It's a more hefty increase than it was last year. That's good news for workers, but it means business owners have to figure out how to pay it.

Small business owners across the state are getting ready to make some tough decisions. New York's minimum wage is set to increase on Saturday.

It's a more hefty increase than it was last year. That's good news for workers, but it means business owners have to figure out how to pay it.

On December 31st last year, New York's upstate minimum wage increased by 25 cents an hour, from $8.75 to $9. On Saturday, it will increase 70 cents an hour, from $9 to $9.70.

Michael Palencar is the owner of Bay Road Grocery and Deli. He explained his business strategy to us. Palencar says he pays his employees based on the next year's minimum wage. In other words, his employees are already making either $9.70 an hour, or close to it.

"I will increase the current employees who are making what is next year's minimum wage," Palencar said. "I will increase them slightly throughout the year. I won't give it all to them at once, because they're already making above minimum wage."

Since Palencar pays his employees a higher rate than the minimum wage, he says he has to deal with lower turnover. Even though he has to increase prices to pay for the higher wage rate, he says his customers don't mind.

"We build a higher loyalty base from customers because we don't have that turnover," he said. They're not walking into a strange face each day. And with that we have loyal customers that understand that business expenses increase, and unfortunately that does end up getting passed down to the customer."

The minimum wage increase is part of Governor Andrew Cuomo's plan for a $15 statewide minimum wage for all workers. Upstate, the minimum wage will continue to increase by 70 cents an hour each year until it hits $12.50 per hour at the end of 2020. After that, state budget leaders will figure out when it goes to $15 per hour.