Fast Food News – October 24

This post is part of an ongoing of series on the fast food organizing movement. You can read all our Fast Food News here.

Slate took a skeptical view of the Wall Street Journal Editorial Board’s assertion earlier this week that McDonald’s disappointing earnings report should force fast food activists to second-guess their push for a higher minimum wage. While the article agrees that there is truth to the matter that replacing cashiers with touch-screens is the most obvious way to cut down labor costs, that has not been the case in practice, as McDonald’s has rolled out such technology in Europe without an expectation that there would be a decline in the overall workforce. When asked by Slate, McDonald’s itself explicitly said that it has no plans to reduce labor costs using touch screens, calling the Journal’s editorial “highly speculative and hypothetical,” and maintaining that the introduction of touch-screens is about customization for consumers, not automation of the chain’s labor force.

Politico’s “Morning Shift” reports on a potentially game-changing announcement to come from the National Labor Relations Board. According to the report, NLRB associate general counsel Barry Kearney recently told an employment law webinar that the agency may file a complaint this month naming McDonald’s a joint employer in a case against franchisees. This move, according to Politico would potentially complicate the landscape, since any complaint naming McDonald’s a joint employer would potentially put the corporation on the hook, but dozens of these cases against McDonald’s franchisees are already in settlement negotiations. The NLRB quickly backtracked, telling Politico that the McDonald’s cases remain in settlement discussions and there is no timeline for any complaint to be filed.  This issue has become incredibly important,as  Politico also found that the number of companies specifying joint employer status as a specific lobbying issue has multiplied eightfold since the NLRB’s general counsel announced this past July that he would seek to consider McDonald’s a joint employer in labor violation cases against franchisees. The list of companies lobbying on the issues includes the International Franchise AssociationDunkin’ Brands Inc.Burger King Corp.,Yum! Brands Inc., and the National Restaurant Association.

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Today’s News & Commentary – October 24

New claims for U.S. unemployment benefits held below 300,000 for a sixth straight week, suggesting that the labor market is “shrugging off jitters” over a slowing global economy.  Both Reuters and the New York Times conclude that despite an increase from last week’s jobless claims, weekly applications remain at historically low levels that suggest the labor market is slowly but surely recovering.  This is confirmed by The Conference Board’s economic indicators index, which shows “solid increase in September after no gain in the previous month.”  Slow economic growth in the EU and China has caused significant unrest in the global financial markets, but U.S. activity is expanding steadily, with growth in the third quarter expected to top a 3 percent annual pace.

The New York Times reports that many states are considering passing legislation to ease former-convicts’ reentry to society by forbidding employers to ask about criminal history on job applications.  This summer, Washington D.C.’s City Council approved legislation that forbids asking about criminal history on most job applications, and the policy is currently being considered by Georgia, Michigan and New York.  During the past several months, states and cities as varied as Illinois; Nebraska; New Jersey; Indianapolis; Louisville, Ky.; and New Orleans and have adopted so-called “Ban the Box laws.”  The national-level effort is part of a “bipartisan re-evaluation of the criminal justice system and reflects a growing concern that large numbers of people, especially African-Americans — who have been jailed disproportionately — remain marginalized from the work force and at greater risk of returning to crime.”  The reforms endeavor to expunge the criminal records of nonviolent offenders and reassessing parole, decriminalize small amounts of marijuana, and probation rules so violators are not automatically reincarcerated.

New York Times opinion columnist David Brooks responds to an essay by William Galston of the Brookings Institution, entitled “The New Challenge to Market Democracies.”  Brooks refutes Galston’s assumptions that the era of “broad and growing prosperity for the middle class” is over and “economic problems degrade the national spirit and lead to a loss of faith in the whole enterprise.”  Brooks believes that high rates of unemployment and low general labor force participation are the main drivers of the current “emotional recession.”  He claims that the solution to America’s employment woes is for the federal government to take actions that would increase the number of middle-class, satisfying jobs: borrowing money to build infrastructure, reducing aid to unemployed people and increasing aid for the working poor, institution a progressive consumption tax, turning our immigration system into a “talent recruiting system,” and investing in human capital through education.

Uber Drivers Go Offline in “Global Day of Protest”

As we reported earlier this week, Uber drivers in New York, Chicago, Seattle, San Francisco, Los Angeles and London picketed outside of the company’s offices and turned off their apps yesterday in what drivers are calling a “global day of protest.”

