Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘wages’

Female Executives Aren’t Just Paid Less, They Also Suffer More For Bad Performance

Wednesday, August 26th, 2015

Bryce CovertThere isn’t just a gender wage gap among the highest-paid employees in the country. Pay for female executives also drops further when companies perform poorly compared to men but rises less during good times.

In a new note about their research, Federal Reserve Bank of New York economists Stefania Albanesi, Claudia Olivetti, and Maria Prados find that if a company’s value drops by 1 percent, female executives’ pay will drop by 63 percent, while male executives only see a 33 percent decline. On the other hand, if value goes up by 1 percent men will get a 44 percent boost but women will only get a 13 percent increase.

This leads to cumulative losses for women but gains for men. The economists looked at pay for the top five executives in public companies — CEO, vice chair, president, CFO, and chief operating officer — in the Standard and Poor’s ExecutComp database between 1992 and 2005. Over that time, women’s pay dropped 16 percent while men’s rose 15 percent. If a company’s value increases by $1 million, male executives will net $17,150 more in compensation but women will only get $1,670. “So, overall,” they write, “changes in firm performance penalize female executives while they favor male executives.”

There is still a tiny number of female executives to begin with. They made up just 3.2 percent of the people in the roles examined by the New York Fed economists, while they account for 4.6 percent of CEOs at S&P 500 companies and a quarter of executive and senior officers. But even so, they are still paid less than their male peers. The New York Fed research found that female executives’ total compensation was just 82 percent of men’s. The highest-paid female executives at S&P 500 companies made 18 percent less than male ones in 2013, and female CEOs made less than 80 percent of what male ones made.

Several prominent female executives have recently demonstrated the severity of the pay gap at the top. Yahoo CEO Marissa Mayer was paid less in her few years than the man who had the job before her and ended up fired. Mary Barra, the first female CEO of General Motors, got a pay package for her first year that was less than half of what the man who had the job before her made, although her long-term compensation package will be higher. The value of that package, of course, will depend on the company’s value over time.

But part of the disparity is the way that female executives get paid in the first place. In their research, the New York Fed economists found that women’s compensation is made up of less incentive pay than men’s, which accounts for 93 percent of the overall gender pay gap among them. The biggest gap is in bonuses: female executives get bonuses that amount to just 71 percent of male executives’. But they also get less in stock options and grants, getting just 84 percent and 87 percent, respectively, of what men get. The gap in stock options alone explains 41 percent in the overall gender gap.

While there’s a gender wage gap at the very top of the economy, it’s part of a problem that follows women in virtually every job. They get lower salaries right out of college and will make less than men at every education level. While many factors go into the gender wage gap, women’s career interruptions to care for children can only explain about 10 percent of it and the most ambitious women will still make less.

This blog originally appeared at ThinkProgress.org on August 26, 2015. Reprinted with permission.

About the Author: Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media.

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Bar Owner Eliminates Tips So He Can Pay Cooks And Dishwashers A Living Wage

Wednesday, August 5th, 2015

Bryce CovertPortland, Oregon’s new bar Loyal Legion doesn’t just offer customers 99 different beer choices. It also requires them to pay zero in tips.

When owner Kurt Huffman opened the bar, he wanted to figure out to deal with a problem plaguing all of his establishments: the nearly impossible search to hire talented staff in the back of the house cooking and prepping food and washing dishes. “I can’t find line cooks anymore,” he said. The search for a single cook takes his team three or four weeks, an eternity in the business. “I’ve got to figure out how to get the kitchen more money so we can keep talent.”

He noted that the cost of living in the city is so high that almost all of his dishwashers and line cooks have to work two jobs to get by. “The system is broken in terms of how people are paid,” he said.

So to create a new pool of money to be able to increase the wages in the back to be comparable with what the people serving customers in the front are making, he eliminated tipping and instead has raised prices by 20 percent — so a beer has gone from $5 to $6. That’s allowed him to increase the minimum pay for the back of the house to $15 an hour, which increases to $18 after three months. The front of the house will also get an $18 minimum wage.

