Fast Food Workers Get Nice Pay Bump

Will this deal be the future of labor organizing?

A new law kicked in on the first of April, granting one half million employees of fast food restaurants in California a minimum wage of $20 per hour.

The sky hasn’t fallen.

The law applies to restaurants offering limited or no table service and which are part of a national chain with at least 60 establishments nationwide. Restaurants operating inside a grocery establishment are exempt, as are restaurants producing and selling bread as a stand-alone menu item.

Legislation enabling increased wages and workers having input on working conditions in a single industry has been in the works for years. In 2022, Gov. Gavin Newsom signed a law creating a Fast Food Council with the authority to raise wages of fast food workers up to $22 per hour. 

Before the law could take effect, the fast food industry gathered enough signatures to qualify a referendum for the November 2024 election. God only knows what lies signature gatherers I saw in front of Trader Joes told to gain support, but I can guarantee signers were misled. 

So, the law was on hold until voters could decide whether to overturn it.

Last fall, SEIU, along with Unite Here! and representatives from McDonald's, YUM! Brands, the International Franchise Association, and the National Restaurant Association began negotiations leading to the fast food referendum coming off the 2024 ballot.

Each side came out with things they wanted. Workers got an immediate bump. The sins of franchisees wouldn’t include the parent company when it came to lawsuits. The fast food council’s areas of responsibility was limited to wages, complaints about business practices would be passed on to appropriate state agencies. 

The final round of negotiations included a demand that all parties sign on to a Non-Disclosure Agreement, likely because the parties wanted to limit the releases of proprietary financial information. Sources from the labor side of the negotiations told KCRA 3 that SEIU uses non-disclosure agreements "routinely" in high-stakes negotiations to build trust with its opponents.

Faux news types cranked up the outrage machine, claiming that Panera franchisee, Greg Flynn, a Newsom donor, had negotiated a side deal to exempt his employees. As was true with the recent outbursts about the Biden administration and Easter featured on right wing outlets, this specific allegation was proven to be untrue.  But that hasn’t stopped repetition of a claim that negotiations were done in secret.

The result of those negotiations was placed into the legislation publicly on the third to last day of the 2023 session, meaning it was too late for any changes to be made before it passed. A “clean up bill” is currently in the works; it exempts employees already covered by bargaining agreements.

Prices are going up, up, up!  …. Profits are going up, up, up!

Mainstream media outlets ran stories last week focused on business owners’ complaints

One TV outlet claimed the law would make LA’s food deserts even worse. If he hasn’t already, you should expect KUSI/Fox to interview Carl DeMaio in front of a franchise location.

Truth be told, chain operators are caught up in having to pay a flat percentage of sales to their brand corporations, which means increased sales volumes results in more cash flow to parent companies. And, yes, cash flow these days is disproportionally directed at profits and stock buybacks.

For the bigger picture let’s turn to Judd Legum at Popular Information:

• In the last three months of 2023, after-tax corporate profits reached an all-time high of $2.8 trillion. This is part of a long-term growth in corporate profits that began in the 1980s, picked up steam at the turn of the millennium, and exploded since 2020. 

• Notably, the surge in corporate profits since 2020 has been fueled, in part, by expanding corporate profit margins. Last year, corporate profit margins (excluding the financial sector) were over 15%, a level not seen since the 1950s. This is because the increases in prices for goods and services have outpaced the increase in costs — both labor and non-labor — for corporations. 

• According to an analysis from the Groundwork Collaborative, "corporate profits drove 53 percent of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases. 

Rather than blame the Big Boys on Wall Street, the fuss has been all about workers at the lower end of the economic scale.

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Is this type of deal the future? There are questions about this sort of labor deal, where unions are negotiating on behalf of an industry sector that includes non-members.

Labor reporter Hamilton Nolan says “Let’s Talk About the $20 an Hour Fast Food Wage.”

• It’s a pretty fucking major tangible economic gain for low income workers, and a structural gain for labor in the sense of establishing a long-term state-backed institution that can mitigate the supremacy of corporate control in that industry. 

