New York's Unilateral Move To $15 Per Hour Will Have Unintended Consequences

$15-Per-Hour Wage Gains Ground In New York, California, DC.

The AP (7/23, Leff, Klepper) reports that in New York, the state Wage Board Wednesday endorsed a proposal to set a $15 minimum wage for workers at fast-food restaurants “with more than 30 locations.” Gov. Andrew Cuomo’s Administration “has the final say, and he has signaled his support.”

        The New York Times (7/23, A1, McGeehan, Subscription Publication) reports that in New York, wages would first be raised in NYC “and then the rest of the state,” reaching $15 per hour in NYC in 2018 and in the rest of the state in 2021. The move is “a major victory for the campaign to improve the lives of workers who often struggle to pay for basic needs on low salaries.” The Times says that the $15 wage “would represent a raise of more than 70 percent for workers earning the state’s current minimum wage of $8.75 an hour.”

        The AP (7/24, Klepper, Dobnik) reports that New York’s fast-food industry is considering filing a lawsuit against Gov. Cuomo’s plan, which still awaits formal approval by Cuomo’s labor commissioner. Lawyers “say their lawsuit could focus on whether the increase was arbitrarily and unfairly applied to a single group.” Critics of the proposal are “also unhappy with Cuomo for letting an unelected Wage Board issue the recommendation instead of letting the Legislature debate the idea.”

        In a front-page story, the Washington Post (7/23, A1, Davis) reports that a “historic measure to raise the District’s hourly minimum wage to $15 is headed toward next year’s ballot after city officials released a ruling Wednesday approving a voter initiative.” The ballot measure “will go to voters in November 2016 only if supporters collect enough signatures, but even opponents say that is likely.”

        And in California, the New York Times (7/23, Lovett, Subscription Publication) reports that the University of California will “raise the minimum wage for its employees and contract workers to $15 an hour,” the “latest in a string of recent victories for labor leaders here who have fought to increase workers’ pay.”

        New York Wage Board Decision Creates Gap Between Low-Wage Workers. The New York Times (7/27, Swarns, Subscription Publication) reports that the move has “created a stark new divide between low-wage workers who will receive the boost in their paychecks and those who will not.” While about 50,000 fast-food workers in the city will benefit from the increase, according to the Fiscal Policy Institute, about 1.25 million workers “who earn less than $15 an hour do not work for fast-food chains and will not benefit.”

        Meanwhile, the New York Times (7/27, Scheiber, Subscription Publication) reports that the move to push the minimum wage to $15 “faces major obstacles, both political and economic.” Even where the proposals are “politically viable,” the “economic challenge could prove daunting” because the size of the proposed increases amounts to what the Times calls “an economics experiment the country has rarely if ever seen before.”

        NYTimes Sees $15 Wage For Fast-Food Workers To Set Trend For Other Businesses. In an editorial, the New York Times (7/24, Subscription Publication) hailed the decision by the New York Wage Board to order fast-food workers to receive a minimum wage of $15 hour over the next few years. The “raise itself, however, is likely to be only one of several outcomes of the board’s action. A fast-food wage of $15 could push up wages in New York more broadly because it sets a new bar for retailers, home care agencies and other low-wage employers to meet or exceed.”

        Retail Labor Union Pushes For Higher Minimum Wage After New York’s $15 Fast Food Victory. Forbes (7/24) reported that retail workers nationwide are pushing for higher minimum wage rates after New York’s Wage Board made the unprecedented move to approve a $15 hourly minimum wage for the state’s roughly 200,000 fast-food workers. Stuart Appelbaum, head of the Retail, Wholesale and Department Store Union, said the decision in New York has set a precedent and predicted more wage bumps. He said, “The message from this week’s decision is that workers, no matter what they do, need to be compensated fully for their work. When you go to work you should not be condemned to a life of poverty.”

        Minimum Wage Push Meets Resistance. Writing for the Orange County (CA) Register (7/28), Ian Lamont warns that, no matter how high officials raise the wage floor, “the total amount a business can pay for wages will remain about the same.” As a result, increases to the minimum wage will disproportionately hurt “young, unskilled and untrained individuals” and endanger their jobs. Lamont notes, “while $18,000 to $20,000 a year in annual wages is certainly not a living wage, being unemployed is far worse in the long run.”

        Forbes (7/27) contributor Mike Patton explains that businesses generally have five ways to respond to large minimum wage increases: increase prices, lay off employees, replace some job functions with technology, move to an area with a lower wage floor, or shut down operations.

        Blog Post: Corporate America Is Not Unified On Minimum Wage Issue. In a “Wonkblog” post for the Washington Post (7/24), Lydia Depillis wrote that businesses are being “steamrolled” as activists push minimum wage increases across the nation. However, Depillis adds that “the private sector itself is far from united against raising the minimum wage,” with “some corporate leaders” actually favoring raising it. This has “made it difficult for the largest business groups, which have to balance the interests of all their members, to put much effort into opposing minimum wage hikes.”