Fast-food Worker Strikes Aren’t What They Appear To Be
This article originally appeared in MarketWatch.
Americans today will see photos of fast-food worker demonstrations on national news and think the employees themselves are going on strike.
Americans will conclude that the demonstrations are a spontaneous display of employee dissatisfaction with wages. In fact, the strikes are being organized by unions and unelected worker centers that are desperate to attract new members, even at a cost of leaving millions of Americans unemployed.
The Service Employees International Union’s worker center, Fast Food Forward, also known as Fight for 15, is calling the nationwide strike to demand $15-an-hour wages and a union. Most fast-food workers make more than the hourly minimum wage of $7.25.
Speaking in Milwaukee, Wisconsin, on Labor Day, President Obama said of the Fight for 15 movement: “All across the country right now there’s a national movement going on made up of fast-food workers organizing to lift wages so they can provide for their families with pride and dignity.”
The push for a $15-an-hour minimum wage, an increase of over 100%, shows the strikes are more about style than substance. Few people go on strike to double their pay. Why doesn’t the SEIU target the retail or agriculture sectors? Don’t those workers deserve $15 an hour too?
Bureau of Labor Statistics data show that fewer than 3% of American workers make minimum wage. That is because they move on to an above-minimum-wage jobs. Raising the minimum, for fast-food workers or for anyone else, would take away the ability of low-skill workers to enter the labor force.
According to the Center for Economic and Policy Research, Current Population Survey data show that 62% of fast-food workers are under 25, and 13% earn the minimum wage. Half are part-timers, according to BLS.
Fast Food Forward, using the website StrikeFastFood.org, is calling for increased civil disobedience, with the potential for arrests. The worker center is comparing the right to $15-an-hour wages with historical civil-rights battles. In May, SEIU President Mary Kay Henry was one of over 100 protesters arrested at McDonald’s headquarters in Oak Brook, Ill.
The Service Employees International Union funds Fast Food Forward through other worker centers such as Jobs with Justice and New York Communities for Change (formerly ACORN), which leads the Fight for 15 movement. The group was launched by the SEIU in late 2012.
While portrayed as grassroots efforts, these protests are orchestrated by the SEIU, which is concerned about its future because union membership continues its steady decline among private-sector employees. Only 6.7% of private employees today belong to unions, compared with 12% in 1990 and 16.8% in 1983, the first year the Bureau of Labor Statistics began tracking the rate.
The SEIU is using worker centers to do its dirty work. Labor unions cannot use extended picketing, disruptive protests or secondary boycotts, but worker centers are not prohibited from doing so. Worker centers such as Fast Food Forward claim to represent employees. But not one worker has cast a vote for Fast Food Forward.
Under American labor laws, employees decide whether to be represented by a particular entity. It is not the organization that decides whether to represent employees. On the contrary, workers are entitled to choose their representatives using a democratic process that involves a secret-ballot election. Organizations that sponsor worker centers attempt to represent employees without their consent. That is an end run around existing laws.
In addition to democratic elections for their leadership, workers have a right to full access to the union’s books to determine their finances. No worker has access to the books of Fast Food Forward.
Unions have to file financial disclosure forms, such as the LM-2 form, with the Labor Department, so dues-paying union members know how their money is being spent. The required filing of this form to the Labor Department offers union members a degree of financial transparency. In contrast, worker centers do not file any forms with the Labor Department.
That is why unions are paying worker centers to orchestrate the fast-food strikes happening today.
I learned first-hand how protests were orchestrated when I appeared on National Public Radio’s show “On Point with Tom Ashbrook” last year. Another guest was Terrance Wise, who apparently had been working for fast-food restaurants for 18 years. He was described as 34, homeless, with three daughters.
Terrance was not a typical minimum-wage worker. The turnover rate for fast-food restaurants is about 150%, and most employees move on within a year. His story certainly evoked my sympathy, and I wanted to contact him to suggest that he might qualify for training programs in high-return fields at local community colleges. When I asked NPR how to get in touch with Terrance, they gave me the name of his publicist — much to my surprise. I did not know that fast-food workers had publicists.
Terrance’s publicist was Berlin Rosen, whose lengthy list of union clients includes the SEIU. According to Berlin Rosen’s website: “We help public relations clients articulate their story in a way that persuades and moves, and then we work to develop messaging, talking points, and briefing materials to tell it with impact.” Terrance was part of a carefully developed story.
No matter that raising the minimum wage to a “living wage” of $15 an hour, which is what worker centers and unions demand, would hurt young and unskilled workers, the very employees whom protestors supposedly represent. Fewer people would be hired, and the young and low-skilled would lose job opportunities.
The real-life experience on military bases shows the true employment effects of raising the minimum wage for fast-food workers.
Labor Department regulations that went into effect in June 2013 substantially raised the cost of employment on military bases. The rules required the payment of “health and welfare” benefits at a cost of an additional $3.81 an hour, up from $2.56.
This increase came from a determination by the Labor Department that fast-food workers on government contracts were being underpaid and were entitled to benefits required by the Service Contract Act. Combined with President Obama’s executive order to raise pay to $10.10 an hour for federal contractors starting in 2015 (announced just before his State of the Union address), this raises the cost of employment on military bases by up to 76%.
In May, likely because of the actual and impending increases in employment costs, three McDonald’s restaurants closed on Navy bases, and another on a Marine base. Other restaurants have asked to be released from their service contracts. After seeing the drastic, immediate effect on fast-food services, the Labor Department removed fast-food workers from the requirements.
It was estimated that unless the requirements were removed, nearly 5,750 jobs would be lost and 390 restaurants would close. These estimates came from Russell Beland, deputy assistant secretary of the Navy for military manpower and personnel, in an April 8 letter he sent to the Department of Labor. Including Army closures and layoffs, those numbers would likely be even higher.
Higher wages for fast-food workers would have the same effect. More job functions would be automated, and fewer workers would be hired.
Americans should be suspicious of self-appointed, non-elected worker centers that encourage workers to go on strike for a 100% pay increase, eliminating entry-level jobs for low-skill workers. As with many TV shows, the strikes are not what they seem.
Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute. You can follow her on Twitter here.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, e21 delivers a short email that includes e21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the e21 Morning eBrief.