Huffman himself used to work in the back of restaurants, and he noted that the new system allows him to address an “ethical dilemma” he faced when paying those positions less than servers and bartenders who also rake in tips. “I used to work with dishwashers and cooks, and everybody is busting our ass,” he explained.

A growing wave of American restaurants has been getting rid of tipping in favor of a variety of other models. While it started with high-end places on the coasts, it’s now extended to bars like Huffman’s, diners, coffee shops, and barbecue joints. One piece of the reasoning, which Huffman also noted, is that tipping is no longer an expression of gratitude for service but simply a given. “In the olden days, tips were actually an index of quality of service,” he said. “They aren’t anymore. People tip always the same.” In fact, the quality of service only accounts for a percentage point or so change in the size of tips; instead, they tend to fluctuate more on gender, race, and looks.

The no-tip model could also serve as an experiment for how his sit-down restaurants might address a higher minimum wage. Huffman expects a $15 minimum wage requirement will soon be enacted in Portland given that it’s already been passed in San Francisco and Los Angeles, the cityraised the wage for its own workforce to that level earlier this year, and voters will weigh in on an overall hike to that level come November. “I think everybody in the restaurant industry, everybody who’s paying attention, is thoughtful and mindful of how we’re going to address that change,” he said.

His company ChefsTable Group has 16 restaurants, and he estimated that for six of them, that sort of cost increase will be nearly impossible to contend with without other changes. One change he’s considering is adding an automatic gratuity to the bill — perhaps 5 percent — that would go to helping cover that cost, and customers would be able to add what they wanted on top of that.Some restaurants in other cities are instituting higher wages before they even go into effect by eliminating tips and raising prices.

This blog originally appeared in ThinkProgress.org on August 5, 2015. Reprinted with permission.

Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media.

Jobs Report: Flat Wages, Shrinking Workforce

Monday, July 6th, 2015

Robert-Borosage_The June Bureau of Labor Statistics jobs report shows continued growth — 223,000 new jobs added with the official unemployment rate declining to 5.3%. Jobs growth remains steady — rising for 57 straight months, now setting a new record each month – but slow, lagging previous recoveries.   The decline in the unemployment rate was largely due to 432,000 people leaving the labor force, reversing the increase that took place in May.

The headline unemployment figure is always misleading. Nearly 17 million people are still in need of full-time work. Long-term unemployment has declined, but remains higher than before the great recession. The employment-population ratio has also not recovered, remaining at 59.3%, marginally lower than a year ago. The portion of the working age population that is employed or wants a job, the labor force participation rate, declined last month and is lower than a year ago. This is not a picture of robust growth.

The BLS reports are important largely as signposts for the Federal Reserve and its pending decision on when to raise interest rates. Fed Chair Janet Yellen sensibly has been focused on disappointing wage growth and looking for “additional strength in the labor market.” She won’t find much that is encouraging in this report.   In this month’s report, hourly wages showed no growth, with the yearly average up barely 2%, despite hikes in the minimum wage by more and more cities and states and more and more companies. Average hours worked remained steady.

Speculation is that the Federal Reserve is headed towards beginning to wage interest rates in September. Higher interest rates will be a drag on growth, jobs and thus wages. The Fed would be well advised to wait until more workers find jobs, and the greater demand for workers is reflected in continuing rising wages.

Government employment showed no increase. The US Congress continues to block any investment to rebuild our decrepit infrastructure at a time of record low interest rates. With the US able to borrow for virtually nothing, an investment in infrastructure, as Larry Summers argues, would pay for itself, with even a minimum return in efficiency. No business leader with a whit of sense would refuse to grasp this opportunity. Perhaps Donald Trump who has built his fortune by making far riskier bets with borrowed money could explain this to his colleagues.

Manufacturing employment showed little change, adding 4,000 jobs. For the president to meet his pledge of adding 1 million manufacturing jobs in his second term, he would have to average over 32,000 a month. This seems less and less likely, as manufacturing is weakened by our rising trade deficits, resulting from the strong dollar and our perverse trade policies that the president is intent on extending.  The economy has gained only 38,000 manufacturing jobs in the first six months of this year.

