Fast-food workers in New York State working at national restaurant chains were all but ensured a major raise Wednesday when a state Wage Board recommended increasing the minimum wage for them to $15 per hour.
The board unanimously recommend that the increase be enacted incrementally by 2018 in New York City and by July 1, 2021, across the rest of the state. The move does not directly affect local restaurants, but some owners fear that they will have to match the higher wages.
If enacted, the wage hike would put New York at the forefront of the national movement to make the minimum wage a living wage.
Speaking at a rally in Manhattan after the vote, Gov. Andrew M. Cuomo said the change would have national implications, comparing it with the state’s legalization of gay marriage in 2011.
“When New York acts, the rest of the states follow,” he told the crowd. “This statement today is going to radiate across the country.”
Cities including Seattle, San Francisco and Los Angeles have raised their minimum wages recently as part of a nationwide movement that’s responding to a call from President Obama to take local action amid gridlock in Washington. On Tuesday, the Los Angeles County Board of Supervisors voted to raise the minimum to $15 an hour by 2020.
The New York board unanimously recommended that only national fast-food chains with more than 30 locations should be affected by the wage hike.
The board will put those recommendations into a final report by Monday, which will be published and followed by a 15-day public comment period. Acting state Labor Commissioner Mario J. Musolino – a strong supporter of the higher wages – then has 30 days to accept, reject or modify the board’s recommendations, and to file his wage order. His expected approval would put the new wages into effect.
Fast-food workers, along with advocates of social justice who supported the increase, lauded the recommendation, while restaurant owners and their representatives blasted it.
Wendy’s worker Nell Chambers said the additional money would help her provide for her extended family, including eight grandchildren.
“This year, they might actually get a Christmas present,” she said. “Instead of Grandma saying, ‘I don’t have it,’ now I can say, ‘It’s coming, baby.’ ”
The Wage Board heard public testimony from workers and restaurant owners at four hearings, including one in Buffalo. Hundreds of fast-food workers showed up at those meetings, and dozens spoke, outlining the difficulties of surviving on the state’s $8.75-per-hour minimum wage. Workers tearfully spoke of rationing food until payday, sharing rooms and beds to save money on rent, and having to turn to public assistance to make ends meet.
Critics called the decision discriminatory because it targets just one segment of the industry and said it would cause indirect effects that would hurt small businesses.
“Applying a new mandatory minimum wage increase to a narrow group of businesses creates an unlevel playing field for owners that provide important entry level jobs and valuable experience for millions of workers across the state of New York,” Steve Caldeira, International Franchise Association president and CEO, said in a news release.
In New York State, the majority of restaurant franchisees are small-business owner-operators. Forty-five percent of franchisees own just one restaurant, while another 24 percent have five locations or fewer.
Harry Schatmeyer sold his single McDonald’s restaurant in New Jersey eight years ago and used the money as a down payment on five locations in Amherst and the Tonawandas.
“That was a big risk coming to Buffalo, but I saw the potential here,” Schatmeyer said. “Now, I’m feeling really exposed. I’m feeling like that risk might have been a bad move and it might not pay off.” Schatmeyer, who now has 10 locations in Western New York, called the news “a real economic game-changer to the franchise system I signed up for.”
If the wage increase had been across the board instead of just targeting one industry, it could have actually translated into increased sales, Schatmeyer said. Instead, he fears the increased labor costs without a corresponding increase in sales may spell serious trouble.
“I’ve never seen a shift in costs this radical,” he said. “Things could turn upside down very quickly.”
The McDonald’s owner-operators living in Western New York are struggling to live middle-class lives like everyone else, Schatmeyer said, and they’re the ones who will be absorbing the cost of the wage increase.
“None of the owner-operators I know are living high off the hog. At 10 stores, I’m kind of a big shot, and my kids go to Williamsville East public school,” he said. “I have a son who’s 16, he’s going to be going to college in two years, and this absolutely affects what I’m going to be able to do in terms of where I send him.”
Dan Garvey, chairman of the New York State Restaurant Association and manager of East Aurora’s Roycroft Inn, said today’s decision will have a “very dramatic effect” on the restaurant industry as a whole. Although the Wage Board insists the recommendation solely targets multibillion-dollar fast-food corporations, Garvey said that small, independent restaurant owners will suffer, too. Though not mandated, casual and fine dining restaurant owners would be forced to increase their wages in order to compete for workers, but they won’t have as much flexibility as fast-food chains to adjust for the increased labor costs, he said. For instance, they can’t automate jobs the way fast-food restaurants can.
“You can’t take a white linen restaurant and say, ‘Here, order from this iPad,’ ” he said. “There has to be that human factor.”
The IFA called the move a political ploy by Cuomo to satisfy the Service Employees International Union, or SEIU, which has supported Cuomo and pushed for the increase.
“IFA, along with the Coalition to Save New York Restaurants, will aggressively fight Gov. Cuomo’s politically motivated decision to discriminate against local franchise small business simply to satisfy the request of his allies at the Service Employees International Union,” Caldeira said.
Cuomo is using a power he has under state law to circumvent the Legislature; he couldn’t persuade the Senate to back his proposal to raise the minimum to $10.50 per hour and $11.50 in New York City. The Democratic-controlled Assembly had sought a $15 rate for the city.
It’s the second time this year that a Wage Board pushed by Cuomo raised earnings in the restaurant industry. In February, restaurant workers who earn tips received a $2.50 boost to $7.50 an hour.
Cuomo has said entry-level fast-food workers in the state earn an average of $16,920 annually, and the state spends $6,800 in public assistance per fast-food worker annually, or $700 million a year, more than any other state.
Critics say that Cuomo has failed to get other income-equality measures through the Legislature and that and pushing a wage increase through with the Wage Board was a way to pacify unions and the Working Families Party.
There is no one on the statewide Wage Board representing the restaurant industry. The board includes Mayor Byron W. Brown; Kevin P. Ryan, founder of shopping website Gilt; and Michael Fishman, secretary-treasurer of the SEIU.
“We’ve been saying all along that this cake has already been baked and they were just waiting to put it in the oven,” said Matthew Haller, a spokesman for the IFA.
The wage for fast-food workers in New York City would be raised incrementally to $10.50 by Dec. 31, to $12 by Dec. 2016, to $13.50 by 2017 and to $15 by 2018.
For the rest of the state’s affected workers, it would rise to $9.75 by Dec. 31, to $10.75 by December 2016, to $11.75 by 2017, to $12.75 by 2018, to $13.75 by 2019, to $14.50 by 2020 and to $15 by July 1, 2021.
New York’s hourly minimum wage as a whole is set to rise to $9 on Dec. 31.
Bloomberg News and News Staff Reporter Christopher Jasper contributed to this report. email: email@example.com