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Would $15 save employees and break employers?

April 15, 2015 at 6:45 PM EST
Low-wage workers around the nation went out in protest on April 15, demanding a minimum wage of $15 an hour. A few big corporations have begun raising their pay, but some critics say a major hike would hurt employers and kill jobs. Gwen Ifill gets debate from Steve Caldeira of the International Franchise Association and Tsedeye Gebreselassie of the National Employment Law Project.
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GWEN IFILL: Income inequality is emerging as an enduring issue, as activists push to hike the minimum wage and increase livable wages. The debate played out across the country today, as organizers behind the Fight for 15,as it’s known, used Tax Day to make their case.

WOMAN: Living on $8.75 an hour is very hard. I have to live in a shelter because I don’t make enough money to pay rent here in New York City.

GWEN IFILL: Fast food workers in New York were out at sunrise, shouting their message.

PROTESTERS: Whose city?

PROTESTERS: Our city!

GWEN IFILL: They are demanding a minimum wage of $15 an hour. What they earn now, the workers say, is not nearly enough to support their families. Organizers billed this latest strike by low-wage employees as the largest yet, planned for 230 U.S. cities and dozens more around the world.

WOMAN: I live from paycheck to paycheck. And I get paid every two weeks and it’s still not enough.

PROTESTERS: Fifteen in my hands. I want 15 in my hands.

GWEN IFILL: As the campaign continues, a number of cities have passed laws to require a higher minimum wage, if not as high as $15 an hour. In addition, big corporations like Wal-Mart have also begun shifting their pay scales upward. McDonald’s increased starting pay by a dollar an hour at locations it owns, but that doesn’t include franchisees, who operate 90 percent of its restaurants.

The National Labor Relations Board is now considering whether to force McDonald’s to accept more responsibility for those franchise-owned outlets.

So what is at the root of all this?

For that, we turn to Tsedeye Gebreselassie. She is senior staff attorney at the National Employment Law Project, which is connected with the Fight for 15. And Steve Caldeira is the president and CEO of the International Franchise Association, a trade group that represents fast food restaurants like McDonald’s, both at the corporate level and for franchise-holders.

Tsedeye Gebreselassie, I want to start by asking you how widespread these protests ended up being today.

TSEDEYE GEBRESELASSIE, National Employment Law Project: They ended up being quite widespread, and not because just workers protested in more than 230 cities around the world, but because for the first time we’re seeing not just fast food workers strike, but we’re seeing retail workers, we’re seeing adjunct professors.

These are part-time college faculty workers that are making poverty wages, that are making much less than $15 an hour. And we’re seeing just a growing groundswell of workers, of supporters saying, you know, our minimum wage of $7.25 an hour, even the dollar increased that has been promised by some of these companies, is simply not enough to make ends meet.

GWEN IFILL: Steve Caldeira, how possible is what they’re asking to accomplish?

STEVE CALDEIRA, International Franchise Association: First, I think it’s important to state I think what happened today was really less about the minimum wage and more about providing air cover for the Service Employees International Union, which has been behind all these protests.

I think there’s no organic movement in our industry by food service workers. Just this past week, the Department of Labor in forms filed by the SEIU said they spent $18.5 million last year organizing these strikes. So, to me, we can have the minimum wage debate. A lot of cities and municipalities and states have passed that.

But it’s really more about the unions trying to organize. Private sector union membership has been from 35 percent approximately in the mid-’50s to under 7 percent this year.

GWEN IFILL: But my question was whether what they’re asking for is even possible?

STEVE CALDEIRA: Look, I think 95 percent of quick service workers that start entry-level jobs, within six months, they’re making above $9 an hour. So we have to remember these are entry-level jobs for lesser skilled workers. Look, I started at a Burger King in college.

TSEDEYE GEBRESELASSIE: I’m sorry.

GWEN IFILL: I’m going to get to you in a moment. Because what I wanted to ask you today, Gebreselassie, is really whether…

TSEDEYE GEBRESELASSIE: Yes.

GWEN IFILL: First of all, obviously, I want you to respond to what he just had to say.

TSEDEYE GEBRESELASSIE: Yes.

GWEN IFILL: But how much is this an effort to increase union engagement and membership at a time when unions are flagging?

TSEDEYE GEBRESELASSIE: There are — well, first, let me first address what he was saying about entry level.

GWEN IFILL: All right.

TSEDEYE GEBRESELASSIE: The fast food industry, you know, is an industry where 70 percent are over the age of 20. Many of them have been working in fast food jobs for years, and that’s because, while the fast food industry may have been a stepping-stone in past years toward a better-paying job in a different industry, the fact of the matter is, jobs in fast food, retail, home health care, child care, some of the workers that were out on strike today, those are the jobs that are disproportionately fueling job growth in our economy today.

