Gov. Andrew M. Cuomo announced in an op-ed in The New York Times on May 6 that he would take the minimum-wage fight into his own hands after lawmakers denied his proposal for wage hikes in this year”™s budget.
“While lawmakers delay, I am taking action,” he wrote. He said he would instruct the state Department of Labor to investigate and make recommendations on the minimum wage in the fast-food industry ”” a move that bypasses the legislative process and has angered many in the business community.
The governor”™s decision to empanel a wage board came about a month after the 2015-16 state budget passed without an increase to the minimum wage, despite Cuomo”™s efforts to increase the rate to $10.50 an hour statewide and $11.50 an hour in New York City. New York passed legislation in 2013 to raise the minimum wage incrementally to $9 per hour by the end of 2015.
State law allows the Labor Department commissioner ”” or in this case an acting commissioner, Mario J. Musolino ”” to appoint a wage board or panel that represents public, business and labor interests. The board investigates a specific industry or job classification, holds public hearings and then makes suggestions as to whether wages are sufficient for workers in that sector.
Melissa Fleischut, president and CEO of the New York State Restaurant Association, said that in her 16 years of involvement in state politics, she has never seen a wage board used the way Cuomo has instructed. “We were definitely surprised that he decided to go around the legislature,” she said.
The most recent use of the wage board was in July, when it was convened at Cuomo’s direction to consider changing pay regulations for tipped service workers. In February, Musolino authorized that all cash-tipped workers receive a base pay of $7.50 per hour, up from a range of base salaries between $4.90 and $5.65 an hour for different service sectors.
Cuomo”™s in his op-ed announcement pointed to the “obnoxious” income gap between CEOs and entry-level workers in the fast-food business. He said he hopes to “set fast-food workers on a path out of poverty, ease the burden on taxpayers and create a new national standard.”
The governor”™s decision was hailed by labor leaders. Héctor Figueroa, president of the property service workers union 32BJ SEIU, in a statement said Cuomo and New York state “are leading the way and offering hope and a path forward to the close to 200,000 fast-food workers in New York, along with the millions of others in our country making too little for too long.”
But some don”™t see it that way.
Mike Durant, New York director of the National Federation of Independent Business, in a statement said Cuomo “is setting a frightening precedent by governing via executive order and completely usurping the legislative process.” He said the wage board “assuredly will have a predetermined outcome and will set a disastrous course for future minimum wage discussion that will impact New York small businesses.”
Fleischut said “dollars in the restaurant industry are pretty well fixed.” She said raising the minimum wage would not create jobs but rather require employers to take money from elsewhere ”” for example, “the consumer, if prices increase” or “the renovation that doesn”™t happen at the restaurant, so the construction worker doesn”™t get the job.”
An owner of eight national franchise stores in Westchester and New York City, who asked not to be identified for fear of retaliation by wage-hike supporters, said he has tightened his staff after the incremental minimum wage increases in the last couple years.
“When the minimum wage went up, it went up across the board, so everybody raised prices,” he said. With the potential wage increase for fast-food workers, “Now, it”™s just us, McDonald”™s, Starbucks, but it doesn”™t affect the mom-and-pops.”
He said many people don”™t realize that fast-food companies are often owned by independent franchisees. “I don”™t represent the parent company and that”™s the point of this whole matter is that my partners and I own eight stores that we financed ourselves,” he said, adding that franchise CEOs do not decide payrolls or set prices.
It is still unclear how the wage board will define fast-food service.
In the acting commissioner”™s statement to appoint a wage board, Musolino defined fast-food workers as those “who prepare food and serve customers in limited service restaurants, where customers order at the counter and pay in advance.”
Fleischut said that definition was broad and failed to specify if new wage requirements would apply simply to large chains or also include smaller ventures, like an independent ice cream stand.
The wage board”™s three appointed members ”” Byron Brown, mayor of Buffalo, who will represent the public; Mike Fishman, secretary-treasurer of the Service Employees International Union, representing labor; and Kevin Ryan, a business owner and vice chairman of the Partnership for New York City, representing business ”” could be responsible for creating a more specific fast-food worker definition.
The board will hold a public hearing in Buffalo and one in New York City. Times and dates have not been announced. A statement released by the Labor Department said a recommendation from the board is expected in July, and then Musolino will have 45 days to issue a decision.
Ken Pokalsky, vice president of The Business Council of New York State, said, “There”™s a legal challenge to be made about the artificial distinctions between which companies are subject to a targeted wage mandate.”
The Business Council, he said, is considering legal action, adding that “this is a type of policy issue that should be done in the Legislature ”” not through agency action.”
Fleischut said her organization is not considering legal options at this time.
“The best we can do is testify at the hearing, submit comments for the recommendations when they come out,” she said. “I think the most important takeaway is this is not your typical democratic process, this isn”™t an opportunity for the industry to be heard by their elected officials.”
