Fast food workers in New York state were all but assured a major raise Wednesday when a state Wage Board recommended increasing the state's minimum wage for fast-food workers to $15 per hour.
The board unanimously voted to recommend the increase be enacted incrementally by 2018 in New York City and by July 1, 2021, across the rest of the state. It also unanimously recommended that only national fast food chains with more than 30 locations should be affected. By that definition, owners of any major fast food franchise -- even if they own just one location -- would be required to pay employees $15 per hour.
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 will put the new wages into effect.
Fast-food workers, along with social justice advocates 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," said Steve Caldeira, IFA president and CEO, in a news release.
In New York State, the majority of restaurant franchisees are small 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, he 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, he 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 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. Though the Wage Board insists the recommendation solely targets multi-billion-dollar fast-food corporations, Garvey said 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. They can't automate jobs the way fast-food restaurants can, for example.
"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 ploy by Gov. Andrew Cuomo to satisfy the Service Employees International Union, which has supported Cuomo and pushed for the increase.
"IFA, along with the Coalition to Save New York Restaurants, will aggressively fight Governor 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.
The Coalition to Save New York Restaurants is comprised of members of the state restaurant association, the New York Chapter of the National Federation of independent Business, the National Restaurant Association and the IFA. High-powered New York attorney Randy Mastro recently announced he has been hired by a coalition of fast-food franchisees to fight the wage increase on their behalf, but declined to identify his clients.
State Attorney General Eric T. Schneiderman said he "will fight anyone who seeks to challenge this in court."
From the beginning, critics have characterized the Wage Board as a "dog and pony show" to push through Cuomo's agenda. Cuomo has failed to get other income-equality measures through the Legislature, and pushing a wage increase through with the Wage Board would pacify unions and the Working Families Party, they said.
There is no one on the statewide Wage Board representing the restaurant industry. The board includes Mayor Byron Brown; Kevin P. Ryan, founder of shopping website Gilt; and Michael Fishman, secretary-treasurer of the Service Employees International Union. Brown represents the public interest on the board, while Ryan represents business interests, and Fishman represents labor.
"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.
Ryan has pushed for the significant wage increase despite the fact that he moved his warehouse operation from Brooklyn to Kentucky, a low-wage, non-union state in 2010.
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 at large is set to rise to $9 Dec. 31.
News Reporter Christopher Jasper contributed to this report.
(c)2015 The Buffalo News (Buffalo, N.Y.)