Originally organized by the California App-Based Drivers Association (CADA), the protest has roots in changes announced by Uber this past September, in which the company informed drivers that the “temporary” summer discounts of between 15 and 20 percent for UberX would be kept indefinitely, meaning drivers will earn less per ride. Uber has argued that the price cut has lead to a 10% increase in earnings for drivers, as the discounts have increased demand, leading to more trips for drivers overall. However, drivers say they are making less than $12 an hour after expenses – far less than the more than $25 an hour Uber claims they can earn. A full accounting of these pricing changes can be found in our first post.

In San Francisco, roughly 60 Uber drivers gathered at the company’s offices, carrying signs that read, “Uber is bullying their drivers” and chanting, “Uber, Uber, you can’t hide. We can see your greedy side.” A similar scene could be found in Southern California, where dozens of drivers held signs reading “Uber: 15 Hour Days and Poverty Wages” outside of the company’s Santa Monica offices. Though drivers in New York, Chicago, Seattle and London did not picket in their respective cities, they did turn off the app. As many as one-fifth of Uber’s 10,000 drivers in New York logged out, even though the torrential rain would have allowed drivers to take advantage of Uber’s much debated “surge pricing” scheme that is implemented during bad weather and periods of increased demand. Still, according to Uber, the protest “represents a fraction of all Uber partners” with thousands of drivers still using the app to pick up passengers throughout the day’s protest.

Groups such as CADA continue to proliferate globally, with drivers organizing in London, New York, Seattle and San Francisco over the past several months. Continue reading

Today’s News & Commentary — October 23

The ride sharing app Uber is recruiting veterans to work as drivers, the Boston Globe reports. Uber representatives attended a veteran job fair in Boston last week to pitch the company to former service members looking for work. The recruitment effort is part of the company’s new UberMILITARY strategy, an attempt to hire 50,000 new drivers who are affiliated with the armed services. Cities and taxi companies have challenged Uber, and the company remains controversial as On Labor has reported.

Union leaders are calling on the Obama administration to provide greater protections against the Ebola virus for U.S. workers, the Wall Street Journal reports. Richard Trumka, president of the AFL-CIO, asked President Obama to implement mandatory national protection standards and to protect workers who raised health and safety concerns from employer retaliation. The Service Employees International Union, which represents airport employees, has conducted its own safety training for its members.

New Jersey governor Chris Christie said yesterday that he’s “tired of hearing about the minimum wage,” while addressing the U.S. Chamber of Commerce’s legal reform. Governor Christie went on to say: “I don’t think there’s a mother or father sitting around a kitchen table tonight in America who are saying, “You know, honey, if our son or daughter could just make a higher minimum wage, my God, all our dreams would be realized.” Politico points out that 69% of minimum wage workers are  20 years or older, while 44% are 25 or older.

In South Korea, workers at Hyundai Heavy Industries, the world’s largest shipbuilding company, have endorsed a possible strike. The Wall Street Journal reports that two-thirds of the Hyundai’s employees voted to strike over wage and benefit issues. The unionized members are asking for a 6.5 percent pay increase and a one-time bonus after the company began cutting bonus and overtime pay last year.

McDonald’s Earnings Report and the Need for Dialogue

As we covered in our inaugural Fast Food News, the Wall Street Journal editorial page focuses today on McDonald’s new earnings report. That report shows a 30% decline in quarterly profits and a 5% drop in revenue. And while the declines seem attributable largely to rising beef, cheese, and pork prices, Businessweek includes minimum-wage increases in states like Minnesota, California and Michigan as part of the cause for the earnings drop. The Journal, for its part, takes the weak earnings as a clear indication that further wage increases will only lead to further earnings losses, and, ultimately, to job losses.

An earnings report like this one provides more clear evidence – if we needed any – that McDonald’s and the fast food campaign need to begin talking to each other. Businessweek stories and WSJ editorials are not a substitute for actual dialogue between workers who are demanding significant wage increases and employers who would have to pay for them. Part of the benefit of such dialogue would be an honest exchange of information. What is the actual cause of the earnings decline? What forced McDonald’s to raise its food prices by 3%? Could the workers credibly offer increased productivity in exchange for wage increases, as efficiency-wage theory predicts? If wages went up across the fast food industry, might demand increase enough to keep pace with price increases?

