An unelected panel mandated a $15 minimum wage for the fast-food industry in New York this week. When does Andrew Cuomo’s board decide that the governor’s campaign workers deserve a living wage, too?
Some industries are more equal than others.
The state legislature obstinately refused to vote the unskilled workers more of other people’s money. So, the governor appointed a panel that did. It’s modern New York, not ancient Athens, so some people rather than the people decide. In the words of the screaming hordes holding sandwich boards outside of hamburger joints, this is what democracy looks like.
Legislators dictating the “minimum” amount an employer must pay workers may appear as a terrible usurpation of the owner’s prerogative. But when compared to unelected bureaucrats dictating the hourly wage, the intrusions by politicians into payroll decisions start to look quaint, welcome, utopian even.
Discriminating tastes surely opt for Sparks Steak House over White Castle. That shouldn’t embolden bureaucrats to discriminate against the latter and exempt the former. Governor Cuomo doesn’t do the state’s business over a Castle Pack 7 and Fish Nibblers. So, he may not care if prices rise and doors close. But many of the 20 million New Yorkers whose dads did not serve as governor occasionally rely on such institutions for quick, cheap, and sometimes edible meals. Why punish them further?
Problems in process create problems in pricing. Customers, after all, don’t care how the Sausage McMuffin gets made. They care how much it costs.
“They’re going to have to raise prices across the board to absorb costs,” Christin Fernandez, director of media relations and public affairs for the National Restaurant Association, tells The American Spectator. “This is a single-digit profit industry. They’re going to have to pass on the costs to costumers, which would be the worst-case scenario for them.”
You can offer 59-cent hamburgers. You can pay workers $15 an hour. You can’t do both.
With the books of many Manhattan fast-food joints so teetering on the edge of red and black that they now charge for extra ketchup that costs the franchisees 1.5 cents per packet, one sees how setting the price of labor at more than double the federal minimum wage ($7.25) necessarily inflates the cost of the Whopper. One needn’t possess a Columbia economics degree to understand how Dairy Queen’s $5 Buck Lunch morphs into the $8 Buck Lunch and Wendy’s Right Price Right Size Menu becomes wrongly priced and downsized.
Other options Fernandez hears from restaurateurs include future closures and further automation. Robots may lack the personality of workers with neck tattoos, but they rarely mix hepatitis in with the special sauce, so automation—already squeezing out the service at several Big Apple hotels—increasingly strikes as a more attractive option than hiring $10-an-hour workers at $15.
Fernandez points out, “A third of all their costs goes to labor.” If a three-person body raises such a massive portion of the budgets of thousands of businesses by 70 percent on a whim, expect repercussions (few of them intended) when the edict goes into effect in the city in 2018. Jared, the King, and Ronald McDonald, after all, don’t own the restaurants associated with them. Thousands of franchisees do.
And their burdens shift to their patrons and employees. “The true minimum wage is zero—the amount an unemployed person receives from his nonexistent employer,” Milton Friedman pointed out in a Newsweek column written before my birth. This truism remains unchanged even as the government’s minimum wage has exploded in the intervening years.
When labor costs eclipse the worth of labor, workers suffer layoffs, customers suffer higher prices, and businessmen suffer bankruptcy.
Andrew Cuomo says “Eat it!” And if you frequent the Golden Arches, you will.