Weighing NYC’s Wages

Last month, workers in New York City saw the passing of an historic bill: legislation mandating that all fast food chains raise their minimum wage to $15 an hour. While the pay raise will be taking place in waves over the next six years, the change is still a huge victory for those advocating for a living wage in low-paying jobs. The battle for a $15 an hour minimum wage has been fast and loud; the issue only first became a mainstream topic a little over a year ago, and in that time, it has gained traction in multiple metropolises.

The murmurs about raising the minimum wage were first heard in Seattle last year. Kshama Sawant, a Seattle City Councilmember and the first Socialist to hold such a position in the city in over a century, heavily based her campaign on the promise to raise the minimum wage. Sawant took office in January 2014, and just four months later, Seattle Mayor Ed Murray announced that Seattle would raise its minimum wage to $15 an hour. Since then, San Francisco, Los Angeles, and New York City have all passed similar measures.

The legislation passed in NYC differs from those passed in other cities in that it only applies to the fast food industry. Many people are baffled as to why the wage was only applied to one sector; proponents of the measure argue that the increased wages among fast food workers will pressure other industries into raising their wages as well, but that begs the question of why the wage wasn’t just raised across the board from the start. Despite the limited amount of people that the increase will directly impact, the change has garnered a great deal of both praise and disdain from New Yorkers.

While the move has been met with momentous support, it still has its fair share of protractors. Opponents of the measure argue that raising the minimum wage for fast food workers will negatively affect not only the fast food industry, but other sectors as well. A large concern is that workers will jump ship from their current jobs, at which they currently make under $15 an hour, in favor of flipping burgers at McDonald’s.

“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?” asks Tim Worstall of Forbes.

Photo courtesy of Annette Bernhardt.

The latter half of his point has also been a major concern. With the cost of paying workers being so high, opponents say, many companies will opt to let employees go, hire less people, or simply replace them altogether. Automation technology like hamburger assembly lines and touch-screen kiosks, while only in the experimental phase right now, may soon become the norm in fast food chains if they prove to be cheaper than hiring a stable of employees at $15 an hour. Indeed, after the measure passed, Dunkin’ Donuts CEO Nigel Travis stated that while he was in support of a general minimum wage increase, he believed that the move within the fast food industry would hurt franchisees over time: “I don’t think it’s going to mean layoffs. I think there will be less hiring, less growth.”

Lastly, some make the arguments that increasing the minimum wage to a “living wage” isn’t addressing the real problem of what makes living so costly. Much of what makes life so expensive in some major cities is the lack of affordable housing; raising the minimum wage, opponents say, is not solving the problem at its core, but rather treating it at its surface.

There are plenty who are thrilled about the change, however. Many cities and states, proponents argue, have left the federal minimum wage behind in favor of a higher “living wage,” so this increase is not as unreasonable as some say. This gradual increase in worker’s wages, they explain, is morally a step in the right direction that’s been brewing for years, as the nation slowly realizes that workers are making poverty-level wages so that huge companies can report monstrous profits to shareholders and CEOs. Marc Benioff, the CEO of Salesforce.com and a huge proponent of raising the minimum wage, said as much when he criticized Wall Street and its “unrealistic” profit goals in a recent interview with CNN.

Those in favor of the measure point to certain benefits of having a better-paid workforce: higher employee satisfaction, lower absenteeism, lower employee turnover rate, and better productivity. In short, well-paid workers are happy and productive workers. Well-paid workers, in turn, lead to more money in the economy. Proponents argue that raising the wage will add an extra $450 billion into the economy annually, and affect a total of around 81 million workers via both direct and indirect benefits.

One of the biggest arguments in favor of the wage increase is its effect on taxpayers and big businesses. Each year, taxpayers are paying around $152.8 billion in public assistance for the families of low-wage workers. Employees of companies like McDonald’s and Walmart are making so little working at or just under full-time that they are unable to support themselves and their families without some from of federal support, be it Medicaid or food stamps.

A recent report from the UC Berkley Labor Center states that 73 percent of Americans receiving public assistance are a part of low-wage earning families. This, proponents say, is indicative of a broken economic system where employees are solely in service to a company’s bottom line, and are viewed as costs to be cut instead of resources to be invested in.

The measure was only recently enacted here in New York City, and will slowly roll out over the course of three to six years, so the effects of the plan remain to be seen for some time to come. Regardless of the outcome of the measure, it is notable and important that the dialogue is even happening.

Photo courtesy of Seattle City Council.