This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the September/October 2013 issue of Dollars & Sense magazine.
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We’re Not Lovin’ It
Low-wage workers fight to make bad jobs better.
There’s a line in Johnny Paycheck’s 1977 hit song that goes “I’d give the shirt right off my back, if I had the guts to say ... Take this job and shove it, I ain’t working here no more.” In the past year, fast-food, retail, and warehouse workers have shown they do have the guts—but instead of quitting, they’re fighting back. From New York to California they’re taking to the streets. They’re fighting for a living wage, for respect from their bosses, and in some cases, for the right to form a union.
Back in June 2012, eight immigrant workers peeling crawfish under sweatshop conditions for C.J.’s Seafood (then a Walmart supplier) went on strike in Louisiana. They stayed out for weeks, demanding an end to forced labor, wage theft, and other unfair labor practices—and they won. Following up on the C.J.’s workers’ successful action, Walmart warehouse workers in California and Illinois walked out in September, calling for improved workplace safety and a fair wage. A month later, Walmart associates walked out at 28 stores in twelve cities. The strikes marked the first time in history that Walmart retail workers had ever gone on strike, and were quickly followed by more strikes and demonstrations on Black Friday, the biggest shopping day of the year.
Walmart workers took a breather after the fall strikes, as they battled an NLRB lawsuit brought by the company and strategized their next action. But low-wage workers in other cities quickly picked up the baton. On November 29, hundreds of fast-food workers staged a one-day strike in New York City. The walkout marked the launch of Fast Food Forward, a new coalition of workers, unions, and community and civil-rights groups working to increase the wages of New York City fast-food workers. By April of this year, more workers were ready to join the fight. In a wave of strikes that would last through June, fast-food and retail workers in New York, Chicago, Seattle, Milwaukee, St. Louis, and Detroit walked off the job. Pickets popped up at KFC, Jimmy John’s, Chipotle, Target, McDonald’s, Burger King, Popeye’s, Long John Silver’s, Subway, Sears, Victoria’s Secret, and dozens of other establishments. On August 29, a day after the fiftieth anniversary of the March on Washington, workers took to the streets again. Thousands of workers in nearly sixty cities participated in work stoppages, demanding $15 an hour, respect from management, safe working conditions, better hours, and the right to unionize.
What has sparked this upsurge? It’s hard to say. Unions have been trying to gain a foothold in the low-wage service sector for decades—a task made more difficult by the declining bargaining power of unions like the United Food and Commercial Workers union (UFCW) in the face of grocery-industry restructuring. When unions were strong, their very presence pushed up wages and working conditions across the industry, and helped inspire workers hoping to organize a union, or move into existing union jobs in restaurants and supermarkets.
But those days are long gone.
Perhaps a major catalyst to the recent strikes is the nature of the “recovery” from the Great Recession. During the downturn, 78% of jobs lost were either mid-wage or high-wage jobs and, according to the Bureau of Labor Statistics (BLS), three out of five newly created jobs are part-time, low-wage jobs. A growing number of Americans is realizing that “good jobs” aren’t coming back, and that for things to get better, they’re going to have to fight to turn their McJobs into something better.
Myths about Retail and Fast Food Jobs
Lousy jobs at fast-food joints and retail stores have been around for a long time. Sam Walton (of Walmart) and Ray Kroc (of McDonald’s) designed their business models around underpaying their employees. But experts have always brushed off calls to improve these jobs, arguing that they were stepping-stones—summer jobs for teenagers; flexible, part-time jobs for moms; or extra-cash jobs for retirees. It didn’t matter that the jobs paid low wages and offered little opportunity for advancement because they weren’t designed to support a family or be a career.
But, as good jobs have steadily disappeared over the past three decades, these rationalizations are starting to sound pretty tired. A recent report by Catherine Ruetschlin at the think-tank Demos shows that more than 90% of retail workers are over the age of 20 and that, for the vast majority, this is their full-time, long-term occupation. Labor researchers Stephanie Luce and Naoki Fujita paint a similar picture in a study of New York City-area retail workers. According to their survey, the median age of retail workers in New York is 24 years and the average retail worker has been working in the industry for five years.
The Hamster Wheel of Low-Wage Work
Widespread coverage of the strikes suggests growing public concern over the sustainability of a McJobs economy. Dozens of newspapers, magazines, and blogs have covered the walkouts and the plight of low-wage workers, with many telling a similar story: After working for years, or even decades, at the minimum wage, workers have little to show for their efforts. They make poverty-level wages. They don’t make enough money to pay their bills and provide for their families. They have to beg their bosses for more hours to put food on the table and make them eligible for healthcare, but they are often rebuffed or told that hours are contingent on working harder. Many workers try to improve their job prospects by combining work and school, but in most cases, their wages don’t pay enough for tuition, so they drop out or just take one class at a time.