The economy continues to add jobs, which is an indisputably good thing. But the pace is slow, and little of the recovery is reaching most Americans. Surveys show that Americans are growing more optimistic about the economy. This is reflected in rising non-revolving consumer credit – significantly student and car loans – which is outpacing after-tax income growth. If the Fed raises interest rates, these debts will grow more costly, putting a crimp on consumer demand. Again, with the Congress refusing to act sensibly, the Fed has every reason to wait until wages are rising and more Americans are working before starting to put on the brakes.

This blog was originally posted on Our Future on July 2, 2015. Reprinted with permission.

About the Author: The author’s name is Robert Borosage. Robert L. Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. The organizations were launched by 100 prominent Americans to develop the policies, message and issue campaigns to help forge an enduring majority for progressive change in America. Mr. Borosage writes widely on political, economic and national security issues. He is a Contributing Editor at The Nation magazine, and a regular blogger at The Huffington Post. His articles have appeared in The American Prospect, The Washington Post,Tthe New York Times and the Philadelphia Inquirer. He edits the Campaign’s Making Sense issues guides, and is co-editor of Taking Back America (with Katrina Vanden Heuvel) and The Next Agenda (with Roger Hickey).

New York manicurists to get emergency protections against wage theft, hazardous chemicals

Wednesday, May 13th, 2015

Laura ClawsonTalk about journalism with an immediate impact. Last week’s New York Times investigation of labor law violations and unhealthy working conditions for manicurists in the city’s nail salons has spurred Gov. Andrew Cuomo to take sweeping emergency action:

Nail salons that do not comply with orders to pay workers back wages, or are unlicensed, will be shut down. […]Salons will be required to publicly post signs that inform workers of their rights, including the fact that it is illegal to work without wages or to pay money for a job — a common practice in the nail salon industry, according to workers and owners. The signs will be in half a dozen languages, including those most spoken in the industry — Korean, Chinese and Spanish. […]

Salons will now be required to be bonded — which is intended to ensure, through a contract with a bonding agency, that workers can eventually be paid if salon owners are found to have underpaid the workers. The move is an attempt to counteract the phenomenon of salon owners’ hiding assets when they are found guilty of wage theft.

Additionally, health and safety measures will be put in place, like requiring manicurists to wear gloves and masks and salons to be ventilated, while the Health Department will investigate the most effective health protections to incorporate into what will eventually be permanent policies replacing the short-term emergency measures.

Some of the abuses Sarah Maslin Nir’s investigation into New York City nail salons exposed may be especially prevalent in New York, where there are more nail salons per capita than in any other American city and where manicures cost below the national average. That might, for instance, make wage theft more common and more aggressive than in other locations—but that doesn’t mean it’s not happening in California and Illinois and Massachusetts, too, and states should take this as a spur to inspect their own nail salons. And the health hazards manicurists face similarly deserve a good hard look by state regulators. Customers might end up paying a couple dollars more for a mani-pedi, but we’re talking about workers’ lives here, and their ability to collect the pay they’ve legally earned.

This blog was originally posted on Daily Kos on May 9, 2015. Reprinted with permission.

About the author: The author’s name is Laura Clawson. Laura Clawson has been a Daily Kos contributing editor since December 2006. Labor editor since 2011.

Put Working People First

Tuesday, January 13th, 2015

Leo GerardThe jobs report Friday set off cheering: a quarter million positions added in December; unemployment declining to 5.6 percent. This good news arrived amid a booming stock market and a third-quarter GDP report showing the strongest growth in 11 years.

It’s all so very jolly, except for one looming factor: wages. They’re not rising. In fact, they fell in December by 5 cents an hour, nearly erasing the 6-cent increase in November.

Hard-working Americans need a raise. Their wages are stuck, rising only 10.2 percent over the past 35 years. Workers are producing more. Corporations are highly profitable. CEOs, claiming all the credit for that as if they did all of the work themselves, made sure their pay rose 937 percent over those 35 years. That’s right: 937 percent!

