September 1, 2013

Workers' protests highlight fast-food economics

The Associated Press

NEW YORK — American fast-food workers often earn about $7.25 an hour to make the $3 chicken sandwiches and 99-cent tacos that generate billions of dollars in profit each year for McDonald's and other chains.

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Protesting fast-food workers fill a McDonald's restaurant on New York's Fifth Avenue last Thursday. Thousands of fast-food workers and their supporters have been staging protests across the country to call attention to the struggles of living on or close to the federal minimum wage. The push raises the question of whether the economics of the fast-food industry allow room for a boost in pay for its workers.

AP

Thousands of the nation's many millions of fast-food workers and their supporters have been staging protests across the country in the past year to call attention to the struggles of living on or close to the federal minimum wage. The push raises the question of whether the economics of the fast-food industry allow room for a boost in pay for its workers.

The industry is built on a business model that keeps costs – including those for labor – low so companies can make money while satisfying America's love of cheap, fast food. And no group along the food chain, from the customers to the companies, wants to foot the bill for higher wages for workers.

Customers want a deal when they order burgers and fries. But those cheap eats squeeze franchise store owners who say they already survive on slim margins. And the corporations have to grow profits to keep shareholders happy.

"There's no room in the fast-food business model for substantially higher pay levels without raising prices for food," says Richard Adams, a former McDonald's franchisee who now runs a fast-food consulting business.

Caught in that triangle are the workers. The median hourly wage for a fast-food cook last year was $9, up from about $7 a decade ago, according to the Bureau of Labor Statistics. But many workers make the federal minimum wage, which was last raised in 2009. At $7.25 an hour, that's about $15,000 a year, assuming a 40-hour workweek. It's well less than half of the median salary of an American worker.

The protests come as President Obama has called for an increase of the federal minimum wage to $9 an hour, with some members of Congress and economists calling for a hike as well. And the fast-food workers movement is getting financial support as well as training from organizers of the Service Employees International Union, which represents more than 2 million workers.

Workers protesting in cities including New York, Chicago and Detroit, are pushing for $15 an hour, which would mean wages of $31,000 a year. But the figure is seen as more of a rallying point and many say they'd be happy with even a few bucks more.

"Anything to make it more reasonable," says Jamal Harris, 21, who earns $7.40 an hour working at three different fast-food restaurants around Detroit – a Burger King, a Long John Silver's and a Checkers – because he's never sure how many hours he'll get at any one job.

The same is true for Robert Wilson, a 25-year-old McDonald's employee in Chicago. "It was never a consistent check," said Wilson, who lives with his mother and brother who also work at the restaurant.

Wilson says he was given one 10-cent raise in the past four years. That brings his pay up to $8.60 an hour after seven years working at the restaurant.

Low wages and a lack of benefits for workers aren't anything new in the fast-food industry, of course. It's why "McJob" has been a pejorative term for so long. What's changing now is that such jobs are playing a bigger role in the U.S. economy, bringing the fast-food protests closer to home for many.

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