It’s party time in the Big Apple, kids! Or at least it is if you work at a major fast food chain. Having been unable to convince the GOP led state senate to massively jack up the minimum wage across the state, Governor Andrew Cuomo has taken some executive action via a relatively obscure government panel to do so, but only for those working at big chain burger joints. And the people rejoiced. (Via NPR)
There aren’t a lot of obscure government board meetings that warrant a watch party, let alone one with a marching band.
But that’s how fast-food restaurant workers and their supporters celebrated Wednesday on a blocked-off street in Manhattan, as they watched a state panel recommend a $6.25 increase in their hourly wage, to $15.
“It’s a victory! We have been fighting, and today we have made history,” said Alvin Major, a 49-year-old cook at a KFC restaurant in Brooklyn. He said a $15 minimum wage would mean that he could stop relying on food stamps to feed his family of six.
Rather than letting the legislature raise the wage, Cuomo has directed the New York Wage Board (the members of which were appointed by Cuomo) to review a change to the state’s wage structure and – surprise, surprise – they have endorsed boosting the minimum wage for larger retail outlets in the fast food industry, first in New York City and then across the entire state. The Governor, while planning this scheme out, flatly stated that McDonald’s made $4.67B last year and Burger King made $291M. And that’s too much. (There will be an exemption for chains with less than 15 outlets.) He also claims that people earning the minimum wage in the fast food industry are costing the state money because they have to be subsidized with government assistance programs.
What Cuomo either fails to realize or chooses to ignore is the inconvenient fact that McDonald’s won’t be taking much of a hit at all. 80% of their outlets are owned by franchisees who may only operate a handful of them and they run on a thin margin. (The company is currently planning to expand that to 90% by next year and are closing hundreds of corporate owned stores as their profits have been taking a beating, contrary to what Cuomo seems to think.)
There are plenty of other things wrong with the plan and the Governor’s analysis, most of which were ably explained this week by Tim Worstall at Forbes who tore apart Cuomo’s “reasoning” here and found it lacking in many regards. One of Cuomo’s chief failures in vision is his lack of understanding as to how this will affect other low wage jobs in areas of the state with much lower costs of living.
And we can drill a little deeper into the numbers as well. The median wage for the entire state is $19.65, a little higher than the national one (and thus we’d expect that full year full time one as the EPI uses to be higher than the national one of $24). But in Binghampton [sic] it’s only $16.05. Every burger flipper in the area must now be paid darn close to the average wage for every job in the area? Elmira’s not going to do much better with a median of $16.31. Glens Falls at $15.30?
How many pre-school teachers (median wage, $9.96 in Glens Falls) are there going to be when Maccy D’s is forced to pay $15 for cooking the fries? Come to that, how many people will there be left cooking those fries?
The entire analysis from Worstall is a bit wonky, but spot on and well worth a read.
While we’ve discussed it here before, schemes like this also ignore the basic wage structure upstate and the general unfairness of the approach. There are many middle class jobs which still require a lot of training, skills or certifications and they pay in the 12 to 15 dollar per hour range. Will those people also be getting a six dollar per hour raise? They will not. And why would anyone put in the time learning to operate a fork lift as an apprentice when they could make just as much or more by going to operate the fry machine?
This plan is going to put the Empire State even more firmly on the path to self-destruction. I hope the last person to leave New York remembers to turn out the lights.