Employment Issues / In the News

New York workers see income soar, but will the world follow?

The news that fast-food workers in New York State are likely to see their hourly pay rise from a minimum of $8.75 (£5.65) to $15 (£9.69) has sent shock waves though America. But will this unprecedented sector-specific pay increase be followed elsewhere around the world?

I have previously considered the impact of the recommendation of the Fast-food Wages Board on local businesses in New York. With fast-food restaurants in the area employing 180,000 workers, there is a good chance that prices will rise and jobs will be lost.

What’s happening?

The Order will only affect employers with 30 or more restaurants across the whole country. But this doesn’t just limit those affected to national or international brands. Of course, McDonalds is taking a lot of the heat from workers in its stores, but the reality is that the vast majority of restaurants are not owned by the Corporation, but by much smaller franchisees.

And why have fast-food workers been singled out? In the US In particular, those working in the catering and hospitality sector have always supplemented their low-wages with healthy tips. Fast-food workers, however, rarely enjoy such a ‘bonus’. That said, McDonalds has gone to great lengths to justify its pay regimes by citing the training and additional benefits workers receive.

Representatives of other low-paid sectors are now appealing to local and national bodies for pay increases across the board. The ‘Fight for 15’ campaign has seen success in cities including Seattle, Los Angeles and San Francisco, with Chicago set to raise minimum pay to $13 within the next few years.

International impact

With competition for employment continuing to be an issue around the world and migration still frequently in the news, there may be pressure on other global destination cities to keep up with the pay standards New York and the US is setting. In London, for example, the minimum wage is currently only £6.50 per hour, increasing to a ‘living wage’ £7.20 by April 2016. The Living Wage Foundation suggests a more appropriate figure should be £9.15, however. Much closer to where New York City will be by 2018.

Should we now expect a rise in wages across some of our more popular destination cities, or will New York fast-food workers be in a bubble? Only time will tell, but it will be important for any business to consider its financial and employee models to ensure sustainability and profitability in the coming years.

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