Polcover: The Wages of Sin

Nora Polcover

March 27, 2013

The Wages of Sin

It is November 29^th in the year 2012 and the sounds of disgruntled workers echo through New York City. At this time, fast food employees are striking in the name of low wages and no cross franchise union to unite them. They strike in the hopes that people will understand their struggle to survive on their extremely low income. The strike was funded by the Service Employees International Union, and was inspired by the strikers of Wal-Mart after black Friday. The goal in mind for these strikers is to achieve a livable wage of $15 per hour. Currently, the average fast food employee scrapes by at $18,000 per year according to the Bureau of Labor Statistics¹. This is the poverty line for a family of 3. According to Forbes, the CEO of McDonald’s James A Skinner brought in a yearly salary of $20.71 million in 2011². The fast food industry shows one of the largest disparities between income of the employees and income of the company in the world. November 29^th is not the only strike in recent times to bring awareness to this issue. On April 4^th, 2013, over 400 fast food employees in New York City walked out during their lunch rush in protest against their low wages and inability to form a cross franchise union. In New York, this movement funded by the SEIU is called Fast Food Forward. The website offers a petition for visitors to sign and information for their case. This paper will address the issues that fast food employees face with their employers and why they are fighting to achieve their livable wage.

According to the Fast Food Forward’s website, the fast food industry brings in about $200 billion a year, with the CEO going home with $25,000 in a day³. That figure is more than the money an average employee makes in a year. Also according to their website, fast food employees only make 25% of what they need to survive in New York City, on top of the minimum wage value decreasing by 30%⁴, according to the National Employment Law Project. Naturally, this means that many fast food employees must hold between 2 and 3 jobs in order to stay afloat. The fast food industry has a history of employing disadvantaged people, according to Eric Schlooser, author of Fast Food Nation⁵. This includes immigrants and teenagers. However, it seems that more and more people are becoming reliant on these jobs. NELP goes on to say that more adults are dependent on low wage jobs than has ever been seen. Because of the recent economic recession, 58% of new jobs were taken in low wage positions⁶, such as working in the fast food industry. In the past, the low wage jobs were saturated by younger employees. Now, according to NELP’s fact sheet about the Fair Minimum Wage Act of 2013, the average age of a low wage employee is 34.9⁷. It appears that working adults are depending on these jobs to make their ends meet just as much as immigrants and teenagers. However, many of these people have a difficult time making that happen on the low wages they make working at a fast food restaurant. Many of these people, as previously stated, work several jobs to make it work. A lot of them also have to rely on government assistance just to put food on their tables and clothes on their back. But their employers have a goal of keeping the cost of labor as low as possible.

However, as Schlooser explains in his book, the fast food industry goes to extreme lengths to make their employees replaceable. They are not given any skills. Their goal is to require no training for their employees. The equipment is automatic, with “buzzers and flashing lights that tell employees what to do”⁸. Without the need to train their employees, it makes them extremely interchangeable and makes the cost of labor drop. He goes on to say that “crew members are employed ‘at will’”⁹. This means that achieving a 40 hour work week is difficult, and getting overtime is even more difficult. In fact, most places want their chains to keep their overtime down in order to keep the cost of labor low. These are the sort of things that a union would help workers obtain, however the formation of a cross franchise union is almost impossible at this point.
Employees are intimidated out of creating a union. Right now, it is not against the law for an employer to ask around about unions at a fast food chain. McDonald’s, for example, does not have a policy on this because of the franchise structure. The owner of the franchise makes the rules in his own franchise. The employer can also tell employees that the union is bad for them, and that the union will collect their dues without getting them the protection or help they are looking for. Also, the National Labor Relations Act states that if an employee is striking for purely economic reasons, such as a pay raise, the employer has a right to replace them¹⁰. This is one of the likely reasons that these strikes had not happened until recently. Now, with the financial and legal support of SEIU, the fast food workers strike. They strike for a fair wage. They strike for their own union. Their employers, however, have their own reasons for wanting a low minimum wage.

According to the Cry Wolf Project, a subdivision of the National Employment Law Project, there are two main arguments that are always made in favor of keeping the minimum wage low. The first is that “raising the minimum wage would impair the economy”¹¹. With a higher minimum wage, businesses will higher less employees in order to cut the cost. This leads to the second argument. “A higher minimum wage would ultimately hurt the workers it is intended to help”¹²..” The argument here is that by raising the minimum wage, you are removing the entry level of an entry level job and thus people will have a more difficult time finding work. However, there recent studies turn up results that are to the contrary. According to a study published by Review of Economics and Statistics, November 2010, the minimum wage does not have an impact on job growth¹³. In fact, according to the Cry Wolf Project, the restaurant industry continued to make profits and have jobs that needed filling even with the rise in minimum wage in 2007¹⁴. This includes employers such as McDonald’s.

McDonald’s sits in the top three low wage employers. In July 2012, NELP published a report about the corporate profits and the minimum wage. In this report, McDonald’s was shown to see a 130% increase in their profits over the course of the last four years¹⁵. Not only that, but their top executive made $4.1 million dollars in a year, which breaks down to $2,037 as an hourly wage¹⁶. It is clear, then, that McDonald’s is not wanting for money. While their lowest paid employees struggle to get by and juggle multiple jobs, McDonald’s’ top executives and CEO bring home and enjoy extravagant wages. It is no surprise that their employees are disgruntled.

Currently, there is a piece of legislation that has just been introduced to the Senate called the Fair Minimum Wage Act of 2013. This Act would raise the minimum wage to $10.10 by 2015 and index the minimum wage to raise with inflation, and prevent it from eroding ever again. According to NELP’s fact sheet of this Act, 30 million Americans would receive a raise if this passes. It also predicts that this would actually benefit the economy by giving these employees more money to spend at local businesses. It predicts $32 million in “new economic activity” and 140,000 new jobs as businesses make more money and require more employees. In this view, raising the minimum wage would stimulate the economy instead of impair it¹⁷. Even business press, such as The Economist, are in favor of raising the minimum wage¹⁸.