It doesn’t add up for workers who struggle more every year. Something’s gotta change. The AFL-CIO is working on that. It launched a campaign last week to wrench worker wages out of the muck and push them up.

At a summit called Raising Wages held in Washington, D.C., last week, AFL-CIO President Richard Trumka said, “We are tired of people talking about inequality as if nothing can be done. The answer is simple: raise the wages of the 90 percent of Americans whose wages are lower today than they were in 1997.”

“Families don’t need to hear more about income inequality,” he said; “They need more income.”

The meeting attended by 350 union representatives, community group officials, economic experts and religious leaders was the first of many that will be conducted across the country by the AFL-CIO to spotlight the pain and problems that wage stagnation causes. The AFL-CIO will begin these meetings in the first four presidential primary states – Iowa, New Hampshire, Nevada and North Carolina.

The idea is to ensure that candidates, Republican and Democrat, can’t squirm out of dealing with the issue. And Trumka said labor won’t tolerate sappy expressions of sympathy. The federation will demand concrete plans for resolution.

Also last week, the AFL-CIO launched Raising Wages campaigns with community partners in seven cities – Atlanta, Columbus, Minneapolis, Philadelphia, San Diego, St. Louis and Washington, D.C. In addition to seeking wage increases for all who labor, these coalitions will pursue associated issues such as fighting for paid sick leave and equal pay for equal work.

At the same time, the AFL-CIO and allies will push for federal legislation to seriously punish employers who illegally retaliate against workers and to provide real remedies for workers unjustly treated.

At the summit, workers told their stories alongside experts. Among them was Colby Harris, who suffered illegal retaliation. A member of OUR Walmart, he was fired last year after participating in strikes for better conditions.

“They are trying to silence people for saying we need better wages and benefits. The average Walmart worker makes less than $23,000 a year. These companies have no respect for their workers,” Harris told the group.

Another speaker, Lakia Wilson, said that workers can do everything right, work hard, follow all the rules and still lose out in this economy. The Detroit native earned a bachelor’s degree in education and a master’s in counseling. While serving as a school counselor, she took a second job as an adjunct professor at a community college to make enough money to qualify for a home mortgage.

But then, in a cutback at the college, she was laid off. She lost the extra income, and the bank began foreclosure. It was, she said, a horrible, humiliating experience. She cashed out her retirement to save her home. Now her credit and retirement are shot. This happened to her, and to so many others, she said, even though they “did everything necessary to get a good job and get the American dream.”

U.S. Sen. Elizabeth Warren talked to summit attendees about why the economy does not work for people like Wilson and Harris. Though this economy is splendid for those who own lots of stock, it’s not for the vast majority of workers who get their income from wages.

Sen. Warren pointed out that the economy didn’t always work this way. From the 1930s to the 1970s, she said, workers got raises. Ninety percent of workers received 70 percent of the income growth resulting from rising productivity. The 10 percent at the top took 30 percent.

Since 1980, however, that stopped. Ninety percent of workers got none of the gains from income growth. The top 10 percent took 100 percent. The average family is working harder but still struggling to survive with stagnant wages and growing costs.

“Many feel the game is rigged against them, and they are right. The game is rigged against them,” Sen. Warren said.

The rigging was adoption of Ronald Reagan’s voodoo trickle-down strategy.  That economic plot puts massive corporations, Wall Street and the 1 percent first. Politicians bowed down to them, legislated for them, deregulated for them. In return, the wealthy were supposed to chuck a few measly crumbs down to workers.

They did not. Workers got nothing.

Despite that, workers still get last consideration. That, Sen. Warren said, must be reversed.

Accomplishing that, clearly, is a David vs. Goliath challenge. David won that contest, and workers can as well – with concerted action. Papa John’s worker Shantel Walker told the summit such a story – one of victory against a giant with collective action.

She discovered that a teenager at the New York franchise where she worked was putting in time that was not clocked. The restaurant was stealing wages.

