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Fast-food folly

When Gov. Andrew Cuomo in May directed the state labor commissioner to convene a panel to determine whether the wages of fast-food workers should be hiked, it was abundantly clear what the result would be. The only unknown was what amount the wage board would recommend.

The answer came last week. The wage panel recommended hiking fast-food workers’ pay to $15 an hour—a more than 70 percent jump from the current minimum wage of $8.75. The increase would be phased in over three years in New York City and six years elsewhere in the state.

New York is not the only place adopting a $15-an-hour minimum wage, but nowhere else is the rate statewide or targeted to a narrow industry segment.

Mr. Cuomo opted for a wage panel because he had failed to persuade lawmakers to include a minimum wage hike in the state budget. Economists these days are divided on the merits of broad hikes in the minimum wage, but few if any advocate big, industry-specific hikes.

There are numerous problems with the latter approach, and unintended consequences are likely. For example, the people Mr. Cuomo wants to help—low-income workers—could face a reduction in fast-food jobs as employers cut back on hiring, shift to labor-saving business models or simply relocate out of state. Further, because low-income families disproportionately patronize fast-food restaurants, they also would pick up more than their share of higher prices caused by the wage hike.

The recommendations also make no distinction between a fast-food business operating in New York City and another in a rural upstate community, where it could be much harder to absorb a near-doubling of labor costs over relatively few years.

And then there’s the issue of fairness: Why impose a major cost increase on only a small slice of New York businesses? Reframing the question, why favor one small group of minimum-wage workers over all others statewide?

Objections can be filed with the wage board until Aug. 15. It might be a long shot, but those who oppose the fast-food pay hike should speak up now.

8/7/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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