NY State minimum wage set to rise to $15/hour . . . but only for fast food workers.

[Achwienichtig]

I don't know how much attention this has gotten nationally. Long story short, New York State is on the verge of hiking up the minimum wage for, and only for, fast food workers. Articles abound on the internet about it. Here's a random one that covers the pertinent of the situation.

http://www.npr.org/sections/thesalt/2015/07/23/425460095/fast-food-workers-cheer-as-15-minimum-wage-advances-in-new-york-state

Honestly, I've been on the fence about Gov. Cuomo ever since he was first elected. However, this move has really ticked me off. Granted, his involvement was indirect, but he's made it clear that he supports this move.

I myself support moderate minimum wage increases, but I have a big issue with the manner in which recent wage increases have been handled. Look at Seattle's minimum wage hike. One of the driving proponents of the $15/hour wage hike was Nick Hanauer, whom you might recognize as the multi-billionaire who gives TED talks about economic inequality (I genuinely despise this guy). Great for you Mr. Hanauer. You are a multi-billionaire. You can afford to raise your employees' salaries. The problem is, of course, that Hanauer only considers two economic classes: the super-rich, like himself, and the super poor. His proposal takes no account of small business owners who work on a small margin (particular in the food industry), who will be drastically set back by the minimum wage hike.

Since the Seattle wage law was passed, Forbes Magazine writer Tim Worstall has been warning about the negative side-effects of the law, namely fewer jobs to go around. In his latest article on the topic, he indicates that this is what we are currently seeing.

http://www.forbes.com/sites/timworstall/2015/03/16/we-are-seeing-the-effects-of-seattles-15-an-hour-minimum-wage/

Of course, these wage hikes are an experiment more than anything. More information on the exact effects of these hikes will be made available as more regions adopt them.

In New York's case however, this wage increase only applies to one industry, the fast food industry. Politically, this move is meant to appease a certain crowd of people, but economically this is an entirely arbitrary move. These are entry level jobs that require no special training, in a market that has low margins. As you can guess, lawsuits are already in progress, as well they should be. To single out one industry is ridiculous, and the state of New York deserves a good spanking.

http://www.nbcnews.com/business/business-news/fast-food-franchise-owners-consider-suing-n-y-over-minimum-n397776

By the way, this is happening shortly after the state approved of casinos to help revitalize some local economies. Sounds like they really care about the poor to me.

In any case, this:

 

[dismal]

The law seems very arbitrary. (I say "law" though it does not seem to have been produced by a legislature.)

I wonder how one defines "fast food"?

 

[Achwienichtig]

The law seems very arbitrary. (I say "law" though it does not seem to have been produced by a legislature.)

I wonder how one defines "fast food"?

Well, the governor is saying this is just "the first step in economic justice," whatever that means.

Why fast food? Because fast food employees have been the ones taking to the streets demanding the raise. It has nothing to do with wise government and everything to do with short term appeasement of the crowd regardless of actual loses that may accrue as a result.

 

[Horatio Parker]

For one thing, businesses off loading their costs onto the state. Workers have to be able to live off their pay, not their pay plus welfare.

AFAIK, small businesses are exempt. Large chains, I think six or more locations, are subject.

I'm no fan of Cuomo's, but this is a good move.

 

[dismal]

Why fast food?

That's the arbitrary part. It seems mostly to be a case of a "law" lodged against a political outgroup than on any rational policy distinction.

 

[Achwienichtig]

For one thing, businesses off loading their costs onto the state. Workers have to be able to live off their pay, not their pay plus welfare.

AFAIK, small businesses are exempt. Large chains, I think six or more locations, are subject.

I'm no fan of Cuomo's, but this is a good move.

The thing is, most fast food businesses are franchises. Any given owner might own only a handful of locations, and they operate on tight budgets. These owners will be affected the most.

Add onto that the fact that this movement is largely driven by McDonald's workers. Well, McDonald's right now is a failing company and they have been losing money for quite some time.

http://naturalsociety.com/mcdonalds-keeps-losing-money-month-after-month/

It's quite possible these people will be out of a job soon.

I'm not saying people shouldn't get paid a living wage. I am saying that this is an arbitrary decision and it ignores some basic rules of economics.

 

[dismal]

Governments are allowed to ignore the basic rules of economics when passing laws, but I don't think they are allowed to pass laws that selectively apply to people based on arbitrary distinctions.

 

[laughing dog]

I'm not saying people shouldn't get paid a living wage. I am saying that this is an arbitrary decision and it ignores some basic rules of economics.

Doesn't seem arbitrary to me.

What basic rule(s) of economics do you think this ignores? And do you think social policy must always follow basic rules of economics?

 

[Achwienichtig]

Governments are allowed to ignore the basic rules of economics when passing laws, but I don't think they are allowed to pass laws that selectively apply to people based on arbitrary distinctions.

Yes, and that is the legal argument they appear to be making. From an article I post above:

Franchise owners say they're considering a lawsuit against Cuomo's plan to raise the minimum wage in their eateries to $15 an hour, arguing that it is not fair or legal to be saddled with such a significant increase in labor costs that won't apply to retail, landscaping, child care or other traditionally low-wage industries.

