Posted 11 months ago on Sept. 8, 2013, 4:09 p.m. EST by LeoYo
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How the Restaurant Lobby Makes Sure Fast-Food Workers Get Poverty Wages
Sunday, 08 September 2013 10:35 By Steven Rosenfeld, AlterNet | News Analysis
Fast-food workers feed their families on a pittance while the big corporations resist fair pay and sick leave.
While thousands of fast-food workers were preparing to walk off their jobs earlier this summer to seek raises to $15 an hour, the industry’s corporate lobbyist, the National Restaurant Association, was celebrating a string of political victories blocking state minimum wage increases and preempting local sick day laws.
In June, the NRA boasted that its lobbyists had stopped minimum wage increases in 27 out of 29 states in 2013. In Connecticut, which increased its state minimum wage, a raise in the base pay for tipped workers such as waitresses and bartenders vanished in the final bill. A similar scenario unfolded in New York State: It increased its minimum wage, but the NRA’s last-minute lobbying derailed raising the pre-tip wage at restaurants and bars. The deals came despite polls showing 80 percent support for raising the minimum wage. The NRA’s lobbying didn’t stop there. It also told members that it blocked a dozen states this year from passing laws that would require earned paid sick leave, which is what New York City and Portland, Oregon adopted. Meanwhile, it boasted that six states, including Florida, passed NRA-backed laws that preemptively ban localities from granting earned and paid employee sick time. “These are horrible things, but there are amazing things that are happening to change it,” said Saru Jayaraman, co-director and co-founder of the Restaurant Opportunities Centers United (ROC), which has been working a dozen years to slowly change the industry’s exploitive business model and labor practices. “And there will be increasingly important stuff coming up.”
As fast-food workers across the country prepare for a second nationwide walkout over wages on Thursday, most Americans have little idea how profitable and politically aggressive the corporate mainstays of America’s second biggest employer have become. While labor activists have had victories in 2013, such as New York and Portland passing sick leave laws, and New Jersey poised to raise its minimum wage via a ballot measure this fall, the restaurant industry’s lobbying powerhouse is at war with the industry’s workers. “It’s an old-boy network. It’s very old-school thinking. It’s very, very conservative,” said Paul Saginaw, founder of Zingerman’s food companies in Michigan, which employes 600 people and unlike the NRA, supports better benefits for employees like healthcare. “There has to be some pressure put out to provide better lives for people.” Most Americans are unaware that millions of people who work in the industry—especially the 2.5 million fast-food preparers and servers who earn an average of $8.74 an hour, according to federal labor statistics—are not just teens in their first job, but adults with families to support. They may not know there’s a separate minimum wage for tipped workers, $2.13 an hour, that hasn’t changed in 22 years—although 32 states have raised it slightly. They may not realize that they, as the restaurant-going public, subsidize owners via cash tips, even as the NRA routinely tells legislators its industry cannot afford to pay better wages or basic benefits.
Most Americans don’t know that restaurant salaries are so low that the industry’s 12.2 million workers use food stamps at twice the rate of the U.S. workforce, and are three times as likely to be below the poverty line. Or that women earn less than men in similar jobs. Or that restaurants are among the biggest low-wage employers of people of color. Or that virtually every chain—except for In and Out, according to ROC—don’t want to pay living wages and benefits or offer real opportunities for advancement.
Most tellingly, almost every national chain—from fast-food outfits such as Yum! Brands Inc. (Taco Bell, Pizza Hut, KFC) and McDonald’s to full-service dining such as Darden Restaurants Inc. (Olive Garden, Red Lobster, Capital Grille)—have reported higher revenues, profits, margins and cash holdings to Wall Street analysts despite the recession, according to the National Employment Law Project. Giants like McDonalds had 7.8 percent revenue growth over the past decade, according to Gurufocus.com, a financial reporting site. Yum had 10-year revenues of 8.7 percent, and Darden’s 10-year revenues grew 9.1 percent.
But last winter, as the NRA was fighting minimum wage increases and paid sick leave, it was telling lawmakers that the industry could not afford to pay employees more. Yet this August, the NRA’s newsletter was predicting another profitable year, where revenues would be up 4 percent compared to 2012. "Restaurant and foodservice sales are expected to reach a record high of $660.5 billion this year," another 2013 revenue forecast on its website said. “The NRA is the worst employer lobby in the U.S.,” Jayaraman said, speaking about its lobbying and PR operation that pretends it is not an industry dominated by Fortune 500 companies, but instead a rickety mom-and-pop operation teetering on the brink of ruin. “The [earnings] data does not bear any resemblance to what they say is true.”
There are many reasons why America’s restaurant industry, which employs nearly one in 10 Americans, gets away with underpaying its workers and blocking laws that would benefit employees. These reasons include the industry’s longtime low-wage business mode; its longstanding fear-based lobbying that any wage or benefit increase would kill jobs; and a sophisticated political operation that nurtures ties to both parties, encouraging lawmakers to adopt anti-worker laws.
“The question is where is it coming from and who benefits,” said Ben Goldfarb, executive director of Wellstone Action, a group that trains progressive activists. “We know who benefits. It’s the Restaurant Association members and the electeds [legislators] who do their bidding… It’s not about what’s good or bad for the economy.”
Exploitive Roots, Exploitive Lobbying
The business model—where almost everyone except for top management earns an average of slightly more than $11 per hour—is premised on paying workers the lowest legal salary and has not changed in decades. As The New Yorker’s James Surowiecki recently explained, many of today’s largest service-sector companies, particularly restaurants and big-box retailers, were founded decades ago and sought to hire young people and housewives as low-wage, part-time employees, to give them work experience and spending money. “The reason this has become a big political issue is not that the jobs have changed; it’s that the people doing the jobs have.”
This summer’s fast food walk-outs—which will continue this fall—are part of a campaign to challenge and change that status quo, particularly as the media is discovering that the largely non-unionized restaurant workforce is filled with people with families. One consequence of the Great Recession is that millions of middle-class jobs have been replaced by lower-paying service jobs—food sector jobs that are now filled by adults with children, and jobs that offer little opportunity for advancement.
“On what I’m earning right now you have to choose between paying your rent and eating the next day,” Christopher Drumgold, a 32-year-old father of two from Detroit who earns $7.40 an hour after a year at McDonald’s, told reporters during July’s fast-food worker walk-out. “Fifteen dollars an hour would be great. We’d be able to pay our living costs.”
This kind of working-class struggle prompted President Obama to call for raising the federal minimum wage from $7.25 an hour to $9 in his 2013 State of the Union speech. Some Democrats in Congress quickly responded by going higher, proposing it be raised to $10.10, and that the minimum cash wage for tipped workers be 70 percent of the federal (or higher state) minimum wage.
While polls consistently find that 80 percent of Americans, including majorities of Republicans and people earning more than $100,000 a year, support a $10.10 wage, the industry’s national and state-level lobbyists went to work to kill any increase at the state or federal levels. And if that didn’t work, they sought exemptions for tipped workers in states where the increase was seen as passing.
What unfolded in New York, which raised its minimum wage but not for tipped restaurant workers, and in Maryland, where the NRA stopped a minimum wage increase in a legislative committee, shows just how the NRA wields its power and influence.
“The NRA is a very conservative organization… my values are so different,” said Saginaw, who has been in the restaurant business for 31 years and was a former member. “They certainly weren’t representing my interests. They talk the small business owner game a lot but their lobbying efforts are dictated by the large corporate chains. I’m a small businessman.”