There has been a lot of controversy surrounding the governor’s decision to convene a wage board for the purposes of considering increasing the minimum wage for fast food workers to $15 an hour.
It has been reported that the governor convened the wage board in effort to placate advocates (mainly from New York City) who are pushing for various liberal causes to be enacted in the state, such as increasing the overall state minimum wage. When the legislature failed to increase the state’s minimum wage, these advocates accused the governor of not doing enough. The governor, in response, convened the wage board, a three-member panel, selected by the governor, tasked with the job of recommending whether the New York State Commissioner of Labor should raise the minimum wage for a certain industry — in this case fast food workers — and to what amount.
Not surprisingly, the wage board recommended raising the minimum wage for fast food workers to $15 an hour. The commissioner of labor now must decide whether to act upon the wage board’s recommendation. However, it would be surprising if the commissioner of labor did anything other than accept the wage board’s recommendation in light of the fact that he was appointed by and works for the governor.
Many constituents have contacted my office to express their concerns with the wage board’s recommendation. Almost all have asked how the minimum wage can be raised unilaterally by the governor without legislation. Further, there is a lot of confusion as to who is going to be covered by the new mandate and how is it going to be phased in.
The governor’s power to convene a wage board comes from Labor Law Sections 653(1) and 659.1. These provisions of the law were enacted to ensure that there is flexibility in industries where workers received other compensation as part of their wages to ensure that, in total, those workers receive the minimum wage rate that is set by the state.
For example, waiters in restaurants are not required to be paid the full minimum wage because they also receive tips. If the minimum wage the waiters are paid, together with their tips, is not enough to equal the state’s general minimum wage, then presumably a wage board could be convened to increase the minimum wage for such workers so that their total compensation is at least equal to the state’s general minimum wage.
Unfortunately, in this case, the governor is taking a broad interpretation of this power and is using the wage board as a means to bypass the legislature and enact a higher minimum wage rate for a certain industry (fast food workers) than the minimum rate enacted by the state legislature. This should be concerning to anyone who believes in the free enterprise system and that businesses and their employees should agree on what should be paid as opposed to government mandating what workers should be paid.
If the governor has the power to set the minimum wage rate for fast food workers, why can’t he set the rate for all other classifications of workers? This is a dangerous precedent. Moreover, regardless of how you feel about the minimum wage, you should be concerned that the governor is setting the rate unilaterally as opposed to getting it done legislatively.
It is for these reasons that I am sponsoring legislation that will clarify that minimum wage increases are within the purview of the state legislature and that the governor cannot, by unilateral power, increase the minimum wage. I also suspect that when the wage board’s recommendations are implemented by the commissioner of labor, there will be legal challenges to this unilateral action.
As far as who is going to be covered by this mandate, the wage board states in its recommendation that the 58 percent wage increase will apply to fast food establishments that, among other things, (i) have the primary purpose of serving food and drink items; (ii) where patrons order and select items and pay before eating; and (iii) are part of a chain that has 30 or more “establishments” nationally.
Clearly, fast food restaurants like McDonalds, Burger King and Wendy’s are meant to be covered. However, does the definition include grocery stores and convenience stores? What about gas stations that derive the majority of their revenue from food sales? Again, one of the problems with making such sweeping changes unilaterally without using the legislative process is these type of questions do not get properly considered and ultimately, due to ambiguity, legal challenges will be made and additional costs will be incurred.
Finally, the wage board, by its own admission, states there will be job losses with the mandated wage increase. It has thus provided a phase-in period, which is intended to minimize the anticipated job losses. Upstate franchises can expect to pay workers $1 more each year until Dec. 2021, when rates reach $15 an hour. New York City will need to increase the rate to $12 an hour by 2016, $13.50 an hour by 2017, and $15 an hour by 2018.
This follows the recent state minimum wage hike that will be fully phased in this December, to which businesses are still adjusting. It was recently reported that job growth is flat everywhere in the state except in New York City. This rate will surely further hurt Upstate and likely put a stop to fast food industry job growth as well.
If you have any questions or comments regarding this or any other state issue, please contact me. My office can be reached by mail at 200 N. Second St., Fulton, New York 13069, by email at [email protected] or by calling 598-5185. You can also friend me, Assemblyman Barclay, on Facebook.