Walker helped organize a protest at the restaurant. Between 80 and 100 people rallied for justice for the young worker. And they won. The restaurant paid the teen. “Now is the time to stop the poverty wages in America,” Walker said; “Raise the wage!”

Trumka said the AFL-CIO and its allies will demand that of lawmakers. He said they would insist that legislators “build an America where we, the people, share in the wealth we create.”

For that to occur, lawmakers must serve the vast majority first. They must stop functioning as handmaidens to the rich in an economic scheme that has failed the 99 percent from the very day the 1 percent got Ronald Reagan to buy it.

The AFL-CIO and its allies intend to help lawmakers see that they must prioritize the needs of America’s workers.

This article originally appeared in ourfuture.org on January 13, 2015. Reprinted with permission.

About the author: Leo W. Gerard, International President of the United Steelworkers (USW), took office in 2001 after the retirement of former president George Becker.

The Dark Side Of the Jobs Report: Shrinking Workforce, Stagnant Wages

Sunday, January 11th, 2015

Image: Dean BakerThe unemployment rate edged down to 5.6 percent in December from 5.7 percent in November (revised from an earlier reported 5.8 percent), the Labor Department reported today. However, the main reason was that 273,000 workers reportedly left the labor force. The employment-to-population ratio (EPOP) was unchanged at 59.2 percent, roughly 4.0 percentage points below the pre-recession level.

The establishment survey showed the economy adding 252,000 jobs in December. With upward revisions to the prior two months’ data, this brings the three-month average to 289,000.

Some of the job growth in December was likely attributable to better than usual weather for the month. For example, construction reportedly added 48,000 jobs; restaurant employment rose by 43,600. But even without these strong gains, there was still healthy job growth. Manufacturing added 17,000 jobs, finance added 10,000, and professional and business services added 52,000. Unlike prior months, the jobs in this sector were mostly (35,200) in the less well-paying administrative and waste services category.

The health care sector added 34,100 jobs. Job growth in this sector has accelerated sharply, averaging 36,500 over the last three months. By comparison, it averaged just 21,200 in the year from September 2013 to September 2014. Retail added just 7,700 jobs. This reflects the earlier than usual Christmas hiring, which added 88,300 jobs the prior two months.

The story on wages is less encouraging. The widely touted November jump in wages was almost completely reversed, with the December data showing a 5-cent drop from a downwardly revised November figure. The average over the last three months grew at a 1.1 percent annual rate compared with the average of the prior three months, down from a 1.7 percent growth rate over the last year. This may be due in part to a shift to lower paying jobs in restaurants, retail, and the lower-paying portions of the health care industry. However, it is also possible that we are just seeing anomalous data. Nonetheless, the claims of accelerating wage growth have no support in the data.

Interestingly, there seems to be some shift to generally less-skilled production and non-supervisory workers. The index of weekly hours for these workers is up 3.6 percent from its year-ago level. By contrast, the index for all workers is up by just 3.3 percent. Since the former group is more than 80 percent of the payroll employees, hours for supervisory workers would have risen by just 2.5 percent. This is consistent with employment data showing much sharper employment gains for workers with high school degrees or less than for college grads. The EPOP for college grads is actually down by 0.2 percentage points over the last year.

Other data worth noting in the household survey include a rise in the employment-to-population ratio for African Americans of 1.8 percentage points over the last year and for African-American men of 2.2 percentage points. The EPOP for African Americans is up by 3.9 percentage points from its low in 2011, although it is still down by 4.0 percentage points from pre-recession levels. The 10.4 percent December unemployment rate for African Americans is down from a recession peak of 16.8 percent.

This report shows some evidence of the labor market effects of the Affordable Care Act. While the number of people choosing to work part-time was down slightly from its November level, it is still 1.1 million above its year-ago level. The number of people who are self-employed is also up from its year-ago level. Averaging the last three months, the number of self-employed workers is up by 480,000 (3.5 percent) from the same months of 2013. (It had been dropping in 2013.) Also, the over-55 age group comprised just 37.6 percent of employment growth in 2014, compared to an average of 65.3 percent in the prior two years. This could indicate that many pre-Medicare age workers now feel they can retire since they can get insurance through the exchanges.

