Fast Food Workers Strike Out Swinging

Thomas Warns*

On Labor Day, Ned Resnikoff asserted in an article posted on msnbc.com that the recent nationwide fast food strike has the potential to revive the long flagging American labor movement. In particular, Resnikoff stated:

“Over the past several months, a new kind of labor activism has emerged from some of America’s poorest-paying and least-unionized industries. Fast food workers have stood near the forefront of the movement, waging a nationwide strike campaign which began in December with about 200 New York-based fast food employees and now encompasses thousands of workers spread across 58 cities…If the fast food workers achieve tangible results, it could transform low-wage fast food and retail in the same way that the United Auto Workers (UAW) and other unions helped to transform manufacturing during the 1930s. Their efforts, combined with the stimulative impact of World War II, helped birth a new American middle class and an organized labor Golden Age.”

Although the burgeoning fast food labor uprising may be sending chills down the spines of some franchise owners, its impact on employers, employees, and consumers is still far from certain.

Fast Food Strike.jpg

The employees who are striking for $15 an hour attract some sympathy from the public when juxtaposed with the multi-billion dollar revenues companies like McDonald’s, Subway, and Wendy’s rake in every year. But this David vs. Goliath comparison is hollow on two levels: first, the overwhelmingly majority of fast-food workers are employed by franchisees, not the parent corporations; second, wages are determined primarily on the skill required for the work and the scarcity of replacement workers. Unfortunately for the fast food strikers, the low amount of skill required and the ease with which their jobs can be filled severely undercuts their bargaining strength.

In light of such weaknesses in their cause, the strikers appear to be picketing with an eye towards Washington. As this article notes, the protests may just be a way of influencing politicians to raise minimum wages at the state and federal level if the franchises should refuse a wage increase. There may be sufficient political capital on Capitol Hill and in state legislatures across the country for such legislation if, as some have indicated, the large increase in employee wages does not lead to a corresponding significant price increase at the register. However, the LA Times indicates that “a $15 minimum wage would cause as much as a 17% surge in fast-food prices.” Although consumers may not like such a spike in prices in the historically value-based fast food industry, such an increase doesn’t seem crippling to the strikers’ call for increased wages.

But what about Resnikoff’s bit comparing a revival in fast-food labor activism to the rise of the UAW in the 1930s? That comparison should draw both hope and peril for strikers and their supporters. The UAW did succeed at providing middle class wages for union employees, and if the same happened in the fast food industry, turnover would likely plummet (it is estimated to be around 75% every year in the industry). On the other hand, the high wages the UAW bargained for are often cited as a cause of the decline of the American auto industry. While it is impossible for fast food businesses to outsource the kind of work performed by line food-prep workers, higher wages could influence franchisees to cut employment or turn towards automation, two trends the UAW have encountered. If prices do increase significantly for customers, their consumption habits might change and further drop the demand for workers in many stores.

While the appeal of a $15 wage is obvious for fast food workers, they may be better off if Washington and the labor unions stay out of the picture, and the strikers negotiate a smaller price increase that would be closer to a coveted “living wage” without undermining the very existence of the strikers’ jobs.

*Thomas Warns is a J.D. Candidate, class of 2015, at New York University School of Law and is a Staff Editor of the Journal of Law & Liberty.