Governor Cuomo’s fast food wage hike faces major outrage

Governor Cuomo recently made an announcement that the minimum wage for fast-food workers at New York franchises of national chains shall be raised to $15 an hour. The news shocked a lot of small-business owners and shook New York’s economy. To fight this alleged discriminatory action, the National Restaurant Association is headed to court to fight this decision. Previously, there was an administrative appeal to the Industrial Board of Appeals and it upheld the decision of Cuomo’s wage board to impose that $15 wage. This fight will now be continued in court. In the past, New York governors have employed the democratic legislative process to hike the minimum wage. But this time, the Governor opted for self-appointed three person board that targeted only national fast food franchises.

An irrational procedure without proper evaluation

One of the issues that are being raised by the restaurants is that the board did not include any industry representatives. There was a major rush to pass the judgment. There were also limited number of hearings. This restricted the people directly related to the issue from giving any meaningful input. The decision is not only arbitrary but irrational and to an extent, illegal too. The move will raise wages of the workers at fast-food restaurants with at least 30 locations nationally.

Contrary to the popular belief, this will be highly devastating. What people see are national chains that are large global corporations. But the real situation is that these restaurants are typically small businesses owned by various small franchises. They are equal to the next-door café or restaurant. Basically it is small business owning New Yorkers working to grow a local economy. They would be terribly hit by the Governor’s wage hike. It would majorly increase the operating costs due to the sudden increment in payroll costs.

Fast food wage hike will cause disparity in economy

And like every normal business, every single increase in cost will be covered by heavily charging customers. Other remedies will involve reducing workforce or cutting employee hours. If we talk in numbers, a wage hike will cause at least 200,000 New Yorkers to lose their job. A recent survey also suggested that most businesses i.e. around 70 percent will likely opt for cutting staff levels. 83 percent might retort to reducing employee hours and 43 percent might take an extreme step and opt for closing. Whatever the case be, businesses will ultimately suffer.

Another problem is that Governor Cuomo is already planning to urge the Legislature to boost New York’s minimum wage after it was declined to do so last year. The major problem is the process that was followed. There has to be a proper method before taking such decisions. It is highly wrong that unelected, unaccountable board acting in piecemeal fashion is trying to raise the minimum wage. In every bit, it is unfair, irrational and discriminatory. There has to be a process and the present one is more of a tyranny. New York deserves a better and a fairer process and it will be wrong to single out these small businesses for disparate treatment. You cannot ignore one end of business chain in order to benefit another.