Activists call for $15 min wage
Say won’t hurt employers, will help state
Hundreds of activists marched on the State House last week demanding better wages as part of a national Fight for $15 action supported by labor groups across the country.
While there, the Massachusetts activists received word that their cause took a step forward: A bill to raise pay to $15/hour for workers at fast food companies and large retail stores was approved by the Joint Committee on Labor and Workforce Development and had advanced to the Senate Ways and Means Committee for consideration.
Activists say not only is the wage increase critical to the survival of many families but that it will boost the state’s economy without the incurring profit loss for the big fast food and retail companies.
For many, the image of of a fast food worker often means white high schoolers working part-time for extra spending money. However, in a flat economy, many adults rely on fast food jobs to support themselves and dependents.
“The image of a young white male teen working at McDonalds is a way of hiding a lot of unfair treatment in the workplace,” said Harris Gruman, executive Director of Service Employees International Union Massachusetts State Council.
Sixty-eight percent of the state’s fast food workers are over 20 years old, according to the Massachusetts Budget and Policy Center.
“People who work in fast food and retail are also trying to get ahead and raise families and be middle class,” said Gruman.
The federal minimum wage is $7.25/hour. The state minimum wage rose to $9/hour in January and is slated to rise to $11/hour by 2017.
To support her- or himself, a single adult in Massachusetts needs to make $19.61/hour, according to an Alliance for a Just Society report issued October 2015. In a two-parent, two-child household, each parent needs to make $17.85/hour. A single parent with two children needs an hourly wage of $43.30.
These wage levels are based on calculations of what is needed to cover basic necessities — such as food, healthcare, utilities, childcare, clothing and transport — as well meet tax obligations, set aside a little for retirement and emergencies and not rely on public assistance. The calculations assume a person works full-time, year-round.
To get by in Massachusetts at the current state minimum wage of $9/hour, a person has to work 87.1 hours a week, either through overtime or extra jobs, reported the Alliance for a Just Society. Otherwise they may be forced to cut back on necessities like meals and medicine.
For many Massachusetts workers, a pay raise is a matter of survival, activists say.
It also is unlikely to cause negative effects for employees, such as reduction in employment or hours, said Randy Albelda, professor of economics at UMass Boston. She said this conclusion is supported by economic research conducted during the last 20 years.
Familiar equity gaps
Most low-wage retail and fast food jobs are held by women. Additionally, a high percentage of employees in these positions are black or Latino. The low wages only widen already-prevalent gender and race income gaps.
The National Employment Law Project, an employee rights advocacy group for low-wage workers, looked at “front-line jobs” — the largest, non-managerial occupations — in each sector along with who filled them between 2012-2014. Across the U.S., 71.1 percent of fast food positions were held by women, 26.2 percent by Latinos, and 21.4 percent by blacks.
This is higher than the population percentage for any of those categories: Women constitute 50.8 percent of the U.S. population in 2014, Latinos 17.4 percent and blacks 13.2 percent.
In retail, national numbers were just slightly better: over of retail workers are female, nearly 18 percent Latino and nearly 15 percent black.
Local spending boost
More money in the pocket of fast food and retail workers will boost their local areas, Albelda predicts.
Low-income workers typically put their money into purchasing food and goods at stores in their community. They are unlikely simply to hold onto the dollars or to divert the money far outside the local economies.
“When low-income workers have money, they spend it,” Albelda said. “They’re not taking it and investing or taking trips to South Africa or investing in gold. They’re spending it on goods, which typically boosts the economy.”
Additionally, better pay could reduce low-income earners’ need for government subsidies such as food stamps, thus saving taxpayers money, said Tyrek Lee, Vice President of 1199 SEIU.
Painless fix
Though anyone paid $9/hour struggles to be self-supporting, activists primarily target fast food and major retail companies because they believe these companies can easily remedy the situation.
“Those [sector]s are areas where we could easily bring people up to a living wage without hurting the companies any,” said Gruman.
Even while raising wages, companies stand to save — or at least not lose — money.
As workers becoming more able to support themselves in these jobs, they will be more likely to stay put, Gruman said. This will save companies the time and money it takes to find, train and develop manager-employee relationships with new hires.
It costs fast-food companies approximately $4,700 each time an employee leaves, according to a report prepared by UMass-Amherst’s Political Economy Research Institute.
And employees leave often.
Fast food workers frequently depart before completing a year, and once hired elsewhere, many move on again during the year. The turnover rate for fast-food restaurants is 120 percent, according to a 2006 report by Timothy R. Hinkin and J. Bruce Tracey, professors of organizational management at Cornell University.
The SEIU’s Lee also predicts that, with higher pay, workers would become more motivated and focused, thus producing better results.
“[With higher wages] they wouldn’t have to work two or three jobs, which would let them focus on the job at hand that they’re in,” he said.
Higher pay may lower company costs in areas such as employee healthcare.
Albelda said a survey she conducted with the Boston Public Health Commission found that an increase in household income often resulted in the family buying healthier foods and in fewer health problems like stress and obesity.
Absorbing a wage increase
In other ways, costs may go up. To offset higher wages, companies may choose to raise prices slightly — such as selling Big Macs for 12-20 cents more, said Gruman.
Both Gruman and Albelda doubted a minor increase would impact sales.
A 2015 study from UMass-
Amherst’s PERI seemed to agree. The institute assessed scenarios involving a national minimum wage increase to $10.50 in a single year, followed by an increase to $15 after three years. The combined effects of reduced employee turnover, slight price increases and predicted sales growth suggest that the fast-food industry could absorb the pay increase without reducing workforce size, reallocating funds from other parts of its operations or lowering average profit rate, PERI concluded.
Should predictions be off, major fast food companies and large retailers could balance budgets by reducing executive pay.
“The parents companies are very wealthy … [they] are making tremendous money and executives are really well paid,” said Gruman.
Albelda said an executive pay cut was an easy, no-harm solution.
“If CEO of McDonald’s had to take a little less money, I don’t think it’d hurt anybody, including the CEO of McDonalds,” she said.
Healthcare and beyond
Improving wages in these sectors can help open the conversation for other kinds of jobs.
Efforts are underway to raise wages for healthcare and childcare workers employed by private companies to $15/hour. Several bills have been drafted and a few heard.
Lee said he hopes pay increases on the low end of the spectrum will open the door for raising largely stagnant wages in jobs that pay more than $15, but still not as much as they should.
“The entire wage floor has been flat for over 20 years,” he said. “Starting with the low-wage at $15 allows us to have the broader discussion about all wages being held down.”