On the whole, this is clearly a very positive report with the strong December jobs number (even if inflated by weather) coupled with upward revisions to the prior two months. However, quit rates are still very low and wage growth remains weak. This should remind the public of how far the labor market has to go before making up the ground lost in the recession.

This article originally appeared in Ourfuture.org on January 9, 2015. Reprinted with permission.

About the author: Dean Baker is an American economist whose books have been published by the University of Chicago Press, MIT Press, and Cambridge University Press.

Takeaways from the 2014 Elections for Working Families

Tuesday, November 11th, 2014

Mary Kay HenryDespite a tough night with many close races, a key takeaway from Election Day is the progress made toward raising wages for working families for an economy that works for all of us, not just the wealthy few.

Raising the minimum wage was a winning issue yesterday in red, blue, and purple states.
In deeply conservative states like Nebraska and South Dakota, the economy isn’t working for working people and the message from voters was clear: we’ve got to increase wages.

In San Francisco, where workers will get to $15 an hour a year ahead of Seattle, we saw incredible momentum built from the Fight for $15, where workers have had the courage to come out and call for wages they can raise a family on without having to cobble together 2-3 jobs and still live on the brink.

Working families issues also prevailed in Oakland with the increase in the wage to $12.25 and earned sick time, which also passed in Massachusetts.

The minimum-wage results and wins in Governors’ races in Pennsylvania, Minnesota and Connecticut show that working families want action on higher wages.

I spent yesterday in Pennsylvania, where folks were so excited to get out and volunteer for Tom Wolf, who made it crystal clear from the very beginning the sharp contrast with Gov. Corbett on wages, healthcare, and education.

We need more champions like Tom Wolf, Mark Dayton and Dan Malloy. They won because of their leadership on the issues that families care about: higher wages, good jobs, better schools, and affordable healthcare. Full-throated champions of those issues can and will win.
The Fight for $15’s momentum continued even on a tough night like last night because of the boldness of the fast food workers, home care workers, Walmart workers and others. Their courage to stand up for a living wage is helping the nation understand that if you work hard for a living, you ought to be able to work one job and live a decent life

The wins in Pennsylvania, Minnesota and Connecticut and in the minimum wage initiatives show that there is a clear path forward for working people. Working people will keep fighting for higher wages and good jobs, at the ballot box, in the workplace, in our communities and on the street.

This blog originally appeared in SEIU.org on November 5, 2014. Reprinted with permission. http://www.seiu.org/2014/11/takeaways-from-the-2014-elections-for-working-fami.php

About the Author: Mary Kay Henry is the president of the SEIU.

Victory for Missouri Home Care Workers!

Tuesday, October 28th, 2014

seiuAfter almost a year of bargaining, Missouri home care workers have reached a historic agreement with the state’s Quality Home Care Council that will raise wages from an average of $8.58 per hour up to $10.15 per hour for many. Home care workers will also receive holiday pay for the first time.

This victory comes just a week after hundreds of home care workers met at the Home Care Workers Rising summit in St. Louis and rallied to demand Missouri Gov. Jay Nixon raise wages. More than a hundred home workers united in SEIU’s Home Care Fight for $15 – both union and nonunion – attended the summit.

The agreement allows consumers to determine the wages of their home care workers. Choosing from a “wage range” of $8.50 to $10.15, consumers will be directly involved with workers and the union. The Missouri Home Care Union bargaining team viewed this unique proposal as a way to strengthen the relationship between better jobs and quality care.

“Home care workers in Missouri have fought long and hard–more than six years now–to get the rights and dignity that come with this contract,” said Linda Carter, a home care attendant from St. Louis.

“Because of our fight, and through the help of the Quality Home Care Council and Gov. Jay Nixon’s administration in reaching this agreement, home care attendants and consumers will be better off here than they ever have been,” she said.

The agreement must now be ratified by the Missouri Quality Home Care Council and by the members of the Missouri Home Care Union. (More details here).

