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New York Moves To Raise State Minimum Wage To $15 For Fast-Food Workers

By Sebastien Malo

NEW YORK (Reuters) – New York moved on Wednesday to raise the minimum wage for fast-food workers to $15 an hour by the end of 2018 in New York City and by mid-2021 in the rest of the state.

The New York Wage Board voted unanimously for the increase, which would cover some 180,000 workers statewide and affect fast-food chains with 30 locations or more in the United States.

The three-member board was formed at the behest of Governor Andrew Cuomo in May after the state legislature turned down his proposals for minimum wage increases for most workers.

Its decision does not need legislative approval, but requires approval by the state labor commissioner, which is expected.

“This is going to help hundreds of thousands of New Yorkers, but this is going to do something else,” said a beaming Cuomo at a jubilant rally in New York City celebrating the vote. “Because when New York acts, the rest of the states follow.”

With the federal minimum wage at $7.25 an hour since 2009, labor and religious groups have pressed state and local governments to enact pay raises as their hopes dim for an increase by the Republican-controlled U.S. Congress.

Last month, Los Angeles set its minimum wage to rise from $9 an hour to $15 by 2020, affecting some 600,000 workers.

Seattle and San Francisco also have increased minimum wages in recent years.

A statewide wage increase for fast-food workers as opposed to city-based would be a first, said the National Employment Law Project, a nonprofit advocacy group.

The rise to $15 an hour marks a major step from New York’s current minimum wage of $8.75.

“I feel fabulous,” said Harley Perez, 19, who work 30 hours a week at a fast-food restaurant but depends on food stamps to get by.

“I won’t have this chokehold with bills, and I won’t need to depend so much on the government for help,” she said.

Sixty percent of New York’s fast-food workers rely on some form of public benefit to supplement their earnings, according to the Fiscal Policy Institute.

The increase would be phased in, taking effect by the end of 2018 in New York City and by July 1, 2021, in the rest of the state.

Business groups and other critics slammed the decision as discriminatory because it singles out one industry, and legal challenges are expected.

(Editing by Ellen Wulfhorst and Mohammad Zargham)

Photo: Protesters rally during demonstrations asking for higher wages in the Manhattan borough of New York April 15, 2015. (REUTERS/Shannon Stapleton)

For Better Or Worse, The Labor Movement Is Reinventing Itself

Haltingly, with understandable ambivalence, the American labor movement is morphing into something new. Its most prominent organizing campaigns of recent years — of fast-food workers, domestics, taxi drivers and Walmart employees — have prompted states and cities to raise their minimum wage and create more worker-friendly regulations. But what these campaigns haven’t done is create more than a small number of new dues-paying union members. Nor, for the foreseeable future, do unions anticipate that they will.

Blocked from unionizing workplaces by ferocious management opposition and laws that fail to keep union activists from being fired, unions have begun to focus on raising wages and benefits for many more workers than they can ever expect to claim as their own. In one sense, this is nothing new: Unions historically have supported minimum wage and occupational safety laws that benefited all workers, not just their members. But they also have recently begun investing major resources in organizing drives more likely to yield new laws than new members. Some of these campaigns seek to organize workers who, rightly or wrongly, aren’t even designated as employees or lack a common employer, such as domestic workers and cab drivers.

The decision of Seattle’s government to raise the city’s minimum wage to $15 resulted from just such a campaign. Initially, the city’s fast-food workers’ campaign, backed by the Service Employees International Union, sought simply to unionize the 4,000 food service workers at Sea-Tac, the city’s airport. When the airport’s employers refused to bargain, the SEIU put an initiative on the ballot in Sea-Tac, the small Seattle suburb that is home to the airport, which proposed to raise Sea-Tac’s minimum wage to $15. The SEIU had assumed that, when confronted with such a measure, the airport would begin bargaining in exchange for having the measure withdrawn. It didn’t. Instead, Sea-Tac voters approved the measure, and the cause of the low-paid workers so dominated the local media that the following year, the city of Seattle raised its minimum to $15 as well, increasing the incomes of 100,000 workers. In America today, it is becoming easier to win a law raising wages for 100,000 workers than to unionize 4,000.

Wage increases are just some of the gains that unions are winning in the legislative and electoral process. The Taxi Workers Alliance has won more favorable regulations from municipal taxi commissions, although fewer than a quarter of its members pay dues. The National Domestic Workers Alliance has won legislation in four states, including California, that entitles domestics to overtime pay; yet none of its members pay dues (the organization is largely foundation supported). In San Francisco, retail workers, the vast majority of whom are nonunion, have prompted the city to adopt an ordinance requiring retailers to regularize part-timers’ hours.

