Editor’s Note: We wrote about it back in June, but the “Fight for $15” campaign for a higher federal minimum wage in the United States is still ongoing. This article, which was one of LP Magazine’s top stories of 2015, covers the basics of the minimum wage debate and how it may be seen from a loss prevention perspective.
“Hard working men and women deserve the opportunity to earn a wage that they can live on. They should be able to put food on the table, have a roof over their heads, and provide for a family without having to work three jobs and 70+ hours a week to make it happen. They should be able to support themselves, their families, and their neighborhoods. They should be treated with dignity and respect. They shouldn’t be forced to rely on public assistance to provide for basic necessities like food, rent, transportation and healthcare for their children.”
Few people with any level of human compassion could or would disagree with these statements, which are commonly used as rallying remarks tied to the “Fight for $15” campaign. But what’s the best way to get there? How do we distinguish between providing the opportunity to earn a living wage, and mandating that every position provides that wage? What expectations are attached? Should a young person assuming their first job working at a quick casual restaurant be entitled to a starting wage that could support a family? Should an adult working that same job assume that they should then earn a wage that can support a family? Where’s the balance? There are many difficult questions, and far fewer answers.
According to National Retail Federation statistics, retail is the nation’s largest private sector employer, supporting one in four U.S. jobs—42 million working Americans that add trillions of dollars to the nation’s economy. Quick casual restaurants are a $200 billion a year industry that employs approximately 4.5 million, according to the Bureau of Labor Statistics. Many who hold these positions begin at an entry level as they learn the business and develop necessary skills. Training and development opportunities and performance-based incentives typically provide the means for advancement. Yet many who continue to hold entry-level positions can struggle to make ends meet and must find other ways to complement their income.
Launched November 2012, the Fight for $15 movement was founded in an attempt to raise the minimum wage to $15 an hour. With the current federal minimum wage standing at $7.25 per hour, this would more than double that wage rate. The movement began with a walkout of quick casual restaurant workers in New York, and has gained momentum ever since. In early December 2014, workers staged one-day demonstrations in over 190 cities, creating what has been called “the largest labor protests in the nation in years.”
The Cost of Doing Business
Outside of the cost of goods, payroll remains one of the highest expenses for retail and related businesses, often accounting for 20-35 percent of gross income, according to typical business models. These numbers can rise substantially in service-related industries, where payroll may account for up to and exceeding 50 percent of gross income. In addition to salaries, these numbers can be increased by the costs of benefits, payroll taxes, unemployment taxes, and related expenses. These costs must be carefully managed in order to remain profitable, attract workers, manage business operations, and maintain competitive wages that allow for raises and other incentives.
How would an initiative that calls for an increase that more than doubles the minimum wage impact the operation of these businesses? Especially those businesses that operate primarily with employees that earn wages on the lower end of the pay scale, such as quick casual businesses, this type of increase could threaten the viability of many operations. Most businesses simply can’t—or won’t—absorb all of these costs.
“Businesses would first look for ways to reduce their payroll expenses, and for many, this would mean significant staff eliminations,” claims a high-level representative for a quick casual restaurant. “Companies will also explore new ways to increase automation, and reduce payroll. Benefits could be further impacted; raises could be highly moderated and substantially cut back… Significant changes will come as companies look for ways to reduce costs and remain profitable.”
And what about employees who worked hard to earn increases based on service and performance? It’s highly unlikely to expect that they would receive proportional increases. In fact, it could likely have a negative impact, lowering performance increases and other opportunities as companies react to the situation. How will experienced employees respond when non-skilled, entry-level workers are coming in and making the same wage?”
“Some smaller operations simply won’t be able to absorb the costs, and will have to shutter their business,” states another representative for a quick casual restaurant business. “Larger operations will redefine the business model, eliminate jobs, and pass on many of the costs to the consumer. It’s not as simple as just giving everyone a raise.“
Muddying the Waters
Looking at the promotional materials for the “Fight for $15” campaign, you’ll find that the push isn’t simply to raise wages for employees or improve the quality of life for hard-working individuals. In fact, if you look at the campaigns closely, a secondary motive stands out. The actual campaign slogan used by the official “Fight for $15” reads, “The ‘Fight for $15’ campaign is seeking a $15/hour living wage and the right to form a union without retaliation.”
