the county have been affected by a labor shortage. The state Department of Labor noted that job postings are at all-time high levels in New York. In July, the number of jobs requiring a high school education or vocational training topped the pre-pandemic high by 95.4%.

“Companies, particularly those that employ low-wage workers, are already raising wages and in some cases offering incentives to hire amid a labor shortage that is showing no sign of abating, and it makes sense to raise the wage floor now and continue supporting New York’s families while providing a predictable path forward for businesses,” state Labor Commissioner Roberta Reardon said. “With today’s action, we are continuing the work of building back with equity and justice.”

New York began raising its minimum wage, with a target of $15 an hour in downstate, in 2016. The $15 minimum wage was phased in over a three-year period for large New York City employers with 11 or more workers, and over a four-year stretch for small businesses with no more than 10 employees.

For Long Island and Westchester County, the minimum wage will reach $15 an hour at the end of this year.

The rest of the state is on a different schedule. When the $15 minimum wage was fully phased in for New York City, counties outside of Long Island and Westchester had an $11.80-an-hour rate. It rose to $12.50 an hour at the end of 2020, despite calls from some state lawmakers and business leaders that it should be delayed due to the pandemic.