For better or worse, the new labor movement is beginning to look a little like the 19th-century Knights of Labor, a workers’ organization that didn’t seek contracts between workers and their employers, but rather worked to advance workers’ interests through legislation. The problem with that model is that the Knights fell apart after two decades, unable to financially sustain itself, while the unions affiliated with the American Federation of Labor, which did have workplace contracts and dues-paying members, managed to survive. This is a problem that today’s unions are compelled again to confront: SEIU’s fast-food campaign is the prime mover of the minimum-wage momentum sweeping much of the nation, but how many resources can the union afford to spend on a campaign unlikely to generate any new members for the foreseeable future?

Los Angeles could well become the place where this new model of unionism gets its most extensive tryout. Should the City Council establish a municipal minimum wage higher than the state’s, more than half a million local workers will see their incomes rise. Some of the city councils in the county’s 80-plus other cities will doubtless match that standard, too, but many won’t. At that point, the L.A. labor movement — the most strategically savvy in the nation — could put initiatives on the 2016 presidential ballot to raise the municipal minimum in scores of L.A. County cities, and build an organization of thousands of nonunion workers to campaign for those measures. That organization could provide the nucleus for a union of low-wage workers — whether or not they have unions in their workplaces or contracts with their bosses — that this city, the capital of poverty-wage work, clearly needs.

Is such an organization possible? Sustainable? If it is, L.A.’s the place where it’s most likely to take root.
Harold Meyerson is editor at large of the American Prospect and an op-ed columnist for the Washington Post. He wrote this for the Los Angeles Times.

Photo: Annette Bernhardt via Flickr

Report: Restaurant CEOs Make 721 Times More Than Their Minimum-Wage Employees

A new report from the Economic Policy Institute highlights the widening earnings gap between minimum-wage workers and restaurant CEOs.

According to the EPI, a full-time employee making minimum wage will earn $15,080 — below the 2013 and 2014 federal poverty lines for a two-person household — over the course of a full year.

Compare that number to the average $10,872,390 that a top restaurant CEO earned in 2013. As the report explains, this means that a restaurant CEO, on average, earned 721 times more than the average minimum-wage worker.

Alarmingly, that 721-1 ratio is much higher than that of just eight years ago. Back in 2006, the ratio of restaurant CEO pay to the minimum wage was 609-1. That gap actually narrowed dramatically just two years later, when Congress passed the most recent minimum-wage hike; that left the ratio at approximately 250-1. After 2008, however, it continuously widened, and peaked between 2011 and 2012.

As demonstrated in the chart below, 2013’s 721-1 ratio is among the largest gaps of the last decade.

EPI Minimum Wage Restaurant CEO chart

One of the first steps towards narrowing the gap would be raising the minimum wage again. CEOs’ pay — which relies more heavily on other economic factors — may continue to rise, but a minimum-wage hike would drastically improve the lives of restaurant employees who often depend on federal safety net programs to provide for themselves and their families.

Many economists and lawmakers — most of whom lean left, such as President Barack Obama — continue to argue for a higher minimum wage to combat the negative economic and social implications of income inequality in the U.S.

Among opponents of a minimum-wage increase, however, is the National Restaurant Association, which represents the CEOs included in the EPI study.

According to the group, a federal minimum-wage hike would force restaurateurs to “limit hiring, increase prices, cut employee hours or implement a combination of all three to pay for the wage increase.” And as several states and even cities across the nation increase their minimum wages on their own — Seattle just passed legislation that will increase its minimum wage to $15 an hour over the next seven years — franchise restaurants warn that the measures are detrimental to businesses and jobs.

But the U.S. Department of Labor calls those claims “myths,” pointing out that employers in California “are required to pay servers the full minimum wage ($9 per hour beginning July 1) – before tips,” and “even with a minimum wage boost coming this summer, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.” Also, while “employers in San Francisco must pay tipped workers the full minimum wage of $10.74 per hour — before tips,” the Bureau of Labor Statistics still finds that the San Francisco restaurant industry has “experienced positive job growth over the past few years.”

A Congressional Budget Office report also finds that while 500,000 jobs may be lost, a federal wage increase could lift 900,000 Americans out of poverty.

Speaking on the wage hike passed in Seattle, McDonald’s CEO Don Thompson reluctantly gave the increase his stamp of approval.

“McDonald’s will be fine. We’ll manage through whatever the additional cost implications are,” Thompson said in May. If other restaurant CEOs could accept that, they too would “manage,” even if they had to pay their employees just a few dollars more.