Union movements are deeply entrenched in the “Fight for $15” campaign. There is a push by several labor organizations to attach union representation to these efforts, and to use the campaign to compel workers to form labor unions in restaurants and other retail industry establishments. For instance, many 2015 protests were backed by the Service Employees International Union (SEIU). “The Fight for $15 movement is growing as more Americans living on the brink decide to stick together to fight for better pay and an economy that works for all of us, not just the wealthy few,” said Mary Kay Henry, president of the SEIU in a recent interview. According to The New York Times, the SEIU has supplied more than $10 million to help finance the organizing operations.
Unions remain an influential force in the business world. Historically, they have provided a powerful voice for the American worker. But is this what the employees are looking for? Are these workers looking to improve their wages and quality of life, or are they looking to create a union? While it’s easy to see how these movements can be tied together, we are really addressing two different issues. As a result, multiple agendas can cloud the message, raise additional concerns, and impede progress.
Safety and Security Concerns for Loss Prevention
Should the minimum wage be increased to $15 an hour? Will such increases have harmful impacts on business operations? Will this lead to loss of jobs and employee unrest? Are labor unions part of the answer? When it comes to matters of this nature, passion and emotion are often tied to our responses. When coupled with large groups, public space, and conflicting opinions, this has the potential to lead to safety and security concerns. Loss prevention teams need to be ready to respond.
While many demonstrations are peaceful, some situations have escalated with protesters taking a more aggressive approach to share their message. “There have been incidents of vandalism, violence, and intimidation,” reveals a representative from a national food chain. “Protesters will enter our locations and take over the restaurant. There have been times when we’ve had to lock the doors to protect our customers and our staff.”
Many of these incidents are allegedly carried out by individuals who aren’t employees, and have no connection to the businesses being targeted. According to one high-level representative for a quick casual restaurant, “When we look at most of the protests that have taken place in our restaurants, the overwhelming majority of those participating aren’t actual employees, but rather union demonstrators and others with no ties to the company. Several white 14-passenger vans will show up at our sites, with protesters quickly moving in to disrupt our business, berate our customers, and taunt our employees. Conversations quickly shift from employee rights to union organizing. Employees have even been followed to their homes and aggressively pressured to sign union cards,” he states.
So what steps are taking place to protect the customers, the employees, and the locations? In response to these potential issues, many organizations have devoted additional resources and put protocols in place to strengthen retail security and help mitigate incidents if and when they occur.
Additional steps may include asking loss prevention teams to develop closer relationships with law enforcement agencies in high-risk areas, cooperative action plans, monitoring social media, postings prohibiting loitering and solicitation, and similar strategies to limit incidents and improve store security. Loss prevention professionals must also remain aware of and in compliance with relevant labor laws and similar regulations whenever there is any potential for these directives to apply to the situation.
While the U.S. economy has gone through some harsh times over the past several years, it’s been six years since the federal minimum wage has increased. Despite President Obama’s push last year to raise the federal minimum wage to $10.10 an hour, Congress has yet to make any moves in that direction.
The federal minimum wage is applicable nationwide, and overrides any state laws that provide a lower minimum wage rate. However, while states can’t impose a lower minimum rate, they can enforce a higher wage rate. This year, a majority of states have boosted their minimum wage above the federal minimum wage, which may put pressure on Congress to move towards increasing the federal minimum wage for the first time since 2009.
Some companies are taking their own steps to improve employee salaries. By February 2016, Walmart employees will see a pay increase to at least $10 an hour. The company further vowed to invest more in training to give entry-level workers greater chance for promotion and other career advancement.
In a recent statement, McDonald’s said, “At McDonald’s we respect everyone’s right to peacefully protest. The topic of minimum wage goes well beyond McDonald’s—it affects our country’s entire workforce. McDonald’s and our independent franchisees support paying our valued employees fair wages aligned with a competitive marketplace.” The company also said that any minimum wage increase should be implemented over time to reduce the impact on business owners.
From a loss prevention perspective, our primarily responsibility is to ensure that appropriate steps are taken to secure the safety of employees, customers, and facilities if and when incidents occur at our locations. The loss prevention team can best accomplish this by taking proactive measures through planning, training, awareness, and strategic action as necessary and appropriate based upon the specific situation at hand.
Contemplating the message behind these efforts, most loss prevention professionals want the same thing for those that work hard to make a living, support our businesses and our economy, even if we don’t always agree on the best way to get there. As these efforts move forward, we should also be able to agree that prudence and common sense should guide our decision making, helping us to find the best—and safest solutions for all concerned.