"Singling out fast food restaurants while ignoring other industries that hire workers who are paid under $15 is unfair and discriminatory, harms New York workers, and puts some New York businesses - including mine and my fellow New York McDonald's franchisees - at a competitive disadvantage," said Jack Bert, who owns seven locations in Queens.

 

[PyramidHead]

Yes, and that is the legal argument they appear to be making. From an article I post above:

Franchise owners say they're considering a lawsuit against Cuomo's plan to raise the minimum wage in their eateries to $15 an hour, arguing that it is not fair or legal to be saddled with such a significant increase in labor costs that won't apply to retail, landscaping, child care or other traditionally low-wage industries.

"Singling out fast food restaurants while ignoring other industries that hire workers who are paid under $15 is unfair and discriminatory, harms New York workers, and puts some New York businesses - including mine and my fellow New York McDonald's franchisees - at a competitive disadvantage," said Jack Bert, who owns seven locations in Queens.

Why does a McDonald's care about being at a competitive disadvantage to retail, landscaping, or child care businesses? Don't they sell sandwiches or something?

 

[Loren Pechtel]

For one thing, businesses off loading their costs onto the state. Workers have to be able to live off their pay, not their pay plus welfare.

AFAIK, small businesses are exempt. Large chains, I think six or more locations, are subject.

I'm no fan of Cuomo's, but this is a good move.

1) This is about offloading government costs onto business--namely, welfare costs.

2) It won't work anyway--we are going to see more unemployment, especially of teens.

3) The size of the business doesn't matter--a big business doesn't have higher profit margins than a small business, although they likely have more reserves to get out of an unfavorable situation without being destroyed.

4) It's a totally stupid idea when only applied to fast food.

5) It's just vote-buying.

6) In New York itself I don't think this will cause much harm because it's so expensive there already. In the outlying areas, though...

 

[Horatio Parker]

For one thing, businesses off loading their costs onto the state. Workers have to be able to live off their pay, not their pay plus welfare.

AFAIK, small businesses are exempt. Large chains, I think six or more locations, are subject.

I'm no fan of Cuomo's, but this is a good move.

1) This is about offloading government costs onto business--namely, welfare costs.

2) It won't work anyway--we are going to see more unemployment, especially of teens.

3) The size of the business doesn't matter--a big business doesn't have higher profit margins than a small business, although they likely have more reserves to get out of an unfavorable situation without being destroyed.

4) It's a totally stupid idea when only applied to fast food.

5) It's just vote-buying.

6) In New York itself I don't think this will cause much harm because it's so expensive there already. In the outlying areas, though...

So you want to expand the welfare state. We agree on something...

 

[Achwienichtig]

I'm not saying people shouldn't get paid a living wage. I am saying that this is an arbitrary decision and it ignores some basic rules of economics.

Doesn't seem arbitrary to me.

What basic rule(s) of economics do you think this ignores? And do you think social policy must always follow basic rules of economics?

If it doesn't seem arbitrary to you, then you should be able to explain why McDonald's employees deserve a minimum of $15/hour but Walmart employees only deserve a minimum of $9/hour. Failure to be able to explain this would be an indication of arbitrariness.

For the record, I make $10/hour at a retail job, and if my wages don't go up with McDonald's, I'm gonna be pretty pissed.

Now, as for economic rules, any time you raise the cost of a good or service, all other things being equal, demand goes down. That's economics 101. As one local newsman put it, a rising tide should raise all ships. To single out one industry without raising the bar on all industries (that is almost the definition of all other things being equal) puts an unfair strain on that industry, because it both raises the cost and decreases demand. Companies are going to respond by cutting cost, and that will very likely mean terminating employees. Today's McDonald's employees are tomorrow's Walmart employees.

 

[Horatio Parker]

Doesn't seem arbitrary to me.

What basic rule(s) of economics do you think this ignores? And do you think social policy must always follow basic rules of economics?

If it doesn't seem arbitrary to you, then you should be able to explain why McDonald's employees deserve a minimum of $15/hour but Walmart employees only deserve a minimum of $9/hour. Failure to be able to explain this would be an indication of arbitrariness.

For the record, I make $10/hour at a retail job, and if my wages don't go up with McDonald's, I'm gonna be pretty pissed.

Now, as for economic rules, any time you raise the cost of a good or service, all other things being equal, demand goes down. That's economics 101. As one local newsman put it, a rising tide should raise all ships. To single out one industry without raising the bar on all industries (that is almost the definition of all other things being equal) puts an unfair strain on that industry, because it both raises the cost and decreases demand. Companies are going to respond by cutting cost, and that will very likely mean terminating employees. Today's McDonald's employees are tomorrow's Walmart employees.

If the raise included you, you'd approve?

 

[Achwienichtig]

Why does a McDonald's care about being at a competitive disadvantage to retail, landscaping, or child care businesses? Don't they sell sandwiches or something?

They share much of the same clientele. Many in those industries appeal to low wage earners. By choosing not to raise the minimum wage across the board, the clientele's situation will not improve much, but the cost of doing business will rise for McDonald's while not rising for Walmart, which can still pander to that clientele.

