- Albany 05/06/2015 by Governor Andrew Cuomo (New York Times)
INCOME inequality is a national problem that leaders at all levels of government are grappling with. While American capitalism never guaranteed success, it did once guarantee opportunity. But today, too many Americans don’t believe their children will have a better life than their own. The ideal of mobility has been replaced by the reality of stagnation.
Some argue that we can close the income gap by pulling down the top. I believe we should do it by lifting up the bottom. We can begin by raising labor standards, starting with the minimum wage.
In 2013, I raised New York State’s minimum wage; it is now $8.75, up from $7.25 (and will rise to $9 at the end of the year). In my latest budget, I proposed raising it again, to $11.50 in New York City and $10.50 elsewhere in the state. But the Legislature rejected that proposal. So I am continuing the fight. While lawmakers delay, I am taking action.
State law empowers the labor commissioner to investigate whether wages paid in a specific industry or job classification are sufficient to provide for the life and health of those workers — and, if not, to impanel a Wage Board to recommend what adequate wages should be.
On Thursday, I am directing the commissioner to impanel such a board, to examine the minimum wage in the fast-food industry. The board will return in about three months with its recommendations, which do not require legislative approval.
President Franklin D. Roosevelt made the minimum wage a national law in 1938. Years earlier, he said, “By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living.” But minimum wages have not kept pace with the rising cost of living.
Nowhere is the income gap more extreme and obnoxious than in the fast-food industry. Fast-food C.E.O.s are among the highest-paid corporate executives. The average fast-food C.E.O. made $23.8 million in 2013, more than quadruple the average from 2000 (adjusting for inflation). Meanwhile, entry-level food-service workers in New York State earn, on average, $16,920 per year, which at a 40-hour week amounts to $8.50 an hour. Nationally, wages for fast-food workers have increased 0.3 percent since 2000 (again, adjusting for inflation).
Many assume that fast-food workers are mostly teenagers who want to earn extra spending money. On the contrary, 73 percent are women, 70 percent are over the age of 20, more than two-thirds are the primary wage earners in their family, and 26 percent are raising a child.
Fast-food workers and their families are twice as likely to receive public assistance compared with other working families. Among fast-food workers nationwide, 52 percent — a rate higher than in any other industry — have at least one family member on welfare.
New York State ranks first in public assistance spending per fast-food worker, $6,800 a year. That’s a $700 million annual cost to taxpayers.
While workers in the fast-food industry are struggling, the industry is healthy, having taken in $551 billion in global revenues last year, a sum that is projected to grow to $645 billion by 2018. McDonald’s brought in $4.67 billion last year; Burger King earned $291.1 million. The government is subsidizing these corporations, allowing them to keep their labor costs low and their profit margins high.
Industry leaders have argued that raising wages for fast-food workers would drive up the prices of burgers and fries beyond what many customers, themselves of modest means, can afford. But that hasn’t been the experience in other countries. Australia set the minimum wage for adult fast-food workers at $16 an hour, but a Big Mac there costs only $4.32 on average, compared with $4.79 in the United States, according to The Economist’s Big Mac Index. France, where the minimum wage is over $12, has more than 1,200 McDonald’s.
More than 600 economists, including seven Nobel Prize laureates, have affirmed the growing consensus that raising wages for the lowest-paid workers doesn’t hurt the economy. In fact, by increasing consumer spending and creating jobs, it helps the economy. Studies have shown that every dollar increase for a minimum-wage worker results in $2,800 in new consumer spending by household, and of the 13 states that have increased the minimum wage since 2014, including New York, all but one experienced employment growth.
Through the Wage Board, New York can set fast-food workers on a path out of poverty, ease the burden on taxpayers and create a new national standard.
Roosevelt, too, faced powerful opposition to the minimum wage. But he did not pull his punches as he said: “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”