Putting Labor Back in Labor Day

The fast food strikes that began last November in New York City with walkouts by 200 workers expanded and spread to other cities in the spring and summer. On Thursday, thousands of workers in 60 cities went on a one-day strike. The demands were the same, only amplified — higher pay, to $15 an hour, and the right to organize without retaliation.

There are many reasons to support the strikers. There’s the still resonant goal — expressed by those who marched on Washington 50 years ago — of ensuring that work leads to a decent standard of living. That’s not achievable at today’s federal minimum wage of $7.25 an hour, or at the typical  wage for fast food workers, about $9.00  an hour. If the minimum wage had kept pace with inflation over the past 50 years, it would be about $10 an hour today. If it had kept pace with the growth in average labor productivity, it would be about $17 an hour. Split the difference and you are not far from what the strikers are calling for.

Another reason to support the strikers is economic self-interest. The low wages of fast food workers — and of workers in retail, home care and other low-wage industries — force many of them onto food stamps and other public assistance to get by. Taxpayers step up with aid because employers don’t pay enough.

There’s also the fact that fast food corporations — McDonald’s, Yum Brands (which includes Taco Bell, Pizza Hut and KFC), Wendy’s — can afford to pay more. The chief executives of McDonald’s and Yum are among the nation’s highest paid bosses. Wendy’s profits have been soaring lately. The corporations invariably say that individual franchisees set wages and franchisees say they can’t afford to pay more without raising prices, which they say would drive away customers and lead to job loss. But wages aren’t the franchisees’ only cost. They also pay rent and royalties to their corporate bosses. How about lowering those costs to create room for raises?

Of course such changes would lead to lower profits and that would translate into lower executive pay and lower shareholder returns. But we’re talking about big,profitable companies, which are big and profitable in part because they rely on underpaid labor.

The second part of the strikers’ demands — the right to unionize without retaliation — goes hand in hand with the call for higher pay

Unionization is what improved compensation and working conditions in factories in the last century, transforming underpaid laborers into the middle class.

Even as the share of American workers in unions fell  to its lowest levels in nearly a century, full-time unionized workers still made considerably more than non-union workers, with median weekly wages in 2012 of $943 and $742, respectively, according to Bureau of Labor Statistics.

There’s no intrinsic reason that service jobs at profitable corporations, say, in restaurants and big box stores, should pay so little. What is missing today is employee bargaining power, which unionization provides, so that the growth in labor productivity flows more to wages and salary and less to executive salaries and shareholder returns.

Corporations benefit from the status quo. Workers don’t. That’s why they want a new bargain.  Happy Labor Day.