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Fast-Food Strike Puts Spotlight on Living Wage (5144)

The recent one-day strike by fast-food workers highlights a broader problem of wealth destroyed by inflation and more people depending on public assistance to survive on low wages.

12/12/2013 Comments (54)
Ildar Sagdejev/Wikimedia Commons

McDonald's employee serves customers in Raleigh, N.C., in October 2011

– Ildar Sagdejev/Wikimedia Commons

WASHINGTON — Last Thursday’s fast-food strike came and went in more than 100 U.S. cities, and in the current U.S. economy, such strikes are likely to return. However, the protests are bringing growing awareness to a problem in the United States that affects not only the fast-food industry: Too many jobs in the U.S. fail to give workers a living wage, and the solution is not simple.

On Dec. 5, thousands of fast-food workers across the country went on a daylong strike demanding a $15-per-hour wage and the power to create a union.

Kendall Fells, organizing director of Fast Food Forward, told the Register that his group is “urging the fast-food industry to step up and pay its workers a living wage.”

“It’s ridiculous that multinational corporations that make billions of dollars in profits have workers in their restaurants and stores who work hard and are forced to rely on public-assistance programs to get by,” Fells said.

The National Restaurant Association has dismissed the fast-food strikes as a “campaign engineered by national labor groups.”

But the challenge of low-wage earners is immense. Currently, the federal minimum wage sits at $7.25 per hour, where someone who works 40 hours in a week can earn $15,080 in a year — a sum just below the $15,510 federal poverty line for a family of two and close to $8,000 below the federal poverty level for a family of four. 

The average restaurant wage of $9 per hour does not even come close to the wage of the average renter of a two-bedroom apartment: $14.32 per hour, according to a 2013 study by the National Low Income Housing Coalition. Those wages are even further from the housing wage of $18.25 per hour that an average renter would have to earn to keep housing costs to one-third of his income.

“It’s very instructive that a minimum-wage worker today does not make enough money to raise even one child out of poverty,” said Tom Mulloy, policy adviser for the Office of Domestic Social Development of the U.S. Conference of Catholic Bishops (USCCB).

“There is a reason that John Paul II, in the Compendium of the Social Doctrine of the Catholic Church, referred to wages as a ‘family wage,’ because the wages earned from work are one of the more important ways that we as humans gain the resources to form and nurture families.”

Impact on Families

The problem of low-wage jobs cannot be ignored, especially with its impact on families. Mulloy noted that many parents have to find multiple jobs, leaving less time available to spend with their children.

“This has deeper consequences on the social, spiritual and moral development of kids. And that is another really big challenge we have to face as well,” he said.

According to a study by the Center for Economic and Policy Research, 30% of fast-food workers are teenagers, 30.7% are aged 20-24, and 36.4% are aged 25-54. More than one-third (36.4%) of workers over 20 are raising one child. Almost 80% earn between minimum wage and $10.09 per hour.

And an additional problem in today’s economy is that a number of fast-food restaurants are opting for part-time jobs providing less than 30 hours a week, as companies reduce hours to avoid the Affordable Care Act employer health-insurance mandate.

According to a study by economists at the University of California-Berkeley, 52% of fast-food workers rely on public assistance. Fells argues that paying more generous wages consequently would save taxpayers $7 billion in federal assistance programs like Medicaid and food stamps, as a $15 hourly wage would provide a fast-food worker (averaging 40 hours a week) a gross income of nearly $31,000 per year.

Mulloy noted that “there is no silver bullet” to this problem. He suggested solutions must be “both-and,” such as improved educational resources, workforce protections and greater support for families, in addition to improving wages. But the solution, he said, had to involve the collaboration of all parts of society.

“There is no exclusively government or business response,” he said.

Free-Market Solutions

Michael Matheson Miller, a research fellow at the free-enterprise Acton Institute and director of the Poverty Cure program, said that free-market solutions must be developed to address the “frustration” of fast-food workers and low-wage earners struggling to get by.

“It’s hard to live on minimum wage,” he said. “These people work hard, they’re not making a lot of money, things are expensive, and it’s tough just to get by.”

Miller pointed out that a huge problem low-wage earners feel keenly is the manipulation of the money supply through inflation. The inflation of the money supply increases prices and further reduces the purchasing power of their wages.

In fact, the federal minimum wage of $1.60 per hour in 1968 had more purchasing power than the $7.25 minimum wage in 2013. Adjusted for today’s inflation, the 1968 minimum wage would be equivalent to $10.56 per hour, according to the Bureau of Labor Statistics.

President Obama is proposing hiking the minimum wage to $10.10 an hour, but Miller cautioned this government-imposed approach “was not the best answer” to a complex problem.

“Economic policies, if we don’t think them through, can actually damage the common good and really hurt working families,” Miller said.

Miller said that some large companies could have large enough profit margins to absorb a wage hike and grow their businesses, but “90% of businesses are just trying to get by,” particularly small business in the current economy.

Businesses face three responses to cover increased labor costs, pointed out Miller: They can be more productive, raise prices or cut costs (often by reducing labor hours). Miller pointed out that price increases would reduce the purchasing power of other low-wage salaried earners. An additional impact is that the higher wages will make employers less likely to hire people at the bottom of the social ladder, “people who have struggled and are trying to get up.”

Miller said that creating small businesses in communities is key to lifting people’s opportunities and wages.

“One of the things we need to do is to create a friendly environment with both taxes and regulation to help create conditions for small businesses to develop.”

 

Shortsighted Business Culture

Business Insider CEO and editor in chief Henry Blodget stated in a Business Insider article that part of the problem is that major companies have forgotten that workers are substantial stakeholders in the life of the company. Instead, the prevailing culture is to keep employee wages low in order to maximize short-term profits that keep shareholders happy. This culture he blamed as the reason why a Canton, Ohio, Wal-Mart was holding a food drive for its employees around the holiday-shopping season.

“This situation says everything about what’s wrong with the U.S. economy right now,” said Blodget, noting that Wal-Mart is “one of the richest companies in the world,” with a market value of $260 billion, turning a $17-billion profit in 2012.

“Average Americans account for most of the spending in the country. And thanks to the refusal of rich companies like Wal-Mart to share more of their wealth with the people who create it, average Americans are broke,” Blodget said. “When people are broke, they can’t buy things. When people can’t buy things, companies can’t grow. And when companies can’t grow, they cut costs (fire more people). And, in so doing, they make more people broke.”

 

The Catholic Approach

The Catechism of the Catholic Church teaches, “A just wage is the legitimate fruit of work. To refuse or withhold it can be a grave injustice. In determining fair pay, both the needs and the contributions of each person must be taken into account. ‘Remuneration for work should guarantee man the opportunity to provide a dignified livelihood for himself and his family on the material, social, cultural and spiritual level, taking into account the role and the productivity of each, the state of the business and the common good’” (2434).

In his apostolic exhortation Evangelii Gaudium, Pope Francis stated that the current financial crisis “originated in a profound human crisis: the denial of the primacy of the human person.”

“We have created new idols,” the Pope stated. “The worship of the ancient golden calf (Exodus 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose.” 

Mulloy said that all participants in the U.S. economy need to reorient their values along the lines of Pope Francis and reject a “culture of waste” that treats employees as disposable parts, reduces human beings to the activity of consumers and reacts more to a dip in stock markets than the death of those suffering on the margins.

“We need to think about how to put the effect of our decisions on family and the human person back at the center of our economic decision-making,” Mulloy said. Businesses need to make a profit, he added, but “those profits have to come in a morally acceptable manner.”

Peter Jesserer Smith is a Register staff writer.

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