Is America Finally Getting a Pay Raise? April 3, 2015 4:27 p.m. By Annie Lowrey 

How much will workers benefit from this McRaise? Photo: Richard Graulich/Corbis

This month’s jobs report presents a conundrum. Of late, big company after big company after big company has announced pay increases. The economy is growing and employers are adding jobs, even if March produced something of a weather-related blip in the hiring numbers. But in aggregate, wages still aren’t rising. What gives?

It’s definitely a strange trend. In the past few months, a number of businesses have announced pay bumps — a sign that they need to compete to attract and retain employees, and thus a sign that the labor market really is heating up. The trend took hold last year, when basicwear giant Gap Inc. said it would raise its minimum hourly pay. Other firms followed, including Aetna, Ikea, Starbucks, Target, T.J. Maxx, and Walmart. And this week, we also got a big, fat McRaise. McDonald’s said that it would boost hourly employee pay to at least the local minimum wage, plus a dollar. By the end of 2016, the average hourly wage rate should be more than $10, the company said.

But alas, this business trend has not translated into a macroeconomic trend — at least not yet. Today, the government said that average hourly earnings have only climbed a little more than 2 percent over the past year. That’s a paltry figure, and there’s just no sign of sustained wage increases in the monthly report.

It seems that there are a few things going on. First off, the big pay bumps that have been announced, in truth, just are not that big. Take the McRaise. It applies to just 10 percent of the company’s domestic workforce. (That’s because the hike only goes into effect in stores that McDonald’s itself runs. Most of its outlets are operated by franchisees.) And it’s a small raise — just enough to for employees to nab something off the dollar menu every hour or two.

“They announced it on April Fools’ Day, and I really felt like it was a joke,” said Bleu Rainer, who works part-time at a McDonald’s in Tampa. “I was like, ‘For real?’ We want $15 an hour. We want union representation. We’re not playing with them. We want $15.” Getting $9 an hour would not change his ability to pay his rent or keep his lights on, he added. He’d still be scraping by in poverty.

Other companies’ raises have been bigger in scale and scope than the McRaise, to be fair. The pay hike offered by the Gap hit 72 percent of its workforce, according to data pulled together by the National Employment Law Project. Ikea’s hit about half of its employees, and Walmart’s about 40 percent. Walmart’s pay hike should cost the company about $1 billion a year, or 6 percent of its 2014 profits. In contrast, McDonald’s pay hike should only cost it around $100 million a year.

But all of these pay raises have been concentrated in low-wage sectors, muting their effect on the overall economy and helping explain why the headline number is not moving yet. Giving a 2 percent raise to a teenager flipping burgers for $8.25 an hour is a lot cheaper than giving a 2 percent raise to a dental assistant making $20 an hour, after all. And right now, it’s mostly the teenagers flipping burgers that are seeing those small bumps in their pay. As The Wall Street Journal notes, wages have climbed 3.6 percent in the generally low-wage leisure and hospitality industries. They have climbed only 1.9 percent in education and health, where there are millions of middle-class and upper-middle-class jobs.

There’s also a bit of a telescoping going on in the media, I fear. Back in the economic expansions of the 1990s and 2000s, companies rarely felt the need to trumpet the news when they offered their workers a few more quarters and nickels per hour. Now — given the high-profile Fight for $15 campaign and the broader cultural attention paid to inequality — they do. Bizarrely, all of the attention on the plight of low-wage workers might make these raises seem like a bigger deal than they are. “The announcement from McDonald’s — it was PR stunt,” said Kendall Fells, the Fight for $15’s organizing director. “It’s laughable. But the workers have more momentum now than ever.”

That’s the thing. Even if these changes have not shown up in the aggregate numbers yet, they are indicative that companies are competing a little harder to bring in and keep employees. They are a sign that the economy is getting better. They might show that external pressure helps corporations do the right thing. And they do mean that hundreds of thousands of workers should be seeing a little more take-home pay.

At some point, the data should catch up with the headlines.

Child care workers join fast-food workers’ fight for $15 an hour by Claire Zillman – MARCH 30, 2015, 9:44 PM EDT

Child care workers are chronically underpaid, earning wages in line with fast-food workers and retail associates.

In the wake of minimum wage increases at Wal-Mart and Target, a new group of workers has joined the campaign that’s being credited for helping prompt such pay hikes.

On Tuesday, child care workers will join the Fight for $15, the movement started in 2012 by 200 fast-food workers in New York City who walked off the job to protest low pay. When the Fight for $15 stages its next protests on April 15, child care workers are expected to demonstrate alongside the home care workers and airport workers who have joined the campaign since its launch.

