Panel backs pay hike for New York fast-food workers

Last Updated Jul 22, 2015 5:52 PM EDT

A panel created by New York Governor Andrew Cuomo on Wednesday voted to raise the minimum wage for the roughly 200,000 fast-food workers in the state to $15 an hour.

Amid bursts of applause during a meeting at the New York City Department of Health and Mental Hygiene in Manhattan, the three-member board unanimously recommended that the $15 rate be phased in by Dec. 31, 2018, for New York City, and by July 1, 2021, for the rest of the state. It applies to fast-food chains with 30 or more locations.

"This is not really about wage boards, and hearings and hearing officials. This is really about who we are as New Yorkers and what we believe. What we believe in New York is there should be opportunity for all," Cuomo told a celebratory rally that followed the board's decision. "You cannot live and support a family on $18,000 a year in New York state. That's why we have to raise the minimum wage. This is going to help hundreds of thousands of New Yorkers."

Rebecca Cornick, a 60-year-old resident of New York City, told the crowd that she supports herself and her granddaughter making $9 an hour at Wendy's, where she has worked for the last eight years. "Everything costs time and money, and neither of those is possible as a Wendy's employee," the woman said. "I won't be rich, I won't be able to do everything, but I'll be able to do more than survive, I'll be able to live," she said of the increase in pay recommended by the wage board.

Specifically, the board advised phasing in the $15 an hour rate by Dec. 31, 2018, for New York City, and by July 1, 2021 for the rest of the state.

In New York City, where the cost of living is substantially higher than in the rest of the state, hourly pay for fast-food workers would climb to $10.50 on Dec. 31, 2015, to $12 an hour on Dec. 31, 2016, $13.50 a year later and $15 on Dec. 31, 2018. For the rest of the state, the hourly rate will climb to $9.75 at the end of the year, followed by hourly increases of a dollar in the subsequent four years, followed by a jump to $14.50 on Dec. 31, 2020 and hitting $15 on July 1, 2021.

"It's long past time for New York to catch up with the times and raise the wage, because it's vital to lifting New Yorkers out of poverty and moving our economy forward," New York City Mayor Bill de Blasio said in a statement on the wage board's vote.

Cuomo in May moved to circumvent state lawmakers who rejected an increase in the state's minimum wage, saying a board would determine whether fast-food workers are adequately paid.

The wage board's decision followed four public hearings in June in which industry and worker advocates testified. At a June 29 meeting in Albany, Byron Brown, chairman of the board and the mayor of Buffalo, said the panel's three members agreed that there should be "a substantial increase."

The board's recommendations won't require approval by New York's legislature, which previously rejected his proposal to increase the minimum wage to $11.50 in New York City and $10.50 elsewhere in the state, the governor said.

The minimum wage in New York is $8.75 and will increase to $9 at the end of the year.

In an op-ed piece published in the New York Times in May, Cuomo said a board convened by the state's labor commission would examine whether the minimum wage in the fast-food industry is sufficient to provide for the life and health of its workers.

The governor also pointed to the burden on taxpayers of low-wage jobs, saying New York State tops the nation in public assistance spending per fast-food worker, at $6,800 a year, or $700 million annually.

"The government is subsidizing these corporations, allowing them to keep their labor costs low and their profit margins high," Cuomo wrote at the time. "The industry 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."

Wednesday's move comes in the wake of nationwide strikes in recent years by workers at McDonald's and other fast-food chains calling for a $15 hourly wage.

Some restaurant owners have expressed concern about the impact of a minimum wage hike.

"We believe a minimum wage should be set across all industries, and the legislature should be involved, instead of a three-person panel," Melissa Fleischut, president and CEO of the New York State Restaurant Association, told CBS MoneyWatch on Wednesday ahead of the board's decision.

In the moments after the panel approved its recommendations, International Franchise Association President and CEO Steve Caldeira released a statement vowing to fight what he called "Cuomo's politically-motivated decision to discriminate against local franchise small business simply to satisfy the request of his allies at the Service Employees International Union."

"We believe when you work hard for a living that job ought to be valued not just with a minimum wage but with a living wage," SEIU President Mary Kay Henry, the first woman to lead the union, told Wednesday's rally.

New York fast-food workers aren't the only employees in line for a pay hike. The University of California, the nation's largest public university, said Thursday that it plans to incrementally raise the minimum wage for workers from a current rate of $9 an hour to $15 by the fall of 2017.

"How we support our workers and their families impacts Californians who might never set foot on one of our campuses," said UC President Janet Napolitano, who oversees 10 campuses, including UCLA and Berkeley, according to The Associated Press. "It's the right thing to do."