“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 seventy-plus 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.”
There are very few people with any level of human compassion that could or would disagree with statements like these, 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 then 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 very 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 US 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 of those that hold these positions begin at an entry level as they learn the business and develop the skills and experience to contribute to the success of the organization. Training and development opportunities and performance-based incentives typically provide the means for advancement and higher wages. Yet many of those that continue to hold entry-level positions can struggle to make ends meet. Many of those that remain at these entry level wages 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 most retail and related businesses, often accounting for 20 to 35 percent of gross income, according to many 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 other related expenses that will have a direct impact on the overall cost of doing business. These costs must be carefully managed in order to remain profitable, attract workers, manage business operations, and maintain competitive wages that allow for annual and performance raises and other associated programs and incentives.
How would an initiative that calls for an increase that more than doubles the minimum wage impact the operation of these businesses? Other than the potentially devastating impact of the increased costs, how will this affect the overall management of payroll dollars? Especially for those businesses that operate primarily with employees that earn wages on the lower end of the pay scale, such as quick-casual businesses and similar operations, this type of increase could ultimately threaten the viability of many operations. Most businesses simply can’t—or won’t—absorb all of these costs. Fundamental principles of economics tell us that costs won’t simply be absorbed by the business owner, as some have suggested. These expenses would be largely addressed in other ways.
“Businesses would first look for ways to reduce their payroll expenses, and for many this would mean significant staff eliminations,” claimed a high-level representative for a quick-casual restaurant. “Companies will also explore new ways to increase automation and reduce payroll. Additional responsibilities will have to be linked to certain staff positions as a result. 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 many of those changes will directly impact the workforce.
“And what about employees that have worked hard to earn increases based on service and performance? It’s highly unlikely—virtually impossible—to expect that they would receive proportional increases. In fact, it could likely have a negative impact by lowering performance increases and other opportunities as companies react to the situation. How will our employees respond when non-skilled, entry-level workers are coming in with little or no experience making the same wage?” the representative asked.
Another quick-casual restaurant executive stated, “Some smaller operations simply won’t be able to absorb the costs and will have to shutter their businesses. 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. There would be consequences, and those consequences would be shared.”
Muddying the Waters
Looking at many of the websites and articles that promote the “Fight for $15” campaign, you’ll find that the push isn’t simply to raise wages for the employees that work in these establishments or to simply improve the quality of life for hard-working individuals. In fact, if you look at most of these campaigns closely, a secondary motive stands out very clearly. The actual campaign slogan used by the official Fight for $15 reads, “The Fight for $15 campaign is seeking a $15-per-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 strong 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 establishments. For instance, many of the recent protests were backed largely 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.
This is a strong message and a powerful reminder that a power-in-numbers approach to workforce issues still carries tremendous value and relevance. Unions remain an active and influential force in the business world, commanding our continued attention and respect. Historically, they have provided a strong resource and 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? Is that what the workforce wants, or is this a situation where there are other motives or interests muddying the waters?
While it’s very easy to see how these movements can be tied together, we are really addressing two very different issues. As a result, multiple agendas can cloud the message, question motives, raise additional concerns, and ultimately impede both progress and outcomes.
LP Magazine did reach out to the Fight for $15 campaign and the SEIU for comment and additional clarification, but have not received any response regarding our requests at this time.
Safety and Security Concerns
Does every man and woman deserve the opportunity to earn a wage that they can live on? Is there a difference between having that opportunity and requiring that every potential employment prospect provide that opportunity? Should the minimum wage be increased to $15 an hour? How do we define “fair pay?” Will such increases have harmful and lasting impacts on many business operations? Will this lead to loss of jobs and employee unrest? Is the introduction of additional 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 clearly has the potential to lead to safety and security concerns in locations where demonstrations are held.
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,” revealed 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.”
Ironically, many of these incidents are allegedly carried out by individuals who aren’t employees and have no direct 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 fourteen-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 stated.
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 and practices in place to help mitigate potential incidents if and when they occur.
“Our primary goal is to keep everyone safe,” stated a representative for a fast-food company. “We’ve strengthened our security resources, developed action plans in the event of an incident in the stores, and held training sessions with our management teams on how to respond. Safety is paramount, and it begins by treating everyone with dignity and respect. We will not tolerate physical or verbal altercations in our locations. We will shelter in-store and lock the doors if necessary or simply close the location to protect our employees and customers.”
Additional steps may include developing 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 safety. Companies 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.
Next Steps
As is true in response to many complex issues, balance and compromise is likely part of the solution. “We feel that overall we have a very good relationship with our employees, and we certainly want that to continue,” stated a high-level representative for one quick-casual restaurant. “We want to be transparent and treat our employees fairly and with the utmost respect. We want our employees to have options and be content with their jobs. But there has to be balance.”
When such calls for change occur, balance is a key word. While our nation’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 toward increasing the federal minimum wage for the first time since 2009.
Some companies are taking their own steps to improve employee salaries. For example, Walmart recently announced that 500,000 full- and part-time associates—more than a third of its work force—will receive pay raises to at least $9 an hour, which is $1.75 above the federal minimum wage. By February of 2016 that increase will be raised 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 ensure the safety and security of our employees, customers, and facilities if and when incidents occur at our locations. This is best accomplished 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 of us want the same thing for those that work hard to make a living and 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.
The report suggests that the best way to get a handle on fraud and its related costs is tracking incidents by channel and payment method. Every payment method and channel shows a unique risk profile and may require different steps for mitigation. Tracking helps merchants assess the need for investment in fraud prevention solutions.
Outside of the cost of goods, payroll remains one of the highest expenses for most retail and related businesses, often accounting for 20 to 35 percent of gross income, according to many 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.
From a loss prevention perspective our primarily responsibility is to ensure that appropriate steps are taken to ensure the safety and security of our employees, customers, and facilities if and when incidents occur at our locations. This is best accomplished by taking proactive measures through planning, training, awareness, and strategic action.