Testimony on Minimum Wage Regulations for Fast Food Workers before the New York State Wage Board

David R. Jones

Thank you for the opportunity to testify today on the issue of minimum wage regulations for workers in the fast food industry in New York. My name is David R. Jones and I am President & CEO of the Community Service Society of New York (CSS).  CSS is a 172 year-old organization that fights poverty with the belief that working for a decent wage is the best path to economic security. Most recently, CSS’s work contributed to passage of the paid sick days law, and, just last week, passage of the Fair Chance Act preventing discrimination in employment based on involvement in the criminal justice system. 

It has been over two years since the New York State legislature agreed to increase the minimum wage from $7.25 an hour to $9.00 beginning in 2016. This was a step in the right direction.  But as cities including Seattle, San Francisco and Los Angeles have enacted minimum wages that will reach $15 an hour in the coming years, it is becoming increasingly clear that New York must do more.

Nowhere is action needed more than in the restaurant and food services industry. This industry is by far the leading employer of workers making less than $15 an hour in the state of New York, according to employment and earnings data from the Current Population Survey. And within this industry, workers in fast-food establishments earn, on average, $150 less per week than workers in full-service restaurants, according to Bureau of Labor Statistics data.   

According to the Wage Board’s research, there are over 160,000 workers in fast food restaurants in the state of New York. Nearly 40 percent of these workers are in New York City, and another quarter are in Long Island or the Hudson Valley. In other words, most fast food workers are in the most expensive parts of the state to live in.

The vast majority of workers in the fast food industry in New York State work in occupations with median hourly wages between $8.75 and 9.25 an hour, according to the Wage Board’s research. While data specific to New York City is limited, we found that workers in the most common fast food occupations in the New York City metro area have very similar earnings as those reported for the state as a whole. These wages are simply unsustainable, particularly for workers living in high cost areas and with families to feed. 

In arguments over potential minimum wage increases, opponents often like to say that minimum wage workers are primarily young students earning a little extra cash, and it is therefore not important that they earn family sustaining wages. However, this is increasingly not the case nationwide, and it is certainly not the case in New York City. The Wage Board’s research shows that statewide 60 percent of fast food workers are over 25 years old.  Additional analysis from CSS found that in New York City, that number jumps to 71 percent. CSS research on other segments of the low-wage food services industry has shown that New York City workers in these industries are far more likely to be working full-time and supporting families than similar workers in other parts of the country.  

Hardships Faced by Low-Wage Workers

Since 2002, CSS has elevated the voice of low-income New Yorkers through our annual Unheard Third survey. The survey is done in collaboration with Lake Research Partners using scientific polling methods and professional interviewers to poll over 1,500 New York residents each year.  It is the only public opinion poll in the nation that regularly tracks the concerns and hardships of New York City’s low-income residents as well as their views on what would help them get ahead. 

As part of the survey, we ask residents whether or not they have experienced any of a list of serious material hardships such as falling behind in the rent, going hungry, or being unable to fill a needed prescription.  Based on the data showing median hourly wages for fast-food workers is between $8.75 and 9.25 an hour, we examined the hardships reported by workers in New York City earning under $10 an hour. Nearly six out of ten (57 percent) experienced three or more hardships, and one-third reported experiencing five or more hardships according to our 2014 survey. For comparison, less than a quarter of workers earning over $15 an hour reported experiencing three or more hardships. Among workers earning $10 an hour or less, one in five often skipped meals because there wasn’t enough money to buy food; nearly one in three often had trouble affording subway or bus fare; and nearly four in ten fell behind in the rent or mortgage. These workers also bear the weight of constant stress over expenses and the fact that they have little to fall back on in an emergency. Among workers earning less than $10 an hour, over 40 percent worry all or most of the time that they won’t be able to meet expenses.  One-quarter have no money in savings, and over half have less than $500.  

We also found that those earning $10 an hour or less were much more likely to report relying on public benefits compared to those with higher hourly earnings. Of those making $10 an hour or less, over half are enrolled in Medicaid and over one-third reported depending on food stamps. For those with hourly wages of over $15 an hour, only 11 percent are on Medicaid and only six percent are on food stamps. 

This data on benefit utilization underscores a point that several researchers across the country have made and that you will hear more about from experts here today. By paying such low wages, billion dollar corporations are forcing the public to foot the bill for basic necessities such as food and health care when workers’ paychecks are insufficient to provide for themselves and their families. Not only is it unconscionable that a full-time worker at a fast food restaurant would have to rely on food stamps to feed their family at home, it is also unfair that the tax paying public is essentially subsidizing large corporations that are making handsome profits.  Higher wages for these workers would decrease spending on public benefits, increase tax revenue from earnings, and inject money into local economies. Even the businesses would benefit from reduced turnover and a more productive workforce, and increases to their payroll could be absorbed by increased productivity, redistribution of revenue, and modest price increases.¹    

Public Support for a $15 an Hour Minimum Wage

Our survey also asks respondents about a host of policy issues, which this year included how they would feel about the state raising the minimum wage to $15 an hour.  Across income levels and political party, a majority of New York City residents want to see this wage level reached. Three-quarters of New Yorkers overall support a $15 an hour minimum wage, including two-thirds who strongly support it.  Over eighty percent of low-income respondents and Democrats are in support, with around three-quarters strongly in support. And though we do see a greater level of opposition among Republican respondents, over half support a $15 an hour minimum wage.

In conclusion, CSS commends the Governor for directing Commissioner Musolino to convene this Wage Board and we support a phased-in increase in the minimum wage to $15 an hour for workers in the fast food industry.  The bottom line is $9 an hour is not enough. Throughout the country we have seen localities go far beyond this mark, all the way up to $15 an hour.  We cannot afford to let our workers fall behind. The fast food industry will continue to be a prominent source of employment in the low-wage sector, particularly for those who may not have the skills and educational credentials for higher paying jobs. These workers deserve wages that will allow them to keep their family’s heads above water.

 

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1. Robert Pollin and Jeannette Wicks-Lim. “A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs.” January 2015.  Political Economy Research Institute, University of Massachusetts-Amherst.

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