Fast Food Tradeoff: Less Jobs for Living Wages

Jessica J. Trevino /MCT/Landov
Jessica J. Trevino /MCT/Landov

New Orleans   In the national publicity one-day strikes for higher wages of $15 per hour that waved their banners in hundreds of cities around the country, no one really believes that the $15 per hour figure is anything other than a rallying cry or in bargaining terms, a first proposal.   Organizers, including with the Service Employees International Unions, would clearly accept a lot less, and perhaps not much more than the average wage nationally of around $8.70 per hour that workers are getting now.  

Nonetheless it is interesting to hear the comments of various economists and researchers on the impact of $15 an hour.   Most of them interviewed by Steven Greenhouse of the New York Times, whether for it or against it, seemed most divided over the impact on prices with a range from Ken Jacobs at Berkeley of 10% to the industry at 25%.  Even at the top end the discussion is whether a hamburger at $3 bucks now will cost $3.60, if all this were to come to pass.  Heck, as unhealthy as these burgers are, Mayor Bloomberg of New York City probably would have argued that they should cost $5.00 just to save lives alone.

Only David Neumark, an econ professor at UC-Irvine was willing to garner a guess at the impact on employment, saying that paying $15 per hour would cut the fast food workforce by about 5% or so.  Others were more reserved, saying it had not been studied, but it would have an effect, or that it might accelerate automation, or whatever.  

How bad would that be?  The Census estimates there were 4.1 million fast food workers in 2012.   If employment losses due to $15 wage rates were 5%, 205000 jobs would be lost.  I hate to tell you this and I hope it’s not a secret, but that’s not a bad tradeoff if 3.9 million or almost 4 million workers all of a sudden have a living wage in these jobs!  I’d take that deal in a minute!

Mary Kay Henry, President of SEIU, was quoted as saying wage increases don’t put companies out of business, and “It’s in our interest to make sure we secure our employment, not to reduce employment.”  Yes, that’s true, but it’s certainly not always true as a union organizing strategy, including for SEIU.  A major construct of SEIU’s signature Justice for Janitors campaign was the attempt to stabilize the cleaning industry by securing more fulltime jobs and reducing the number of part-time jobs, so that workers could make a decent living as cleaners.  The major organizing program for almost all of the building trades unions is to secure and protect higher wages, by increasing training and standards that are primarily designed historically to limit the number of jobs in the construction industry, which is what hiring halls are often really about.   Same for longshoreman and so many other unions.

The organizing math is clear in fast food.  If more money, means fewer jobs, then so be it.  In reality the articulated strategy for SEIU seems to be to bring some of the big companies to the table and calf off a sliver of this huge non-union job sector into the ranks of organized labor, which might, if wildly successful, mean some higher wages for some segment of the workforce, while the rest continue to make whatever.  The prospects are probably higher in embracing some slight downturn in the employment count in exchange for higher, living wages, than to believe that the big companies are going to subsidize wage increases for franchisees by taking less or some other sleight of hand. 

We don’t have to live with a permanently low wage food service job sector in exchange for a cheaper burger, if reduction in the job count means that 4 million workers finally can make a decent living doing the work.  Wouldn’t that burger taste better then, even if it might be killing you later?


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