Mary Kay Henry, president of the Service Employees International Union, which backs the Fight for $15, told Fortune that child care workers protesting alongside fast-food workers illustrates a dual crisis: underpaid working parents are struggling to pay for child care and those who care for others’ children are struggling to take care of their own.

Child care workers in the U.S. earn median pay of $9.38 per hour, according to the Bureau of Labor Statistics. That is comparable with the earnings of food preparation workers—$9.28 per hour—and retail sales employees—$10.29 per hour—and is especially measly when weighed against child care workers’ role in early childhood education.

Responsive, sensitive, and secure adult-child attachments are developmentally expected and biologically essential for young children; their absence signals a serious threat to child well-being, according to a 2012 study by the National Scientific Council on the Developing Child. Findings such as these help explain the child care industry’s growing expectation that its workers have college degrees. The share of Head Start teachers with an associate or bachelor’s degree grew by 61%; for assistant teachers, it increased by 24% between 1997 and 2013.

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Conservatives Say $15 Minimum Wage Is Killing Seattle Restaurant Scene, Restaurateurs Disagree by Alan Pyke Posted on March 18, 2015 at 2:26 pm Updated: March 18, 2015 at 3:39 pm

Kshama Sawant


As Seattle prepares for the April launch of the highest minimum wage law in America, conservatives are warning that businesses are already shuttering under the pressure of higher labor costs and pointing to a recent report of a rash of restaurant closures as evidence. The problem is, the actual owners of those restaurants say that they’re not closing because of wages, and the city seems to be enjoying robust growth in that industry.

The New York Post editorial board, American Enterprise Institute scholar Mark Perry, Forbes contributor Tim Worstall, and Rush Limbaugh all cited a Seattle Magazine article from March 4 that claimed a “rash of shutterings” was afoot in the Seattle restaurant world. The magazine suggested that the minimum wage law might be a contributing factor in the closures of the Boat Street Cafe, Little Uncle, Grub, and Shanik.

“That’s weird,” Boat Street Cafe owner Renee Erickson told the Seattle Timeswhen fact-checkers emailed to confirm the Seattle Magazine story. “No, that’s not why I’m closing Boat Street.” Erickson’s three other restaurants remain open, and two brand new ones are in the works in Seattle. “Opening more businesses would not be smart if I felt it was going to hinder my success,” said Erickson, who described herself as “totally on board with the $15 min.”

Poncharee Koungpunchart and Wiley Frank of Little Uncle “were never interviewed for these articles,” they told the paper. They are closing one of their two locations, “but pre-emptively closing a restaurant seven years before the full effect of the law takes place seems preposterous to us.” Frank reportedly asked one conservative writer who had picked up the wage-menace red herring to “not make assumptions about our business to promote your political values.”

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Fight over Seattle’s $15 minimum wage could have national consequences – by Ned Resnikoff March 14, 2015 11:48AM ET

A lawsuit brought by the International Franchise Association could set precedent for how states regulate chains

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A federal judge will rule early next week on whether to temporarily suspend a portion of Seattle, Washington’s $15 minimum-wage law, pending the outcome of a longer inquiry into whether the legislation is constitutional. The International Franchise Association (IFA), which requested the temporary injunction, is suing the city of Seattle on charges that the new law unfairly discriminates against franchisees. The outcome of that lawsuit could potentially influence wage laws and other labor regulations across the country.

Seattle’s minimum-wage law, which is scheduled to take effect on April 1, requires employers to raise wages at different rates depending on how many workers they employ nationwide. A business with 500 or fewer employees in the U.S. must pay its workers at least $10 per hour starting on April 1, and $15 per hour by the first day of 2021. Businesses with more than 500 employees must pay at least $11 starting on April 1, and are required to raise their wages to $15 an hour by 2019, two years ahead of schedule.

The IFA isn’t trying to block the entire law. It simply rejects the way its members are affected by the distinction drawn between small and large businesses. Seattle counts franchisees among the businesses that will have to raise wages at a faster rate.

In other words, the city is placing franchisees in a separate category from other small businesses due to their licensing agreements with large conglomerates such as McDonald’s Corporation, the world’s largest fast-food chain.

The IFA argues that this violates the commerce clause of the U.S. Constitution because Seattle is attempting to regulate an interstate relationship between a franchisee and the licensing franchisor. Additionally, IFA lawyers charge that the law breaches the First and Fourteenth Amendments by discriminating against franchisees.