And many retail and fast-food workers describe horrible working conditions. They get burned by the fryers, assaulted by customers, and humiliated by their bosses. If they ask for sick days or time off to heal from injuries, or speak up about unsafe working conditions, their hours are cut, they get harassed by their supervisors, they get demerits, or they get fired. At the recent Left Forum conference, a Brooklyn KFC worker described a common scenario: While covering a late-night shift, her boss would call her from home, screaming at her to get off the clock because there were not enough customers to justify paying her. The worker would have to finish her shift without pay.
This scenario is not unique to KFC. A recent report put out by Fast Food Forward shows that, of the 500 fast-food workers surveyed, nearly 85% had experienced some form of wage theft by their employer. The report corroborates the findings of a major study conducted by the National Employment Law Project (NELP) in 2008. The NELP study demonstrated severe and widespread workplace violations in low-wage industries across the United States, ranging from minimum wage, overtime, and “off-the-clock” violations, employer retaliation and discrimination, and straight-up theft through tip-stealing, illegal payroll deductions, and pay-stub violations (see sidebar, p. 14). Sophisticated workflow software exacerbates the problem. In recent years, companies like Microsoft have put out new software that enables managers to schedule workers down to the minute, calling them in for two-to-four-hour shifts once or twice a week, and telling them to be on call all other days.
Rampant Wage-Theft and Abuse
A 2008 study by the National Employment Law Project (NELP) sought to uncover the scope of exploitative and coercive managerial practices that violate workers’ legal rights. As expected, the abuses were myriad. The most common one? Wage-theft. According to the NELP report:
- Over 25% of workers interviewed were regularly paid below the minimum wage.
- Nearly 20% did not receive proper compensation for overtime.
- Nearly 17% had not been paid for off-the-clock work in the previous week.
The managers responsible for workplace abuses exhibit a disregard for labor rights that does not stop at underpayment of wages. The NELP study found many workers still remain in harm’s way:
- 12% of tipped workers had experienced tip-theft within the previous week.
- 20% of workers had withheld complaints of wage-theft, dangerous conditions, or similar violations from their employer for fear of retaliation.
- 50% of workers who had filed for workers’ compensation faced illegal managerial intimidation in reaction their claim. Common tactics include: Denying the claim, calling immigration, or even firing the worker.
SOURCE: Annette Bernhardt, Ruth Milkman, Nik Theodore, Douglas Heckathorn, Mirabai Auer, James DeFilippis, Ana Luz Gonzalez, Victor Narro, Jason Perelshteyn, Diana Polson, and Michael Spiller, “Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in American Cities,” National Employment Law Project, 2008 (available at unprotectedworkers.org).
Does It Have to Be This Way?
Big companies and business organizations like the National Restaurant Association and the National Retail Association are vocal in their opposition to wage increases. Spokespeople for Walmart and Target argue that low wages are necessary to keep prices low and provide jobs in the communities where they operate. In a recent op-ed for the Washington Post, Walmart general regional manager Alex Barron argued against legislation to increase the pay of workers at big-box stores in Washington D.C., claiming higher wages would “result in fewer jobs, higher prices and fewer total retail options.”
In fast food, the argument against increasing wages is slightly different. Companies like KFC (owned by Yum! Brands) and McDonald’s are dominated by franchisees who rent their businesses from the parent corporation. These franchise owners claim that their margins are paper thin as a result of parent company demands, so they simply can’t increase wages and stay in business. The Employment Policies Institute, a Washington, D.C., business lobbying group, reiterated this argument recently in a full-page scare ad published in USA Today. The ad warned workers that, if the $15 campaign was successful, owners would be forced to replace workers with “less-costly, automated alternatives like touch-screen ordering and payment devices.”
A number of scholars have challenged these arguments, particularly Walmart’s low-wages-for-low-prices ultimatum. University of Colorado-Denver management professor Wayne Cascio has shown, through a comparison of Walmart/Sam’s Club and Costco, that low wages are not necessary for high profits and productivity. Costco employees average roughly $35, 000 per year ($17 per hour), while Sam’s Club workers average roughly $21, 000 per year ($10 per hour) and Walmart workers earn an average of less than $9 an hour. Costco also provides it workers predictable, full-time work and health benefits. However, contrary to popular assumptions, Costco actually scores higher in relative financial and operating performance than Walmart. Its stores are more profitable and more productive, and its customers and employees are happier.
Costco is not exceptional. Zeynep Ton, of MIT’s Sloan School of Management, has studied retail operations for a decade and argues that “the presumed trade-off between investment in employees and low prices can be broken.” “High-road” employers like Trader Joe’s, Wegmans, and the Container Store have all found ways to make high profits and provide decent jobs. Catherine Ruetschlin’s research shows that a modest wage increase—bumping up the average annual salary of Walmart or Target workers to $25,000—would barely make a dent in big retailers’ bottom line, costing them the equivalent of about 1% of total sales. Even if a company like Walmart passed on half the cost of the increase to customers, the average customer would pay roughly $17 more per year, or about 15 cents per shopping visit. And, considering most low-wage workers spend nearly their entire paycheck on necessities, the industry would see a boost in sales ($4 billion to $5 billion more per year) to its own workers. Fast-food companies are highly profitable. McDonald’s alone saw profits more than double between 2007 and 2011. They could easily send some of these profits downstream to franchise owners and workers.