Photo: The All-Nite Images via Flickr

Chart via Economic Policy Institute

Taking On Big-Business Wage Theft

Lawsuits show that the fight against wage theft is heating up, but workers shouldn’t have to sue their employers to get paid what they’re owed.

Despite the extensive press coverage of the fight of fast-food workers for a $15 hourly wage, one recent development hasn’t gotten much attention: fast-food workers around the country have started to win significant wage-theft lawsuits against McDonald’s franchisees, to the tune of hundreds of thousands of dollars. These lawsuits raise an important question: How has McDonald’s been able to get away with stealing hundreds of thousands of dollars from low-wage workers? The answer is straightforward. Our system for enforcement has been so severely weakened that many employers are able to regularly violate workers’ basic rights. And the law itself is broken. Its structure allows corporations like McDonald’s to escape responsibility for the conditions in their workplaces.

In February, student guest workers won a lawsuit that charged a McDonald’s franchise in Pennsylvania with wage theft. They had been paid sub-minimum wages, denied overtime pay and charged exorbitant prices for company housing. The Department of Labor required the franchise to pay $205,977 to both guest workers and native-born workers at the franchise. This victory was rapidly followed by a wave of other lawsuits around the country.

Last week, McDonald’s workers in three cities launched highly publicized cases charging the corporation with wage theft. These workers had experienced many types of wage theft. The workers in California claim that they were not paid for overtime work. In Michigan, workers are asserting that they were required to show up for work but were not allowed to clock in. Workers in New York allege that they were not compensated for the time they spent cleaning their uniforms, required to do work off the clock and not paid overtime. The New York suit was almost immediately successful. Last week, seven franchises agreed to settle for almost $500,000.

McDonald’s workers are not alone. Wage theft has become a widespread problem in low-wage industries in the United States. An influential study found that more than two-thirds (68 percent) of workers had experienced some form of wage theft in their previous week of work: They were paid below the minimum wage, not paid for overtime, required to work off the clock or had their breaks limited. An organization of fast-food workers in New York City surveyed workers and found that 84 percent of workers had experienced wage theft in the last year.

Addressing wage theft will take a two-pronged solution: rebuilding the enforcement system in the U.S., and cutting through the smokescreen of subcontracting and franchising to hold employers responsible for the wages and working conditions in their workplaces.

The enforcement regime in the United States has been significantly weakened over the last several decades. There has been an overall downward trend in funding for the Department of Labor. The number of labor inspectors had plummeted for years. The Obama administration has added new inspectors, but not enough to make up for the long-term decline. Meanwhile, the number of workers who need protection has grown. This pattern has to be turned on its head. If rampant wage theft is to be stopped, we need to radically increase the number of labor inspectors on the ground.

But – as Annette Bernhard points out in a new paper – increased funding is not enough. The enforcement system that we have is not well structured to deal with our current economy. It must be transformed. The penalties for employers who violate workplace regulations must increase. Enforcement agencies should partner with organizations like unions and worker centers that are in daily contact with workers. These organizations can educate workers and employers about workplace regulations, and they can provide an ear to the ground to help identify violators.

Even a radical transformation of the enforcement regime will not be enough in today’s economy. We need to change the law to deal with changes in the structure of employment. Right now, McDonald’s is structured so that the franchise owners are technically considered to be the employers. They are held legally responsible for wage violations in their stores, leaving McDonalds itself off the hook. Both recent legal victories charged franchise owners rather than the McDonald’s corporation itself. McDonald’s is shielded from blame while it continues to reap the majority of the profits that come from mistreating workers.

We need a new definition of what it means to be an employer. The current definition makes it impossible for workers to hold their corporate employers – the ones who are setting the real terms of their work – responsible. The two remaining McDonald’s wage-theft cases target both the franchise owners and the McDonald’s corporation itself. That challenges the narrow definition of employer, which limits responsibility to the franchise owner. The time has come for the law to be changed. All employers — from the front-line employers up to top of the employment chain – should be legally recognized as such so they can be held accountable for the conditions in their workplaces.

Wage theft has become an endemic problem in today’s economy. Low-wage workers should not have to turn – again and again – to private lawsuits as a solution. They deserve the basic right to be paid for their labor. To get there, we need full funding and comprehensive reform of the enforcement system in the United States, and we need legal reforms that hold central employers responsible for the conditions in their workplaces.

Harmony Goldberg is the Program Manager for the Roosevelt Institute’s Future of Work Initiative.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: Steve Rhodes via Flickr