As outsiders, workers and their campaign are compromised in their ability to assess the causes of McDonald’s price hikes and earnings losses. It is difficult for them to assess the likelihood of mechanization and job cuts. And, with all due respect, the workers are not likely to take the Wall Street Journal at its word.

But, if brought to the table and presented with McDonald’s own data, the workers would be able to responsibly adjust – if necessary – their demands. Continue reading

Fast Food News – October 22

Fast food workers and their campaign for increased wages and workplace reform have become a focus of global interest and attention. The campaign raises questions about economic equality, wage policy, dignity, and the future of the labor movement. Against this backdrop, OnLabor will now provide a bi-weekly update on the latest happenings in the fast-food movement, including in-depth news stories and legal developments from across the nation.

Yesterday, McDonald’s posted a nearly one-third drop in quarterly profit, with CEO Don Thompson acknowledging that sales would fall again this month. According to Reuters, McDonald’s is attributing the drop in sales and profits to perception issues with consumers, who desire fresher, unprocessed food. While, McDonald’s placed the blame on food image, Bloomberg Businessweek reports that many of the fast-food chain’s issues have arisen due to a constant increase in the cost of doing business. According to analysts, a combination of rising meat and cheese prices and minimum wage increases in states such as Minnesota and California have led the fast-food chain to increase prices by 3% year-over-year.

The Wall Street Journal Editorial Board took this opportunity to argue that McDonald’s earnings report could be used to counter fast-food workers’ campaign to increase the minimum wage. According to the Journal, the steep decline in profits should be a reason for the chain to keep wages at their current levels. Acknowledging that McDonald’s has seen particular pressure from fast-food workers and unions, the Board argues that an increase in wages will bring further continued losses and eventually lead the chain to replace employees with machines. The Journal reports that by the third quarter of next year, McDonald’s will roll out new technology in some markets that will make it easier for customers to customize their orders and pay digitally as part of what the chain refers to as the “McDonald’s Experience of the Future” initiative. The Editorial Board of the Wall Street Journal believes this program will provide McDonald’s with a convenient way to justify a future reduction in the chain’s global workforce if earnings continue to decline.

Continue reading

Today’s News & Commentary — October 22

Researchers from the Northeastern University and the Urban Institute released a report Tuesday on forced-labor trafficking in the U.S., according to Reuters and the Boston Globe.  The study found that in many cases, trafficking victims entered the country legally, with valid work visas.  Workers are often recruited in their home countries, deceived about the nature of the work they will perform, and ultimately held against their will and subject to psychological abuse.  The study found that “most workers were not abused physically, which may not be the typical image of a trafficked person.”  This fact, moreover, may contribute to the difficulty in detecting trafficking; one of the authors of the study said that “[v]ictims are often hidden in plain sight,” and explained that there needs to be greater awareness of “the coercion and fraud the traffickers use to control these individuals.”

The Associated Press reports on renewed efforts by public health advocates and lawmakers to eliminate the use of child labor on tobacco farm.  In May, Human Rights Watch released a report detailing widespread illnesses, including symptoms consistent with nicotine poisoning, among children working on tobacco farms.  Since then, the group has introduced legislation aimed at banning children younger than 18 from working on such farms, and it has also urged the Department of Labor to take regulatory action.  Meanwhile, some members of Congress have taken notice as well: Representative David Cicilline, D-R.I., “has sponsored a bill to amend the Fair Labor Standards Act of 1938 to ban children under 18 from jobs where they have direct contact with tobacco plants or leaves.”

The Los Angeles Times reports on a dispute between a Japanese company and a labor union over a proposed light-rail manufacturing plant in California.  After the company, Kinkisharyo International of Osaka, had settled on a site in the city of Palmdale, local activists, including members if the International Brotherhood of Electrical Workers Local 11, “presented the city with a 588-page appeal claiming violations of state environmental law.”  Supporters of the company said that the petition amounted to “greenmail”—the use of environmental claims as leverage to secure labor concessions.  The company had previously refused to agree to a card check agreement with the local union.  A company representative said “[i]f our employees want to organize, they can. But we aren’t going to organize for them.”

In welcome news for a number of Governors engaged in close reelection races, the last Department of Labor report before November’s elections found that unemployment rates fell in 31 states last month, according to the Associated Press.