Companies that provide fast food have voiced strong opposition to AB257. According to Matt Haller, CEO of the International Franchise Association, which represents more than 1,200 franchise companies including McDonald's, Wendy's, and Papa John's, "it's this solution in search of a problem that doesn't exist." Paul Brown, CEO of Inspire Brands Inc., which owns Dunkin' Donuts and Arby's, said, "Obviously, we believe it's problematic on many, many fronts."
As companies try to entice employees back to service occupations, fast food salaries have lately started to creep up. However, over half of inflationary pressures may be traced to corporate profits rather than pay increases. With conglomerates raising consumer prices above and beyond their rates of cost increases, Wall Street has seen its highest profits in nearly 75 years, particularly in highly consolidated industries like oil and gas, container shipping, meat and poultry, commodity grains, and consumer packaged goods and grocery retail. Meanwhile, workers' raises are not keeping up with profit-driven price inflation, the labour share of the national income has decreased, and bankers are wagering that the Fed's interest rate increases would "help push up the jobless rate." This is expected given that the minimum wage would be $21.50 an hour if wages had kept pace with the extraordinary productivity of American workers since 1975. The minimum wage would be $44 per hour if it had kept pace with Wall Street bonuses.
Fast food is a uniquely American institution that was born in California. Due to years of promotion, it is a cultural and culinary staple that fits working people's busy schedules. However, a lot of the costs associated with fast food are externalised, including the impact animal agriculture has on the environment, the health effects of frequent consumption, and the low pay and unfavourable working conditions that cashiers and grill cooks must endure.
Supporters of AB257, California’s FAST Recovery Act, want to solve the problem of worker exploitation with pioneering new legislation. The FAST Act would create a committee made up of fast food workers, labour activists, franchisors, franchisees, and government officials to set industry-wide standards for pay and working conditions and guard against retribution. AB257 is now on its way to Governor Gavin Newsom's desk after receiving unanimous support from both chambers of the California State Legislature.
The bill would benefit more than 500,000 California employees spread over more than 30,000 workplaces. The state's $15 minimum wage will rise by 50 cents on January 1 from its current level. The FAST Act council would start establishing hourly wages at $22 an hour and climb in rhythm with the consumer price index, or up to 3.5% a year. The law applies to national fast food businesses with 100 or more outlets. Workers at over 300 fast food outlets walked out in favour of the legislation in June 2022, thanks in part to the organisational efforts of worker advocacy organisations including the California AFL-CIO and Fight For $15.
More than $1 million has been spent lobbying legislators against the measure by Chipotle, Yum Brands, Chick-fil-A Inc., In-N-Out Burgers, Jack In The Box, and Burger King, and $615,000 has been spent by the International Franchise Association. In a 2021 letter to franchisees on the unsuccessful national living wage legislation, Inspire Brands boasted, "We were successful in our lobbying efforts to repeal the Raise the Wage Act, which would have raised the federal minimum wage to $15 and abolished the tip credit." The business also has some of the most workers that depend on food stamps. McDonald's is also included as one of the top 5 companies having SNAP-dependent employees. The CEO of McDonald's, on the other hand, received $20 million in pay in 2021. Since March 2020, the company has authorised over $3.4 billion in share buybacks to investors, amounting to an average of $865 million per quarter over the previous five years that could have been used to fund higher wages and job training.
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The FAST Act's potential effects outside of California may potentially worry the sector. According to Eric Schlosser's Fast Food Nation, the state is the origin of contemporary fast food culture and accounts for 14% of restaurant sales in the United States.
However, selling fast food is not a simple task. The greatest Covid-19 death rates were seen among fast food cooks, especially among Latinx employees. More than 87% of fast food employees experience an occupational injury at least once each year, and 90% of them claim to have been forced to work beyond hours, denied breaks, or not paid for overtime. At least 12% of employees had encountered workplace violence, while a 2016 poll found that 40% of women in the industry reported being sexually harassed. A Fight For $15 organiser who has personally documented more than $150,000 in stolen earnings over the previous ten years estimates that 85% of California's fast food employees have suffered pay theft. In addition, two thirds of California's fast food workers received public assistance or had a family member who did, with nearly one in three receiving SNAP due to food insecurity. These expenditures total $4 billion for the entire state of California and $1.2 billion for Los Angeles County alone. This amounts to massive subsidies for fast food company shareholders.
According to a 2021 poll, over 80% of employees at McDonald’s, Wendy’s, Burger King, Arby’s, Sonic and Taco Bell earned below $15 an hour, averaging around $26,000 a year. To put this in perspective, the minimum living wage for a person in California before the current inflationary period was $19.41, or $40,371 a year. To afford a basic 2 bedroom apartment in California, you would need to earn at least $39.01 an hour. A stark example of racial capitalism is the fast food industry, where 90% of workers are people of colour and nearly 7 out of 10 are women.
In Nickel and Dimed, the late Barbara Ehrenreich said, "We can hardly pride ourselves on being the world's premier democracy, after all, if the overwhelming majority of people spend half their waking hours in what amounts, in simple words, to a dictatorship."
Therefore, it is understandable why more than 70% of Americans favour unions, the largest percentage since 1965. High profile union drives at AmazonAMZN -0.2%, StarbucksSBUX -2.9%s, AppleAAPL -1.4%e, and Trader Joe's have received strong popular support. Sectoral bargaining, however, is something that AB257 also adds to the toolkit of workers and living wage supporters.
Sectoral bargaining is when employees negotiate with many employers in order to establish norms that apply to the whole sector, not just the individual businesses. This is crucial in light of the holes in American labour law that enable companies to intimidate and control workers during union campaigns, terminate organisers, and even shut down operations. The advantages of unionisation, such as well-documented higher earnings, better benefits, better and safer working conditions, protection from retaliation, and the elimination of gender and racial pay inequalities, may be enjoyed by all employees in the sector thanks to sectoral bargaining.
Sectoral bargaining is even more crucial for employees in fractured industries like franchises or those excluded from labour legislation, such independent contractors, farmworkers, and domestic workers with a majority of female, non-white, and immigrant workers. By preventing a "race to the bottom" in which unionised firms compete with non-union businesses offering lower salaries, sectoral bargaining also levels the playing field for owners, managers, and employees.
Sectoral negotiating is also extremely common around the globe, from Germany and Norway to Argentina and South Africa. There are historical examples in the United States, such as the wage boards from the Progressive Era before World War I and different programmes from the New Deal, such the National Industrial Recovery Act. In order to provide employees a voice in matters that impact them at work, a "Essential Workers Board" has been established deep inside Houston, Texas' Harris County.
The fast food industry's outrage over AB257 is understandable given this situation. Steps toward equality undoubtedly seem oppressive when you have had the benefit of making unilateral decisions and profiting from them for such a long time. On the other hand, if your company depends on low pay to function, it may be time for a new business strategy.
According to Barbara Ehrenreich, who stated this in Nickel and Dimed, "When someone works for less pay than she can live on — when, for example, she goes without food so that you can eat more affordably and conveniently — then she has made a great sacrifice for you, she has made you a gift of some part of her abilities, her health, and her life. The majority of our society's benefactors are the so-called "working poor," as they are sometimes referred to with approval. They neglect their own kids so that other people's kids can be taken care of; they live in run-down homes so that other homes can be gleaming and immaculate; they go without so that inflation will be low and stock prices will be high. To be a member of the working poor is to be an anonymous contributor, a nameless benefactor, to everyone else.”
AB257 is a step in the right direction toward normalising decent wages, dignity, and worker power in a massively successful and well-liked business and is a step in the right direction toward reimbursing society for its debt to fast food employees.