The IFA’s argument, if upheld, would not just affect Seattle. When officials in Chicago, Illinois were developing a plan to raise the city’s minimum wage last year, they initially floated a proposal similar to Seattle’s, under which franchisees would have been again regarded as large employers and required to raised their wages to at least $15 per hour at a faster rate than other small businesses. They eventually backed down under pressure from business groups, including the IFA.

Paul Clement, the lead attorney representing the IFA in its lawsuit against Seattle, referenced the defunct Chicago proposal when asked by a journalist for Fortune magazine whether the suit would “have ramifications beyond the city of Seattle.”

“For other jurisdictions looking to increase the minimum wage in a non-discriminatory way, this lawsuit won’t have any impact,” said Clement. “But for jurisdictions — and I think Chicago is one — that are using Seattle’s legislation as a model for their own, that want to borrow not only the $15 wage but the discriminatory provisions as well, then this lawsuit would have direct implications for them.”

Clement, who served as solicitor general under President George W. Bush, has something of a reputation for getting involved in precedent-setting cases. He has argued before the U.S. Supreme Court more than 75 times, including as part of a crucial 2012 lawsuit concerning the constitutionality of the Affordable Care Act.

Asked over email if the IFA viewed the Seattle lawsuit as a potentially precedent-setting test case, association spokesman Matt Haller told Al Jazeera: “Franchises provide opportunities for minorities, immigrants, veterans and first-time business owners to own their own businesses — and they do so at a greater rate than non-franchised businesses. If policymakers in other cities or states create barriers to economic growth and franchise ownership by adopting radical policies like Seattle, they do so at their own peril.”

A much larger fight

The IFA’s lawsuit isn’t just over whether franchisees can be compelled to raise wages at a faster rate than other small businesses; it’s part of a much larger fight over the legal status of franchises, and whether they can be regulated differently because of their licensing relationships with multinational corporations.

While the IFA maintains that a franchise is just a small business, experts like David Weil, head of the Wage and Hour Division at the U.S. Labor Department, maintain that the franchising model is primarily a clever way for businesses like McDonald’s to shift operational costs and legal liability away from corporate headquarters. In his book, The Fissured Workplace, Weil argues that delegating the operation of fast-food restaurants and commercial outlets to smaller franchisees helps keep wages low and working conditions poor.

Franchisees operate on a thinner profit margin than multinational firms, putting them under greater pressure to control costs. Because they have less of a stake in their brand integrity, writes Weil, they “may be more willing to violate consumer, workplace, or environmental regulations in order to reduce labor costs than would be the case for company-controlled units.”

Additionally, labor organizations have charged that many franchisors exert enough control over their franchisees to be considered “joint employers.” Over the past year, former employees at various McDonald’s restaurants have sued both the franchisees and the McDonald’s Corporation itself for wage theft and discrimination, claiming that McDonald’s manages the day-to-day operations of its franchisees closely enough to be legally liable when one of those franchisees violates labor laws. The general counsel for the National Labor Relations Board (NLRB) has supported this reasoning.

The fight over whether to treat McDonald’s as a joint employer with its franchisees is “thematically related” to the IFA’s lawsuit against Seattle, said Seattle University law professor Charlotte Garden.

“Although there are different legal principles at work in the two cases, they are both about the advantages that franchises get from the franchise relationship, especially relating to HR policies,” she said.

Seattle Mayor Ed Murray has justified his city’s treatment of franchisees under the new minimum wage law by saying that franchises “have resources that a small business in the Rainier Valley or a small sandwich shop on Capitol Hill do not have.”

“Franchise restaurants have menus that are developed by a corporate national entity, a food supply and products that are provided by a corporate national entity, training provided by a corporate national entity, and advertising provided by a corporate national entity,” said Murray in a June 2014 statement responding to the IFA’s lawsuit. “They are not the same as a local sandwich shop that opens up or a new local restaurant that opens up in the city. Our process for reaching $15 an hour in Seattle recognizes that difference.”

But Garden said the growing political momentum on behalf of minimum-wage hikes just gives franchisees and franchisors all the more reason to ensure that difference can’t be legally recognized.

“Given the types of legislative compromises that are often necessary to enact a minimum wage increase, I think some within the business community would very much like to advance a vision of the Fourteenth Amendment that subjects classifications of different types of businesses to heightened scrutiny,” she said.

Vox Sentences: Is Walmart’s big raise a sign the economy’s back on track? Updated by Dylan Matthews on February 19, 2015, 8:00 p.m. ET

(Joe Raedle/Getty Images)

Los Angeles Residents Divided Over Proposed $15 Minimum Wage – KIRK SIEGLER FEBRUARY 09, 2015 4:26 PM ET

Los Angeles is considering raising its minimum wage to $15 an hour, from $9 currently. The dramatic proposal is causing excitement and some anxiety.

