In a somewhat radical move for legalized wage modifications, New York is making an impact. Its recently-accepted wage and leave policy will be having a big effect, in particular, on the state’s hospitality industry. This wage increase was announced mere hours after California one was announced, which was indeed the very first state in America to approve a $15 minimum wage.
The flip side of this is – according to restaurant owners/managers – menu prices will have to increase. However, the new policy has been hailed as “a spectacular victory for the national labor rights movement, which has been buoyed by striking fast food workers who first called for a $15 wage in 2012.” It’s time. And now it’s happened.
Around 50% of US states have been gradually increasing minimum wage from $7.25 but only California (and now New York) have reached the $15 mark. Others are considering it, such as Washington DC which went up to $11.50, might make the additional hike too.
The New York minimum wage increase was approved by a 26 to 12 vote in the Senate on 31 March. Just before they voted, Senate President Pro Tem Kevin de León stated: “At its core, this proposal is about fairness.” Assemblyman Sebastian Ridley-Thomas echoed this sentiment by arguing: “This is an argument about economic justice. Justice is not something that can be negotiated or compromised.”
In practical terms, this is how it will work: any NYC company with at least 11 staff members will get an increase to $11 by the end of this year and then a further $2 every year until it gets to $15 (by 2018). Companies that have 10 or less members of staff will be given until 2020 to get to $15. And then for the rest of the state (which includes the wealthier suburbs), they will be subject to a slower increase pace.
In addition to the wage increase, it is hoped that the 12 week paid leave parental plan will become law.
When Stop & Shop and Giant join up with the Food Lion parent company, a $29 billion grocer will be established. This will give the stores a far greater leverage vis-à-vis competing with food discount retailers like Wal-Mart, since it will become America’s fourth largest grocer.
The hope is that this would make the consumer happy. Which comes at a great time given that Whole Foods supermarkets have been accused of overcharging their customers by selling prepackaged meat, dairy and baked goods. Indeed, according to Julie Menin, Department of Consumer Affairs Commissioner, there was a fraudulent mark up of $14.94 on coconut shrimp, with chicken tenders being marked up by $4.85.
So the question is, will this mean that the newly established grocery store will help the consumer’s pocket at the end of the day? In some ways yes, but when it comes to fast-food restaurants, possibly not. Given that there is a strong likelihood that New York will be increasing minimum wage to $15 an hour, a staggering 72 percent of restaurant owners said that they would “very likely” increase food prices to the customer to counter this. A further 18 percent said they would be “somewhat likely” to follow suit.
So with some prices increasing and others decreasing, New Yorkers might ultimately be left in the same boat at the end of the day.
There may be a move away from tippers and towards raising the minimum hourly wage for tipped employees such as wait staff, hairdressers etc. in New York. A state panel has suggested it be raised to $7.50 an hour (from its current $5). Others are criticizing the move saying it’s not enough since if there wage is not at least $8.75 per hour, bosses legally need to make up the difference but if they don’t, the state of New York is currently unable to enforce it and thus these workers are not being paid fairly. Thus a minimum wage needs to be set for all.
In light of this, some eatery owners are considering eliminating tipping. Instead, menu prices will be raised by 22 percent. One such restaurant owner is Tom Colicchio who has wanted to do this for some time but now, given the recommendations of the Wage Board to raise the hourly wage tipped workers can be paid, the potential increase restaurant expenses would justify this.
Others believe that the entire industry should move over to the European model whereby a service charge is just included in the clients’ bill and thus pay for workers is higher. A few restaurants do this already in America but now more are considering the option. However, there is some kind of a crowd mentality happening with restaurateurs right now as no one wants to act alone. Only if a whole bunch of them enact this, will Colicchio consider following suit.