The McDonald’s employees, however, are hoping to receive a livable wage. A livable wage is different from a minimum wage. The minimum wage is a legal guideline that gives an employer a minimum hourly wage that they can pay their employees. A livable wage is the amount of money an employee needs to make in order to make their ends meet. The livable wage that McDonald’s and other fast food employees are fighting for is $15.00 per hour. Fast Food Forward is not the only organization that is fighting for this. In Chicago, a similar movement is taking place organized by the Workers Organizing Committee of Chicago called Fight for 15¹⁹. They are also for a livable wage of $15.00 per hour. Both groups know that they can no longer survive on the miniscule wages that they make, even with stretching themselves to work multiple jobs. The number of people in this position is growing as the number of people dependent on these jobs is increasing.

Although some politicians and employers make the argument that the raise of minimum wage would hurt their businesses, recent economic studies have shown this not to be the case. In fact, their businesses would likely benefit from this raise, according to these studies and projections. With the $200 billion average profit of the fast food industry, it also appears that they can very well afford to give their employees a raise to help them come off of government entitlements and live comfortably. While the wages of their employees have not gone up, the top executives and CEO of McDonald’s and other companies like it have made millions of dollars. The strikes on November 29^th, 2012 and April 4^th, 2013 may only be the beginning of a larger movement, as their occurrence was inspired by the post black Friday strike of Wal-Mart employees. Hardworking low wage employees are no longer only the disadvantaged members of our society. They are college graduates and people of an average age of 34.9. The growing fast food industry will see more unhappy employees as they continue to work hard and struggle to pay their bills and care for their families. As these people continue to earn a wage that is below the poverty line for a family of 4, and at the poverty line for a family of 3, it can be expected that the weak arguments against their raises will crumble and there will be more strikes and demonstrations in the future, just as in labor movements that preceded this one. Remember, remember, the 29^th of November.

1 Occupational Employment Statistics. Washington: Bureau of Labor Statistics, 2012. s.v. "May 2012 National Occupational Employment and Wage Estimates United States." http://www.bls.gov/oes/current/oes_nat.htm

2 Forbes, "America's Highest Paid Chief Executives." Last modified March 25, 2011. Accessed April 5, 2013. http://www.forbes.com/lists/2011/12/ceo-compensation-11_rank.html.

3 Fast Food Forward, "We Can't Survive on $7.25." Accessed April 5, 2013. http://www.fastfoodforward.org/en.

4 National Employment Law Project, "Living Wage and Minimum Wage." Accessed April 5, 2013. http://www.nelp.org/index.php/content/content_issues/category/living_wage_and_minimum_wage/.

5 Schlooser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. New York, New York: Houghton Mifflin, 2002.

6 National Employment Law Project, "The Fair Minimum Wage Act of 2013." Accessed April 5, 2013. http://www.nelp.org/page/-/rtmw/NELP-FMWA-2013-Fact-Sheet-030413.pdf?nocdn=1.

7 National Employment Law Project, "The Fair Minimum Wage Act of 2013." Accessed April 5, 2013. http://www.nelp.org/page/-/rtmw/NELP-FMWA-2013-Fact-Sheet-030413.pdf?nocdn=1.

8 Schlooser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. New York, New York: Houghton Mifflin, 2002.

9 Schlooser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. New York, New York: Houghton Mifflin, 2002.

10 National Labor Relations Board, "National Labor Relations Act." http://www.nlrb.gov/national-labor-relations-act.

11 National Employment Law Project/Cry Wolf Project, "Consider the Source 100 Years of Broken-Record Opposition to the Minimum Wage." Last modified March 2013. http://nelp.3cdn.net/fb518f3647002218a7_a6m6ilt1w.pdf.

12 National Employment Law Project/Cry Wolf Project, "Consider the Source 100 Years of Broken-Record Opposition to the Minimum Wage." Last modified March 2013. http://nelp.3cdn.net/fb518f3647002218a7_a6m6ilt1w.pdf.

13 Dube, Arindrajit, T. William Lester, and Michael Reich. Review of Economics and Statistics, November 2010, "MINIMUM WAGE EFFECTS ACROSS STATE BORDERS: ESTIMATES USING CONTIGUOUS COUNTIES." Last modified November 2010. http://www.irle.berkeley.edu/workingpapers/157-07.pdf.

14 National Employment Law Project/Cry Wolf Project, "Consider the Source 100 Years of Broken-Record Opposition to the Minimum Wage." Last modified March 2013.

15 National Employment Law Project, "Big Business, Corporate Profits, and the Minimum Wage." Last modified July 2012. http://nelp.3cdn.net/24befb45b36b626a7a_v2m6iirxb.pdf.

16 National Employment Law Project, "Big Business, Corporate Profits, and the Minimum Wage." Last modified July 2012. http://nelp.3cdn.net/24befb45b36b626a7a_v2m6iirxb.pdf.

17 National Employment Law Project, "The Fair Minimum Wage Act of 2013." Accessed April 5, 2013. http://www.nelp.org/page/-/rtmw/NELP-FMWA-2013-Fact-Sheet-030413.pdf?nocdn=1.

18 The Economist, "The argument in the floor Evidence is mounting that moderate minimum wages can do more good than harm." Last modified November 24, 2012. http://www.economist.com/news/finance-and-economics/21567072-evidence-mounting-moderate-minimum-wages-can-do-more-good-harm.

19 Workers Organizing Committee of Chicago, "Fight for 15." http://fightfor15.org/about/.