The Politics of the Minimum Wage Debate: An Analysis of Fast Food Workers in the State of New York

Abstract

The minimum wage is a charged issue across the United States. Republicans and Democrats strongly disagree on whether a minimum wage should exist and if so, what it should be. Proponents of the minimum wage see it as a way to grow the overall prosperity of a society by increasing the consumption of low wage workers, who have more money to spend with a higher wage. Others suggest that the exact opposite will happen if the minimum wage reduces employment, hurting those it was supposed to help. However, whenever the minimum wage has been instituted, it has been increased in a jurisdiction, whether it be a city, a state or a country. New York State is among the first to increase the minimum wage for a certain subset of society, franchise fast food workers, leaving others who do not work in this niche at a reduced wage. This is important for two reasons. One, this piecemeal approach to raising the minimum wage is novel and merits further analysis. Two, at the immediate outset, it creates wage inequities not only between different industries (food & beverage vs. retail & others) but also within an industry (franchise fast food vs. non-franchise fast food). Given the following, this thesis studies the political and economic ramifications of the revised minimum wage law in Upstate New York by considering the case of franchise fast food restaurants in New York State. An analysis of the different stakeholders in the process suggests that there are many different implications that the law at present does not take into account. The primary impetus for raising the minimum wage for franchise fast food workers was that their wage was not a livable wage and thus, taxpayers paid a significant amount of money in public assistance to subsidize these low wage workers. The proposition for raising the minimum wage for this part of the population was that public assistance spending would go down, thereby saving taxpayers money in the long run. My hypothesis was that while noble in its goal, the revised minimum wage laws in New York State are too narrowly defined to have a significant impact on public assistance spending. The simulations performed in Chapter IV confirm my hypothesis. An increased minimum wage for all citizens of New York State leads to far greater reductions in public assistance than when the minimum wage is only increased for franchise fast food workers. By studying the relationship between increasing the minimum wage for a subset of society relative to raising the minimum wage for the entire society and studying its relationship with public assistance spending, a starting point has been established for further research.