Minimum Wage Issues Trending Around the Country

By: Megan J. Muoio, May 29, 2015

The issue of the minimum wage – whether it should be increased, how, and whether increases should be centered on workers in specific industries – has been in the news lately.  In this blog post, several recent developments in the area of the minimum wage in California, New York, and New Jersey will be discussed.

A New Minimum Wage for California?

In California, a state-wide ballot measure aims to increase the minimum wage to $15 by 2021. The ballot measure is being pushed by the SEIU United Healthcare Workers West union, which hopes to put the issue on the ballot for the November 2016 election. If it passes, it would increase the minimum wage for workers in California by $1 per year until it reaches $15. Oakland and San Francisco have already moved to increase the minimum wage for workers in their cities to an amount higher than the current state minimum wage. In Los Angeles, where fifty percent of the work force makes the minimum wage, the City Council recently approved a bill to raise the minimum wage city-wide to $15 per hour by 2020. Quizzically, labor organizers are now lobbying for exemptions for unionized workforces, which would leave them free to negotiate a wage below the minimum wage. A 2014 wage increase for hotel workers (to $15.37 per hour) contains a similar exemption.

A Proposal to Improve Fast Food Workers’ Wages in New York

In New York State, the trend to increase the minimum wage is focused on fast food workers. On May 7, 2015, Governor Andrew Cuomo announced his intention to impanel a Wage Board to recommend an increase in New York State’s minimum wage for fast food workers. Cuomo argued in an op-ed piece in the New York Times that his proposal was meant to overcome delays by the New York State Legislature in taking action to provide a living wage to fast food workers. Focusing on the profitability of the fast food industry in general (and going so far as to call the income gap in the fast food industry “extreme and obnoxious”), Cuomo emphasized that nationwide 52% of fast food workers are on welfare and that New York State pays $700 million per year in public assistance to fast food workers.

A study by the Berkeley Center for Labor Research and Education at the University of California found that three-quarters of people helped by public assistance programs are headed by a low wage worker. Advocates for an increased minimum wage stress that the minimum wage is not a living wage. As illustration, they point to the fact that full time minimum wage workers only earn approximately $16,000 per year, even though the poverty line for a family of 3 is more than $20,000 per year. Nationwide, $153 billion is spent on public assistance to families of low wage workers. As a result, taxpayers are assisting the poor and subsidizing large corporate employers who pay their employees low wages.

In response, the National Restaurant Industry described the proposal as an “assault” on the restaurant industry that would affect new minority and women-owned businesses and restaurants started by those entrepreneurs on the “first rung of the ladder.” Other critics have criticized the proposal for possibly resulting in raised food prices at fast food restaurants, which would affect those restaurants’ customers, many of whom are of modest means themselves. In response, Cuomo countered that McDonald’s manages to pay its workers in Australia $16 per hour and in France more than $12 per hour, without having to raise its prices in order to remain profitable in those countries. Labor advocates have contended that raising the minimum wage will increase consumer spending and improve the overall economy, and point to economic data from minimum wage increases in other cites which did not result in economic disaster. For example, after restaurant associations in San Francisco and Santa Fe predicted disaster for their industries in the face of living wage increases, both cities had lower unemployment rates and higher rates of restaurant growth than neighboring no-living wage cities.

An Effort to Standardize the Minimum Wage in New Jersey

Nine cities in New Jersey have enacted local laws providing paid sick leave for workers, and others have considered raising the minimum wage above the state-mandated $8.38 per hour. The possibility of a patchwork minimum wage – higher in some cities and municipalities than others – with no uniform statewide wage is the subject of proposed legislation in both chambers of the New Jersey State Legislature. Republican lawmakers have proposed a bill that would prohibit local units of government from adopting increased minimum wage or mandatory paid sick leave provisions for private employers. The New Jersey Business and Industry Association supports the legislation and has argued that it would be unreasonably burdensome for businesses to comply with potentially different rules in each of New Jersey’s 565 municipalities. Although it is unclear whether the bills have enough support to make it into law, the legislation likely has the support of Governor Chris Christie, who has opposed Democratic legislator’s efforts to increase the minimum wage state-wide.

Employers would be wise to keep an close watch on the trends in minimum wage laws across the country and monitor how these legislative changes will affect their businesses nationwide.