I'm not worried about the McDonald's corporation. I just think this move does nothing constructive to fix the problem, and it possibly will cost people their jobs.

 

[Achwienichtig]

If it doesn't seem arbitrary to you, then you should be able to explain why McDonald's employees deserve a minimum of $15/hour but Walmart employees only deserve a minimum of $9/hour. Failure to be able to explain this would be an indication of arbitrariness.

For the record, I make $10/hour at a retail job, and if my wages don't go up with McDonald's, I'm gonna be pretty pissed.

Now, as for economic rules, any time you raise the cost of a good or service, all other things being equal, demand goes down. That's economics 101. As one local newsman put it, a rising tide should raise all ships. To single out one industry without raising the bar on all industries (that is almost the definition of all other things being equal) puts an unfair strain on that industry, because it both raises the cost and decreases demand. Companies are going to respond by cutting cost, and that will very likely mean terminating employees. Today's McDonald's employees are tomorrow's Walmart employees.

If the raise included you, you'd approve?

I said in the OP that I approve of raising the minimum wage. I just don't believe in selectivity, firstly because it is unfair, secondly because it raises real economic problems.

 

[Horatio Parker]

If the raise included you, you'd approve?

I said in the OP that I approve of raising the minimum wage. I just don't believe in selectivity, firstly because it is unfair, secondly because it raises real economic problems.

I'll take that as a yes.

I think it's a problem that you'd want to have. If workers leave retail for fast food, won't that put economic pressure on your employers to raise your wages?

I don't think anyone should have to work for $10/hr, except maybe for a no show gig. I have, but it was PT in combination with other stuff.

 

[laughing dog]

If it doesn't seem arbitrary to you, then you should be able to explain why McDonald's employees deserve a minimum of $15/hour but Walmart employees only deserve a minimum of $9/hour. Failure to be able to explain this would be an indication of arbitrariness.

How about raising the cost of unhealthy food means less of it is consumed?

For the record, I make $10/hour at a retail job, and if my wages don't go up with McDonald's, I'm gonna be pretty pissed.

Now, as for economic rules, any time you raise the cost of a good or service, all other things being equal, demand goes down. That's economics 101. As one local newsman put it, a rising tide should raise all ships. To single out one industry without raising the bar on all industries (that is almost the definition of all other things being equal) puts an unfair strain on that industry, because it both raises the cost and decreases demand. Companies are going to respond by cutting cost, and that will very likely mean terminating employees. Today's McDonald's employees are tomorrow's Walmart employees.

1st, demand typically refers to the relationship between the amount purchased and the price paid. Technically, the demand curve remains unchanged, and the market moves along the demand curve.

2nd, if this law applies to all fast food joints, then it is a rising tide for all the firms in the fast food industry. It will reduce hours worked and perhaps jobs. But the size of that effect will depend on how much less is sold. But that is why I asked if social policy must always follow the rules of economics.

In my opinion, this rather large and discrete jump in minimum wage is likely to have a larger and more disruptive effect than a more gradual and smaller increase over time to the same level. But is it necessarily a bad thing if fewer high school students end up studying and learning more because they worked less at a crappy job? Is it necessarily a bad thing that the people who end up working earn more even though others earn less?

I don't see that one can automatically answer those questions categorically without knowing the actual magnitudes of the effects.

 

[Achwienichtig]

I said in the OP that I approve of raising the minimum wage. I just don't believe in selectivity, firstly because it is unfair, secondly because it raises real economic problems.

I'll take that as a yes.

I think it's a problem that you'd want to have. If workers leave retail for fast food, won't that put economic pressure on your employers to raise your wages?

I don't think anyone should have to work for $10/hr, except maybe for a no show gig. I have, but it was PT in combination with other stuff.

Two responses: 1) If the goal is to raise the wages all around, then raise the wages all around. Don't raise the wages in one industry and hope for the invisible hand of the market to work the rest out. 2) I don't think other industries will respond this way. It's not like this is going to create more jobs. If anything, it will kill some jobs. It's not going to create any new job mobility.

 

[Jayjay]

I'll take that as a yes.

I think it's a problem that you'd want to have. If workers leave retail for fast food, won't that put economic pressure on your employers to raise your wages?

I don't think anyone should have to work for $10/hr, except maybe for a no show gig. I have, but it was PT in combination with other stuff.

Two responses: 1) If the goal is to raise the wages all around, then raise the wages all around. Don't raise the wages in one industry and hope for the invisible hand of the market to work the rest out. 2) I don't think other industries will respond this way. It's not like this is going to create more jobs. If anything, it will kill some jobs. It's not going to create any new job mobility.

If you are raising minimum wage, it's already targeting only some industries: those that use minimum-wage labor. What's wrong with targeting it to just some sectors that are deemed, for whatever purpose, more urgently in need of a raise? I think the biggest problem with universal minimum wage is that industries are different, and workers in each industry should have enough leverage that they could negotiate the wage level that suits them, rather than it being imposed from above.

Second, you mentioned that this is experimental. I'd say it's rather wise to limit it only to some industries at first and seeing how it works.