A wages board in New York State has recommended raising the minimum wage for fast-food workers to $15 per hour by 2018 in New York City and 2021 across the rest of the State. I joined the BBC World Business Report to discuss the impact of the move.

Earlier this year, some cities including Seattle, San Francisco and Los Angeles set out plans to increase hourly pay to $15 across the board by 2020.  LA County followed only days ago. So far, New York has restricted itself to fast-food workers but these are not the only workers, on low pay and pressure is expected to force other industries to follow suit. Those in the retail and hospitality sectors are also affected by low wages and many receive public assistance to enable them to afford basic provisions.

Pay for the workers will rise incrementally over the coming years, increasing from the current New York minimum of $8.75. There will now be a 15 day period for comments, after which it is expected the Labor Commissioner will pass the recommendations into law.

Speaking in the Wall Street Journal, James Parrott,chief economist at the Fiscal Policy Institute said, “Wages are so low that 60% of fast-food workers qualify for public assistance. Taxpayers are subsidizing low-wage workers in fast food.”

New York State of Mind

In New York , the number of fast-food jobs and restaurants are growing at more than twice the national rate.  Such growth may suggest that there are high profits to be had, but there is a fear amongst fast-food franchisees that they may not be able to afford to survive.

Also up for debate is the meaning of ‘fast-food’, which will be something that may need to be clearly established before any changes are introduced. The recommendation will initially only apply to organisations with more than 30 establishments nationwide. Whether this includes franchises is yet to be confirmed.

The ‘Fight for 15’ campaign has gathered pace over the last few months, with workers protesting outside the McDonalds annual shareholders meeting in May. McDonalds, like many fast-food chains, work on the franchise model, which pushes the risk and cost to individual owners whilst price-setting their products. It is this strange relationship that may force businesses into bankruptcy or McDonalds into change.

Living wage

In the UK, the move by Chancellor George Osborne to introduce a national living wage, set to replace the minimum wage from next year, will step-up the responsibility on employers to meet employee’s financial needs. The Government’s proposals do not come close to the Living Wage Foundation’s recommendations for a genuine living wage, however.  From April 2016, the mandatory living wage for over 25 year-olds will be £7.20 per hour. The Foundation’s recommendations, recently adopted by Ikea in the UK, are currently at £9.15 for London workers and £7.85 outside the capital.

The UK’s increase to minimum pay doesn’t come close to some areas of the United States, of course.  But it is worth noting that the Federal minimum wage, which is a non-mandatory guide for states, is only $7.25 and hasn’t increased since 2009.

photo credit: <a href=”http://www.flickr.com/photos/39160147@N03/15229816635″>McDonalds</a&gt; via <a href=”http://photopin.com”>photopin</a&gt; <a href=”https://creativecommons.org/licenses/by/2.0/”>(license)</a&gt;