Protesters assemble in front of a McDonald's in Los Angeles, demanding a $15 an hour minimum wage in September.

Protesters assemble in front of a McDonald’s in Los Angeles, demanding a $15 an hour minimum wage in September. Paul Buck/EPA/Landov

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San Francisco and Seattle have already passed a $15 minimum wage (they’ll rise to that level over the next few years), but what’s different in LA is the number of working poor in this huge city.

There are an estimated 800,000 people in Los Angeles living below the federal poverty line, and more than 500,000 workers earning the minimum wage. One of them is Samuel Homer.

“It would make a big difference for me,” Homer says.

Homer is 20 years old and works at a Burger King in South LA, where he’s putting himself through Southwest College. He doesn’t have a car, which makes life in LA pretty tough. Some days he hardly has enough money for bus fare, let alone tuition.

“It’s definitely hard to pay a lot of bills, and it’s hard for me to get hours while I’m still in school,” he says.

Council Member Bernard Parks stands in front of his office in South Los Angeles. He's concerned that raising the minimum wage to $15 an hour could create more unemployment.

Council Member Bernard Parks stands in front of his office in South Los Angeles. He’s concerned that raising the minimum wage to $15 an hour could create more unemployment. Kirk Siegler/NPR

So the $6 an hour bump that’s being discussed at city hall would be a big deal for someone like Homer. It would also be a big deal for one of his neighbors, who is a whole lot less enthusiastic.

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Report: Fast food industry could survive $15 minimum wage – by Ned Resnikoff- January 23, 2015 12:39PM ET

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Congress could more than double the federal minimum wage without doing serious harm to the fast food industry, according to a report from economists at the University of Massachusetts-Amherst. In a hypothetical scenario where the minimum wage gradually rose from $7.25 per hour to $15, the authors of the report found that fast food companies would be able to “fully absorb” the increase without limiting its profit margin.

The industry could absorb increased labor costs, the report contends, by reducing turnover and slightly increasing prices. Reducing turnover would theoretically increase the productivity of the employees, therefore reducing the increase in labor costs.

“In terms of policy implications, our results offer a straightforward conclusion,” the report says. “Achieving a $15 federal minimum wage within the U.S., phased in over four years, should be seen as a realistic prospect.”

The $15 figure was not selected at random: It is the wage floor that protesting fast food workers have been demanding for more than two years, as part of a nationwide campaign backed by the labor union SEIU. Thanks, in part, to labor movement pressure, Seattle and San Francisco have both approved $15 minimum wage increases in the past year. Various other cities and states have also raised their wage floors by lesser amounts.

Industry groups such as the International Franchise Association (IFA) have denounced the demands for a $15 wage floor as irresponsible.

“Mandating wages would lead to higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately, lost jobs and opportunities for employees to become managers or franchise owners,” said IFA President and CEO Steve Caldeira in August. “The franchise industry is a proven job creator and career builder, yet efforts to double the minimum wage to $15 would clearly jeopardize opportunities for existing and prospective employees.”

In some other parts of the world, the fast food industry pays its lowest-wage employees considerably more. Burger King and McDonald’s employees in Denmark, for example, tend to earn at least $20 per hour. In Australia, the standard minimum wage is AU $16.87, or $13.39 in U.S. currency.

One sentence that perfectly explains why the middle class has to care about inequality – Updated by Matthew Yglesias on January 19, 2015, 11:00 p.m. ET

Larry Summers sums up the cost of rising inequality to the typical American household: “If the US had the same income distribution it had in 1979, the bottom 80 per cent of the population would have $1 trillion — or $11,000 per family — more. The top 1 per cent $1 trillion — or $750,000 — less.”

Behind the startling figures is a startling point, at least by the standards of the 20th Century American economy: economic growth alone is no longer enough to address normal people’s desire for rising living standards. A rising tide might lift all boats, but the American economy no longer works that way.

Inequality — at least as an abstract concept — doesn’t have much juice as a political issue. But income and wage growth for middle class families is thequintessential political issue. And one of the major shifts beneath the surface of American politics over the past few years is the growing conviction among the Democratic Party’s wonks — including the centrist, not-so-populist ones like Summers — that you really can’t deliver on the thing voters care about without addressing inequality on a policy level.