But is sectoral organizing the future for labor unions? Here’s where things get interesting, as in What Is the Future of Work?

• Some in the union world believe that grassroots-level union drives, with all of their democracy-building people power in the workplace, are the most valuable substance of organized labor. Others have long believed that in difficult industries there is no way to achieve large scale power for workers with shop by shop organizing, and therefore sectoral bargaining should be our focus. The truth is that there is no reason you can’t have both—that is really a question of how you design the sectoral bargaining system.

Isn’t this sort of agreement bad for many individual workers, as owners cut hours and increase automatization? (Emphasis mine)

• More to the point, the standard argument that raising minimum wages will cause business owners to raise prices, cut jobs, and pursue automation with greater fervor is a little absurd because it leaves out one key fact: Business owners under capitalism will always try to raise prices, cut jobs, and pursue automation, no matter what. They want to increase their profits, always! If their labor costs are one dollar per month, the logic of profit maximization will still dictate that it would be better if their labor costs were zero dollars per month. The trick of this argument is that it includes an unstated assertion that if we don’t raise the minimum wage then employers will not voraciously seek to cut their labor costs, which is not true.

Nolan points out that the enforcement part of this fast food agreement is technocratic, backed up by the competing interests of the political world. Those interests can and do change over time. Can you imagine what a whack-a-doodle Governor would do to a fast food council?

This movement in the fast food industry started more than a decade ago ago with the Fight for Fifteen movement. When a labor union based on organizing workers and increasing their power came into the fore, they were able to use their broad base as a lever of power.

• Labor organizing is not some intermediate step on the way to the creation of perfect political policies that will render American capitalism humane; labor organizing is a constant necessity to maintain the wall that holds American capitalism back from eating all of us alive. If wages are low, we need to organize to raise them. If wages go up, we need to organize to keep them. We can never stop organizing. That’s the price of the power.

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Tuesday’s News to Think About

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Florida Just Upended The Election by Jay Kuo at the Status Kuo

• Because there is no longer any state constitutional right to abortion—despite a specific right to privacy in the state constitution and specific state supreme court precedent—the six-week abortion ban passed by the extremist legislature and signed by the governor can now go into effect in 30 days.

• Six weeks. Many, if not most, women don’t even know they are pregnant by that point. And then, under the new ban, it’s usually too late to do anything about it. 

• This ban is going to fire up women voters in the state, just as it has in Kansas, Wisconsin and Ohio, all states that had highly restrictive abortion bans on the books. Women, after all, as Justice Alito wrote dismissively in Dobbs, are not without political power. Republicans are about to find out how much.

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Would-be Tesla buyers snub company as Musk’s reputation dips via CNBC

• Brand valuation consultancy Brand Finance found Tesla’s reputation fell in 2023 in the United States, the Netherlands, France, United Kingdom, and Australia. Tesla’s reputation did not suffer in China, where access to news on the company and its CEO may have been limited, and Germany.

• In the U.S., a survey by consumer analytics firm CivicScience shown exclusively to Reuters found that 42% of respondents had an unfavorable view of Musk in February, up from 34% in April 2022 when Musk disclosed his stake in Twitter.

• “A modest but growing number of EV shoppers are increasingly put off by Elon Musk’s behavior and politics and are now finding viable alternatives to Tesla in the marketplace,” Ed Kim, president of California-based consultancy AutoPacific said.

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MAGA suckers are about to lose a lot of money thanks to Truth Social via Daily Kos

• Like everything else related to Donald Trump, his social media platform Truth Social’s parent company, Trump Media & Technology Group, has been embroiled in a nasty stew of incompetence, greed, and legal warfare. And much of that came to a head Monday as the company lost almost 21.5% of its inflated valuation after its much-hyped initial public offering, or IPO.

• Despite the one-day collapse, the stock is still grossly overpriced, and a close examination of TMTG’s 8-K filing with the Securities and Exchange Commission shows just how much of a disaster it is—and how much further the stock could plunge