While fast-food workers cheered an expected increase in their minimum wage to $15 per hour, the restaurant industry cried foul and braced for higher labor costs.
Both sides of the debate reacted to a state Wage Board’s recommendation Wednesday to increase the minimum wage in New York State to $15 per hour for fast-food workers at national chain restaurants. The $15 minimum would take effect gradually – by 2018 in New York City and by July 1, 2021, in the rest of the state.
The recommended increase covers chains with at least 30 locations, both corporate- and franchisee-owned.
Gregory Biryla, executive director of the business group Unshackle Upstate, predicted that restaurants affected by the wage hike might respond by cutting jobs or hiring less; raising prices for their products; or, in extreme cases, closing locations. The $15-per-hour wage will create “intense competition” for those jobs, Biryla said.
“The people you’re going to squeeze out of those jobs are low-education, low-skilled workers just entering the workforce, who absolutely need first-job experience more than anybody else, often in poverty, often urban,” he said.
Some fast-food restaurants might make greater use of automation, like kiosks for ordering food, that would supplant some workers’ jobs, he said. “When you squeeze a business, a business’ first instinct is going to be to survive,” he said.
Jay Holland, government affairs coordinator for the New York State Restaurant Association, said it was unclear how franchisee-owned restaurants would shoulder such a pay hike. “In a lot of ways, they are run, owned and operated and act like small businesses, even though they have a corporate name. A local business owner runs the store as if it was any other restaurant, any other deli, or coffee shop,” Holland said.
The fast-food industry complained that the wage increase unfairly targeted one sector of the economy. “Singling out fast-food restaurants while ignoring other industries that hire workers who are paid under $15 is unfair and discriminatory, harms New York workers, and puts some New York businesses – including mine and my fellow New York McDonald’s franchisees – at a competitive disadvantage,” Jack Bert, a New York City-based McDonald’s franchisee, said in a statement.
A McDonald’s spokeswoman declined to comment. Tim Hortons, which also has a large local presence, also declined to weigh in.
Carolyn D. Richmond, chief labor counsel for the New York City Hospitality Alliance, said prospective franchisees might “think twice before going into those types of businesses. And that’s a shame because it is a great entry point for a lot of recent immigrants to this country, and a lot of people do become business owners. The franchise model has worked for decades, and that might be less enticing to a lot of people starting their own businesses.”
Advocates of the increase said that it would raise the standard of living for workers and benefit the local economy, as the additional dollars earned are spent.
Fast-food workers have rallied for a $15-per-hour minimum as part of a “Fight for 15” campaign backed by social justice and labor groups. Local workers who form the backbone of the fast-food industry said they were upbeat about the increase, even if the payoff will come slowly.
Patrick Meadows, a KFC worker, said he would have liked to have seen the full increase to $15 per hour implemented more quickly, “but the gradual increase will be a positive move for the kids of the future,” he said. Meadows has two 13-year-old children. If they need jobs while they are going through college several years from now, he said, the fast-food industry will pay better by then.
Somalia Doyle, a second-year college student, works at Wendy’s but hopes to not be working in fast food by the time the full increase takes effect. She said the incremental increase will help her cover more of the cost of her books and tuition. “It’s still going to help because the wage is going to increase every year,” she said. Doyle currently has to hold two jobs, but with a higher wage, she hopes to cut back on the number of hours she works.
Jamal Williams, a McDonald’s worker, said he looks forward to earning enough to get beyond merely covering expenses. “I make just over $9 an hour, and that’s just enough to pay rent,” he said, “and then I don’t have any more money.”
Gov. Andrew M. Cuomo and supporters had pushed for an across-the-board increase in the minimum wage to $10.50 per hour and $11.50 per hour in New York City, but the State Senate didn’t back the idea. Cuomo turned to a Wage Board as an alternative. The state’s acting state labor commissioner, Mario J. Musolino, can implement the Wage Board’s recommendation – which he is expected to do – without the State Legislature’s approval.
Nigel Travis, CEO of Dunkin’ Brands Group, the parent company of Dunkin’ Donuts, warned that the wage hike could lead to higher prices. He criticized Cuomo for excluding a member of the restaurant industry from the Wage Board. “Our franchisees – and, in fact, other company’s franchisees – were denied the chance to fairly express their concerns,” he said.
Some opponents of the $15-per-hour minimum are threatening to challenge it in court.
Jerry Newman, a retired University at Buffalo professor who wrote a book about working undercover in fast food, said he believes that the industry can absorb the pay hike the way it is structured.
“This is spread over a six-year period, with a dollar increase every year,” he said. “If it were $6 in one year, it would be catastrophic. But $6 in six years? Yes, it puts them at a serious disadvantage, but a lot of things can happen in six years. This could be the first nail in constructing a house of fair wages. It could be the straw that changes everything.”
Bloomberg News contributed to this report. email: email@example.com and firstname.lastname@example.org