Testimony on Increasing the Minimum Wage in the Fast-Food Industry

June 5, 2015. James Parrott presented testimony to the New York State Department of Labor Wage Board hearing on increasing the minimum wage in the fast-food industry.

Fast-food is a highly profitable and fast-growing industry. Fast-food employment has risen across New York, adding significantly to the growing problem of low-wages that are far from adequate in allowing a worker to meet basic family budget needs. A significant portion of fast-food workers are trying to raise families, but more than two out of every five workers in this industry live in or near poverty. Not surprisingly, 60 percent of New York’s fast-food workers rely on one or more forms of public benefits to supplement their meager fast-food earnings. As a result of this cost-shifting, taxpayers shoulder over $900 million in public costs that essentially amounts to a subsidy to fast-food’s low-wage business model.

In light of these facts, it would be sound public policy for New York State to phase in a $15 an hour minimum wage for the fast-food industry. Considerable economically sound research supports the conclusion that the industry can accommodate such an increase. A higher wage floor would generate significant cost savings due to reduced turnover and there is room for modest price increases to ease the adjustment without jeopardizing overall employment levels or profitability.[1] Moreover, a $15 fast-food wage floor would boost consumer spending and reduce poverty, and would have positive overall economic consequences throughout New York State.

PDF of Testimony

[1] See, e.g., Robert Pollin and Jeannette Wicks-Lim, A $15 U.S. Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs, University of Massachusetts Political Economy Research Institute, January 2015.