Last week marked the largest surge of protests in the fast food industry as hundreds of workers walked off the job demanding $15 an hour and the right to form a union without fear of intimidation.
It’s been the consistent demand among low wage workers for the past four months, some earning the federal minimum wage of $7.25. These strikes have been backed by faith based groups as well as the Service Employees International Union (SEIU), which has added strength to walkouts at fast food restaurants in Milwaukee, Chicago, St. Louis, Kansas City, Flint, Mich., Detroit and New York City.
“What else do we have to lose?” said Terrance Wise, a fast food worker in a recent Democracy Now interview. “We are already slowly dying in our day-to-day lives, so why not speak up, and stand up, and let the nation know that we are suffering? This is really a cry for help. This great nation should not turn its back on working-class people that need help.”
Some critics have been quick to announce the future “$10 Big Mac” if workers get their demand for a pay increase. Menu prices are likely to rise marginally, but believe it or not, there are some fast food restaurants that already pay workers starting wages of $10.50 while staying competitive, proving that the two are not incompatible in a $660 billion per year industry.
The In-N-Out effect
Using company data, The Daily Beast reports that In-N-Out burger, a fast food burger chain with 283 locations in the Western U.S. pays employees a starting wage of $10.50 per hour. Where most fast food workers struggle to get full-time work and health care benefits, In-N-Out claims to offer a bevy of employee benefits.
“We start all our new Associates at a minimum of $10.50 an hour for one simple reason…you are important to us! And our commitment to a higher starting wage is just one of the ways in which we show it. Another way is through offering excellent part-time and full-time benefits like flexible schedules to accommodate school and other activities, paid vacations, free meals, comprehensive training and a 401(k) plan,” The In-N-Out company website claims.
Does this translate to expensive menu items for consumers? Hardly. A cheeseburger costs on average $2.20, french fries just $1.50. Some experts say it is evidence that that claims of a $10 Big Mac are a far-fetched fantasy.
“It’s probably vastly overstated. Is anyone going to deny that prices will go up? They will probably increase a little, but we have an incredibly competitive fast food industry. There will be countervailing measures to make sure that the increases are not too substantial. It is going to be depressed by a relatively robust, competitive fast food market,” said David A. Schultz, professor at Hamline University school of Law in a statement to Mint Press News.
“If prices rise too high the competition could mean more consumption of regular restaurant or home cooked meals,” said Schultz, a nationally recognized expert in government, nonprofit and business ethics.
With a few hundred locations in Arizona, Texas, California, Utah and Nevada, In-N-Out may pale in comparison to the likes of McDonald’s and Burger King, but the company still remains profitable with an estimated $625 million in revenue last year. How could this be? In-N-Out may be profitable precisely because of its policy of higher pay and better compensation for employees.
“These might be better trained workers, they might be more efficient and more productive, they might have less turnover, which translates to lower expenses in terms of training. You can take the low road or the high road in business, and in many cases, the high road wins,” Schultz said.
In-N-Out Burger appears to be the equivalent of Costco in the retail sector. Costco, the main big-box retail competitor to Wal-Mart, pays workers an average of $11.50 starting wage and promotes it as a company policy that makes the company successful.
“At Costco, we know that paying employees good wages makes good sense for business,” said Costco CEO and President Craig Jelinek in March. “We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low.”
Conversely, Wal-Mart, Costco’s main competitor, pays employees an average of $8.81 per hour according to one study by Bloomberg News. The world’s largest retailer is beset by occasional walk outs and employee protests, similar to those seen across the fast food industry in recent weeks.
Building a national movement
Costco and In-N-Out may be feel-good stories in an otherwise grim economy, but they point to the possibility of higher wages and profitability in the current economy. Ultimately the only protection that can ensure all employees earn a living wage is an increase in the federal minimum wage. Roughly 80 percent of Americans support raising the minimum wage to $10.10, according to a recent public opinion survey released by Hart Research Associates.
There is currently legislation pending in both the House and Senate that would raise the minimum wage to $10.10 per hour. It’s below the $15 demands of the fast food workers, but significantly higher than the current $7.25 minimum wage.
Translating these demands into policy remains the challenge of low wage workers and those who support increasing wages. “The question is how to build these from one-day protests to social and political movements that will be picked up by Democrats and politicians,” Schultz said. “It’s about taking something like Occupy Wall Street, which did a great job of getting people’s attention, but did a poor job at translating this into viable political demands.”
Is there a chance that the current demands can create the political pressure to raise the federal minimum wage? Industry experts are skeptical.
“The legislation, known as the Fair Minimum Wage Act of 2013, has little chance of passing a Republican-controlled House. As a result, members of the House Progressive Caucus are seeking other avenues for an increase, such as attaching a wage-hiking amendment to a more Republican-friendly bill,” writes Josh Eidelson of The Nation.
President Obama has publicly backed the Fair Minimum Wage Act saying, “In the wealthiest nation on Earth, no one who works full-time should have to live in poverty.” A single income family making minimum wage earns roughly $14,500, well below the federal poverty line of $15,510 for a two-family household.
There are millions of Americans who fall into this category. According to the U.S. Bureau of Labor Statistics, approximately 1.7 million earned exactly the Federal minimum wage of $7.25 per hour in 2011. About 2.2 million were paid wages below the minimum. Collectively, these 3.8 million workers with wages at or below the Federal minimum made up 5.2 percent of all hourly-paid workers.
Because of the rise in the cost of food and housing, the minimum wage today is far less than the $1.60 paid to minimum wage workers in 1968, who were making the equivalent of $10.70 in 2013 dollars.
Lagging wages are having an impact on the housing market, where a minimum wage worker cannot afford a two-bedroom apartment anywhere in the U.S. working a regular 40 hour week. According to the National Low Income Housing Coalition, a minimum wage worker would have to work between 63 and 175 hours per week in order to afford a two-bedroom apartment at fair market rent.