McDonald’s faces worker pressure as shareholders meet – By Kim Gittleson BBC News, Chicago May 21st 2015

Workers and labour unions are stepping up their pressure on McDonald’s to raise the wages it pays workers.

Protesters at Oak Brook, Illinois, 20 May 2015

Over 1,500 employees and supporters converged on the fast-food giant’s headquarters in Illinois on Wednesday.

Larger protests are planned for Thursday morning, before the company’s annual shareholder meeting.

The company has been under pressure from workers to raise wages, just as investors have become increasingly unhappy with the firm’s slumping sales.

Customers in the company’s biggest market – the US, which is responsible for 40% of its operating income – have been increasingly foregoing McDonald’s and other fast-food restaurants in favour of so-called “fast casual” chains like Shake Shack and Chipotle.

That has caused the firm’s share price to sink – and let to grumbling amongst shareholders, who will vent their frustrations with McDonald’s management on Thursday behind closed doors. McDonald’s has banned media from attending the meeting.

Earlier in May, chief executive Steve Easterbrook – the Brit who took over the firm in January – unveiled plans to turn around the company after it reported yet another quarter of disappointing results.

‘Still in poverty’

McDonald’s is facing pressure on all sides: from customers, investors, and increasingly, workers.

The company has been under pressure for over two years by the Fast for 15 campaign – a group of workers, backed by traditional labour unions – that has called on McDonald’s and others to raise the base amount it pays workers to a so-called “living wage” of $15 (£9.7) per hour.

Protesters at Oak Brook, Illinois, 20 May 2015

The current US federal minimum wage is $7.25, but some states and cities – most notably, Los Angeles – have higher minimums.

Outside McDonald’s headquarters in Oak Brook, protesters carried banners and balloons, and chanted slogans.

“I’ve been working at McDonald’s for the last 23 years and I’m still living in poverty,” Tyre Johnson told the BBC at the protest.

Mr Johnson says he started working at a McDonald’s in Chicago in 1992 for $4.25 per hour and currently only makes $8.55.

“The shareholders of McDonald’s are investing money into a million dollar bigtime boss – why can’t they invest that money into the workers?” he added.

McDonald’s, for its part, dismissed the protestors.

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Seattle Restaurant Data Demolishes Conservative Argument Against $15 Minimum Wage – by Alan Pyke Posted on April 2015

Signs supporting a $15 minimum wage in Seattle CREDIT: AP

Weeks before the first gradual increase in Seattle’s minimum wage kicked in, conservative pundits decided that the city’s vibrant restaurant scene was shuddering to a halt. Numerous prominent outlets on the right touted a thin report in a local magazine that a handful of well-liked restaurants were closing down to avoid the wage law.

High-profile writers confidently proclaimed that Seattle’s once-proud restaurant scene was in retreat and that the wage hike was already chilling business activity and killing jobs, based on one anecdotal report. None of that was true. When the Seattle Times asked them about the story, the restaurant owners in question laughed off the claim that their decisions were motivated by the wage law. But even that direct testimony didn’t stop the media wave all the way. The conservative National Federation of Independent Business ran a post parroting the disproven restaurant closures claim days after the Times debunked the anecdote underlying the narrative.

Now, there’s even harder evidence that the right was wrong. The Big Picture pulled the numbers on how many restaurant permits have been issued by the city each month going back to the start of 2012. The chart shows plenty of ups and downs – what data scientists call “noise” – but the 12-month average for permits is almost perfectly steady:

seattle-restaurant-permits1CREDIT: The Big Picture

The city has been issuing about 25 restaurant permits a month on average, sometimes a little more or less, since late 2012. It continued to do so throughout the 2013 mayoral election when the $15 minimum wage became a near-certainty. The rate held over the subsequent months of negotiating between business, labor, and community leaders. And since the compromise bill to raise the city wage over the next several years became official, it’s hovered right around there. In short, the city restaurant scene “looks very much today (in terms of permits) as it did prior to any notion of a higher minimum wage,” the finance expert who ran the numbers wrote.

In a second post, the author looked at the quarterly figures for total restaurant businesses operating in Seattle, which reflects the net of restaurants closing and opening in the city. The city doesn’t have these figures for the first quarter of 2015 yet. But restaurant owners have known for about a year that gradual minimum wage increases would begin this month. In that time, the numbers show, the city’s restaurant scene has grown consistently, with more people opening up food and drink places than closing them:

seattle-netrestaurantsCREDIT: The Big Picture

Ideological opponents of the minimum wage will doubtless find other avenues to argue against the notion that such laws enhance economic growth. But the Seattle restaurant scene simply isn’t the smoking crater they wanted it to be.

Of course, higher wages will bring changes to how Seattle businesses operate. There just isn’t evidence that their response will be to “go Galt,” in the language of free market fundamentalists who insist that minimum wage laws kill jobs. So far, at least one local restaurant has decided to handle the increase by raising wages to $15 an hour immediately – years ahead of when the law would require it – and do away with tips while raising menu pricessignificantly. Two other restaurants had started printing a 2 percent “Seattle Ordinance Wage Equity Surcharge,” but abruptly canceled that quiet protestdays later after customers said they disliked the notation.

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

Screen Shot 2015-03-15 at Mar 15, 2015 5.02

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.