Big Money to Make Burgers

A higher minimum wage is the progressive issue du jour, sweeping one liberal bastion after another.

No place in the United States, however, has attempted something as radical as the step New York is about to take. It involves a dramatic increase in the minimum wage, from $8.75 to $15 an hour, but only for one segment of low-income laborers — fast food workers.

A labor board appointed in May by New York Gov. Andrew Cuomo this week formally recommended the increase. The acting state labor commissioner has 45 days to accept the proposal, which would trigger a public comment period before it could take effect. But those are considered formalities.

When the increase is fully phased in over three years in New York City and six years in the rest of the state, fast-food workers no longer will be low-income employees. The $15 wage will be higher than what a substantial number of New York residents currently earn — including many occupations that require far more education and skill than flipping burgers and frying potatoes.

Richard Burkhauser, a Cornell University professor who studies minimum-wage issues, said he thought the proposal was a joke when he first heard about it. He said he is not aware of any jurisdiction in the U.S., in at least the past 60 years, targeting one narrow group of workers for higher pay under a minimum wage law.

“It is a most audacious move by the governor. I’ve been doing minimum wage [research] for 30 years. I’ve never seen anything like it,” he said. “We are way out there.”

In announcing the creation of the wage board in May, Cuomo highlighted the gap between what executives and front-line fast food workers earn.

“It is a most audacious move by the governor. I’ve been doing minimum wage [research] for 30 years. I’ve never seen anything like it,” he said. “We are way out there.”

“There is no more obvious and obnoxious display of this injustice than in the fast-food industry,” he said. “Fast-food workers are not kids. Over 70 percent of them are primary wage earners for their families. Fast-food workers are proof that the minimum wage is unlivable because they are not living on the minimum wage.”

Cuomo created the three-member wage board after the state Legislature thwarted his efforts to raise the minimum wage across the board. The result is that millions of workers will find themselves making less than workers at McDonald’s, Burger King and other fast food joints. In some cases, the pay disparity will be substantial.

The median wage — the point at which half of the wages are higher and half of the wages are lower — is less than $15 an hour for scores of occupations and millions of employees. “It is not a trivial number,” Burkhauser said.

The $15 rate would apply to all fast-food workers regardless of experience, and they would earn more than many workers just starting out in many other jobs.

According to data from the New York Department of Labor, the average starting hourly wage for all occupations in the first quarter of 2015 was $10.74. The fast-food salary, when fully implemented, will be 28 percent higher than that.

The special fast-food minimum will apply to every worker in that category, including new hires.

There are 341 occupations aside from fast-food employees where the starting pay is less than $15 an hour.

There are 341 occupations aside from fast-food employees where the starting pay is less than $15 an hour. That represents more than 5.7 million out of that state’s 8.8 million workers. A large number of those 5.7 million workers earn less than $15 an hour. It is impossible to determine a precise number, but at least 1.9 million non fast-food workers earn less than that.

Among the occupations where the average starting wage is less than $15 per hour are:

• Child care workers — $9.20
• Teaching assistants — $9.48
• Security guards — $9.86
• Light truck or delivery service drivers — $9.97
• Travel agents — $10.50
• Photographers — $10.63
• Tellers — $10.87
• Printing press operators —$11.48
• Animal trainers — $12.11
• Clergy members — $12.14
• Emergency medical technicians and paramedics — $12.40
• Chefs and head cooks — $12.91
• Dental assistants — $13
• Music directors and composers — $13.79
• Embalmers — $13.79

Still, Cuomo’s approach has its supporters.

“The fight for $15 began less than three years ago in New York City, and now it’s achieving one of its biggest victories right where it started,” National Employment Law Center executive director Christine Owens said earlier this month in a prepared statement. “People thought workers had no shot, but now they are winning $15 around the nation, political leaders are lining up to support them, and even large employers are racing to raise pay.”

Some of the left, in fact, argue that $15 an hour does not go far enough. Salvatore Baboons, an associate fellow at the Institute for Policy Studies, wrote this month that if the minimum wage had kept pace with the nation’s overall income growth since 1968, it would stand at $21.16 per hour today.

After lawmakers rejected calls for further hikes in the minimum wage — the rate will rise at the end of the year — Cuomo dusted off a decades-old law that had not been used in years giving the governor authority to set up wage boards for specific industries.

Burkhauser, the Cornell professor, said that was the original conception of how minimum wages would be set in the early 20th century before policymakers adopted across-the-board minimums that were easier to administer. “This is the history that the governor dipped into,” he said.

Frank Sobrino, a spokesman for Cuomo, said the governor would like to see the Legislature act on minimum wages in a comprehensive way. But if lawmakers balk, he said other lower-wage workers will still benefit.

“This will put upward pressure on other wages,” he said. “If you’re in another industry, this is all good. This is going to put upward pressure on wages.”

Some experts are not so sure. Burkhauser said a minimum wage that high likely will distort the labor market, particularly outside of New York City where wages already are high.

Jeffrey Clemens, an economist and professor at the University of California at San Diego, predicted some fast-food eateries will try to get around the new requirement by changing their business models in order to be reclassified.

“If you can get yourself to be counted as a full-fledged restaurant or establishment, it wouldn’t apply,” he said.

With the pay disparity so great, Clemens said, some employees in other fields likely will be drawn to the suddenly high wages in fast-food restaurants. And that could have unintended consequences. Fast-food operators may opt for those with more experience and education than those who typically hold those jobs.

And that could mean that many of the fast-food workers who marched in support of a $15 hourly wage could find themselves elbowed out by newcomers.

“These are the very workers who are going to be the first to go,” Burkhauser said. “The good news for the fast food industry is that they will be hiring a lot more productive workers. They’ll be hiring fewer of them.”

And will the public benefit from better-qualified workers? Clemens expressed skepticism. “From a consumer’s perspective, you want to get the burger for the lowest price possible,” he said.

Burkhauser predicted the price of fast food will rise as businesses pass the increased costs on their customers, who tend disproportionately to be on the lower end of the income scale.

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