This blog originally appeared on SEIU.org on October 21, 2014. Reprinted with permission. http://www.seiu.org/2014/10/victory-for-missouri-home-care-workers.php

Debunking the Heritage Foundation’s New Minimum Wage Myths One by One

Friday, September 12th, 2014

The Heritage Foundation released a new Issue Brief this week: “Higher Fast-Food Wages: Higher Fast Food Prices”. Author James Sherk claims that if the minimum wage in the fast-food industry were to increase to $15 an hour, “the average fast-food restaurant would have to raise prices by nearly two-fifths … caus[ing] sales to drop by more than one-third, and profits to fall by more than three-quarters.”

While the Heritage Foundation attempts to present a mathematically and logically correct depiction of the aftermath of a minimum-wage increase, they fail to acknowledge one fundamentally important fact: the increase will be gradual, occurring over a period of years. Even without considering the report’s many other flaws, the Heritage Foundation’s assumption of a sudden jump in the minimum wage from its current level of $7.25 to $15 is unrealistic.

As Vanessa Wong highlights in “This is What Would Happen if Fast-Food Workers Got Raises”, there are two distinct types of outlets: “those run by the company, and those operated by independent franchisees who set their own wages and pay royalties to the chain.” Thus, Heritage Foundation hastily categorized all fast-food restaurants as one, not even considering the elephant in the room: the corporations such as McDonald’s that charge each branch high franchising fees.

So, how much are these small franchisees paying the mother-ship corporations? According to Robert E. Bond’s “How Much Can I Make?” the franchise fee, royalties, and advertising for a typical McDonald’s is $45,000, +12.5%, and 4%. For a doughnut shop like Dunkin’ Donuts, the fees are even higher, with a franchise fee of $50,000.

If Heritage’s figures are correct, these fast-food restaurants have a profit margin of just 3 percent before taxes, which “works out to approximately $27,000 a year.”  Thus, the franchise fee and royalties are way too high — those profits go directly to, in this case, McDonald’s, which  operates at a profit margin of 19.31% as of June 30, 2014.

McDonald’s and other large fast-food companies have successfully shrugged off responsibility for the welfare of its workers by making the franchisees responsible. The low-wage jobs — and the cost of these salaries — are offloaded on the franchisees, while the corporations maintain their guaranteed profits, and relative profit margins from quarter to quarter.

Raising the minimum wage — even if only to $10.10, not to the living wage level of $15 an hour — is an economic imperative. Heritage believes that fast-food restaurants still offer “entry level jobs,” and “generally employ younger and less-experienced workers”.

Fast-food restaurants used to be a place for “entry level employees” — teens and young adults, sometimes still in school, newly entering the workforce. The recession drastically changed the dynamic. Today, at fast-food restaurants, we see the faces of older workers on the other side of the counter. Many are parents who rely on their full-time fast-food jobs to support themselves and their families. Instead of providing a “first work experience”, fast-food jobs are now a primary  source of income for older, experienced workers.

The problem, once again, is corporations. Individual fast-food restaurants should not be the only battlefront in the fight for livable wages. We should demand that the mother-ship fast-food corporations let go of their greed, and lower their franchise fees and annual royalties.

The Heritage Foundation points its finger in the wrong direction: the responsibility for providing minimum wage fast-food workers with a livable wage falls on the corporations.

This article originally appeared in Campaign for America’s Future on September 10, 2014. Reprinted with permission. http://ourfuture.org/20140910/debunking-the-heritage-foundations-new-minimum-wage-myths-one-by-one.

About the author: Jiao (Kitty) Lan is a Roosevelt Fellow at the Campaign for America’s Future. She is a sophomore at Georgetown University, majoring in Political Economy and Financial Engineering and has taken an interest in Computer Science in her first two semesters. She has had several political internships, including one with Rep. Mike Honda and one with Sen. Dianne Feinstein. Her top three anything are Pops cereal, her two tiny yet vivacious Pomeranians, and traveling the world.

