Hiking minimum wage threatens U.S. jobs
Are national minimum wage protests at fast-food chains a spontaneous reaction to the slow-growing economy and sluggish labor market?
No, these protests are organized by a campaign called Fast Food Forward, led by the worker center New York Communities for Change, funded in part by unions, including the Services Employees International Union.
This was brought home to me when I was on National Public Radio’s show “On Point” with host Tom Ashbrook on Wednesday. Also on the show was Terrance Wise, 34, who has three daughters and has worked at fast-food restaurants for 18 years.
Terrance is not your typical minimum wage worker. Most minimum wage workers move on after a couple of years, because turnover in the fast-food industry is rapid. When I asked NPR how to get in touch with Terrance, I was given the name of his publicist. A minimum-wage worker with a publicist? That’s something.
Turns out Terrance’s publicist is strategic consulting firm BerlinRosen, which has an impressive list of union clients, including the SEIU. According to BerlinRosen’s web site: “We work with our union clients to develop hard-hitting campaigns that bring together eye-catching member-to-member mail, persuasive tv ads, phone programs, web campaigns and earned media to help deliver your message and win the day.”
No matter that raising the minimum wage to a “living wage” of $15 an hour, which is what protesters demand, would hurt young and unskilled workers, those employees whom protestors supposedly represent. Fewer people would be hired, and the young and low-skilled would lose job opportunities.
Protests are occurring in New York City, Chicago, Detroit, Milwaukee, St. Louis, Kansas City, and Flint, Mich. Restaurants that have seen strikes include Burger King, McDonald’s, Domino’s, Wendy’s, KFC, Taco Bell, Burger King, Domino’s, and Subway.
Strikes have been percolating for months. In April, McDonald’s workers in Harlem went on strike, and last November, workers walked out at Wendy’s in Fulton Mall in downtown Brooklyn, and at McDonald’s in Times Square.
New York Communities for Change was founded in 2010 after the Association of Community Organizations for Reform Now, better known as ACORN, shuttered its operations due to controversy and scandal. The organization reopened with the name New York Communities for Change under the leadership of Jon Kest, who used to head the New York branch of ACORN, at the same premises on Nevins Street in Brooklyn.
After Kest’s death last December, Jonathan Westin, a former ACORN organizer, became NYCC’s executive director, and director of Fast Food Forward.
Fast Food Forward describes itself as “a movement of New York City fast food workers to raise wages and gain rights at work. It is part of the national movement of low-wage workers fighting for a better future.” Read about Fast Food Forward here
Worker centers such as NYCC purport to represent employees. But unlike unions, they are not selected as employee representatives.
Employees decide whether or not to be represented by an organization; it is not the organization that decides whether to represent employees. Under current law, workers are entitled to choose their agents using a democratic process that usually involves a secret ballot election.
Organizations that sponsor worker centers attempt to represent employees without their consent. Worker centers do not have to file union financial disclosure forms with the Labor Department. That means employees — supposedly represented by the worker centers — do not have access to the organizations’ books to determine their finances. Some worker centers are tax-exempt 501(c)(3) organizations—even though unions do not have 501(c)(3) status — and some are funded by unions.
Worker centers use demonstrations, lobbying, and community organizing to bully and shame employees into submission, tactics that unions are not permitted to use.
The SEIU, which held a National Day of Action to advocate for higher wages on July 24, has contributed more than $100,000 to NYCC. Find SEIU’s 2010-2012 LM-2 reports here.
In addition, NYCC received $353,881 from the United Federation of Teachers between August 1, 2011 and July 31, 2012. Find Teachers AFL-CIO, Local 2’s (UFT) 2012 LM 2 here.
So the SEIU is skirting the law by paying the NYCC to do what the union, under current law, is not permitted to do.
Another worker center participating in the Fast Food Forward campaign is the Restaurant Opportunities Centers United. The group’s mission is “to improve wages and working conditions for the nation's 10 million restaurant workers.”
Since January 2008, when ROC United started expanding outside New York City, it launched affiliates in New Orleans, Miami, Michigan, Chicago, Philadelphia, Los Angeles, Houston, and Washington, D.C. to conduct “workplace justice” campaigns. In 2011, the latest year available, ROC United listed revenues of $2.7 million. Of that, more than 99% came from tax-exempt charitable contributions.
Contributions to unions are not tax-deductible. So ROC United receives tax-deductible contributions for labor organizing activities, doing an end-run around the law’s intention.
Although ROC United calls for “workplace justice,” it’s not workplace justice if young workers lose their jobs. If the protests were successful, increases in the minimum wage would price the young and unskilled workers out of the market.
In 2011, according to Labor Department figures, 3.8 million people earned minimum wage or below. Read about characteristics of minimum wage workers here. (Restaurants are allowed to pay below minimum wage because employees receive tips.) This represents less than 3% of nonfarm payroll workers.
About half of minimum wage employees are under 25, more than half work part-time, and these jobs are highly concentrated in the leisure and hospitality industry.
According to data from the Labor Department and the Census Bureau assembled by Heritage Foundation economist James Sherk, the average family income of minimum wage workers was $53,000 in 2011, higher than average household income of $51,000. Minimum wage work generally supplements the income of other family members. Read Sherk’s study.
If the Fast Food Forward demonstrations were successful, there would be fewer jobs for entry-level workers. That means no first rung of the career ladder, and more youth unemployment. In June the teen unemployment rate was 24%, and the African-American teen unemployment rate was 44%. Data for July are due on Friday.
University of California economics professors David Neumark and J.M. Ian Salas, and Federal Reserve Board economist William Wascher, conclude, in a National Bureau of Economic Research paper published in May 2013, that a higher minimum wage results in more unemployment for teens and low-skill workers.
They write, “We continue to view the available empirical evidence as indicating that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.” Read the NBER paper.
Worker centers such as NYCC should stop masquerading as friends of workers and admit they are paid by unions to do work that unions are not allowed to do. Higher minimum wages will price the young and unskilled out of jobs, and add to their difficulties in finding employment.
Originally published on MarketWatch.com.