Summers is the lead US author of a recent report that offers an outline for Hillary Clinton’s economic agenda, and the fingerprints of this turnabout are all over it. The “third way” idea that the state should provide education, infrastructure, and relief for the poor but not much else is really gone, in favor of a much more populist vision. And you see the same thing in the Obama administration’s latest tax proposals, that would offer much stiffer rates on wealthy investors in order to reduce the burden on middle class workers.

That kind of frank redistributionism isn’t the only possible approach to middle class income stagnation. But right now it seems to be the approach Democrats are converging on. And though Republicans have started appropriating populist rhetoric, I don’t really think they’ve articulated an approach to back that rhetoric up. Whoever’s able to connect these dots in a way that works substantively and makes sense to people is going to have a huge leg up in grappling with the economic issues of the years to come.

LA residents need to make $33 an hour to afford the average apartment – Ben Bergman January 15, 03:28 PM

 You need to earn at least $33 an hour — $68,640 a year — to be able to afford the average apartment in Los Angeles County, according to Matt Schwartz, president and chief executive of the California Housing Partnership, which advocates for affordable housing.

Finding affordable apartments is especially tough in Los Angeles, where 52 percent of people are renters, according to a new study. JUSTIN SULLIVAN/GETTY IMAGES

You need to earn at least $33 an hour — $68,640 a year — to be able to afford the average apartment in Los Angeles County, according to Matt Schwartz, president and chief executive of the California Housing Partnership, which advocates for affordable housing.

That’s more than double the level of the highest minimum wage being proposed by Mayor Eric Garcetti, which he argued would make it easier for workers to afford to live here. “If we pass this, this will allow more people to live their American Dream here in L.A.,” Garcetti proclaimed when he announced his plan to raise the minimum wage to $13.25 by 2017.

The $33 an hour figure is based on the average L.A. County apartment rental price of $1,716 a month, from USC’s 2014 Casden Multifamily Forecast. An apartment is considered affordable when you spend no more than 30 percent of your paycheck on rent.

To earn $33 an hour or more, you’d need to have a Los Angeles job like one of the following occupations:

But many occupations typically earn far below that $33 an hour threshold in L.A. County, according to the California Housing Partnership:

  • Secretaries: $36,000 ($17 an hour)
  • EMT Paramedics: $25,00 ($12 an hour)
  • Preschool teachers: $29,000 ($14 an hour)

That’s why L.A. residents wind up spending an average of 47 percent of their income on rent, which is the highest percentage in the nation, according to UCLA’s Ziman Center for Real Estate.

Naturally, people who earn the current California minimum wage of $9 an hour ($18,720 a year) would fare even worse in trying to afford an average apartment.

A Burger Joint Pays $15 An Hour. And, Yes, It’s Making Money – Allison Aubrey ALLISON AUBREY December 2014

A worker at Moo Cluck Moo, a fast-casual burger and chicken chain in suburban Detroit, prepares a meal. Workers at Moo Cluck Moo all make $15 an hour.

A worker at Moo Cluck Moo, a fast-casual burger and chicken chain in suburban Detroit, prepares a meal. Workers at Moo Cluck Moo all make $15 an hour.

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A worker at Moo Cluck Moo, a fast-casual burger and chicken chain in suburban Detroit, prepares a meal. Workers at Moo Cluck Moo all make $15 an hour.

Zachary Rosen for NPR

Fast-food workers rallied around the country Thursday, calling for a minimum wage of $15 an hour. But in suburban Detroit, a small but growing fast-casual burger and chicken chain has already figured out how to pay higher wages and still be profitable.

When Moo Cluck Moo opened its first location almost two years ago, the starting pay for all workers was $12 an hour. The idea, according to co-founder Brian Parker, was to train everyone to multitask.

No one is just flipping burgers. All of the workers are expected to be jacks-of-all-trades: They bake buns from scratch daily, they house-make aioli and prepare made-to-order grass-fed burgers and free-range chicken sandwiches.

And, now, says Parker, the investment is paying off. Revenue is up at the chain’s two locations. And workers are sticking around. And their pay now? It’s up to $15 an hour. By comparison, a typical fast-food worker in the U.S. makes about $8 or $9 an hour.

“Because of our low turnover, and the fact that people are really into their jobs, $15 an hour wasn’t a big stretch,” Parker says.

Parker says there are savings in not having to constantly train new hires, and his workers are empowered because they’re given so much responsibility.

When we stopped in for a visit this week, manager Dan Chavez was standing at the grill preparing a made-to-order Moo Burger. He has been cooking in restaurants for 15 years, so he knows how to move quickly from the grill to the fryer. He also oversees baking and talks to customers.

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