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By Edward Krudy NEW YORK (Reuters) - New York Governor Andrew Cuomo on Monday signed into law a minimum wage increase that takes a two-tier approach, setting a higher $15 per hour minimum for New York City and its environs and a lower legal minimum for less-costly areas. Cuomo held a rally celebrating the event with Hilary Clinton, who is campaigning for the Democratic presidential nomination in her home state before its April 19 primary. Democrats have rallied behind the $15 minimum wage ahead of the presidential election in November. "This new economy is not a fair economy for the middle class and the working families of this country," Cuomo said at the signing in a New York City convention center. "They feel that the American dream is slipping away." States and cities have moved to surpass the federal minimum wage, which has remained at $7.25 an hour since 2009. California Governor Jerry Brown on Monday also signed into law a plan to raise the minimum wage from $10 to $15 an hour by the year 2023, making the nation's most-populous state among the first to boost pay to that level for the working poor. Clinton's Democratic opponent for the nomination, U.S. Senator Bernie Sanders, issued a statement from the campaign trail in Wisconsin praising both New York and California for pushing through the legislation. In New York, the minimum wage rises to $15 per hour from its current $9 by the end of 2018 for most businesses in New York City. Commuter counties of Nassau, Suffolk and Westchester will reach $15 by the end of 2021, while the rest of the state will reach $12.50 by the end of 2020. The two-tier approach was a compromise deal reached with the state's Republican lawmakers, who said an increase to $15 in the poorer upstate areas in the north of the state would be unfair to business owners. After 2020 the $12.50 minimum wage upstate has the potential to rise by an amount determined by the state labor commissioner and the director of the budget. Any increase would be indexed to inflation and wage growth. New York's law also carves out a slow-lane for New York City business with up to 10 employees, giving them four years instead of three to implement $15 per hour. The law also contains a "safety valve." From 2019, state budget officials will look at the effects of the wage increases on regional economies and determine whether they should continue or be suspended. In addition to the minimum wage law, Cuomo also signed a bill granting 12-week paid family leave that will phase in by 2021. (Additional reporting by Joseph Ax; Editing by Daniel Bases and Dan Grebler)