So why do most big retailers and fast-food chains insist on a bad-jobs or “low road” model? There are a few reasons. MIT’s Ton argues that labor costs are a large, controllable expense, and retailers generally view them as a “cost-driver” rather than a “sales-driver.” Store-level managers are pressured by higher-ups to control labor costs as a percentage of weekly or monthly sales. And because store managers have no control over sales (or merchandise mix, store layout, prices, etc.) they respond to pressure from above by cutting employment or forcing workers to work off-the-clock when sales dip. Another factor is financialization—the increasing dominance of finance in the economy. Firms feel a lot of pressure from Wall Street to be a Walmart and not a Costco. As Gerald Davis has argued, the rise of finance and the dominance of “shareholder value” rhetoric have resulted in an emphasis on short-term profits that register in increased share prices and big CEO bonuses.
Perhaps the main reason why companies refuse to invest in creating good jobs is that they can. In this era of neoliberalism, there is little external pressure from unions, community groups, or the government forcing companies to create jobs that offer a predictable, full-time workweek paying decent wages and benefits. When ten Walmart butchers in Jacksonville, Tex., voted for a collective-bargaining agreement in 2000, the company simply negated their decision by eliminating delis from every one of its stores in the United States and switching to pre-packaged meat. Even companies with a positive image like Costco have dumped millions of dollars into fighting pro-worker legislation like the Employee Free Choice Act, preferring a paternalistic strategy over unionization.
The Alt-Labor Upsurge
The organizations behind the recent fast-food and retail actions, and even the demands of the strikers themselves, vary considerably. However, one unifying characteristic across the movement is the absence of traditional union-organizing strategies, pushing many observers to classify the movement as an alternative labor, or “alt-labor” movement. “Alt-labor” is shorthand for organizations and campaigns that eschew old-school, one-worksite, one-union strategies, in favor of less risky, and often more effective, community-based methods of organizing and outreach.
Alt-labor strategies are not actually new. Workers adopted them in the 1930s, and organizations like New Labor in New Brunswick, N.J., have been around for years, fighting against wage theft and unsafe workplaces. But as labor scholar Janice Fine notes, non-traditional labor organizations have become increasingly important during the past two decades. New organizations like Brooklyn’s New York Communities for Change (out of the ashes of ACORN) have appeared on the scene and are registering real gains. NYCC worked as part of WASH New York, a hybrid labor/community group organizing washeros at Astoria Car Wash & Hi-Tek in Queens. The groundbreaking campaign resulted in the first collective-bargaining agreement for New York car-wash workers. NYCC is also behind Fast Food Forward, another hybrid group that is organizing fast-food workers in Brooklyn, using community support networks to help workers stand up for better wages, hours, and working conditions.
The wave of fast-food and retail strikes that spread from New York to St. Louis, Detroit, Seattle, and other cities in April was spearheaded by broad coalitions like Fast Food Forward. These coalitions are comprised of unions like the Service Employees International Union (SEIU), religious organizations, alt-labor groups like Jobs With Justice, community groups, and immigrant-rights groups. They also share common goals—Fast Food Forward, the St. Louis Organizing Committee, the Workers Organizing Committee of Chicago, and other coalitions in Milwaukee, Detroit, and Seattle are all calling for $15 an hour and the right to organize a union. And rather than organizing through one union, one store at a time, the coalitions are targeting the industry as a whole, staging one-day protests designed to inspire other workers and call attention to their struggle.
The Organization United for Respect at Walmart (OUR Walmart) is the grassroots organization behind the Walmart campaign. OUR Walmart gets much of its funding from UFCW and differs from the fast-food campaigns in that it is explicitly not seeking to form a union. Instead, OUR Walmart’s goal is to build a worker-community support network that can pressure Walmart to improve its wages, hours, and working conditions without a collective-bargaining agreement. OUR Walmart has organized short (one-hour or one-day) simultaneous strikes that spotlight Walmart’s abuses, while limiting the risk for workers involved. The strategy comes from decades of failing to crack Walmart using traditional organizing strategies.
Many labor scholars laud the actions of these coalitions, but don’t see the alt-labor formations as a long-term solution. They argue that because the organizations are funded by external sources like unions, religious organizations, and grants, rather than by members, the organizations will eventually fade away after workers achieve initial successes and the public loses interest. Without a concerted, long-term strategy to unionize, workers will have no way to cement their gains, and will have to keep hitting the streets.
This may be the case, but for many workers, they’ve got nothing left to lose. There are so few good jobs out there that all strategies with the potential to make bad jobs better and increase wages need to be on the table. Fast-food and retail workers are showing they’ve got the guts to try something new, and if the past year is sign of things to come, one of these days we might finally have something to sing about on Labor Day.