12 Recent Victories for Workers in Raising Wages and Collective Bargaining

Friday, August 22nd, 2014
Kenneth Quinnell

Kenneth Quinnell

While it certainly seems that far-right extremists are waging an all-out war on working families and their rights, workers aren’t just defending themselves; they are fighting to expand their rights and achieving some significant gains. Here are 12 recent victories we should celebrate while continuing to push for even more wins.

1. AFSCME Sets Organizing Goal, Almost Doubles It: AFSCME President Lee Saunders announced that the union has organized more than 90,000 workers this year, nearly doubling its 2014 goal of 50,000.

2. Tennessee Auto Workers to Create New Local Union at VW Plant: Auto workers at Volkswagen’s plant in Chattanooga, Tenn., announced the formation of UAW Local 42, a new local that will give workers an increased voice in the operation of the German carmaker’s U.S. facility. UAW organizers continue to gain momentum, as the union has the support of nearly half of the plant’s 1,500 workers, which would make the union the facility’s exclusive collective bargaining agent.

3. California Casino Workers Organize: Workers at the new Graton Resort & Casino voted to join UNITE HERE Local 2850 of Oakland, providing job security for 600 gambling, maintenance, and food and beverage workers.

4. Virgin America Flight Attendants Vote to Join TWU: Flight attendants at Virgin America voted to join the Transport Workers, citing the success of TWU in bargaining fair contracts for Southwest Airlines flight attendants.

5. Maryland Cab Drivers Join National Taxi Workers Alliance: Cab drivers in Montgomery County, Md., announced their affiliation with the National Taxi Workers Alliance, citing low wages and unethical behavior by employers among their reasons to affiliate with the national union.

6. Retail and Restaurant Workers Win Big, Organize Small: Small groups of workers made big strides as over a dozen employees at a Subway restaurant in Bloomsbury, N.J., voted to join the Retail, Wholesale and Department Store Union. Meanwhile, cosmetics and fragrance workers at a Macy’s store in Massachusetts won an NLRB ruling that will allow them to vote on forming a union.

7. Minnesota Home Care Workers Take Key Step to Organize: Home health care workers in Minnesota presented a petition to state officials that would allow a vote on forming a union for more than 26,000 eligible workers.

8. New York Television Writers-Producers Join Writers Guild: Writers and producers from Original Media, a New York City-based production company, voted to join the Writers Guild of America, East, citing low wages, long work schedules and no health care.

9.  Fast-Food Workers Win in New NLRB Ruling: The National Labor Relations Board ruled that McDonald’s could be held jointly responsible with its franchisees for labor violations and wage disputes. The NLRB ruling makes it easier for workers to organize individual McDonald’s locations, and could result in better pay and conditions for workers.

10. Workers Increasingly Have Access to Paid Sick Leave: Cities such as San Diego and Eugene, Ore., have passed measures mandating paid sick leave, providing workers with needed flexibility and making workplaces safer for all.

11. Student-Athletes See Success, Improved Conditions: College athletic programs are strengthening financial security measures for student-athletes in the wake of organizing efforts by Northwestern University football players. In addition, the future is bright as the majority of incoming college football players support forming a union.

12. San Diego Approves Minimum Wage Hike; Portland, Maine, Starts Process: Even as Congress has failed to raise the minimum wage, municipalities across the country have taken action. San Diego will raise the minimum wage to $11.50 an hour by 2017, and the Portland, Maine, Minimum Wage Advisory Committee will consider an increase that would take effect in 2015.

This blog originally appeared in AFL-CIO America’s Unions on August 20, 2014. Reprinted with permission.

Author’s name is Kenneth Quinnell.  He is a long-time blogger, campaign staffer and political activist.  Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars.  Previous experience includes Communications Director for the Darcy Burner for Congress Campaign and New Media Director for the Kendrick Meek for Senate Campaign, founding and serving as the primary author for the influential state blog Florida Progressive Coalition and more than 10 years as a college instructor teaching political science and American History.  His writings have also appeared on Daily Kos, Alternet, the Guardian Online, Media Matters for America, Think Progress, Campaign for America’s Future and elsewhere.

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