New York Fast-Food Workers May Get 66% Pay Increase

The increase will come in at least two stages:

The wage increase announced by the New York State Department of Labor wage board will raise the minimum wage to $15 by 2018 for fast-food workers employed at chains in New York City that operate 30 or more stores, and to $15 by July 1, 2021 for chains in the rest of the state.

The nation’s largest fast-food chains will bear the brunt of the change, particularly McDonald’s Corp. (NYSE: MCD), Chipotle Mexican Grill Inc. (NYSE: CMG), Starbucks Corp. (NASDAQ: SBUX) and Dunkin’ Brands Group Inc.’s (NASDAQ: DNKN) Dunkin’ Donuts. The persistent question is whether these chains can afford the increases, or whether a drop in profits margins will trigger layoffs. The debate has been at the core of the push for higher wages. The rise in wages is for the lowest paid workers a double-edged sword.

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By nearly any measure, adding 66% to one of the core cost bases of an entire industry is almost unprecedented, even if the action is, in and of itself, “fair.” However, workers need to be wary if they get what they pray for.

New York Governor Cuomo’s comments on the recommendation:

My friends, I’ll tell you why I’m excited today; because this is not really about wage boards and hearings and hearing officials. This is about something more important and more fundamental and profound. This is really about who we are as New Yorkers and what we believe. And what we believe in New York is that there should be opportunity for all and there is fundamental fairness for all and there is justice for all. That’s what the Statue of Liberty says. That’s what we believe, that’s what brought generations to this state, to stand up to those principles.

And the truth is, those principles are in jeopardy because there is a lot of injustice. And what you did and what where doing is we’re standing up to fight that injustice and say, “We’re not going to take it anymore, and the state of New York is going to lead the way.” It is an injustice when you have a growing income inequality where fewer and fewer Americans are becoming richer and richer and more and more Americans working harder and getting left behind. It is an injustice when working families in this country have actually gone backwards over the past ten years when you add in inflation. It is a shame that in this nation today with all our progress, you still have one out of five children in poverty that is a shame. It is repugnant to the concept of a minimum wage to say that this $9 wage is what we had in mind.

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