So we have got to figure on the a way to raise pay in those industries; 42 percent of workers in this country make less than $15 an hour, precisely because, as Steve was saying, unionization rates have gone down, which was a key way to raise the wage floor in our country, precisely because the minimum wage floor has so far eroded in its value. At $7.25 an hour, that hasn’t gone up since 2009.

GWEN IFILL: So, now it’s my turn to ask you to answer the question I posed, which is…

TSEDEYE GEBRESELASSIE: Yes.

GWEN IFILL: … whether this is about union organization.

TSEDEYE GEBRESELASSIE: This is about unions helping workers raise pay, which is traditionally something that unions and other worker organizations do.

I mean, that is the job. That is the job, to raise wages and working conditions for members and non-members alike. And that’s why part of what has been said through this fast food movement over the last two years is the fact we have seen state after state, and now city after city raise the minimum wage through policy. That is a direct effect of the organizing that’s been happening on the ground.

GWEN IFILL: And, in fact, Steve Caldeira, we have seen Wal-Mart, T.J. Maxx, we have seen Target agree to raise their wages.

STEVE CALDEIRA: Sure.

GWEN IFILL: I guess the question is, what is the difference with fast food — with the fast food industry? Is it the franchise problem, where so many – so few of the actual outlets are owned by the company itself?

STEVE CALDEIRA: Well, McDonald’s, Target, Wal-Mart legally have the right to raise the wages of their employees in the corporate environment.

I think the big distinction here is that franchisees put their own skin in the game. They’re independently owned. They have the right to hire, to fire, to set wages. They process their own payroll. They’re given an employer identification number by the Internal Revenue Service. These are the people that create the jobs in all 435 congressional districts across the country.

And they have been dealing with more regulatory environment, higher taxes through the fiscal cliff deal, high commodity costs, and I think Tsedeye brought up a good point. Part of the reason why you see folks staying in these jobs longer is because of the lack of a pro-growth agenda coming out of Washington.

TSEDEYE GEBRESELASSIE: No.

STEVE CALDEIRA: And it’s just not the administration. It’s also Congress.

We need to do things in this country that enable small business job growth. Two-third of all net new jobs in this country come from small business, as opposed to stifling small business job creation.

GWEN IFILL: Ms. Gebreselassie?

TSEDEYE GEBRESELASSIE: When you talk to small business owners, the number one reason they cite for the reason why they can’t grow the way that they want to is lack of consumer demand. Consumers can’t spend what they don’t have.

And when you are making $7.25 an hour, when you’re a 50-year-old fast food worker that has been making a minimum wage for the last 20 years, that is forced to rely on public assistance to make ends meet, because half the fast food workers are forced to do so, then you can’t spend. And that stifles economic growth for all of us.

I think that what we learned in the economic recession and the resulting recovery is that if we want a recovery that is sustainable and that works for all Americans, then we have to figure out a way to rebuild the middle class. And the way to do that is to raise wages.

We are in an economy right now where wages have stagnated or declined for the bottom 70 percent of the entire work force.

GWEN IFILL: Let me ask you both, finally, kind of…

TSEDEYE GEBRESELASSIE: Yes.

GWEN IFILL: And I’m trying to — looking for middle ground here.

TSEDEYE GEBRESELASSIE: Sure.

GWEN IFILL: So, if you were to say, Steve Caldeira, that it’s $15 — especially for franchisees, whose skin is in the game, is out of the mark — they just can’t do that, what is it that these companies can be doing to speak to the kind of concerns that Tsedeye was just now saying?

STEVE CALDEIRA: I think the franchisees need to have flexibility. It’s all about supply and demand.

 

So, if Wal-Mart, Target, and McDonald’s are raising the wages at the corporate level, there’s a reason why they’re doing — they’re competing for workers. I think it needs to be left up to the franchisee, who, by the way, wants to attract, develop, and retain great employees. So I think they need to be given the flexibility based on, where are they situated, what is the climate and the economic environment where they do business, because they want to do right by their employees.

GWEN IFILL: And, Tsedeye Gebreselassie, is there any — is there a middle ground here?

TSEDEYE GEBRESELASSIE: Yes

I mean, I agree that franchisees need some flexibility. And one way to give them that flexibility so that they can raise wages is for that corporate franchiser like McDonald’s to maybe lessen some of the fees that they’re forcing the franchisees to kick back to them. McDonald’s posted $5 billion in profit last year, so the argument that there is not money in the corporation to trickle down to raise wages and improve working conditions for their workers ring hollow.

GWEN IFILL: Tsedeye Gebreselassie of the National Employment Law Project, Steve Caldeira of the International Franchise Association, thank you both very much.

STEVE CALDEIRA: Thank you.

TSEDEYE GEBRESELASSIE: Thank you so much.

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