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.
Sandwich chain Jimmy John’s continues to face backlash for its use of non-compete agreements for low-wage workers, according to The Huffington Post. House Democrats plan to send a letter to the Labor Department and the Federal Trade Commission asking the agencies to investigate this practice and ascertain the impact on both workers rights and competition. In the letter, the 20 House Democrats who have signed on argue that such a non-compete agreements are “anti-competitive and intimidating to workers.” As OnLabor has previously reported, the agreement states that the worker agrees not to work at one of the sandwich chain’s competitors for a period of two years following employment at Jimmy John’s. To date, there are no reported instances in which the non-compete has been enforced. The Huffington Post has also provided a map of the potential non-compete zones for all of Jimmy John’s roughly 2,000 locations nationwide.
According to a new report from the Community Service Society, New York’s tipped workers earn, on average, significantly less than the workforce as a whole even when including their tips. The Wall Street Journal first reported on this new study, highlighting that one out of five tipped workers in New York State makes less than the current state minimum wage of $8 an hour even when including tips, as such workers may be paid as little as $5 and hour due to a “tip credit.” The report also highlighted that those who work for tips are more than twice as likely to live in poverty as those who work for regular wages. The report was released to coincide with a hearing in New York City by the state Wage Board, which is meeting to decide whether to raise the minimum wage for several hundred thousand workers who rely on tips as part of their income. The New York Daily News and Brooklyn Daily Eagle followed the hundreds of tipped and low-wage workers, including delivery workers and wait-staff, who first rallied outside a Domino’s Pizza location in Harlem before marching to the public hearing. Two more hearings — in Buffalo on Nov. 13 and in Albany on Dec. 9 — are scheduled before the Wage Board delivers its report to the state Labor Department and Governor Cuomo.