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Confronting the Myth that Low Wages Are Necessary for Profits in the Fast Food Business

Why In N Out Burger is far more attractive than McDonalds.
 
 
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Editors note: This is the third in a series of reader-supported—i.e. crowdfunded —articles about the powerful National Restaurant Association and the plight of low-wage workers who are being screwed at every turn by industry lobbying tactics and misleading propaganda. An amazing 387 AlterNet readers contributed more than $5,500 to support this ongoing investigative project. Many of the donors are listed at the end of the article. Read part 1&2 of the series here and here.

The more you look at what it means to work in America’s restaurants—especially at the corporate-run chains—the less you will want to eat out.

The ongoing protests by fast-food workers for higher wages and paid sick days underscore the most visible problems. There’s also wage theft. There’s gender and racial harassment. There’s discrimination in pay and promotions. There’s slick public relations efforts that paper over this exploitation, with corporate lobbyists repeatedly telling politicians that they can’t pay workers more—while other executives tell Wall St. analysts about using their profits for stock-buybacks, expansion plans and shareholder dividends.

The nationwide fast food worker walkouts are highlighting and rejecting a predatory low-wage, low-benefit business model that’s all too common in service sector jobs. Ironically, some of the nation’s top business school professors say the restaurant industry’s scorched employee policies aren’t even the best way to build companies.  

“If paying more is considered part of a bigger strategy, then yes, I think companies can afford to pay more,” said Zeynep Ton, a MIT Sloan School of Management professor and author of the forthcoming The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits. “The only way to pay more (as well as invest in training, offer more stable schedules, etc.) without hurting business is if employees are more productive and more part of the company’s success.”   

But Ton’s prescriptions of investing in workers and empowering them are all-but absent in the restaurant industry, especially at the corporate chains. Instead, millions of the U.S. industry’s 12.2 million employees are all-too-often treated like robots and abused like serfs. And Ton and labor activists say that will not change until the public demands it.

“When we care, companies might start caring as well,” she said.

What follows are profiles of three trend-setting chains illustrating the issues that separate terrible employers from somewhat better ones. The fast food strikers want raises to $15 a hour and paid sick leave, as most are adults with families and not teenagers in first jobs. But they face other issues, too, such as gender and racial discrimination and harassment, segregated workplaces, and few opportunities for advancement.

Racing To The Bottom: McDonald’s.

McDonald’s is across-the-board terrible. They require employees to work at Christmas and Thanksgiving, but don’t pay overtime. They pay as close to minimum wage as possible. Their marketing to kids is predatory and creepy. Some salads have more calories than burgers. They use “ pink slime” for chicken entrees. They encourage employees to get food stamps to offset low pay. And they’re everywhere.

This spring, USAToday and 24/7WallSt.com said that McDonald’s—more than any fast-food chain—was one of “eight companies that most owe workers a raise.” McDonald’s can afford to pay the vast majority of its 800,000-plus U.S. employees more, the paper reported, citing the firm’s own financial reports. Its stock was up 6.9 percent over last year, and up 68.2 percent over the past five years.

Most companies don’t make payroll data public, unlike their earnings reports. But there are websites that post jobs, average salaries and employee comments. Glassdoor.com lists hundreds of entries for McDonald’s. Almost all of its wages hover near legal minimums. For cashiers, the hourly average is $7.74. For crew member, it’s $7.70/hour. For a crew trainer, it’s $8.14. For drive through cashier, it’s $7.73. For grill cook, it’s $7.72. For fry cook, it’s $8.20. For swing manager, it’s $9.33. For general manager, its $43,862 a year, or $21.08 hourly. For assistant store manager, it’s $29,574 annually or $14.22/hour.