Cuomo bypassing legislature in minimum-wage fight
New York Gov. Andrew Cuomo on Thursday said a board will determine whether fast-food workers are adequately paid, a move that circumvents state lawmakers who rejected an increase in the state's minimum wage.
Calling income inequality "a national problem that leaders at all levels of government are grappling with," Cuomo, in an op-ed piece published in the New York Times, said he was directing the state's labor commissioner to put together a board to examine whether the minimum wage in the fast-food industry is sufficient to provide for the life and health of its workers.
The board's recommendations will come in about three months, Cuomo said, and won't require approval from the State Legislature, which rejected his proposal to increase the minimum wage to $11.50 in New York City and $10.50 elsewhere in the state.
The minimum wage in New York currently stands at $8.75, and will increase to $9 at the end of the year.
"Nowhere is the income gap more extreme and obnoxious than in the fast-food industry," wrote Cuomo, noting that the average fast-food CEO made $23.8 million in 2013, while entry-level food-service workers in the New York State earn an average of $16,920 a year, which at a 40-hour work week comes to $8.50 an hour.
Nearly three-quarters of fast-food workers are women, 70 percent are over 20, and more than two-thirds are raising a child and are the primary earners in their family, Cuomo stated, dismissing the notion that fast-food workers are "mostly teenagers who want to earn spending money."
The governor also pointed to the related-costs on taxpayers, saying New York State tops the nation in public assistance spending per fast-food worker, $6,800 a year, or $700 million annually.
"The government is subsidizing these corporation, allowing them to keep their labor costs low and their profit margins high," wrote Cuomo. "The industry is is healthy, having taken in $195 billion in global revenues last year, a sum that is projected to grow to $210 billion by 2018. McDonald's (MCD) brought in $4.67 billion last year; Burger King (QSR) earned $291.1 million."
Cuomo also disputed industry arguments that raising wages for workers would increase the costs of burgers and fries for customers, many of them of modest means themselves, citing the average $4.32 price of a Big Mac in Australia, which set the minimum wage for adult fast-food workers at $16 an hour. A Big Mac averages $4.79 in the United States, the governor said, citing the Economist's Big Mac Index.
Not surprisingly, the move drew praise from labor activists and criticism from industry advocates.
"We're opposed to discriminatory minimum wages," Matthew Haller, a spokesperson for the International Franchise Association, told CBS MoneyWatch.
Last year, the IFA voiced strong opposition to an effort to raise the federal minimum wage to $10.10 an hour, arguing it would hurt the bottom line for franchise businesses.
The IFA is currently in a legal battle with Seattle over a law requiring large businesses, or those with more than 500 employees, to pay a minimum of $15 an hour over three years, starting in April. Smaller businesses have three years to phase in the pay hike.
The ordinance requires franchisees to meet the three-year deadline, which the IFA contends unfairly discriminates against small businesses, with the group drawing a distinction between large franchises and chains like McDonald's and franchisees.
A federal court in March denied the IFA's bid for a preliminary injunction, with the trade court's appeal to the 9th circuit court pending.
Christine Owens, executive director of the National Employment Law Project (NELP), called it a "game-changer that will no doubt reverberate around the nation and across numerous low-wage industries."
NELP, an advocacy group that represents low-income workers, is among those supporting a movement called 'Fight for $15,' which had workers in more than 200 cities protesting low wages in April.
"More and more Americans and our elected representatives are standing up to say that it's time to stop profitable corporations from paying wages so low that they trap people in poverty," Mary Kay Henry, president of the Service Employees International Union (SEIU), said in a statement applauding Cuomo's announcement.