New York Moves Closer to a $15 Minimum Wage for Fast-Food Employees

Whats come to you about minimum wage or salary?

In Indonesia, it become a problem since year 2012.

The new scheme, boost the minimum wage more than 50% than before.

The impact? Now, they asking more, they asking increase minimum 30% each year.

They said about don’t have enough saving to buy a house.

It’s true but not 100% correct.

Okay, let see an example. When they create a protest, they come to road with a big motorcycle, with a monthly installment maybe almost 50% of monthly salary.

Or, they said always lack of entertainment, food, high cost of living, etc.

Now, potential investor and existing business owner, asking government about the situation.

They want a predict and consistent number of wage increment.

For some industry, wage and salary is 50% of operating cost.

With this low economic situation, the business owner screening and plan to close the business.

Then, we see from another side.

Do you recognize the price of property in your area?

Let see an apartment in Jakarta is USD 25,000 in year 2010.

Now, guess how much? It’s become USD 50,000, or even more in some area, in year 2014.

If you see Singapore, Australia, USA, UK, the price is 10-20x times higher than Jakarta, with same size or smaller.

For middle low class, they can not buy it, and that’s why they asking a huge increase every year.

The problem is, if the minimum wage rising with higher than a local inflation, it would led you to an increase on another price.

E.g. I like to eat street food. Not because I can not afford it, but because I can have more saving and use it for investment in property.

Let say, 10 years ago, I can buy a street food for USD 1, but now, you must pay it for USD 5.

Then, think, you must ready for your pension scheme and plan.

Well, this is out of topics, related with financial planning and your pension plan.

We will discuss on another time.

Why I start with Indonesia, wages, and price?

Because, its similar situation.

New York wants to increase the wage step by step.

The minimum wage for the city’s fast-food workers would rise to $10.50 by the end of 2015, $12 by the end of 2016, $13.50 by the end of 2017 and $15 by the end of 2018. For the rest of the state, the fast-food minimum wage would increase annually on a more gradual basis until reaching $15 in 2021.

The increase is higher than local inflation.

Short term benefit, you have a huge room for saving.

Long term “benefit”, you will see that another price will become higher. E.g. property price.

Long term negative impact, you will see that some of your friends will close the business or out of the job.

It happen in Indonesia also.

Based on research, more than 5000 blue workers are out of the jobs within 3 years due to high increase on minimum wage.

So, be smart for what ever government policy is.

Don’t change your life style even you have an increment.

Use it for saving and investment, because you don’t know what happen to you in next 1 or 5 or 10 years from now.

Prepare your retirement plan.

I share a little tips that I always use.

1. Create 2 bank account. It’s minimum number.

First for daily consumption. Second for saving, investment, and emergency funds.

2. Using a flow of 50-30-10-10, from monthly income.

The proportions are:

50% for daily consumption.

30% for productive debt and investment (e.g. housing).

10% for funding to poor or need peoples, socialization cost (e.g. treat friends to maintain long term relationship), fun, vacation, etc.

10% for saving and emergency funds.

You must have a liquid saving for minimum 6x times of your monthly obligation (debt) and consumption.

Let say you have total USD 500 for installment and monthly consumption (rent, meals, etc).

Then, you must have a liquid assets (or any kind of assets that could sell) for minimum USD 3000.

It will save you for another 6 months if you’re fired and out of the job.

It’s for you that still single.

If you are married with 2 children’s, you must prepare for 12x times.

Read the New York article, as follow.


A bank manager explains the situation to pensioners waiting outside a branch of the National Bank of Greece hoping to get their pensions, in Thessaloniki, Greece June 29, 2015. Greece closed its banks and imposed capital controls on Sunday to check the growing strains on its crippled financial system, bringing the prospect of being forced out of the euro into plain sight.  REUTERS/Alexandros Avramidis

The cost of operating a fast-food franchise in New York is about to get more expensive.

On Wednesday, a panel organized by the state to study worker pay announced its recommendation that New York raise fast-food workers’ minimum wage to $15 per hour. The state’s current rate is $8.75 per hour, though it is slated to go to $9 by the end of the year for workers in all industries.

The increase would be implemented in stages, with New York City on a faster timetable. The minimum wage for the city’s fast-food workers would rise to $10.50 by the end of 2015, $12 by the end of 2016, $13.50 by the end of 2017 and $15 by the end of 2018.

For the rest of the state, the fast-food minimum wage would increase annually on a more gradual basis until reaching $15 in 2021.

Related: Pizza Hut’s Second-Largest Franchisee Sued in Pay Dispute

The hike would only impact employees at restaurant chains with 30 or more units.

The wage board’s proposal still needs final approval from the state government before it goes into effect, something that seems likely due to New York Gov. Andrew Cuomo’s continued support of efforts to raise the minimum wage.

Gov. Cuomo directed the Department of Labor to establish the wage board to examine the issue of fast-food workers’ minimum wage in May. In late June, the three-member board announced that two months of research and public meetings had led them to believe that reform was necessarily, though they refrained from giving an official recommendation until today’s meeting.

Cuomo and supporters argue that the focus on fast-food employees is necessary due to the specific economic hardships of workers, who have served as figureheads throughout activist work to raise minimum wage across America.

“It’s an industry that’s really marked by two extremes,” says Irene Tung, a senior policy researcher at the National Employment Law Project. “On one hand you have extremely profitable global corporations that are returning millions of dollars to shareholders and on the other hand you have some of the lowest paid workers in the entire country.”

While the decision will only directly affect fast-food workers, Tung says that it will force other restaurants and industries to raise wages in order to attract employees. Ultimately, she says, the decision will improve pay not only for those directly impacted, but all employees working low-paying jobs in the state and set a precedent for other states examining minimum wage legislation.

However, franchise industry groups believe that singling out the quick service restaurant industry is unfair.

“Applying a new mandatory minimum wage increase to a narrow group of businesses creates an un-level playing field for owners that provide important entry level jobs and valuable experience for millions of workers across the state of New York,” International Franchise Association president Steve Caldeira said in a statement. “If Governor Cuomo wishes to advance a wage increase, it should cover all of New York’s businesses, not just a select few.”

Advocates for employees and restaurant chains in opposition regarding minimum wage legislation tend agree on one issue: Franchisees are likely to find themselves caught between a rock and a hard place with minimum wage hikes. Many labor activists blame the franchise system and franchisors for forcing franchisees to operate on thin margins; for example, the Service Employees International Union recently lobbied for a bill of franchisee rights in California in addition to fighting for higher minimum wage laws. Meanwhile, those who oppose legislation increasing minimum wage say that these activists ignore the economic realities of running a restaurant business and that new regulation will ultimately hurt both franchisees and employees.

In any case, it’s clear that fast-food franchise owners of New York are entering a period of change that will serve as a forecast of things to come for other states and industries as minimum wage battles continue to be fought across the U.S.


Author by Kate Taylor, 23 July 2015

Access on 23 July 2015.


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